Auction Season, Market Conditions & Colored Diamonds
As auction season begins in New York and Hong Kong, sales at the two major auctions for Christie's and Sotheby's showed very solid results. With sales in Hong Kong topping $100 million and sales in New York reaching over $60 million, rare colored diamond sales at the spring auctions look to again outpace sales in 2013. A wide array of greens, blues, yellows, oranges pinks and champagne diamonds highlighted both sales, with some very interesting results in the medium price range of the market.
New York Auction Review - April 2014
Christie's and Sotheby's had two jewelry and diamond auctions in New York in the last couple of months, with Sotheby's Important Jewels auction achieving sales of just over $11 million dollars and Christie's Magnificent Jewelry auction seeing sales of over $60 million dollars.
As always, the main trade periodicals reported the highlights of the sales, including a 6 carat intense pink that sold for $5.7 million dollars at Christie's, as well as a 5 carat Fancy Gray Blue that sold for over $1.1 million dollars.
However, there were some interesting results in the Christie's sale for a variety of colors, as you can see below. Good quality green diamonds had a couple of interesting results as well as multi-colored deep brownish and greenish orange and yellow diamonds. There was also a lovely six carat plus champagne diamond that sold for over $100,000 USD, one of the first times we have seen a pricing level achieved on these types of goods as market penetration of champagne and cognac diamonds continues to penetrate the American jewelry market.
Location Lot # Shape Size Grade Reserve Price
NY 31 Cushion 6.61 yellowish Brown $70,000 - $100,000 $106,250
NY 56 Cushion 8.22 Deep brownish Yellow $60,000 - $80,000 $149,000
NY 94 Cushion 23.9 Fancy Yellow $375,000 - $450,000 $557,000
NY 95 Old Mine 2.49 Fancy yellowish Green $300,000 - $500,000 $1.805 M
NY 113 2.16 Very Light Pink $30,000 - $50,000 $68,750
NY 161 Ashoka 5.92 Dark Brown greenish Yellow $100,000 - $150,000 $125,000
NY 162 Radiant 7.11 Fancy browinish orangey Pink $350,000 - $500,000 $569,000
NY 169 Radiant 3.51 Deep brownish orangey Yellow $20,000 - $40,000 $35,000
NY 195 Oval 5.01 Deep brownish greenish Yellow $50,000 - $70,000 $62,500
NY 197 Square 3.6 Intense Green $800,000 - $1,200,000 $1,205,000
NY 200 Square 2.17 Vivid orangey Yellow $60,000 - $80,000 $75,000
As you can see in the auction table above, all of the stones sold within the estimate selling ranges or above in many cases. The highest sale relative to the reserve estimate was the 2.49 carat Fancy yellowish Green diamond, which sold for over four times the average reserve estimate. However, the stone was an antique piece in an old mine cut and a very rare and beautiful color, so we definitely saw some sentimental buying on that lovely piece.
The Important Jewels auction from Sotheby's in February was more for stones in the five and low six figure range. Here the concentration on sales was for the larger Fancy Yellow diamonds, as four 5-carat pieces sold for very healthy prices. However, there was also a couple of Light Pink diamonds that sold in simple settings for solid prices.
Location Lot # Shape Size Grade Reserve Price
NY 43 Cushion 1.42 F Light pinkish Brown $15,000 - $20,000 $18,750
NY 87 Radiant 2 Fancy Yellow $15,000 - $20,000 $20,000
NY 153 Radiant 5.02 Intense Yellow $60,000 - $80,000 $118,750
NY 154 Radiant 5.02 Fancy Yellow $150,000 - $200,000 $179,000
NY 154 Radiant 5.01 Fancy Yellow
NY 196 Heart 5.01 Fancy Yellow $70,000 - $90,000 $87,500
NY 331 Round 1.01 Light Pink $25,000 - $25,000 $28,250
NY 680 Cushion 6.8 Fancy Yellow $90,000 - $120,000 $167,000
Overall these two New York sales confirm the strength of the market at the auction level and as the buying had a strong breadth of international bidders, dealers as well as retailers and a high percentage of the lots on offer sold, the market can take a lot of positives from the NY sales. The Christie's sale in particular confirmed the strength of the market as they only had 287 total lots on offer and they were able to garner sales of over $60 million dollars. A few years ago a sale like this would comprise over 350 lots with total sales volume of $50 million, confirming the strength of the market.
Diamond News - Resource Investor
Analyzing the worlds 50 largest diamond mines
According to a recent report from the resource investor, global diamond production in 2014 is expected to be 121 million carats of rough, based on estimates of the 50 largest producing mines in the world. 14 of these mines have been operating for over 30 years and a further 21 mines have been operating for more than 10 years, with many of these mines expected to have lives of between 15 and 20 years, the recent Bain & Company report seems to indicate that average production declines of at least 1.9 % over the next decade are quite conservative.
The report indicates that there are potentially another 7 mines, 4 of which should come online in the next 4 years, with potential maximum production of 12 million carats, however, with 14 mines already running for over 30 years and a further 21 mines running for at least ten years, the drop off in production from these means should be much steeper than any new potential production going forward, providing further evidence that diamond production should continue its decline for the next decade.
With most of the production concentrated in Russia, Angola, Zimbabwe, Botswana and South Africa, some of the more volatile regions of the world, global diamond mining continues to show long-term signs of pressure and production declines.
Economic News
Stocks Expected to Collapse by 50% in 2014
It is only a matter of time before the stock market plunges by 50% or more, according to several reputable experts. "We have no right to be surprised by a severe and imminent stock market crash," explains Mark Spitznagel, a hedge fund manager who is notorious for his hugely profitable billion-dollar bet on the 2008 crisis. "In fact, we must absolutely expect it."
Unfortunately Spitznagel isn't alone. "We are in a gigantic financial asset bubble," warns Swiss adviser and fund manager Marc Faber. "It could burst any day." Faber doesn't hesitate to put the blame squarely on President Obama's big government policies and the Federal Reserve's risky low-rate policies, which, he says, "penalize the income earners, the savers who save, your parents - why should your parents be forced to speculate in stocks and in real estate and everything under the sun?"
Billion-dollar investor Warren Buffett is rumored to be preparing for a crash as well. The "Warren Buffett Indicator," also known as the "Total-Market-Cap to GDP Ratio," is breaching sell-alert status and a collapse may happen at any moment.
So with an inevitable crash looming, what are Main Street investors to do? One option is to sell all your stocks and stuff your money under the mattress, and another option is to risk everything and ride out the storm. Or, is the best option to re-allocate your investments into hard assets with a proven track record?
COLORED VS COLORLESS
It is difficult to evaluate the price and success of this special palette of stones. Fancy colored diamonds appear to command higher prices than their classical colorless sisters. There is a maxim which says that "for each colored diamond, 10,000 colorless diamonds can be found". Indeed, colored diamonds are extremely rare.
Instead, it is color that determines a stone's value. Eddy Elzas, owner of Rainbow Gems in Antwerp, explains: "Fancy, intense and vivid describe very different types of colored diamonds that will not be sold at the same price. Unfortunately, people misuse these characteristics [yet they] are essential."
To complement the famous Four Cs that define diamonds and to ensure the nomenclature is correct, there are three additional characteristics that need to be taken into account for colored stones. The tone, hue and saturation of a colored diamond will help us to identify if it is a fancy light, fancy, fancy intense or fancy vivid stone, the latter deemed the finest. "[However] the Four Cs for colored diamonds have a different connotation than the ones for colorless diamonds," explains Yves Frey, the managing director of Yves Frey Diamonds in London. He says the carat weight of a colored diamond holds less importance as the main objective of the polishing phase is to reveal the stone's color. In terms of clarity, impurities can be tolerated as long as they do not interfere in the play of the color and in the sparkle," Frey explains. "As for the color, in colored diamonds their exceptional tint is achieved due to external elements, for example radium for green diamonds and nitrogen for yellow diamonds."
MOST FASHIONABLE PIECES
The growing confidence among consumers when it comes to wearing colored stones has begun to filter into fine jewellery, most notably in the growing vogue for colored diamonds among brides. Antonia Kendle, gemologist at Holts London, explains: "Yellow diamonds are a popular choice for engagement rings, and cognac-hued diamonds are popular both as center gemstones for engagement rings and as side gemstones to complement unusual colored sapphires."Kendle says Holts' customers are increasingly interested in having colored diamonds or gemstones in their engagement ring instead of the classic colorless diamond. "This seems to be due to a wish to have something a little different, not the same as everyone else but still elegant and wearable," she notes.
Arguably, the affordable end of the colored diamond market plays quite literally into the hands of brides, trendsetting grooms or women seeking a special right hand ring. But colored diamonds are also something of an investment. "Larger stones of top quality in rarer colors such as pinks and blues are only for the most discerning of our clients who compare them to valuable pieces of art," Kormind explains. "Then, there are individuals and collectors that have purchased colored diamond of good quality and rare colors as an investment to diversify their portfolio, as well as high earning professionals that want a more unusual and valuable item to wear."
Fancy colored diamonds have the potential to seduce us all, from brides, gem dealers and collectors, to those celebrities treading the red carpet. Their rarity and beauty also equates to aspiration and a desire to be different, driving interest in even the most reasonably priced of stones. Ultimately, as Yves Frey concludes: "Fancy colored diamonds reveal your self-expression and true passion."