19 May 2016

‘Oppenheimer Blue’ diamond smashes estimates, sells for world record A$80 million

A recent spate of eye-popping bids at Geneva’s semi-annual magnificent jewel auctions has highlighted the surging value of precious stones, with some of the world’s ultra-rich increasingly investing in hard assets as a safeguard against stock market volatility.

“When you buy a Picasso, you pay a lot, but you know you are going to sell it for even more.”

The dazzling 14.62 carat blue diamond etched a record $80 million at auction in Geneva, May 18, 2016.

The dazzling 14.62 carat blue diamond etched a record $80 million at auction in Geneva, May 18, 2016.

The “Oppenheimer Blue”, the largest and finest fancy vivid blue diamond ever offered at auction, sold for a world record 56.837 million Swiss francs ($80.71 million) on Wednesday after dramatic see-saw bidding, Christie’s said.

“It’s the most expensive jewel ever sold at auction,” said Christie’s spokeswoman Alexandra Kindermann.

The rare rectangular-cut stone, which weighs 14.62 carats, previously belonged to Sir Philip Oppenheimer, who controlled the Diamond Syndicate in London.

Before the auction experts ad said it was in with a chance of beating the record of $48.4 million set by Sotheby’s in November with Hong Kong billionaire Joseph Lau’s purchase of the 12.03-carat “Blue Moon of Josephine”.

The packed Geneva saleroom broke into applause as Rahul Kadakia, Christie’s International Head of Jewellery, brought down the hammer after two phone bidders ended a 20-minute battle for the gem.

The buyer’s identity was not immediately known.

Sotheby’s fetched a record price in the Fancy Vivid Pink Category on Tuesday, when a private buyer in Asia scooped up a 15.38-carat stone for $31.6 million.

Ehud Laniado, president of Cora International, which sold the stone dubbed “Unique Pink”, said he was “very happy with the sale price”, and voiced confidence that the gem’s value would rise over time.

“When you buy a Picasso, you pay a lot, but you know you are going to sell it for even more,” he said.

 

 

Surge in diamond prices amid volatile share market

A recent spate of eye-popping bids at Geneva’s semi-annual magnificent jewel auctions has highlighted the surging value of precious stones, with some of the world’s ultra-rich increasingly investing in hard assets as a safeguard against stock market volatility.

Britain’s Sir Philip Oppenheimer (1911-1995) led a powerful cartel called the Central Selling Organization for 45 years, tightly controlling roughly 80 percent of the international diamond trade in a bid to prevent wild price swings.

Among his major credits was convincing the Soviet Union to sell its significant diamond reserves through his London-based cartel.

De Beers, the giant mining company built by the Oppenheimer family, also flourished in the latter half of the 20th century, thanks in part to Sir Philip’s outsized influence in the sector.

The blue stone has passed through several hands since Oppenheimer’s death and this week marked its first appearance at public auction.

“As a general rule, these stones are quite small,” said Christie’s diamond expert Jean-Marc Lunel, noting that a Fancy Vivid Blue weighing just five carats typically generates considerable buzz in the diamond market.

Last week, Canadian mining company Lucara Diamond announced the sale of a huge 813-carat uncut diamond for a record $63 million ($66.8 million).

The name of the buyer for the gem, which was discovered in Botswana, was not divulged, nor the conditions of the sale overseen by Nemesis International.

That record sale figure for a rough diamond is unlikely to last very long.

Lucara is preparing to auction an even larger 1,109-carat diamond at Sotheby’s in London on June 29.

 

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07 Mar 2016

Bullish Australian Dollar adds sparkle to investment diamonds

The key takeaway here for diamond buyers is that these unexpected developments in our currency present an excellent buying opportunity, whether adding to existing holdings or getting into the market for the first time.

Australian dollars

MARKET COMMENTARY: The AUD/USD had a terrific week, this morning trading at just over 0.74 Australian cents to the US Dollar. The Aussie has now rallied 8.3% since January 15th, significantly outperforming expectations as a week of positive economic surprises has helped. The Australian economy is growing faster than expected, commodity prices have increased with iron ore extending its 19% gain last month, and a falling US Dollar have all been factors supporting our unexpected stronger currency.

This translates into a favourable buying opportunity for investors looking at making additions to their diamond portfolios. Just as with commodities such as oil and gold, diamonds around the world are traded in US Dollars. This means that the higher the Australian dollar is worth against the US Dollar, the lower the price in AUD for the same diamonds, even though the intrinsic value remains the same.

AUD index

What will happen short-term with the AUD is anyone’s guess considering the degree of volatility across currency markets, but many economists believe these gains to be a short-term corrective rally, predicting an overall weakening trend in the Aussie as the year continues. Some believe the AUD could go as low as 50 cents vs. the USD with continued volatility in commodity prices and concerns over soft Chinese growth weighing on the local currency.

A growing number of economists also say that if the surge in the Aussie continues, the Reserve Bank of Australia might have to cut interest rates to less than the current 2%.

“If the currency gets up into the high US 70 cents, the Reserve Bank may well consider cutting interest rates again,” independent economist Saul Eslake told Bloomberg at the weekend.

“We know [the RBA] prefer the Aussie to be trading closer to US 65 cents and, given that we are nearly [US10 cents] away from that level, there’s a risk of currency-related comments from RBA officials,” says Kathy Lien, BK Asset Management’s director of foreign exchange strategy.

The key takeaway here for diamond buyers is that these unexpected developments in our currency present an excellent buying opportunity, whether adding to existing holdings or getting into the market for the first time.

Until next time,
Anna Cisecki, Executive Director

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10 Feb 2016

Coloured Diamond Prices resilient, steady in Q4 2015

Strong performers in the fourth quarter included 1-carat and 1.5-carat Fancy Vivid Blues and Pinks, which showed a 4.4-percent and 3.7-percent increase respectively.

Fancy color diamonds

The average price of fancy colour diamonds increased slightly in the fourth quarter of 2015, with the yellow diamond segment growing 1.1 percent, according to the Fancy Colour Research Foundation (FCRF).

The overall fancy color diamond category marginally grew by 0.3 percent, although 3-carat and 5-carat fancy yellows showed a 2.7-percent and 4.4-percent increase respectively, largely driven by low availability at rough diamond tenders.

Other strong performers in the fourth quarter included 1-carat and 1.5-carat Fancy Vivid Blues and Pinks, which showed a 4.4-percent and 3.7-percent increase respectively. After having shown strong growth in the previous two quarters, the fancy blue category registered a slight decline.

The Fancy Color Diamond Index was largely flat on a year-over-year basis compared to the fourth quarter of 2014, with blue fancy color diamonds up 1.7 percent, pink fancy color diamonds saw a 0.5-percent increase and yellow fancy diamonds slipped 1.8 percent.

“Mining companies have effectively shut down a considerable portion of their rough diamond production, especially in Africa, around mid-2015, resulting in market shortages across color and size categories, as reflected in the index results,” said FCRF board member and senior vice president at Dominion Diamond Corporation Jim Pounds.

The FCRF is a non-profit organization, dedicated to promoting transparency, fair-trade principles and high ethical standards in the fancy color diamond industry. FRCF tracks fancy color diamond supply availability and pricing trends, and publishes the Fancy Color Price Index on a quarterly basis.

Source: Fancy Color Research Foundation

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11 Dec 2015

Barron’s: “Fancy Coloured Diamonds set to sparkle in 2016”

A truism of the diamond market: prices rarely go down. Historically, diamonds are a safe haven – there can be some short-term volatility in the diamond market, but it’s consistently higher over the medium and long term.

barrons-250x63Published December 11 2015 by Barron’s

 

Hong Kong billionaire Joseph Lau paid a combined US $77 million for two fancy colored diamonds at auctions in Geneva last month — $48.4 million for a 12.03-carat vivid blue at Sotheby’s and $28.5 million for a 16.08 carat vivid pink at Christie’s, extraordinary prices for extraordinary stones.

But Lau, who reportedly also happens to be wanted in Macau where was he was convicted in 2014 of bribery and money laundering, is not alone in pursuing fancy coloured diamonds. Pink and blue and even yellow diamonds are among the hottest jewelry items this year and that’s not expected to change in 2016.

“Fancy colored diamonds are probably more important today than ever before,” Graeme Thompson, Director of Jewellery, Asia, at Bonham’s said at a recent Hong Kong press event detailing results from the Knight Frank Luxury Index. The term “fancy” speaks to the depth of colour in a stone with a “fancy vivid” having the richest hue.

The luxury index, which tracks coloured diamonds as well as jewellery among ten asset classes, including classic cars and fine wine, rose 10% in the 12 months through September and 63% in the last five years. Prices of colored diamonds, despite eye-popping auction prices, haven’t risen in the past year, a casualty of the Chinese economic slowdown and the government’s anti-corruption crackdown. Still, the category rose 142% in the past ten years.

Most of that growth is from pink diamonds, up a soaring 315% in ten years, and blue diamonds, surging 154% in that time, the Fancy Color Research Foundation reports. Larger white diamonds have risen in value too, but much more slowly, at a growth rate of 5% a year for the last six years, says Knight Frank, citing Mercury Diamond.

Why are colored diamonds popular? Well, auctions with headline-grabbing prices are one reason. A bigger one is “very, very little supply in the fancy colored diamond market” says Thompson. And, as he says, “people want rarefied things.”

All signs point for the fancy color trend to be hot into 2016 and beyond. The big reason is this lack of supply. To start, there are simply fewer color diamonds in the world – only a fraction of a percent of all diamonds, says Tracey Greenstein, director of research at the Fancy Color Research Foundation. Historically, supply has constantly lagged demand in all colors, Greenstein says.

The rarest sparklers of all are pink. About one in 10,000 carats of diamonds are fancy colored diamonds of gem quality, and of these, only 0.1% are pink, Bonhams says. And nearly all the supply of pink diamonds in the world comes from the Argyle Mine in Western Australia, which owner Rio Tinto is expected to close within five years. “That will have a huge, huge impact on pink diamond prices,” Thompson says.

Less popular this year, and likely to remain so in 2016, are regular white diamonds. When it comes to the smallest white diamonds, those less than three carats, again, it’s an issue of supply. But this time there’s too much of it, which combined with a proliferation of jewelry shops in China’s lesser-tier cities, is creating a softer market.

“I wouldn’t say prices are dropping significantly, but discounts to the full list prices are going to be greater than what we were seeing in the past,” Thompson says.

At DFS Group’s luxury stores, white diamond jewelry remains popular, says Christophe Chaix, general merchandise manager, watches, jewelry and accessories. But the fastest growing sector within the diamond world is yellow diamonds, Chaix says, especially fancy yellow diamonds. These are more common, and so more affordable, than their pink and blue counterparts.

Also a favorite are “tutti frutti” pieces, created with rubies, emeralds and sapphires, Chaix says.

Colored gemstones are having a good run in the auction world too, particularly for scarce gems like Burmese rubies and Kashmir sapphires. “We’ve seen quite dramatic price increases for exceptional stones,” Thompson says.

Just last weekend, Bonham’s sold a pair of Kashmir sapphires that were said to be owned by a European princess for GBP1.5 million (US$2.3 million), topping the estimate of GBP500,000 to GBP800,000. And last week, Christie’s in Hong Kong, sold a 15.04-carat Burmese ruby for HKD142 million (US$18 million) and an Afghan Emerald for HKD17.6 million.

Such big-ticket sales can make even the wealthiest of buyers pale (well, maybe not fugitive tycoons), but they merely reflect retail prices, Greenstein at the Fancy Color Research Foundation says.

These sales do provide evidence to luxury consumers that diamonds and other precious jewels can grow in value over time. “How big is the impact? It’s all part of the magic which is in the world of jewellery,” Chaix says.

Top-shelf jewelers don’t typically create pieces from the rarest of gems because they are so scarce –again, a supply issue – and because the ultimate cost to the consumer would be too high.

The reason to buy jewellery, as Thompson made a point of emphasizing, is to wear it and enjoy it. But, when you’re spending thousands of dollars, it also makes sense to consider the investment value of what you’re buying. You may not be able pay millions of dollars for a Burmese ruby, but you can look for affordable gems that could rise in value one day.

A range of fancy coloured diamonds: blue, pink, and yellow.

A range of fancy coloured diamonds: blue, pink, and yellow.

Those purchases could reward by the end of next year, but more likely it will take another year or so down the road. Even if it takes longer, he points to a truism of the diamond market: prices rarely go down. “Historically, diamonds are a safe haven,” Thompson says. “There can be some short-term volatility in the diamond market, but it’s consistently higher over the medium and long term.”

 

 
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09 Nov 2015

Rio Tinto Boasts ‘Exceptional Result’ for Pink Diamond Tender

The rarity of pink diamonds, shaped by the forces of supply and demand, speak volumes about their investment potential and wealth creation.”

Rio Tinto’s 2015 pink diamond tender has concluded, delivering what the company describes as an exceptional result, reflecting global demand and sustained price growth. The Tender, known as the Connoisseurs Collection was comprised of a collection of 65 rare pink and red diamonds, weighing a total of 44.14 carats, from Rio Tinto’s Argyle diamond mine in Australia. The Tender also included 5 ‘Hero’ diamonds including 4 ultra-rare Fancy Red diamonds, and a collection of Once in a Blue Moon diamonds consisting of 20 of the special blue diamonds mined in the past year.

The five 'Heroes' from the 2015 Argyle Tender

The five ‘Heroes’ from the 2015 tender. Image Credit: Copyright © 2015 Rio Tinto.

  • Argyle Prima – a 1.20 carat Fancy Red pear shaped diamond coveted for its unique combination of size, shape, colour and clarity which is rarely seen in the rarefied fancy coloured diamond world.
  • Argyle Aurora – a 1.47 carat Fancy Red oval shaped diamond, named in honour of Princess Aurora from The Sleeping Beauty.
  • Argyle Allegro – a 0.79 carat Fancy Red radiant shaped diamond, named after the brisk and lively ballet movement and reminiscent of the red colour dancing within this diamond.
  • Argyle Spectre – a 1.93 carat Fancy Vivid Purplish Pink shield shaped diamond. The vibrant pink colour and strong shape of this diamond is inspired by the ballet Le Spectre de la rose.
  • Argyle Élevé – 1.44 carat Fancy Intense Pink emerald shaped diamond, inspired by the ballet movement of rising high without bending and reflecting of the perfect long lines and elegance of the emerald shape.

As far as Argyle Prima was concerned, it went to Sciens Coloured Diamond Fund 11 BV, for an undisclosed value. Mr Philip Baldwin, joint Managing Director of Sciens Diamond Management said, ”The rarity of pink diamonds, shaped by the forces of supply and demand, speak volumes about their investment potential and wealth creation.” 

The Argyle Prima, a 1.20 carat 'Fancy Red' diamond

The Argyle Prima, a 1.20 carat ‘Fancy Red’ diamond. Image Credit: Copyright © 2015 Rio Tinto.

Echoing the good result this year, Rio Tinto’s Josephine Johnson says,  “We are delighted with this year’s results which are a reflection of the collectability of pink diamonds and global appreciation of their rarity, provenance and beauty.”

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03 Nov 2015

Q3 2015 Demand for Blue Diamonds Strengthens

Demand for blue diamonds may have been magnified by the excitement being generated by the upcoming Sotheby’s auction headlined by the “Blue Moon“, one of the world’s important fancy Vivid blue diamonds. This has caused increased demand against a shortage of fancy blue diamonds.”

As the diamond industry gears up for its hot selling holiday season, fancy colour diamond prices are holding steady. According to the Fancy Color Diamond Index, prices of these diamonds remained stable during the third quarter of 2015, at a time when white diamond prices showed declines of 6 – 10%. The best performing fancy color diamonds were Vivid blue diamonds, which showed price increases of up to 6% over the previous quarter.

Between July to September 2015, the Fancy Color Diamond Index remained steady, despite lower transaction volumes. Yellow diamond prices, especially in the Fancy category, were soft and declined by up to 2%. Blue diamonds showed average price rises of up to 2%, driven by the Vivid category, with certain sizes (1.5 carat, 2 carats and 5 carat) increasing by 5 – 6% over the previous quarter. This marks the most significant quarterly price increase for blue diamonds in the last 12 months. Prices for pink diamonds remain steady as well.

On a year-on-year basis, when compared to Q3 2014, blue diamonds have been the strongest performer among all colour categories with a 3 – 4% price appreciation. The highest single-category year-on-year price increase was for 5 carat Vivid blue diamonds at 11%.

FCRF Advisory Board Chairman Eden Rachminov said, “Demand for blue diamonds may have been magnified by the excitement being generated by the upcoming Sotheby’s auction headlined by the “Blue Moon“, one of the world’s important fancy Vivid blue diamonds. This has caused increased demand against a shortage of fancy blue diamonds.”

 

Source: Fancy Color Diamond Index
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25 Aug 2015

Blue Diamonds Drive Colour Index Higher in Q2 2015

“Fancy color diamonds are continuously demonstrating resilience and positioning themselves as a uniquely protected product category, strongly affected by dwindling supply.” -Ishaia Gol, FCRF

The Fancy Color Diamond Index (FCDI) rose in the second quarter, driven mainly by the blue-diamond categories, according to the Fancy Color Research Foundation. Fancy-color diamonds continued to outperform, showing price strength amid a backdrop of declines in their white counterparts during the second quarter.

Based on a survey of more than 20 wholesale traders, analyzed by the FCRF and reviewed by accounting firm Citrin Cooperman, the index revealed prices of fancy-color diamonds across the pink-, yellow- and blue-categories, increased 1% over April to July. The strongest performers included 1-ct fancy blue and 1-ct fancy vivid yellow, both up 4% each. Fancy vivid blue in the 3-10ct range jumped 4-6%. A significant advance of 5-6% was noted in 8-10ct pinks, both intense and vivid. In most categories, the increase in prices was because of lower supply.

fancy-1

Price weakness among white diamonds continued during the period under review as polished inventories accumulated across the supply chain. According to the RapNet Diamond Index (RAPI™), 1-carat diamonds prices slid 1.6% over the same period.

“Fancy color diamonds are continuously demonstrating resilience and positioning themselves as a uniquely protected product category, strongly affected by dwindling supply,” Ishaia Gol, a member of the board of advisors for the FCRF, said. “Actual trading has been thin over the last quarter, mainly driven by notable softness in China.”

Gol, however, pointed to improved demand in other regions and added traders felt strongly about their pricing, acknowledging a decline in supply channels, which would likely be further diminished as miners cut production later this year.

To further enhance data consistency and improve accuracy, the FCRF has continued to expand its global contributor reach in collecting pricing data. Market pricing is submitted by contributors over a secure data link that applies advanced statistical tools to identify trends and rule out pricing outliers.

rapaport-logoSource: Rapaport News August 25, 2015
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