I certainly know what I want for Christmas . . .
In this report I am going to review the recent sales of
notable Pink Diamonds at large scale auctions, placing particular attention on the
most recent sale of the “Pink Star Diamond”[1]
at the Sotheby’s, Geneva. I will support my report with close observation into
the geological processes that led to the formation of the pink diamond, the
popularity, rarity and demand for pink diamonds as well as looking at who’s
buying them.
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| The Pink Star diamond |
The Pink Star was cut by master cutters from the Steinmetz
Group, renowned as one of the best cutting companies in the world. Hamid Wahed
Alikuzia[3]
reports on the cutting process for the
Pink Star Diamond[4]
“The master
cutters of the Steinmetz Group took extra precautions given the extreme rarity
and value of the diamond. A team of eight cutters working on the diamond took
almost 20 months to complete the process of cutting and polishing... It is said
that more than 50 models of the diamond were made before the actual cutting
took place” [5]
The diamond itself is part of the rare subgroup known as
Type IIa, which “comprises less than 2% of all diamonds”[6].
Diamonds in this subgroup are chemically
the purest of all crystals, so long as there are no pervading impurities or
imperfections. They are renowned for their flawless purity and exceptional
optical transparency. We will look in to the types of pink diamonds later in
this report.
Pink diamonds are some of the rarest and most sought after
diamonds in the world. Large, flawless and naturally vivid coloured ones, like
the Pink Star, with no trace of any secondary colours/ elements are extremely
rare. The precise nature of the pink colour
is not completely understood, however there is substantial evidence to suggest
that a process known as Plastic Deformation takes place. It plays an integral
role in the growth of pink lamelle within colourless diamonds, creating an
imperfection/distortion in the crystal lattice of the diamond.
A determining factor for a pink diamond’s high price is its
geology. It is almost unheard of for a pink diamond to be of high carat and
even more unheard of for it to be flawless. This is due to the journey it has
to take from the mantle through to being mined from volcanic rock or picked
from the river gravel (incredibly rare). As Galliou states:
“The
conditions to cause deformation of [pink] diamond in the mantle might be rare…such
deep diamonds are less likely to make it to the surface... stress might be
applied during the ascent of the diamonds to the surface, and most of these
reach the surface. Some diamonds might experience both types of deformation
conditions, resulting in pink diamonds that also have acquired a brown
component, explaining the possible presence of pink and brown “graining” in
some crystals” [7]
This graining is not present in The Pink Star however as it
is flawless. The diagrams below shows what a flawless[8]
diamond looks like from all angles.
Over the years, pink diamonds have set the highest prices
for gemstones sold at auction due to their rarity and desirability. Prior to the recent sale of the Pink Dream,
the previous record for a pink diamond sold at auction was the Gem A graded, faceted
step cut 23.88 carat internally flawless fancy intense pink “Graff Pink” sold
by Sotheby’s, Geneva on November 15 2010 for $45,600,000. More recently was the
sale of the Gem A graded, Type II a historic cushion-cut fancy intense pink
diamond, weighing approximately 34.65 carat. “The Princie Diamond” raised $39,323,750 at
Christie’s in New York in April 2013. Another noteworthy pink diamond is the
Darya-i-Nur, a 186 carat, pale pink diamond, which is considered to be one of
the most celebrated diamonds in the Iranian Crown Jewels and one of the oldest
(17th Century[9]).
Thomas Mulier and Andy Hoffman recently suggested in their
report for Bloomberg why coloured diamonds are so popular:
“Investment
grade diamonds attract buyers …as status symbols and hedges against volatility
in the financial markets. Coloured stones account for 0.01 percent of mined
production….they are prized for their rarity and command the highest price per
carat” [10]
Pink diamonds are amongst the rarest and most expensive,
comprising of less than 0.03 per cent of global diamond production. For every
1,000,000 carats of rough diamond sourced only 1.0 carat of pink diamonds will
be produced, proving just how rare a pink diamond can be and why they command such
a high price. The Pink Star is one of the rarest as not only does it hold a
very high carat weight, it is also internally and externally flawless whilst
retaining a fancy vivid pink. The strength of colour is vital when considering
the value of a naturally coloured diamond, the value increases depending on the
intensity of the diamond’s colour. Michael Neuman of Mondial Pink Diamond
Atelier, said that pink diamonds can command up to 100 times the price of non
coloured stones of a similar size and quality.
Until more recently, coloured diamonds have been mostly held exclusively by royalty and collectors. However, over the last few decades they have become increasingly popular in due to their beauty and rarity. Interestingly, coloured diamonds “were among the few luxury items to continue appreciating in value during the 2008 global financial crisis”[11]. Celebrity and fashion play a large part in the consumer’s mind set and the popularity of a particular stone can be seen to soar as soon as someone of media value wears it. Many high profile celebrities wear coloured diamonds - Mariah Carey is one particular celebrity that wears a 10.02 carat emerald cut pink diamond. Jennifer Lopez is another celebrity who wore a 6.1 carat pink diamond throughout her short lived engagement to Ben Affleck.
Until more recently, coloured diamonds have been mostly held exclusively by royalty and collectors. However, over the last few decades they have become increasingly popular in due to their beauty and rarity. Interestingly, coloured diamonds “were among the few luxury items to continue appreciating in value during the 2008 global financial crisis”[11]. Celebrity and fashion play a large part in the consumer’s mind set and the popularity of a particular stone can be seen to soar as soon as someone of media value wears it. Many high profile celebrities wear coloured diamonds - Mariah Carey is one particular celebrity that wears a 10.02 carat emerald cut pink diamond. Jennifer Lopez is another celebrity who wore a 6.1 carat pink diamond throughout her short lived engagement to Ben Affleck.
The price of
diamond has risen dramatically over the last decade or so. This is for the most part because diamonds,
unlike art work, can be valued on an objective scale with profits being far
higher. A good example of this is the ‘Princie’ pink diamond which sold for
$1,300,000 in 1960 and was then resold by Christie’s in April 2013 for $39,
3000,000.
The affluent
collectors are looking for an inflation fighting commodity that’s a safer
investment than ‘gold or stock’. Saul Singer, a Partner at the asset investment
firm Fusion Alternatives which specialises in diamond investments, stated:
“Investment
diamonds gained 20 percent in 2010, however on a risk-adjusted basis,
Investment diamonds outperformed even the surging commodities market”[12]
On 13 November 2013, history was
made at the Sotheby’s Geneva sale as the flawless 59.60 carat “Pink Dream”, as
it was renamed, was sold to a New York based diamond cutter. Throughout this
essay I have paid close attention to the sale and the reasons why pink diamonds
are in such high demand. The recent interest has clearly prompted a great deal
of research, most notably into distinguishing the exact atomic geology that
causes the diamonds to be pink, ultimately increasing their appeal. I have also
explored the individual properties of the diamond itself and revealed the
factors behind its record breaking price at auction.
With the fragility of the global economic markets set to
last for the foreseeable future, the popularity of investment in pink diamonds
looks set to continue.
[3] Wahed
Alikuzai, Hamid., 2013. Characteristics of the diamond. Concise History of Afghanistan in 25 Volumes
[6] Mathew, Jerin., 14 November 2013. ‘Pink Star Diamond Minded
in Africa Fetches Record $83m at Southeby’s Auction’. International Business Times .
[9] As researched and explored by Jean Baptiste Taverier,
the 17th Century French traveller and jeweller.
[10] Mulier, Thomas. Hoffman, Andy., 14 November 2013. ‘Dealer
Isaac Wolf is Buyer of $83 Million Record Diamond’. Bloomberg
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