Diamonds have come a long way from being just a woman’s best friend. One of the greatest benefits of this multi-function asset class is in addition to the beauty, diamonds act as an investment towards your future as well. Colorless diamonds have for so long been a viable alternative investment option in place of other assets like stocks, bonds, and precious metals. However, since the beginning of the 21st century, color diamonds have become widely recognized as exceptional central investment opportunities for investors worldwide. Now that these rare, colorful beauties are being acknowledged for their full potential the question is should one remain more conservative and go for colorless or take a chance on something relatively newer and invest fancy color diamonds?
Leibish Polnauer, President and Founder of Leibish & Co., poses while holding up a Yellow diamond heart by his hand to check the color and appearance as set in a ring
In order to answer this pressing question, it is crucial to examine the qualities of each. This will help predict what the future holds for the different diamonds and what potential their value actually holds.
Understanding the Rarity of the Diamond
In general, individuals prefer to invest in something not everyone already ownes. Firstly, the more uncommon an item is, the more unique it is, and more often than not the higher its value. Secondly, people like to be individual and different, and not always follow the flock. Colorless diamonds have been commonly used for engagement rings for quite some time. While some, extremely large, colorless diamonds may separate you from the crowd, becasue most are so common they are not considered unique. However, fancy colored diamonds on the other hand, which are each a one-of-a-kind unique piece are among the rarest items found on earth. They have recently managed to heavily increase in popularity and are now attracting awareness of not only the rich and famous, but the public eye as well. They are still and always will be far rarer than colorless diamonds.
Of the many colored diamonds used specifically for investments, Argyle Pink Diamonds have demonstrated some almost unbelievable results. They therefore stand out as one of the most highly recommended investment stones available. They are so rare that Josephine Archer, the business manager of Argyle diamonds which is the world’s leading pink diamond producer, stated that “although the Argyle mine supplies approximately 90% of the world’s pink diamonds, astonishingly, a whole year’s worth of production of stones over half a carat would fit in the palm of your hand.” It is no secret how very rare fancy color diamonds are and to how scarce and truly valuable they can be. As the already small number of color diamonds begins to diminish, the value will only increase.
A Fine Argyle Pink, Blue, and Violet Diamond Collection
The Supply and Demand Factor
Every economist involved in business knows the role that supply and demand plays. If the supply exceeds the demand, you are in trouble. If demand exceeds supply, you stand to gain. Diamonds are in high demand, higher than the supply. However, when it comes to color diamonds the numbers are even more dramatic. Nature has it that the supply of color diamonds is already limited. Now, add the popularity factor that celebrities have recently created and you have a staggering demand for a minuscule amount of color diamonds. This puts these stunning gems at a terrific advantage, and their investors as well.
Investing in a Colorless Diamond
In order for a colorless diamond to be a worthwhile investment it must meet a few requirements. For starters, each and every one of the 4Cs plays an important role. But it is not enough for it to be a clear, large, flawless, well-cut diamond. It must be extraordinarily clear and very large. A small diamond will not increase much in value, nor will a large stone with flaws. A more common, 1 carat, round brilliant diamond may be in great demand, but there is more than enough of a supply to replace any one diamond with a bigger and better diamond. Therefore, an investment-worthy colorless diamond must be of superb quality and significant size.
Investing in Fancy Colored Diamonds
Unlike colorless diamonds, color diamonds do not need to be of any specific size or quality in order to be extremely valuable. The color is the main factor. If the diamond possesses a rare and strong color, it can be a very wise investment opportunity. Though color diamonds have only officially been part of the investment market for a little over a decade, they have proven to be fruitful choices. According to Leibish & Co., the largest online fancy color diamond company, color diamond investments hold phenomenal potential. “When analyzing the price appreciation over time and the high demand verse the low supply, fancy colored diamonds exhibit investment characteristics that most other class’s can only dream of emulating.” For example, a 3.58-carat fancy intense pink diamond was sold in 2003 for $115,000 per carat while a 4.59-carat fancy intense pink diamond sold in 2011 for a shocking $625,000 per carat. That is an unbelievable increase of 443% in value.
A Close Look at the Numbers
Both colorless and color diamonds have solid arguments in terms of viewing them as potential investments. However, one of the clearest ways of determining their successes is by looking at the numbers. Among the ten most expensive diamonds ever sold at auction, only three of them were colorless and the remainders were fancy color diamonds. One of the three was the 101.27-carat Shizuka Diamond and another was the 84.37-carat Chloe diamond. Though these diamonds are sensational and impressive, they are less practical with regards to portability and privacy than the other colored diamonds in the list. One of the most well known suppliers of unique jewelry and rare jewels, Laurence Graff, purchased a 50.01-carat, D, potentially flawless, rectangular-cut diamond not too long ago for $8,370,500, which is $167,400 per carat. With that said, a 3.15-carat, fancy reddish-orange diamond was sold at the same auction for a record-breaking price of $666,200 per carat. That is four times the price of the colorless stone. Additionally, a 6.54-carat, internally flawless, fancy intense pink diamond ring by Oscar Heyman, which belonged to Evelyn H. Lauder, sold for $8,594,500. That’s $1,313,144 per carat, eight times the price of the colorless stone.
Colorless and color diamond are some of Nature’s most beautiful gifts. However, there is no denying the treasure that color diamonds hold. Their rarity and beauty are so great that every diamond investor and dealer is constantly in search of these rare beauties. The convenient size and proven increase of value in such a short period of time answers the initial question with this statement: fancy color diamonds are the most concentrated form of wealth on the planet.
Read more about color diamond investments.
Contributor: Benji Margolese