Colored Diamonds Are Forever…and There’s a Reason for That

Intensity of color is considered a fancy colored diamond’s most important attribute, but intangible elements can also impact significantly on price.

Grading fancy colored diamonds can present a complex conundrum. Especially when factors over and above the diamond’s natural characteristics can influence its value.

Colored diamonds are unique and more challenging to grade than colorless as no two are exactly alike. This means there are differing views within the industry when it comes to grading. So while diamond experts have attempted to grade colored diamonds based on industry standards, some believe there is no replacement for using a broader context.

The GIA offers two types of grading reports for colored diamonds. One, the GIA Colored Diamond Grading Report, focuses on the 4C’s, while the GIA Colored Diamond Identification and Origin Report limits itself to color. However, some believe the GIA’s list of physical characteristics ignores other factors that impact price.

Conceptual pricing

While most retailers utilize the GIA’s standards, Eden Rachminov has developed a framework by which stones can be evaluated for what he terms ‘conceptual pricing.’ In his book Fancy Color Diamonds: The Pricing Architecture, he outlines 11 criteria (or ‘layers’) graders should use to better assess the quality of a colored diamond.

But even Rachminov accepts only assessing physical characteristics ignores other intangible factors that impact price. Provenance is becoming an increasingly important factor, as diamonds owned by famous people have become highly desirable. Rarity is also a feature that can inflate the price and tends to be a key factor as only one in 10,000 diamonds has a fancy color, according to the GIA.

In fact, when Rio Tinto unveiled the Argyle Violet, an oval, 2.83-carat, fancy deep greyish bluish violet diamond, in May this year, it highlighted the fact that only 12 carats of polished violet diamonds have come from its Argyle mine in Western Australia since it opened 32 years ago.

What really counts

But while provenance and rarity can dramatically increase the value of a fancy colored diamond, the single critical element is overall appearance, according to Alan Bronstein, owner of New York’s Aurora Gems a dealer in fancy colored diamonds. “The customer who knows nothing about colored diamonds is not going to pick the one that’s rarer, he’s going to pick the more beautiful stone,” says Bronstein. So when it comes to the question “How do I value fancy colored diamonds?” his advice is simple – “By looking at them.”

However, ever since the .95-carat ‘Hancock Red’ sold for $926,000 per carat in 1987 (after being purchased in 1956 for a mere $13,500) differing views in terms of how to most accurately grade them has done little to impact their popularity.

This was once again underlined in May earlier this year when the Oppenheimer Blue, a 14.62-carat Fancy Vivid blue diamond, became the world’s most expensive jewel sold at auction, selling for $57.5 million at Christie’s in Geneva.

So while some will agree to differ when it comes to grading, recent auction results have underlined that when it comes to jewels color is still king.

Image: IIDGR