_A fascinating year in diamonds
This past year, it has to be said, has been fascinating for diamond auctions. While Knight Frank’s 2016 Luxury Investment Index saw wine overtake classic cars to assume first place, the diamond world has witnessed some spectacular milestones of its own.
The 59.6 carat Pink Star, fetched $71.2m at Sotheby’s Hong Kong in April, simultaneously becoming the world’s most expensive diamond ever sold at auction and the most expensive item in any category ever sold at an auction in Asia.
In May, the world’s most expensive pair of earrings sold at Sotheby’s Geneva for $57m. Then in June in London, a ring originally bought at a car boot sale for £10 in the 1980s sold at Sotheby’s for a staggering £656,750, rocketing past its high pre-sale estimate of £350,000 during a frenzied two minute bidding session.
Above: David Bennett, worldwide chairman of Sotheby’s International Jewellery Division, selling the Blue Moon of Josephine in Geneva in November 2015. Courtesy of Sotheby’s
But back in June 2016, we also saw a spectacular failure. When the Lesedi la Rona, the largest diamond discovered in over a century, went on the block at Sotheby’s London with an estimate of $70m, it did not sell.
I believe the seller is right to hold on to this treasure. When the market is ready, I am confident this stone will sell for a very, very handsome price.
In the meantime, the frequency of world diamond records being smashed, alongside a greater number of both auction bidders and world-class diamonds appearing at auction, are all evidence that a set of savvy, wealthy investors now increasingly believe in diamonds as a viable asset class.
When it comes to investing, confidence in the re-sale value of an item attracts a buoyant marketplace.
For example, the buyer of the £10 ring is likely to re-cut the diamond into a stone that is far higher than the already impressive price it recently fetched at auction. Meanwhile, the buyer of the Pink Star diamond was Chinese retail giant Chow Tai Fook, asserting its confidence and position in the diamond world, while it pursues aggressive expansion plans in the American market.
One of the proudest moments in my own career to date, was the night I sold a 12.03 carat blue diamond, the Blue Moon, at Sotheby’s in Geneva for $48.5m in 2015.
The Blue Moon still holds the world record for the highest price paid per carat for any diamond ever sold at auction - $4.1m. Within minutes of the diamond selling, it was announced that the new buyer would re-name this dazzling, ocean-blue diamond the Blue Moon of Josephine, in honour of his then seven year old daughter. And if that’s not an investment for the future, I don’t know what is.
After all, even a one carat D Flawless diamond is a rarity of nature. It takes nature millions of years to form a diamond. The depths of the planet are like an impenetrable safe that stores rough diamonds.
The minute probability of nature slowly producing a diamond over millions of years, which may or may not rise to the Earth’s surface, which may or may not be discovered, which may or may not have a perfect colour, which may or may not be free of inclusions, is so tiny that these combined factors can, and does, propel the value of such rare stones skyward.
In late July in New York, Australia’s Argyle mine, which produces most of the world’s pink diamonds, will hold its annual exhibition of approximately 60 of its finest pink, red and purplish red stones unearthed from the ground in the past 12 months.
This isn’t the kind of exhibition anyone can buy a ticket for. It will culminate in the opportunity for invited parties to place sealed bids to acquire these rare stones, which regularly command over $1m a carat, with past buyers including Graff, Tiffany, Moussaieff and Chow Tai Fook.
On one occasion in the 1980s Laurence Graff acquired the entire Argyle Pink Diamond Tender, as it is known, for $3.5m. He would go on to sell them in just a few minutes.
The appeal and understanding of coloured diamonds has grown significantly since that time, but Graff culled all the different sized and shaped pink diamonds together to create a flower. The afternoon the jewel was finished, Graff went to meet the Sultan of Brunei at the Dorchester Hotel on Park Lane, which the Sultan had recently purchased.
“While we were talking I pulled out the flower and said: Your Majesty, what do you think of this?” writes Graff in his book Graff: The Most Fabulous Jewels In The World, of his meeting with the Sultan. “He opened his hands to have a look at it and I could see his eyes gleam with excitement at this absolutely unique and beautiful jewel and I sold it to him in two minutes. I was out of all the pink diamonds in two minutes!”
When investing in diamonds today, knowledge is crucial and I always advise would-be investors to consult a diamond expert – one who understands diamonds both for their breathtaking beauty and their wealth preservation potential.