November 2015: Christie’s Geneva auction room is hushed as bidding just goes up, and up, and up. The largest cushion-shaped vivid pink diamond ever auctioned is on the block. The hammer comes down on the 16.08ct ring-set gem at 28.7 million Swiss francs (HK$230 million). The successful bidder is Hong Kong billionaire Joseph Lau, who named the diamond Sweet Josephine. The scene is repeated the next day at Sotheby’s where a 12.03ct blue diamond is sold to Lau for 48.4 million Swiss francs – it is now known as Blue Moon of Josephine.

Twenty years ago, Asian consumers and investors were in thrall to white diamonds. Until, like famous paintings, coloured diamonds started going for mega millions at auctions.

Think of the headline-grabbing sales this year alone: in June this year, a 5.03ct Aurora Green diamond was sold to Chow Tai Fook for HK$130 million; in May, the 14.62ct Oppenheimer Blue, described by François Curiel, chairman of Christie’s Asia-Pacific and China, as “the gem of gems”, changed hands for US$57.5 million, making it one of the world’s most expensive diamonds sold at auction; also in May, the 15.8ct Unique Pink sold to an Asian private collector for US$31.6 million at Sotheby’s Geneva; and in April, the De Beers Millennium Jewel 4, a blue diamond of 10.1ct, went for US$31.8 million in Sotheby’s Hong Kong auction.

According to Chin Yeow Quek, Sotheby’s deputy chairman of Asia and chairman of international jewellery in Asia, “the market has been consumer driven. Coloured diamonds have become increasingly high profile within the last 10 years, setting record prices at auctions in Geneva and Hong Kong.”

Quek notes that record prices at worldwide auctions are being set by Asian buyers. “Asian and Chinese collectors in recent years have developed sophistication in taste and an increased desire and enthusiasm for coloured diamonds.”

And it is not just the pink and blue diamonds that are fetching the big bucks. The Orange is a 14.82ct pear-shaped vivid orange diamond which fetched US$35.5 million at auction in late 2013 and certainly yellow diamonds have had sales in the millions of dollars. Graff Diamonds, which acquires some of the world’s rarest coloured diamonds, unveiled the Golden Empress in 2015, an amazing 132.55ct fancy intense yellow diamond.

Sotheby’s to auction Cartier ring set with a rare blue diamond

Comparing the auction results for fancy coloured diamonds over time, the appreciation is impressive – at the billionaire buyer level. For the average consumer, the issue is not quite as clear-cut. Rachminov Diamonds 1891, an international diamond trader, says that “pricing fancy colour diamonds is one of the greatest challenges of our industry”. Are spectacular auction results a guide for lesser mortals? It seems fair to say they have a huge influence on public opinion and have stimulated prices for smaller stones.

Arnaud Bastien, president and chief executive of Graff Diamonds Asia, notes that coloured diamonds have been sought after by collectors for a long time. “They are more popular now as they benefited from a wider press exposure following repeated record prices. Coloured diamonds are the rarest gift from nature. For every 10,000 white diamonds, there is only one coloured diamond. Supply is extremely scarce and collectors are fascinated with the rarity and beauty. Each coloured diamond is unique and there are never two identical stones. Pink, blue and green are probably among the rarest colours.”

Why are fancy colours so rare? Pierre Hardy, senior gemmologist at Gübelin Gem Lab, explains: “Most diamonds grow in a rather homogeneous common geological environment, incorporating some impurities of nitrogen in their crystal structure, which gives them a transparent colourless look or a slightly tinted yellow colour. Out of all diamonds present within the Earth, a small proportion is located in less typical areas where other elements and/or conditions are present and such diamonds can grow with other impurities which are not commonly found in their crystal structure, such as nickel, hydrogen, boron. These areas, combined with unusual conditions of transportation towards the higher part of the Earth where diamonds will remain stable, make fancy diamonds undergo a sort of natural treatment which will help to create the special colour.”

There are various shades of colour and various levels of colour intensity which affect the price. Most pink diamonds have variations of purple or grey. “Inarguably,” Hardy says, “the most sought-after colour will be a combination of the most desirable colour and the rarest colour. Assuming that the distribution of diamond production and the proportions of various colours will remain the same in the future as they are today, the diamond colour which fits best these conditions is red (whether pink or a more intense red). However, it is worth noting that pure orange and violet (not purple) are said to be the rarest colours.”

Orange, or fire diamonds, are indeed very rare and, according to the Gemological Institute of America, “strongly coloured diamonds in the orange hue range rarely exceed three or four carats in size when polished”. The very popular pink diamonds, too, rarely come in larger sizes.

This is what US$600 million worth of jewellery looks like

Bastien is confident the demand and price of coloured diamonds will only go up further. “They are a class of asset of their own and are considered ‘la crème de la crème’ among the diamonds. Moreover, since there is a growing number of wealthy people in the world, the demand and prices are unlikely to slow down.” There was a fashion trend a few years ago to combine white diamonds with black diamonds in a white metal setting. “Gemmologically, black diamonds are less pure and lower in quality. Their crystal structure has so many imperfections that the light cannot travel through the stone, hence the dark black appearance. In terms of quality, they are indeed not so valuable,” Hardy says.

The Fancy Color Research Foundation reports that from 2006 to 2014, fancy coloured diamonds in pink, yellow or blue, “experienced an average total appreciation of 154.7 per cent.” In the same time period, the colourless, white diamond increased by 62.4 per cent, according to the Diamond Prices Index. One of the phenomena of successful branding in the jewellery industry is the Argyle Pink Diamond. There is even such a thing as the Argyle Premium, added by diamond dealers to the stones, which, if they are above 0.25ct, are laser-inscribed with a certification number.

This article was originally published on scmp.com. Additional reporting by Gaynor Thomas

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