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Investing in Fancy Colored Diamonds: A Game For Billionaire Players

If you’re in the market for a natural pink diamond, now might be the time to act. The Argyle Diamond mine that yields more than 90 percent of the world’s supply is rumored to close in 2020.

In fact, the cost of colorful diamonds is rising across the board as collectors scramble to invest in the rarest, the biggest and the best. Famous up-scale auction houses such as Sotheby’s and Christie’s recently auctioned off monster colored diamonds that fetched $83.2 million and $35.5 million respectively. If you thought it was only clear-cut, white diamonds that were worth big money, you might be surprised to learn that it’s actually the unusual and one-of-a-kind orange-, red- and pink-hued stones that have wallets opening up around the globe.

Why Fancy Colored Diamonds?

The appeal of colored diamonds seems to lie in the fact that they could become extinct very quickly. Whereas large, pretentious diamonds were once purchased to be worn as adornment on the fingers and around the necks of the very rich, the recent trend has focused on diamonds as investments. Indeed, the obscenely large-carat beauties that sold at Sotheby’s and Christie’s recently were purchased by investors — partly due to the fact that colorful diamonds that top out above 10 carats are typically only an option for the insanely wealthy.

Colored Diamonds Versus Fancy Colored Diamonds

While both fancy colored and colored diamonds are measured using the 4C method — color, clarity, cut and carat weight, it’s the color that’s the determining factor in the value of fancy colored diamonds. The more intense, rare and brilliant the hue, the more investors are willing to pay for these tangible assets. According to Leibish Polnauer, the president of Leibish & Co. — a fancy colored diamonds company — the value of a particular fancy yellow-colored diamond jumped a whopping 180 percent over the ten-year period between 2001 and 2011. When measured against Coca-Cola stock, which increased 42.5 percent, it’s easy to see the attraction investors have for these rare colorful gems.

How To Invest in Fancy Colored Diamonds

Martin Rapaport, founder of the Rapaport Diamond Report actually recommends the average investor steer clear of trying to compete in the fancy colorful diamond market, as it’s generally a market for billionaires. The initial investment needed numbers in the millions and even then, gemstones of this type can attract a very narrow niche market, making them hard to resell without a lot of high-powered investment help.

If you find yourself drawn the lovely reds, pinks, purples, oranges and browns of colorful diamonds regardless, you can begin investing with anywhere from several thousand to several hundred thousand dollars. Prices run the gamut from the mundane to the extreme, but a one factor is for certain — make sure you either have a deep understanding of the diamond trade or that you’re being counseled by someone who does. Investing your life’s earnings in a pretty pink stone because someone tells you it’s a priceless Argyle diamond is never a good idea. Do your research or hire someone to help you navigate the sparkling waters of the fancy colorful diamond trade.

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