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Exceptional diamonds hold their own at auction
By Victoria Gomelsky
May 13, 2009
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| This 7.03-carat fancy vivid blue, internally flawless, cushion-shaped diamond fetched $9,488,754 at Sotheby's recent Magnificent Jewels auction in Geneva, setting a record price per carat of $1,349,752 for any gemstone sold at auction. |
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When investors lose faith in currency, financial markets and property, what's left? Gold is yesterday's safe haven. Today, wealthy consumers are turning to diamonds.
That seems to be the lesson drawn from the auction market, where a number of important diamonds, in both colorless and natural-color varieties, have shown remarkable resilience in the face of a seesawing economy. This was borne out in dramatic fashion at Sotheby's recent Magnificent Jewels sale in Geneva, when a 7.03-carat fancy vivid blue, internally flawless, cushion-shaped diamond fetched $9,488,754 against a pre-sale estimate of $5.8 million-$8.5 million. The sale set a record price per carat of $1,349,752 for any gemstone sold at auction.
Beyond its spectacular weight, color and worth, the blue diamond, which was cut from a 26.58-carat piece of rough, bears another distinction: Petra Diamonds, owner of the historic Cullinan Mine in South Africa, discovered, cut, polished and consigned it directly to Sotheby's.
"They cut out the middleman, polished it themselves and put it on consignment," said Douglas G. Walker, deputy director and jewelry specialist at Sotheby's New York. "A precedent could be set."
At Christie's, results from the spring auction season, while pale in comparison to their cross-town rival's, were more than respectable.
An impressive 85 percent of lots sold at the Jewels sale in New York in late April, including the top lot, a pear-shaped, D-color, internally flawless type IIa diamond of 30.02 carats. At their peak, fancy-shaped white diamonds of this caliber went for anywhere from $150,000 to $180,000 per carat. That this stone achieved $130,000 per carat suggests to insiders that the auction market will see a buoyant year.
"White diamonds are still quite rare in the large sizes, and people are still confident in investing in these as a portable form of wealth," Rahul Kadakia, head of jewelry at Christie's in New York, said. "Because of the fact that it's an alternative investment, because you can put X many dollars into a diamond and then sell it a year, two, three years later and you'll get that value back in the diamond, as opposed to currency or stocks or whatever part of the financial markets you look at. This is a tangible place to put your money and it hasn't changed; it's been like this forever."
At the first major sale of the season, at Sotheby's Hong Kong, a pair of 8-carat marquise-shaped, D-Flawless diamonds sold for just over $100,000 per carat. The market's worst fears--that prices for prized stones would plummet along with the rest of the economy--were overblown.
"Way back when, if you said you sold a diamond for $100,000 a carat, it was, well, okay, let's open the champagne," Kadakia said. "In this market, when things are slow and people don't know how long it will be, $100,000 per carat is still being achieved, so that, in my opinion, is the state of the market in regards to white stones."
The colored-diamond category has likewise shown considerable strength. From its apex last year, when vivid stones achieved upwards of $1.3 million a carat, the going price has cooled to a still-lofty $1 million per carat, a reflection of investors' enduring respect for rarity.
"Today, if you had to go find a 5-carat vivid blue or a 5-carat vivid pink, you couldn't buy it for less than $1 million per carat," Kadakia said. "The market is a little more selective, it's a little more difficult to find important stones because people are not selling or buying so readily, so trading has slowed down a little bit, but it's still very much there."
A recent tender by Rio Tinto confirms that blues, in particular, are in extreme demand. The "Once in a Blue Moon" sale--a collection of rare blue diamonds sourced from several years of production at the Argyle Mine in Western Australia, and comprising 16 lots weighing 287 carats in total--exceeded all expectations when bids closed on April 8.
"It was a bold move, with numerous lots selling in excess of the reserve prices, which is a great lead up to our annual Pink Diamond Tender," Jean-Marc Lieberherr, general manager for Rio Tinto Diamonds, said.
Additional highlights from the auction season included a stronger focus on one-of-a-kind jewelry, including a Cartier diamond bangle bracelet that sold at Sotheby's Magnificent Jewels sale, also in late April, for $230,500, far above its $70,000 pre-sale estimate.
"The results reinforced the continued demand for signed and decorative jewels, as evidenced by the strong prices achieved for pieces by Tiffany and Co., David Webb and Buccellati," said Lisa Hubbard, chairman of International Jewelry, North and South America.
Hubbard acknowledged that the April sale, which sold only 55.5 percent by value, "did have some resistance on some of the more important diamonds," but noted that "we were encouraged by the amount of activity in the salesroom today from buyers around the world."
One can only imagine the elation of Hubbard's colleagues in Geneva when they realized only part of her statement applied to them.
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