Diamonds!

Posted on 03 January 2015

                One for the Record Books: Diamonds at Auction in 2014 
  

  Three impressive diamonds that were sold at Sotheby's New York earlier this year.   Photo: Martial Trezzini/AP

What an exciting year it was for jewelry! An impressive number of new records were set with each major jewelry auction this year, making 2014 one for the record books.

For auctions in general, 2014 was a stellar year as the number of wealthy individuals in the world continues to rise – roughly more than 12 million millionaires and nearly 2,000 billionaires – and the number of rare collectibles remains just as scarce.

  • The year has been defined by the superlative “the most expensive”: the most expensive single-family residence ever sold (18-acre beachfront property in East Hampton sold for $147 million),
  • the most expensive real estate listing in the U.S. (Palazzo di Amore for $195 million),
  • the most expensive car ever auctioned (a 1962 Ferrari 250 GTO sold for $38.1 million),
  • the most expensive timepiece ever sold (a Patek Philippe Supercomplication pocket watch sold for $24 million), to name just a few of the most expensive items sold at auction this year.
  • In the art auction arena alone, Christie’s and Sotheby’s sold more than $1.78 BILLION worth of art in one week in November.

Needless to say, the wealthy are increasingly turning to tangible investments such as fine art and rare cars to add to their investment portfolios, spending their many millions at auctions worldwide.

Increasingly, jewelry – particularly diamonds – continues to grow in favor for the world’s wealthiest. “The 2012 Barclays Wealth Insight survey of 2,000 high-net-worth individuals revealed 70% of the respondents owning precious jewelry as part of their investments, as compared with 57% five years previously,” as reported last month by the Wall Street Journal.

The most sought after jewels are, of course, colored diamonds, jewelry with distinguished provenance, and signed pieces by the world’s most established jewelry houses. To better understand the current state of the jewelry auction market, I spoke with Tom Burstein, Senior Vice President of the Jewelry Department at Christie’s New York, for his thoughts on this year’s spectacular auction results.
    
         The Ocean Dream Diamond – Photo courtesy of Christie’s


At the top of the list of most coveted jewels, colored diamonds reigned supreme in 2014. Realizing the highest prices were the colored diamonds at the very top of their class, flawless clarity and pure Fancy Vivid color grading.

Colors that fell in between fared well with a few outliers that outperformed the rest, the most prominent being the Ocean Dream diamond – a 5.50-carat Fancy Vivid Blue-Green diamond that sold for $8,633,798, or $1,569,781 a carat. For Burstein, the diamond was “this deep ocean aqua blue that was just an extraordinary color and ultimately unique for a diamond graded Fancy Vivid Blue-Green.” Burstein also pointed out that despite its rarity of color, the oddly-shaped diamond of just over 5 carats sold within its estimate.
  
Winston & Zoe Diamonds  The Winston Blue (left) & Zoe Diamond (right)


Thanks to extremely limited supply of top quality specimens, blue diamonds came out on top at auction as two exceptional examples of the rare colored diamond, the Zoe Diamond and the Winston Blue, sold for extraordinary, record prices.

  • In May at Christie’s Geneva, the Winston Blue – a 13.22-carat Flawless Fancy Vivid Blue diamond – sold for $23.7 million, setting a world auction record for price per carat for a blue diamond at $1,799,953 per carat.
  • That record would hold for less than seven months as Mrs. Paul Mellon’s stunning 9.75-carat Fancy Vivid Blue diamond, renamed the Zoe Diamond by its new owner, sold for a staggering $32,645,000, or $3,348,205 per carat, at Sotheby’s in November. The most expensive jewel to sell in 2014, the Zoe diamond also set a new world auction record for any blue diamond and a new world auction record for price-per-carat for any diamond.


This year’s sale of two extraordinary Fancy Vivid blue diamonds is really unbelievable. Colored diamonds occur in one out every 10,000 diamonds mined; a high quality blue diamond is roughly one in every 10,000 of those. In fact, the GIA estimates that only 0.3% of colored diamonds sent for grading are predominantly blue in color and very few possess the electric pure blue hue to warrant a Fancy Vivid grading, a highly rare and rather elusive color grade for blue diamonds. What’s more, only a handful of Fancy Vivid blue diamonds close to or over 10 carats have appeared at auction in the past few years, making 2014 a watershed year for blue diamonds.

 The Graff Vivid Yellow.   Photo courtesy of Sotheby’s


Pink and yellow diamonds also performed well in 2014, confirming the unrelenting demand for superior fancy colored diamonds across the board. Not too surprisingly, two new records were set this year, one for yellow diamonds and the other for pinks.

In May, Sotheby’s Geneva sold the Graff Vivid Yellow, a 100.09-carat Fancy Vivid yellow diamond set in a ring by Graff, for a record $16.3 million – the highest ever for a yellow diamond at auction. Though fancy yellow diamonds more the second most common fancy color, yellow diamonds over 100 carats with a Fancy Vivid yellow color grade are still extremely rare, putting the Graff Vivid Yellow in a class of its own with very few peers.
    
   8.41-carat Internally Flawless Fancy Vivid Purple-Pink Diamond   Photo courtesy of Sotheby’s.

At Sotheby’s Hong Kong Magnificent Jewels sale in October, an 8.41-carat Fancy Vivid Pink diamond sold for nearly $17.8 million, setting a new world auction record for a Fancy Vivid pink. While a few fine fancy pink diamonds sold at auction this year, it is important to remember just how rare a Fancy Vivid pink truly is. “Only 0.1% of the twenty million carats of rough produced annually is pink, and a whole year’s worth of production of these pink treasures over half a carat would fit in the palm of your hand. The majority of the produce qualified as ‘pink’ are usually around twenty points and of low clarity,” according to Sotheby’s.

The record-breaking prices for colored diamonds are most likely to continue in 2015 thanks to ever-increasing demand for the rarest of earth’s precious materials. Even in November of last year, the New York Times investigated the rising popularity of colored diamonds as an investment. “Colored diamonds are continuing to climb in value as the market realizes that the supply is dwindling. The Rio Tinto’s Argyle mine, which produces more than 90 percent of the world’s natural pink diamonds, is expected to be closed in 2020.”

Over the past ten years, the price per carat for fancy color diamonds has increased significantly. For example, pink diamond prices have increased by as much as 443%, according to a study by Leibish & Co conducted in 2012. For investors, color diamonds have not lost their sparkle and remain bright spots for investors looking to hedge against volatile equity markets.
  
  A 75.97-carat pear-shaped diamond. Photo courtesy of Christie's

Colorless diamonds, meanwhile, also pulled in multi-million dollar prices, though no new major records were set this year. Most notably, two colorless diamonds sold for more than $14 million in May:

  • a 70.33-carat cushion brilliant-cut D Flawless Type IIa diamond at Sotheby’s Geneva fetched $14.2 million 
  • a 75.97-carat pear-shaped D Flawless diamond sold a day later at Christie’s Geneva for nearly $14.5 million.

Overall, colorless diamonds comprised more than a third of all the Top Ten lots sold at this year’s magnificent jewels sales, a total of forty stones selling for a combined sum of $164.9 million.

Increasingly, consumers are valuing size above all else in the colorless diamond market. “And size counts when it comes to building value. From 1990 to 2011, the value of three-carat diamonds increased by 145 per cent, while five-carat diamonds rose by 171 per cent on the Rapaport Diamond Trade Index,” according to an article published earlier this year in The Week. However, there does appear to be a softening of the market for colorless diamonds of five to six carats and under, noted Burstein.


With more attention being drawn from outside the jewelry industry, the additional new bidders will increase demand for the ostensibly dwindling supply of extraordinary colored and colorless diamonds, which will ultimately push prices even higher in 2015.

The year’s record-breaking sums for these incredibly rare stones have added to their allure as safe, profitable investments for wealthy individuals seeking tangible assets outside the traditional global markets that remain as shaky as a year ago.

Posted on Jewels du Jour, BY NATALIE ON DECEMBER 28, 2014 AUCTION NEWS

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