The Coloured Diamond Investment House, the recently established private venture seeking to build an inventory of the rare gems, has acquired its first three stones, director Lee Satariano told The Times Business.
The three GIA-certified yellow diamonds were acquired for an undisclosed sum from recognised sight holders through the Diamond Trading Corporation.
The three stones are a natural 6.30-carat cushion modified brilliant cut of VVS1 clarity (fancy yellow colour), a natural 4.30-carat rectangular modified brilliant, also VVS1 clarity (fancy intense yellow colour), and a 1.01-carat rectangular modified brilliant of VS2 clarity (vivid yellow colour).
Mr Satariano, the Gaba Diamonds director and a key member of the group of private investors behind the Coloured Diamond Investment House, is lending his expertise as a gemmologist and diamond grader to the project.
The company was set up earlier this year to acquire finest quality coloured diamonds, larger than 0.5 carats in top colours pink and yellow, over the next four years.
“We are pleased with our achievements in these first few weeks,” Mr Satariano said. “The shareholders travelled to Antwerp twice, but considerable correspondence took place in between visits. Originally, we focused on stones of 0.5 to one carat of high intensity colour and we are particularly satisfied with the colour of these diamonds. Our foremost priority throughout this exercise is colour, with the next considerations being cut and clarity. We are seeking yellow diamonds with clarity of ‘VS2’ (very slight inclusions) and above, and we are examining stones of fancy colour, going into intense fancy and vivid.”
Mr Satariano explained the investors were viewing up to 10 stones at a time to make the appropriate colour comparisons. There is no form of grading on a coloured diamond’s certificate to indicate the saturation of the stone’s colour on a scale, making selection a purely subjective matter tinged with desirability. Colour selection has been the investors’ major challenge and several stones made available for viewing were set aside.
Apart from corresponding with suppliers to facilitate the fostering of relationships with coloured diamond collectors, the investors are also busy closely monitoring trends at auction.
“There is no standard pricing for coloured diamonds as they are so rare,” Mr Satariano pointed out. “There is a monthly ‘rapaport’ for white diamonds which gives buyers a guide to current pricing, but there is no equivalent for coloured diamonds. Auctions provide a rough guide according to weight, colour and intensity.
“We have been studying sales at auction and designed our own target inventory against the trends and our own forecast of appreciation.
“We are also building an inventory of the goods we are acquiring and keeping track of pricing so that we are able to monitor their appreciation according to current market values.”
It is a fascinating task. With an estimated one carat of coloured stones for every 100,000 carats of white diamonds, coloured diamonds’ scarcity means other factors bear on their pricing and sales.
The Antwerp World Diamond Centre’s news service Antwerp Facets last month quoted an Antwerp dealer explaining that although coloured diamonds’ pricing had risen sharply similarly to that for white diamonds, “demand is mainly seen for certain sizes and colours since their rarity means that prices will necessarily be high.”
Prices continue to escalate as demand rises and supply drops – the best-known mines for diamonds of specific colours are aging, heightening the gems’ desirability and their attraction as an investment. Antwerp Facets said pink diamonds have seen their value almost double every five years; because coloured diamonds are purchased as investments, they are kept off the market for lengthy periods, further enhancing their value.
A 24.78-carat fancy intense pink diamond mounted as a ring made international headlines last November when it sold in Geneva for a record $46.16 million, leaving previous auction records for the sale of a single gem trailing in its wake.
Sotheby’s, the auction house, had originally valued the stone at between $27 million to $38 million until London-based diamond dealer Laurence Graff set his sights on it. Described by David Bennett, chairman for Europe and the Middle East at Sotheby’s international jewellery department, as “one of the pure diamonds”, the flawless emerald-cut stone was last seen on the market 60 years ago when it was sold by US jeweller Harry Winston from his private collection.
Another spectacular stone to watch will be a 43.51-carat flawless fancy intense yellow diamond, called the ‘Golden Eye Diamond’, which goes on sale in the US on September 8. According to Antwerp Facets, bidding will start at $900,000 and rise in $100,000 increments with bids expected from all over the world.
The Coloured Diamond Investment House will now resume its acquisition exercise next month. Mr Satariano said the investors will continue to examine the potential of pink diamonds at “realistic” targets of one carat. Pink diamonds are so rare, high end stones rarely come to the market and are often sold by invitation only.
“We will continue to look at high end or fancy yellows and the pinks, possibly even blue diamonds,” he continued. “I have been in this business for 20 years but coloured diamonds involve a completely different journey. The most exciting part, however, is our ambition to match one of our stones. It is an enormous challenge as it will be difficult to find an exact match. It is likely we will find a stone similar to one we already have in our inventory which we will have to re-cut.
“That also involves another process as we will have to calculate the loss of weight within the stone. There is a calculated risk involved: the colour could change slightly and completely new certification would have to be obtained for it.”
Individually, the stones are extraordinarily prestigious and the investors anticipate a healthy appreciation on them. A match, however, would heighten their value – matches beyond a pair would elevate the status of the company’s inventory further.
Mr Satariano admits that after setting out on the Coloured Diamond Investment House’s mission, the investors have decided to broaden their parameters to raise their investment threshold.
“The shareholders feel that if we are fortunate enough to come across stones of such rarity at pricing that is accessible to us, we will go ahead and acquire them,” he said. “We believe the appreciation will be significant, especially taking into account current commodity market trends.”
Gaba is now planning to showcase the stones at an event towards the end of the year, by way of giving people an opportunity to learn more about this venture.