DIAMOND NEWS & SA JEWELLER / January 1996
Highlights of the Coloured Diamond Sales at the New York Auctions
By Alan Bronstein
Four times a year, the gem trade flexes its powerful muscles and prepares to battle for the world's rarest gems and most beautiful jewellery. Two of these competitions take place in New York, which becomes the Mecca of the gem world each April and October. The torch is then passed to Geneva for the blockbuster sales of May and November. These auctions have significant impact of the psyche of the trade even though the total sales of tens of millions of dollars account for only a fraction of the billions of dollars spent each year on gem stones and jewellery.
This year's New York auctions at Christie's and Sotheby's concluded with the usual mixture of expected and surprising results, especially for fancy coloured diamonds. While many beautiful pieces did well, many did not sell at the prices predicted and hoped for.
What are the trends?
What are the trends? This is as difficult a question as "Which came first the chicken or the egg?" Both answers can be explored, and as with the gem trade, many trends are noticeable following the auctions. One trend that continues, with encouragement from the auctions, is the growing participation at sales by the public. Thirty-five percent of all lots sold to the public, while the majority of sixty-five percent were purchased by dealers. However, coloured diamonds, especially the finest stones, were still purchased primarily by professional traders.
The market for coloured diamonds has different forces playing upon it at all times, and fancy coloured diamonds remain an enigma to most observers. There is a tendency in the industry to group all fancy colours together and expect them all to move at the same rate and in the same direction.
At the commercially available level, supply and demand play a major role in the value of these stones (e.g. fancy yellows). Collectors of rare stones, so-called one-of-a-kind stones, find that supply is the main factor determining price. There are so few magnificent stones in existence that all the major dealers, traders, investors, and collectors usually vie for them, thus driving up the price.
A hundred coloured diamonds offered at auction may seem a generous supply, but if you look closely only a handful are really special enough to have no price limit. The rest, no matter how lovely, will have parameters based on market availability. When the auction reserves, or minimum selling prices, are higher than the market prices, the stones go unsold.
These reserves attempt to create an illusion for professional traders to become buyers by enticing them with prices that appear to make purchasing below market a possibility. However, most jewellery and rare stones are put to auction by the trade itself, and dealers are reluctant to set too low a reserve for fear that stone might sell too low. These reserves often seem prohibitive to professional traders because many of these stones are available on the open market. Thus they seldom surpass their auction reserve prices or may only reach them when the interests of private collectors are piqued.
Many beautiful coloured diamonds at this season's auction did not sell because the market was not ready to support them at the higher prices suggested by the auction reserves. Most of these stones will eventually trade hands in the market at lower prices. Although the market for coloured diamonds is strong, prices cannot continuously go up, and sellers who choose to use the auctions should leave a little room for illusion for those who buy at auction.
Record shattering has slowed but superior stones continue to push prices to the heavens. For instance at Sotheby's a 6.70 carat blue heart shaped diamond sold for about $525,000 per carat. At Christie's, a 3.03 carat purple-pink oval sold for almost $300,000 per carat. There was a flurry of yellow diamonds that sold for $30,000 to $50,000 per carat at both auction houses. But there were a few beauties that did not sell, perhaps not because they were lacking in any way, but instead because their values were set too high.
Some pleasant surprises
There were some pleasant surprises at both New York auctions. At Christie's, a lovely antique cushion 5.22 carat intense yellow diamond sold for almost $40,000 per carat, surely to the surprise of most observers since the presale estimate was $6,000 to $8,000 per carat. Another special stone was a saturate pink antique-cut round diamond weighing between .60 points and .75 points that was hidden in a heavy gold ring. It certainly wasn't hidden from the eyes of some collectors who bid up to $43,700. Christie's pre-sale estimate was $15,000 to $20,000.
At Sotheby's a 19.45-carat pearshaped diamond with a certificate of fancy grayish blue was estimated at $400,000 to $500,000. It was apparent to many traders that a better blue could be yielded from the stone if it were re-cut. This pushed the selling price to $3,300,000. And a (sweet pastel) pink 3.03 carat oval estimated at $375,000 sold for $525,000. A 3.62 carat antique-cut marquise diamond of intense yellow colour sold for $96,000, almost three times its presale estimate.
This recent auction continues to reflect the new nomenclature adopted by the Gemological Institute of America to describe the colour of diamonds. However, while it is important to remember that the words deep, dark, vivid, and intense are helpful in describing a stone, they do not determine the value. Although the gem world is drawn to qualify and quantify every stone in a hierarchy, and these words assist in that goal, the ultimate value of a stone is determined by its beauty and desirability. Is a deep better than a dark? Or a vivid more beautiful than an intense? Each stone will have to speak for itself. Hopefully the certificate, through its description, will accurately specify the colour, and then it is up to each collector to discover within his or her heart the beauty and value of a stone.
If nothing else, the New York auctions provided proof that there isn't a shortage of money chasing rare gems and jewellery: $38 million was spent at Christie's and $42 million at Sotheby's. Fancy coloured diamonds continue to be the highlight for many, as per carat prices eclipse all other precious stones.
The top contenders for the prizes are catching their breath as they await the Geneva sales, where some of the finest and largest ever blue and pink diamonds will be offered. We may yet be approaching new frontiers in the realm of coloured diamond prices.