In April 2017, a pink diamond called the “Pink Star” sold at auction at Sotheby’s in Hong Kong for an eye-popping $71.2 million.
The 59.6-carat “Pink Star” was the most valuable polished diamond ever offered at auction, surpassing the 24.78 carat “Graff Pink,” which sold for $46.2 million in 2010. It’s the largest internally flawless fancy vivid pink diamond ever graded by the Gemological Institute of America. The large-oval cut “Pink Star” originally came from the DeBeers mine in South Africa in 1999.
The “Pink Star” is the latest in a series of dazzling prices paid at auction for fancy colored diamonds. In 2016, the previous auction price record-holder — the 14.62-carat “Oppenheimer Blue” — sold through Christie’s for more than $50 million. And the 12.03-carat “Blue Moon “ sold for nearly $50 million in 2015.
No wonder fancy colored diamonds are considered a rock solid investment.
“They’re long-term investments with a great return — often many times over their original price,” said Michael King, Director of Trading for Paragon International Wealth Management. Paragon International Wealth Management is a Toronto firm that specializes in the acquisition and management of fancy colored diamonds and guides clients who want to build a successful hard asset investment portfolio.
Colored diamonds come in a wide array of hues, with pink being among the rarest. Their appraised value is based on the stone’s hue and color intensity, clarity and weight. Fancy intense and fancy vivid are the highest quality categories of colored diamonds.
Colored diamonds attract investors because prices tend to increase — and not go down. Red, blue and green diamonds have risen most in value, quadrupling in the past decade, according to Sotheby’s.
Colored diamonds have gone up in value roughly 10 to 15 percent a year since the 1970s, when accurate record-keeping of sales began, with real interest among buyers starting around 2009. During the economic downturn in 2008, investors began looking for tangible assets that wouldn’t take a beating, unlike stocks.
The colored diamonds category on the Knight Frank Luxury Index has gone up 142 percent in the last 10 years, according to Barron’s.
Meanwhile, pink diamond values are up an impressive 315 percent and blues up 154 percent, according to The Fancy Color Research Foundation (FCRF), a nonprofit that promotes transparency and fair trade in the colored diamond trade.
High prices are fueled by the rarity, as well as the decreasing supply of colored diamonds. High demand in a global market — especially in Asia, where colored diamonds are very popular among investors — is driving up prices.
The majority of the very rare fancy pink diamonds come from Rio Tinto’s Argyle diamond mine in Australia. The mine is slated to close by 2020, and experts predict the price of Argyle fancy pinks will soar to around $3 million per carat when it does.
But, while prices are high, they’re one of the few investments with returns that will keep growing, making them a solid portfolio addition. And in the event of an economic downturn, their value remains stable.
“They’re really one of the few-recession proof investments,” added Paragon International Wealth Management’s Michael King.