Everyone knows diamonds are not just incredibly beautiful, but also quite valuable. This is why diamonds are often purchased as investments, in addition to being purchased as jewelry or collection pieces.
Diamonds have many different characteristics, each of which contribute towards the overall value of a stone. The most dominant attribute that tends to catch the public eye is the color of the stone. Those looking to invest in diamonds often find themselves at a crossroads, though, trying to decide whether to invest in colorless stones or fancy colored diamonds. If you are confused on where to invest your money, the following article will provide you with some insight into investing in fancy color diamonds versus colorless stones.
The Rarity of the Stone
When looking to invest in diamonds, it is important to understand where the value of stones comes from. One of the biggest factors in determining the value of a diamond is the rarity of the stone. The more difficult something is to find, the higher its value is likely to increase over time. Josephine Archer, the business manager of Argyle Pink Diamonds, which happen to be of the strongest fancy colored diamond investment opportunities, said “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.” When looking at the prices paid for certain diamonds over time, today's prices are far higher than they were five or ten years ago.
Demand Exceeds Supply
Beyond the rarity of something, there of course needs to be a market demand for the item in order for it to see an increase in value. Colorless diamonds, which are a symbol of love and wealth, are worn on the finger of almost every married - or soon to be married - woman. The market for colorless diamonds is enormous.
While the demand for colored diamonds is much smaller in comparison, colored diamond jewelry pieces are increasingly catching the public eye. Celebrities, and other influential wealthy citizens, have been seen sporting their colored diamond jewelry in full view of the general public for some time now, helping to grow market demand.
When in the market for a colorless diamond, most people know about the 4Cs (color, cut, clarity, caret). However, if you are looking to purchase a diamond for investment purposes, there are other things to keep in mind.
Firstly, the size of the diamond is of utmost importance. Even if the stone has the very best cut, clarity and color, a small stone will not stand out from the crowd. According to Rapaport's publicly posted diamond prices, a high quality one carat colorless stone appreciated 69% between 2006 and 2012, representing an annual growth of 11.45%. While this increase in value is nothing to sneeze at - especially considering how most other investments performed during that same time frame - compared to the performance of larger and colored diamonds, the increase was minimal. A small or standard sized diamond, is simply more common, and thus will not increase as much in price as rarer stones.
An important note to remember is that a colorless diamond, even one of a significant size, will not go up in value if it is a flawed stone. Also, ideally you want to find a diamond that is timeless. You might think all diamonds are timeless, but this is not the case. Since colorless diamonds are found in many diamond mines throughout the world, they can very easily be replaced.
Natural Fancy Colored Diamonds
Fancy color diamonds have only recently been looked at as a legitimate investment option, but have managed to produce some impressive numbers over the past decade. Because colored diamonds are extremely rare, and demand for them is increasing, their prices are soaring at an unbelievable rate.
Leibish & Co., the largest online colored diamond seller, states that the potential for colored diamonds as investments is phenomenal. 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 whopping $625,000 per carat. That represents an increase of 543% over 8 years, or around 68% per year! Not many investments out there can claim to beat that return - especially considering the widespread recession going on during those years .
Unlike colorless stones, a colored diamond does not necessarily need to be large, or of any specific quality. The color is king in this case, and the intensity of the color is one of the most prominent features to look at when determining whether a particular stone is a worthwhile investment. The numbers speak for themselves, and although it is impossible to predict the future, the past years leave us optimistic that colored diamonds will continue to represent a tremendous investment opportunity.
Colorless diamonds still have a firm grip on the market, and have demonstrated some excellent price results over the years. Laurence Graff, one of most well known suppliers of unique jewelry and rare jewels, recently purchased a 50.01-carat, D, potentially flawless, rectangular-cut diamond for $8,370,500 ($167,400 per carat). Interestingly enough, he purchased this same diamond previously in 2005 for $4.2 million. “This is the third time that I have owned this beautiful diamond and I am as thrilled today as I was the first time” said Mr. Graff.
In the very same auction that the aforementioned colorless diamond was sold, there was a 3.15 carat, Fancy Reddish-Orange diamond that sold for a record-breaking price of $666,200 per carat - four times the price of the colorless stone. In addition, there was also a 6.54 carat, Internally Flawless, Fancy Pink diamond ring by Oscar Heyman, (which belonged to Evelyn H. Lauder) that sold for $8,594,500 ($1,313,144 per carat), or eight times the price of the colorless stone!
Of the world’s ten most expensive diamonds ever sold at auction, three were colorless stones, while the other seven were fancy colored diamonds. One of the colorless stones sold was the 84.37 carat Chloe Diamond, and another was the 101.27 carat Shizuka Diamond. Although these are incredibly impressive, they are both relatively large pieces, and somewhat more difficult to conceal and transport than the fancy colored diamonds on the same list.
While both colorless and colored diamonds have performed extremely well over the past decade, fancy colored diamonds have outperformed their colorless counterparts in terms of price appreciation. Thanks to increasing demand, and their extreme rarity, it is expected that colored diamonds will continue to outperform colorless diamonds in the foreseeable future as well.
This article was written by Benji Margolese, Marketing manager of Leibish & Co. Founded in 1979, Leibish & Co. is the world's premier online resource for natural fancy colored diamonds. Based in Ramat Gan, Israel, and with customers around the globe, Leibish enjoys an unparalleled reputation for integrity and service. The Company offers a wide array of GIA-certified colored stones as well as a unique collection of multi-colored diamond jewelry designed in-house such as fancy yellow diamonds. The Leibish & Co. website features a comprehensive knowledge center for the Fancy Colored Diamond Industry, including informative articles and investment materials, and also offers a direct purchasing channel for global buyers.