Blue Diamonds to Smash Records

 Blue diamonds have been grabbing attention more than usual this year, and not just because two incredible rough blue diamonds were discovered by Petra diamonds in South Africa and made headlines around the world. In 2014, blue diamonds broke and established new records for price at auction. First, in Geneva on May 14, the newly dubbed Winston Blue, a 13.22 carat Fancy Vivid Blue diamond, broke the world record of price per carat for a blue diamond. It sold at auction for $1.8 million per carat. Another sub-record was broken in October, when a 3.32 carats Fancy Vivid Blue sold for $1.614 million per carat, breaking a record in the category of 3-5 carat Fancy Vivid Blue diamonds. Although this category is smaller than the entire class of blue diamonds as a whole, the effect of this broken record is still rather significant.

 

New York Vs. Geneva

 


On November 20, Sotheby’s NY will be auctioning off items that belonged to Mrs. Paul Mellon and whose proceeds are designated for a charity. Two items caught my attention among the lots. One was a 9.75 carat Fancy Vivid Blue VVS2, but potentially Internally Flawless diamond and valued between $10 million and $15 million. The other, a similarly sized but somewhat less impressive diamond, is a 9.15 carat Fancy Blue VS1 diamond valued between $1 million and $1.5 million.

  

We can reflect on the estimated selling price for the abovementioned diamonds as follows. If I were to list all of the Fancy Vivid Blue diamonds sold at auctions since 2010 whose weight is between 3-10 carats, the following stones come to mind:


3-5 ct Category

 

April 22, 2010 3.43 ct sold for $905k per carat
April 14, 2011 3.18ct sold for $1.03m per carat
October 18, 2011 3.21ct sold for $846k per carat (a steal!)
November 15, 2011 4.16ct sold for $1.035m per carat
October 15, 2013 3.81ct sold for $1.05m per carat
October 6, 2014 3.32ct sold for $1.614m per carat


 

5-10 ct Category

 

April 7, 2010 5.16 sold for $1.247m per carat
June 1, 2010 5.01 sold for $939k per carat
May 11, 2010 5.02 sold for $1.259n per carat
October 5, 2011 6.01ct sold for $1.69m per carat
April 3, 2012 8.01ct sold for $1.595m per carat
November 13, 2013 5.04ct sold for $1.319m per carat



 

We can clearly see how in the past 4 years alone, the average stone between 3-10 carats sold for an average of $1.21 million per carat, which already surpasses the low estimate that Sotheby’s is giving us. On the other hand, all stones above 5 carats have sold for an average of $1.34 million per carat, indicating a more valuable per carat average than diamonds of the same caliber but in a smaller size category. Therefore, it remains to be seen whether the bidders on the diamond are going to bid with a historical reference in mind, or with a willingness to cross new lines in diamond prices.

  

New Record on the Horizon


We all know that in reality we do not know the outcome until the auctioneer’s hammer finally hits the table. However, what we do know is that the last 2 Fancy Vivid Blue diamonds that were sold at auction were sold for over $1.6 million per carat. In order for the blue diamonds from this auction to break a new world record, either of them must sell for above $1.8 million per carat. In order to break even the sub-category record price for the 5-10 carats category, either must sell for above $1.69 million per carat, the record set by the 6.01 carat diamond sold back in 2011.


Sentimental value


What about the fact that it belonged to a prominent figure? Will that play a role in the diamond’s valuation to bidders? Can it even be compared to a diamond that was on display in the Smithsonian? How can we compare the passionate part of this investment to other investments? Can we say that any amount paid above $1.69 million per carat can be contributed to “goodwill”?


Let me know what you think!

 

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