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| Passion Investments: Gems & Jewelry |
A Dazzling Palette
Catherine Curan
01/01/2008
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Mahie continues on her quest for appealing stones, often with
Bron-stein’s expert counsel. Every year, rep-resentatives from the Argyle mines
display 65 carats of pink diamonds—with one to four very rare red or purple-red
diamonds, depending on the year’s output. It is at this Pink Diamond tender
offer that Mahie buys most of her gems, attending the high-security preview in
New York as Bronstein’s guest.
VALUE JUDGMENT
Collectors of colored diamonds describe them as intoxicating, and
will pay six figures per carat for the most brilliant-hued stones. Also known as
"fancy" diamonds, these jewels are among the rarest in the world. Prices are
likely to escalate further thanks to a following that is rising just as the
top-producing mines are beginning to see their supplies dwindle, so a devotee
must be prepared to wait years for the best of nature’s masterpieces. |
Acquiring a quantity of colored diamonds requires years of
searching, because high-quality colored stones make up only 1/100th of a percent
of all diamond production worldwide, according to estimates from the book
Gems and Gemology in Review: Colored
Diamonds, published by the Gemological
Institute of America and edited by John King. Richly colored pinks, reds and
blues are among the rarest hues. Nir Livnat, CEO of the Geneva-based Steinmetz
Group of Companies, says his firm spent 80 years collecting the 11 extremely
rare blue diamonds, ranging from 5.16 carats to 27.64 carats, that were featured
in the Millennium Collection, which made its debut on New Year’s Eve 2000 at
London’s Millennium Dome.
Supply has begun to dwindle at the mines that are the premier
sources of the rarest stones: the Cullinan mine in South Africa for blues, and
the Argyle mine for pinks. The Petra Diamonds Cullinan Consortium’s recent
purchase of the Cullinan mine from DeBeers for approximately $148 million is an
indication that the new owner expects to profit from low operating costs, even
if the harvest is small—and the mine has more white diamonds than blue ones.
Argyle has been producing pink diamonds since 1985, but the operating company,
Rio Tinto, expects the supply to run out by 2018.
All of this is happening just as fancy diamonds have begun to
capture more attention, and prices are soaring. In October, Sotheby’s shattered
the 20-year-old per-carat record for a colored diamond: A 6.04-carat,
internally flaw-less, emerald-cut blue diamond, set in a platinum ring,
fetched $1.32 million per carat. This new record follows huge price gains since
2000, with blue stones quadrupling and pinks increasing 100 percent, according
to Livnat. This trend worries some members of this clubby, secretive market.
Rahul Kadakia, a senior vice president and the head of jewelry for Christie’s
America, is the first to admit, "The way things are going, people are speaking
about a bubble."
 | SOTHEBY'S SOLD this 6.04-carat blue diamond for a record price
of $1.32 million per carat. (Photograph by Sotheby's.) |
Rock Steady
Prices might continue to sparkle, however, because of the
growing demand. Bronstein says there is unlikely to be a replacement for the
Argyle mine, and bidding at the tender offer last year was fiercely competitive.
Mahie lost out on a dark-gray–violet stone that piqued her interest in the
preview. Like every other fancy-diamond collector, she and Bronstein are
hampered by the limits of what nature provides, and must marshal the patience to
await a possible masterpiece from rough stone.
That was the case three years ago, when a miner from Brazil
called Bronstein for a meeting in New York. The beauty of the first stone the
dealer showed him, a brownish-pink gem just over a carat, inspired Bronstein
to buy it. He was unimpressed with half a dozen of the miner’s other stones,
but was intrigued by another one, a 1-carat rough diamond with a blackish
coat-ing. The miner had cut a small window into it, and Bronstein thought
the stone looked green inside. Such a stone could turn out to be a glorious
green after cutting, or it might be just an ordinary white.
Bronstein agreed to send the stone to his cutter and set a
price depending on what turned up from the cutting process, which took more than
a year. The diamond had to be cut very gently, and sent to a lab repeatedly for
certification that there were no artificial substitutions to the color. The
stone that finally emerged was even better than Bronstein had hoped for: a
0.63-carat emerald cut, in bluish-green—an exceptionally rare hue. He then had
to work out a deal with the miner. Bronstein says the six-figure price was the
highest, per carat, that he has ever shelled out for a diamond of that size, but
he still felt a boyish delight at getting the prize.
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