Welcome back to the Diamonds Hatton Garden blog where we bring you the latest from our Hatton Garden jewellers. Known for our loose white diamonds and large inventory of fancy coloured diamonds for sale, our team specialise in assisting clients who are looking for larger and rarer diamonds as a means for investment. In today’s blog post, we share our guide to investing in natural, fancy coloured diamonds.
Over the past 10 years the average price of the fancy coloured diamonds – pink, blue and yellow – has risen by 77%, but this disguises significant variations between the colours
Pinks have been the top performers with growth of 116%, while yellows have increased by 20% and blue diamonds have been up by 81%. All very encouraging, we are sure you will agree, let’s explore the technical aspects to consider when choosing a fancy coloured diamond for investment purposes.
What are investment grade diamonds?
Investment grade diamonds are diamonds that we classify as diamonds that have a lower financial risk than other diamonds and can make for attractive investments. When compared to colourless diamonds, we see that natural fancy coloured diamonds are much rarer (only 0.01% of diamonds mined is a natural coloured diamond roughly 1 of 10,000 diamonds) this rarity is the primary factor that drives fancy coloured diamonds as an alternative investment vehicle.
How to choose a coloured diamond for investment?
Choosing a coloured diamond for investment is a mixture of understanding the budget that you are working with and examining the technical specifications of the diamond in order to maximise your return. Coloured diamonds come in many different tones and hues and understanding the usual colours chosen by investors can help to make a smart decision that can stand the best chance of generating the return that you are looking for. Likewise, along with colour other important technical factors are important to consider to obtain the best value and best quality for your budget.
As with all diamonds, rarity is the most important factor to consider and dictates the viability of investing in a particular diamond. Below you can see the coloured diamonds that we deal with and the rarity assigned to them.
- Relatively Common Coloured Diamonds – Browns, Greys, Fancy Yellows.
- Mid-level coloured diamonds – Intense and vivid yellow diamonds along with some colour combinations of orange diamonds.
- High Priced and rare coloured diamonds – Pure Orange, Greens, Purples, Pinks and Blues.
- Red Diamonds – a level of their own.
Our goal as investors will be to find a diamond within our budget that is desired and known yet not too rare or too special so there will be a market for it. Also, there are some baselines, some guidelines, that from our personal experience we recommend to uphold (and things to avoid).
Basic Specs and Guidelines for Investing in Coloured Diamonds
Besides for the general instructions regarding how to buy investment diamonds like buying only GIA certified diamonds etc. there are certain technical specifications about the diamonds themselves that we recommend ensuring they exist (or do not exist):
GIA certificate
Make sure you have a GIA certificate. It is the only way to truly know what you are buying. Also, your buyer would want to see it as well.
Fluorescence
The way we see it, fluorescence in yellow diamonds that are bought for investment purposes is a taboo – don’t go there even with the price reduction that comes with it. However, in other coloured diamonds can be quite irrelevant.
Clarity
From our experience, low clarity diamonds are harder to sell. When it comes to low clarity coloured diamonds, they actually have their place, their clientele, but not as investment diamonds. Often, people really want an expensive colour coloured diamond like blue or pink diamonds or that they do not want to go with such a diamond beneath a certain size, this is when such diamonds come in very handy. This is also true about diamond collectors that wish to have as many colours of coloured diamonds in their collection as possible and therefore willing to forget about clarity. Our recommendation -The best value and most commercial is the VS2. However we cannot always find exactly vs2 diamonds so here are the guidelines – when considering the lower and mid-range coloured diamonds not going beneath vs2 (definitely not below si1), and with the higher end diamonds not beneath si1 or si2 that is eye clean.
Diamond Cut
People tend to confuse between cut with shape. When talking about cut we refer to the quality of its polish (the precision in which it was cut). Does the diamond have fire and brilliance? Does it shine as it should? This is one of the most important things to check.
Diamond Shape
Some shapes are more sought after than others and therefore will probably make the diamond easier to sell later on. Stay away from irregular shapes like a kite, triangular etc. In the more common shapes the ultimate is the round, and then comes the princess, cushion cut, oval and radiant, then pear shaped, heart shaped and marquise. Note that there are hardly any round coloured diamonds since it is harder to maintain the colour in rounds (you usually “lose” one intensity degree due to the way light goes through round brilliants).
Diamond Size – Carat Weight
If you consider the lower end coloured diamonds such as fancy yellows and browns then try to stay above 1.00 carat. Even there, it would be most sensible to buy diamonds weighing next to the classic weight steps as it might be more sought after later on. For example, a 1.00 carat fancy yellow diamond makes more sense than an equivalent 1.30 carat yellow diamond which will also cost you at least 30% more. Here are several interesting steps: 1.00ct, 1.50ct, 2.00ct, 2.50ct, 3.00ct, 4.00ct and of course the 5.00 carat diamonds.
Regarding the higher-end diamonds such as greens, blues, pinks, purples and obviously reds – people go down in weight till even 0.15ct or less in order to be able to put their hands on, to afford, such gems.
There are amazing 0.15ct diamonds such as intense pink diamonds and vivid blue diamonds that are worth tens of thousands of dollars per carat that are snatched almost instantly. 15 points is OK. However, if possible, our recommendation is going above 0.20-0.25ct and if possible and you can afford it then even 0.50ct.
Diamond Colour
Stronger is better! In yellow diamonds go above fancy yellows, try to get to Intense Yellow Diamonds. In the higher colours, fancy light will be a good entry point. A fancy light blue with obvious blue colour is highly demanded because it is a lot more affordable (still not cheap) than fancy blue yet you still get a blue diamond. In Light and Faint coloured diamonds the colour is much harder to know.
For more information and for any guidance, contact our team via harel@diamondshg.co.uk or call +44 7951 060238 to arrange your consultation or appointment.