Pricing Fancy Coloured Diamonds
Natural coloured diamonds remain the ultimate collectable investment combining rarity as well as desirability and portability. In light of the often incredible prices achieved in recent years, it is essential to understand some basic valuation principles.
Colour, encompassing both purity of hue and intensity (saturation), has the most significant impact on pricing. Some colours such as red, blue and green are naturally rarer than others including pink, yellow and brown. Yet the demand for beautiful, saturated pinks for example markedly exceeds its natural supply making them costly, sought-after items. It is a classic case where commercial desirability exceeds natural rarity. And prices escalate even more so when both commercial and natural rarity combine. For example, a fancy light blue is valued approximately 20 to 30 times as much as a fancy light yellow, whereas a vivid blue may surpass a vivid yellow by a factor of 50 to 60 times. Yet this increasing premium for vivid blue over vivid yellow is only partly explained by rarity and moreover reflects that certain colours including blue, green and pink require a stronger saturation for optimal colour, pushing demand towards higher saturation levels. Yellow, on the other hand, reaches its greatest colour intensity at relatively lower levels of saturation and coincidentally lighter yellows remain in relatively good demand. On average a fancy vivid diamond can be anywhere from 10 to 20 times the value of a fancy light diamond.
Still, within the same intensity grade, absolute levels of saturation among various stones may vary. Pricing being essentially ‘fluid’ will reflect this with weaker or stronger saturated stones being priced up or down respectively. Price variance at one intensity level may reach 30 percent. However, this price differential may double in the case of intense and vivid yellows when fashioned as round brilliant or emerald (step) cuts since both shapes require more saturated raw material to reach the equivalent intensity grades easily attained in modified cuts. Price spreads are typically in the range of 20 to 50 percent for pink, green and blue due to a higher relative base price affecting general affordability. Nota bene that a narrower GIA intensity range applies to these last three hues.
Coloured diamonds, particularly blue, green, red, purple, orange and violet rarely live up to their paper colour descriptors. Unfortunately, they are mostly never quite pure in hue and often contain one or more colour modifiers which often diminish and only occasionally increase the value of a particular stone depending on whether they visually enhance or dull or worst case tarnish the beauty of its primary colour. In yellow diamonds a brown modifier may cause a discount of up to 50 percent, a green one may reduce the value by 20 percent whereas orange may add a premium of 20 to 30 percent. In pink orangey tends to appear brownish or shift the colour to salmon and prices may fall by a third, purplish on the other hand has little effect and may even bolster the value by up to 20 percent. It may turn the pink a little ‘sweeter’. In blue-grey is the bane and easily reduces the value by at least 20 percent.
Fluorescence holds less importance in the assessment of fancy coloured diamonds than it does for their colourless counterparts. Fluorescence only becomes an issue if it is regarded as strong or very strong in which case discounts of 20 and 30 percent respectively may apply. Nonetheless it only really is considered a flaw if it mutes the colour of a fancy diamond at which point it may affect the marketability. Medium fluorescence may also at times hamper the liquidity of selected stones but mainly impacts larger, very expensive or yellow coloured specimens. Here discounts up to 15 percent are the norm. Contrarily fluo can also pump up the colour and enrich the apparent hue and price premiums in such cases of 20 percent or more are not unheard of.
In terms of clarity coloured diamonds are judged more leniently compared to ‘white’ diamonds. They are assessed first of all for eyecleanliness akin to gemstones. Generally, Si1 clarity grade is the benchmark, with SI2 being slightly discounted at up to 30 percent. VS graded stones are however granted a premium of up to 20 percent which in vvs goods may reach 30 to 40 percent. Internally Flawless represents a special ‘outlier’ and in rare colours and vivid saturation may command a 50 to 100 percent premium.
Since fancy coloured diamonds are primarily about colour, modifications of the classical cuts are most readily encountered. By altering pavilion angles to between 32 and 35 degrees the light path is bent and extended through the material forcing stronger face-up colouration, essential to colour grading of fancies. Understandably non-modified brilliant cuts featuring both a classic facet arrangement on the pavilion as well as steeper angles are uncommon nowadays and generally command a premium since they necessitate a stronger inherent body colour derived from more intensely coloured rough to receive the same colour grade as a modified cut.
Modified cushions followed by radiants are the most abundant cutting styles in fancy coloured diamonds due to their yield and angles lending themselves to cutting coloured rough efficiently.
In smaller sizes below 1-carat pear shapes are the most costly (+ 20 percent) due to higher demand thanks to their versatility towards being arranged in sets, earrings or as shoulder stones. Their relative large ‘face’ also leads to buoyant demand in larger sizes above 3 to 4 carat. The same is true for ovals which are popular in larger sizes and usually command 10 percent premium. They are surpassed in popularity only by round cuts and emerald cuts which are the most costly especially in pure hues and necessitate more saturated rough. Emerald cuts command on average 40 to 80 percent more than a cushion, with the very popular round brilliant being at least 50 percent more expensive in rare colours but reaching 2 to 4 times the price in saturated yellows. Well, balanced heart shapes are also popular albeit uncommon. Beautiful and particularly suited to hues such as pink, red but also blue they may occasionally command significant price premiums.
Spready stones that are relatively shallow and feature a large face similarly can command relatively stronger prices with premiums of 15 to 50 percent prevalent since a good face up colour in less built-up stones infers better colour material.
Non-traditional cuts are sometimes encountered in fancy colours. These are generally only tolerated in exceptional colours and an additional premium is acceptable if recutting them would not reduce the resultant stone to break below a given size range/class.
Well matched or contrasting and complimentary couples, sets and series can easily sell for 10 to 50 percent more in the trade. For exceptional harmonious couples, a price doubling is not unheard of with the highest surcharges paid for well-matched sets of pears and emerald cuts, followed by rounds, which are easier to match.
As for all other diamonds size also matters in fancy colour diamonds. Price jumps from 0.99 carat to 1.00 carat are even more dramatic than those seen in the colourless diamond market. Oversizes within a certain weight range however have much less impact on valuation and are usually outweighed by other more pertinent factors.
As an approximate rule five-carat stones go for around three times the per carat price of a 1-carat equivalent colour specimen, and a 10 carat stone may fetch four times as much. This general trend applies to yellows (3.7 to 4 times), blues or pinks with the exception of round brilliants and step cuts which may command up to 6 or 7 times the per carat figure of a comparable 1ct stone. Multiples for larger stones seem to peak in medium to strong saturation. 5ct Fancy pinks typically go for 3 to 3.5 times the per carat price of a 1 carat stone, whereas Intense Pinks may go for a multiple of 5 times. Premiums revert slightly for vivid pinks with this counterintuitive price behaviour being explained by the often extraordinarily high base price level of vivid diamonds. Stones above 5ct size only increase modestly on a per carat basis and prices eventually taper off beyond 10ct as such stones become truly unaffordable to the vast majority of buyers.
Lastly the ‘paper factor’ deserves a mention. Fancy colours always ought to be compared to the certificate issued and vice versa. The highest market prices are paid for stones that not only excel visually but also feature a great GIA grading report.
All aforementioned factors such as colour, clarity, cut and other visual attributes need to be integrated in order to arrive at a solid assessment of a fancy coloured diamond. Considering this it comes as no surprise that evaluating fancy coloured diamonds requires in-depth market knowledge and is truly an art reserved only to the most experienced diamond professionals.