Value Trends of Colored Diamonds

The recent financial crisis has shaken investors around the world. They have turned their attention away from traditional investments, such as stocks and bonds, and moved toward tangible hard assets, like colored diamonds.

Fancy colored diamonds have become one of the hottest investment trends of the 21^st century. But before you decide whether or not this investment type is for you, you must first decide whether it offers a strong enough return to secure your initial investment.

The Natural Fancy Colored Diamond Boom

Different from white colorless diamonds, high quality natural fancy colored diamonds offer very high values. The well-known criteria for classifying diamonds, the 4C's (color, clarity, cut, carat) also applies to fancy colors but with the added factor of color which includes their intensity and hue.  Comparing white diamonds to colored diamonds of the same quality shows that the increase of the natural fancy colored has been greater, even though the price of colorless white stones has increased since 2006 by approximately 35%.

Particularly since 2013, the increase has been most significant. This is partly due to dealers and private buyers pushing up the prices at auction houses, almost creating a boom that is by all forecasts expected to rise over the coming years. It is interesting to note that over this same time period traditional gilt investments such as gold and platinum depreciated.

There is also the supply and demand factor of colored diamonds, the number of buyers is constantly on the increase and supplies, particularly of certain colors and qualities are dwindling.

News from the Auction House

Two of the most famous auction houses, Christie’s and Sotheby’s, have sold many extraordinary colored diamonds, including dozens of record-breaking gems. In just the past six years, colored diamonds have set and broken at least fifteen price records.

Since 2003, the auction has recorded a 443 percent price appreciation of Argyle diamonds. Since October of 2007, the auction has noted a 110 percent price appreciation of fancy vivid blue diamonds. Moreover, the highest recorded prices ever paid for a diamond at auction were both in the colored diamond category! There’s no denying that the price appreciation of these rare gemstone is continually on the rise.

Ten Years of Increased Price Performance

The value trend of colored diamonds can be described in one word: continual. Over the past 10 years, the price of these rare gemstones has increased at an astonishing rate. For example, the increasingly rare Fancy Intense Pink Diamond has seen a 375 percent price increase since 2003, raising from a per carat price of just over $20,000 to $140,000! Fancy Intense Yellow Diamonds have seen a 170 percent price appreciate since 2003, rising from just over $4,000 per carat to more than $12,000 per carat.

Trend Predictions

The last decade in particular has seen a consistent increase in the value of natural fancy colored diamonds and as much as it has been steady the appreciation has been remarkably rapid.

The coming years are predicted to show a continuation in this proven trend. As much as supplies decrease and demand increases, any investor can be confident that the already rare colored diamonds in the world will demonstrate that this commodity is a sound venture which will enhance an investment portfolio and strengthen one's financial future.