Fancy Colored Diamonds: Updates and News to Know

A Pair of Fancy Colored Diamonds Fetch More Than $18 Million in Sotheby’s Sale

A pair of exceptionally rare, fancy vivid, heart-shape colored diamonds fetched more than $18 million during the Sotheby’s Hong Kong Magnificent Jewels auction on July 10th. The auction took in an impressive $56.4 million in total, with the colored, heart-shape diamonds fetching $10.5 million (the fancy blue) and $8.1 million (the fancy pink), respectively.

The first is a 5.04-carat fancy vivid blue heart modified brilliant-cut diamond. The gem has a VS2 clarity grade, according to its lab report. The heart-shaped gem is mounted on a platinum ring flanked by two pear-shaped diamonds. Its estimate was $7.7 million – $9.7 million (sold: $10,584,595).

The other diamond is a 4.49-carat heart modified brilliant-cut, internally flawless, fancy vivid pink diamond. It’s mounted on an 18k white gold ring flanked by pear-shaped diamonds. Its estimate was $7.5 million – $8.8 million (sold: $8,125,111).

An ‘Internally Flawless’ 12-Carat Blue Diamond Just Sold for $15.9 Million at Auction

Even during times of great economic uncertainty, there are still luxury items that buyers can’t resist. Take, for instance, a dazzling blue diamond that sold for a $15.9 million at auction on July 10th. The gem, a 12.11-carat fancy intense blue diamond, hammered down for the eye-popping sum at Christie’s Hong Kong Magnificent Jewels Sale. That price easily shattered the $8.4 million to $12.3 million pre-sale estimates.

Owned by an anonymous “distinguished private collector,” the marquise-shaped, sky blue stone, which has been graded “Internally Flawless,” comes mounted on a platinum and gold ring between two pear-shaped, brilliant-cut diamonds. Highlighted for its size, quality, and rarity, the diamond was unsurprisingly the subject of a prolonged bidding war that eventually came down to two phone bidders. The “gavel price” was $13.6 million, which doesn’t include the buyer’s premium, but even that was still more than 10% more than the high estimate for the stone.

How has COVID-19 impacted Fancy Color Diamond Investments and other Luxury Investments?

While high-end pink and blue diamonds performed very well on the retail side, auction prices appeared low, reflecting the inferior quality of many of the colored diamonds that find their way to auction. The real action here is at retail level, behind closed doors, where the goods sold tend to be of better quality and so fetch higher prices. Looking ahead, it will be interesting to see what happens to Argyle diamonds, with the mine set to close in 2020.

- Miri Chen, Fancy Color Research Foundation CEO

20 Minutes With: Dewey Burke, Founder & CEO of Luxury Asset Capital

At a time when traditional lenders have become overwhelmed and bogged down with high volume and government programs, collectors with valuable luxury assets—watches, jewelry, gems, cars, and more—have an alternative borrowing outlet with collateral lending firms, such as Luxury Asset Capital. 

Founded in 2008, the Denver-based company specializes in speedy short-term loans to help high-net-worth individuals bridge cash-flow gaps, fund payroll or inventory costs, or cover large, unexpected expenses, such as margin/capital calls, tax payments, or legal bills. Existing collections can also be used as collateral to finance new acquisitions. 

“Collateral lending is a non-bank option that provides the ability to raise capital using assets ultra-high-net-worth clients already own,” says Dewey Burke, founder and CEO. “These are typically assets that traditional banks will not consider when putting together an underwriting package. They don’t know how to value a 40-watch collection, so they won’t.”

Impact of Covid-19 on the Diamond Mines and the Colorless Diamond Market

Overall expectations for 2020 diamond production before the outbreak were for a slight reduction in 2019 output, down by 1.5% from 145m carats in 2019. Rio Tinto’s guidance was 12m-14m carats versus 17m carats in 2019 with the Argyle mine entering its final year of production, while in Q4 2019 Alrosa was already advising of production of 34.3m carats for 2020, a reduction of over 4m carats. However, with more limited production due to mines entering care and maintenance or operating at reduced capacity, initial expectations are for production to fall to 133m carats, a decline of 9%. Should lockdowns continue or the market deteriorates further, then an even more significant decrease is expected.

How do you think the market will change once the world has recovered from Covid-19?

Over the past 10 years the average price of the colored diamonds tracked by FCRF – pink, blue, and yellow – has risen by 77%. Pinks have been the top performers with a growth of 116%, while yellows have underperformed increasing by just 20%. Blues meanwhile were up 81%.

Like most products in the luxury segment, the fancy color diamond market stopped its trade, mainly for reasons associated with logistics and transportation. Diamonds could not move from a buyer to a seller, nor from miners to manufacturers, regardless of how many orders were in the pipeline.

We can refer to past crisis events, such as after the 9/11 terror attack in 2001, or during the mortgage crisis in 2008. In both cases, prices of fancy color diamonds kept their stability. However, the Covid-19 crisis is quite different as it’s characterized by a logistical halt more than anything else and not a result of the economic failure of a large financial sector.

- Miri Chen, Fancy Color Research Foundation CEO

Created By: Rayah Levy, FCD Invest President | Due Diligence Expert | Forever Capital Fund Manager

Please contact Rayah Levy at [email protected] for more information, or to begin your Fancy Color Diamond investment journey with FCD Invest.