Diamond Investing

Thinking of buying a fancy color diamond this Valentine’s Day? Here’s what you need to know.

Prices for fancy color diamonds surged in 2016, supported by rising demand for rare blues and pinks, says a recent report. But how can investors buy these diamonds? And more importantly, how can they choose the right one?
With Valentine’s Day just around the corner, those questions are especially relevant — diamond jewelry has long been considered the perfect gift for a loved one, whether it be a diamond engagement ring, diamond earrings or a diamond necklace. Here’s a look at the key factors investors should look at when buying a fancy color diamond, plus a brief overview of some of the places they are sold.

How to choose?

To pick the perfect fancy color diamond, it’s important for buyers to understand how experts value the stones. According to the Gemological Institute of America (GIA), fancy color diamonds are graded based on four key factors known as the “4Cs”: color, clarity, cut and carat weight. Here’s a quick rundown of those factors:

  • Color: While an absence of color is valued in regular diamonds, color is unsurpringly the most important factor when valuing fancy color diamonds. The GIA notes that any slight color difference can have a big impact on value, with the rarest and most valuable colors being saturated pinks, blues and greens — in fact, last May, a 14.62-carat blue diamond became the most expensive jewel ever sold at auction. Browns and yellows are the most common, and are also the most affordable.
  • Clarity: High clarity is desirable in fancy color diamonds, but even gems with low clarity can be prized if they have an attractive face-up color. 
  • Cut: A fancy color diamond’s size and shape can influence its color. How? Put simply, in large diamonds light can travel further, creating a richer color. What’s more, certain cut styles can intensify color.
  • Carat weight:Finally, as with regular diamonds, larger fancy color diamonds will have a higher carat weight and will generally be more valuable.

In summary, says the GIA, fancy color diamonds with muted colors are more common and less valuable, while “[l]arge, vivid fancy color diamonds are extremely rare and very valuable.”
Of course, for many investors buying large diamonds in the rarest hues is unaffordable, with prices for some coming in at millions of dollars. For that reason, many experts recommend choosing brown or yellow diamonds, which can still be bought for lower prices.
In a recent interview with the Investing News Network, Jeremy Wiseman, vice president of Guildhall Diamonds, said, “fancy yellow diamonds over 1 carat in size and internally flawless are still quite affordable and make a great entry level into the market.”
He added, “[f]ive years ago an internally flawless yellow could be purchased for about C$8,500. Today, these diamonds would cost around C$15,000.” Wiseman also said that even these cheaper fancy color diamonds are a safe investment as their value will continue to increase because of their rarity.

Where to buy?

While fancy color diamonds are rising in popularity, they aren’t easy for investors to get their hands on. According to Eden Rachminov of Tel-Aviv-based Rachminov Diamonds, one of the world’s biggest cutters of colored diamonds, most sales are private, with only 12 to 15 percent of deals being done at auctions.
That said, there are options for those who want to purchase fancy color diamonds. For example, Carats is Canada’s first direct distributor from the world-class Argyle diamond mine, and has the top collection of fancy color diamonds in the nation. In 2017, Carats will be launching a fancy color diamond exchange to give its clients wider access to the gems.
Another option is Leibish & Co., an internationally recognized specialist and online dealer of fancy color diamonds and color diamond jewelry. The company has one of the largest online selections of color diamonds, and has a focus on Argyle pink and canary yellow diamonds.
There’s also Langerman Diamonds, a site that focuses exclusively on fancy color diamonds and has options for every budget. It has an inventory that includes diamonds of over 300 colors and of all shapes and qualities.
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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Carats is a client of the Investing News Network. This article is not paid-for content.



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