Are Fancy Colored Diamonds an Asset?

If you’ve been paying even the slightest bit of attention you’ve probably read about the exorbitant prices that colored diamond have been fetching at world auctions. In fact Sotheby’s Auction House has just announced that its 2012 sales of jewelry at auction topped $460 million, setting a new one year sales record. The previous high had been $404 million in 2010.

3.16Ct Radiant Cut Diamond Fancy Yellow Color Engagement Ring

Of course not all of those sales were attributed to fancy colored diamonds but they were the cause for some significant ones. One fancy deep blue diamond was sold to Laurence Graff for $10.8 million. That paled in comparison though to what he paid in 2010 for a rare pink diamond however. Back then the 24.78 carat diamond which was set on a ring and sold for a whopping $46 million. It was a new record for a single jewel sold at auction.

2 Carat Halo Style Engagement Ring

One company that specializes in the sales of fancy colored diamonds says that over the past ten years pink diamonds have risen 443%. It is worthwhile to note that over that same ten year period gold has risen similarly, and silver even more so, at over 600%.

So do these rising prices of fancy colored diamonds make them an asset? Are they a good investment?

Well, part of the challenge with these large prices at auction is that they are relatively few in number. While the prices are impressive, and in fact are rising fairly dramatically, those prices are being set by a relatively few very wealthy individuals. These records are also being set in an auction setting, with large stones being sold. How that would translate to smaller fancy colored diamonds on the retail market is hard to relate.

The bottom line is it would be hard to say fancy colored diamonds have moved into an asset class when so few individuals and few sales are dictating that market.

Raymond Z for Raymond Lee Jewelers, premiere fine jewelry and luxury watch boutique and buyer.