Over recent months, news outlets around the world have reported stories of several fancy color diamonds continually selling for record-breaking prices in terms of overall value per stone and average price per carat. This should come as no surprise. A diamond’s value is ultimately based on the economy of rarity, and fancy colored diamonds are among the rarest substances on Earth. These diamonds represent a small but important niche zone of the diamond industry.
In my next series of articles, I will take a closer look at fancy color diamonds. We will explore how these stones are formed, examine the relevant differences in manufacturing and grading, and take a look at some of the world’s most important fancy color diamonds and how they have sold recently.
The color of most diamonds comes from trace particle impurities that are present in the carbon lattice structure of the stone as it grows below the earth. The most common trace element in diamonds is nitrogen. Nitrogen imparts a yellowish or brown tint to the diamond depending on its concentration. Diamonds with nitrogen impurities are called Type Ia diamonds and represent about 98% of all gem-quality natural stones in the world. Even D-color diamonds can contain trace amounts of nitrogen, but the concentration is so small that it cannot be detected without sophisticated lab equipment.
If nitrogen atoms are dispersed throughout the crystal in isolated sites (not paired or grouped) it can lead to a range of strong yellow colors that qualify as fancy yellow. Of the entire fancy diamond color range, yellow is by far the most common. Therefore, it is the least expensive of the fancy color groups. However the “canary” yellow colors still represent less than 0.1% of all gem quality diamonds.
Blue diamonds, second only to red in terms of rarity, are caused by boron impurities in the stone. Since boron is much less abundant on Earth than nitrogen, blue diamonds are extremely rare. Purple stones are caused by a combination of crystal lattice distortion combined with a high concentration of hydrogen.
Pink, red, and orange diamonds are thought to be caused by plastic deformation of the crystal lattice structure caused by exceptional temperature and pressure. Because red diamonds are so incredibly rare, little is known about their formation. Scientists believe that, unlike other fancy color stones, reds and pinks are not a result of impurities in the stone. Rather, they are caused by a natural alteration of the crystal lattice structure that occurs during the diamond’s transportation to the surface of the Earth.
Manufacturing Fancy Colors
Manufacturing fancy color stones is a high-risk, high-reward endeavor and some companies have developed an expertise in cutting these diamonds. Fancy colored diamonds are often not manufactured using the same considerations as are taken with colorless stones. The richness of the color is by far the most important factor in determining the stone’s value, and manufacturers will plan the rough stone in order to bring about the best possible color, with less concern for internal impurities.
Even the cut of fancy color stones is different. Ultimately, light refraction and perfect proportions are less important than color. As a result, it is uncommon to see fancy color stones produced as round brilliants, which is the most coveted cut for most colorless stones. Non-round shapes, such as pears, radiants, emeralds and cushions are more common fancy color shapes as they tend to bring out stronger color shades.
In many fancy color stones, the impurities that cause color are not homogenously distributed throughout the diamond. Manufacturers must therefore take great care not to lose the portions of the diamond that contain the fancy shades.
Fancy color diamonds are often cut to maximize the visual appearance of the finished stone, rather than maintaining perfect proportions. It is common to see fancy color diamonds that are unusually shallow or deep, with large table facets and much thicker girdles. Most fancy color stones are analyzed on a case-by-case basis to enhance the beauty of each individual diamond.
Color diamond grading
It goes without saying that diamond grading is a critical determinant of value. Diamonds should be purchased and sold with accurate grading certificates from a reputable grading laboratory. With fancy colors however, the color grading takes on even more significance than for colorless diamonds because even subtle differences in color have a much larger influence on value than in white stones.
Fancy color diamonds are graded on a nine point scale with color saturation descriptors: Faint, Very Light, Light, Fancy Light, Fancy, Fancy Dark, Fancy Intense, Fancy Deep, Fancy Vivid. The difference in value between one level of saturation and the next can range between 50-100% . Fancy color diamond grading is further complicated because such stones often simultaneously exhibit a component shade of different colors.
Laboratories use a list of 27 color hues that span the full spectrum for colored gems and diamonds (Red, Orangish-Red, Reddish-Orange, Orange, Yellowish-Orange, Yellow-Orange, Orange-Yellow, Orangish-Yellow, Yellow, Greenish-Yellow, Green-Yellow, Yellow-Green, Yellowish-Green, Green, Bluish-Green, Blue-Green, Green-Blue, Greenish-Blue, Blue, Violetish-Blue, Bluish-Violet, Violet, Purple, Reddish-Purple, Red-Purple, Purple-Red, Purplish-Red). A modifying color combination can also be added (e.g., Olive or Brown-Olive) for stones without the purest hues.
Even brown diamonds have found their way into the fancy color realm. Once considered to be only useful for industrial applications, the development of the Argyle Diamond Mine in Australia in the 1980s led to a proliferation of deep brown stones into the market. With clever marketing, these diamonds were rebranded as “cognac,” “champagne,” and “chocolate” colors. They have sold well ever since.
Treated and lab-gown fancy color diamonds
With the advancement of technology in all sectors of the diamond industry, some companies have developed and perfected tools and processes to artificially alter the color of a diamond. There are strict guidelines for reporting these stones, as their value is drastically lower than their natural colored counterparts. There are three primary methods to artificially alter the color of a diamond: irradiation with high-energy sub-atomic particles, application of thin films or coatings, and the combined application of high pressure and high temperature (HPHT).
The first two methods can only modify color. They are often used to turn cape colored diamonds into fancy yellows. HPHT, however, actually alters the internal color of the stone and can be applied to either rough or polished diamonds. HPHT is often used to transform rare Type IIa brown diamonds into white stones.
In recent years, advancement in the lab-grown diamond community has led to the production of lab-grown diamonds for all fancy color ranges including blue and pink. While no treatment is illegal, there are strong regulations for the disclosure of such. Attempting to sell treated stones as natural is considered fraud.
Fancy color diamonds for investment
Natural fancy colored diamonds are among the rarest materials on Earth, and command extremely high values as a result. These stones tend to be immune to the volatility of diamond pricing that can be seen in other areas of the diamond world. Colored diamonds have an amazing financial track record and blues and pinks have tended to double in value at least every few years. This has led to an entirely new sector of the investment community that deals in fancy color diamonds, which have become available to the general public as a hard asset for investment.
Last month alone, record-breaking auction prices were achieved for both pink and blue diamonds as well and auction houses have broken individual sales records. The wealthy Asian market continues to covet these rare beauties and this has helped fancy color diamonds to continuously outpace the price growth of almost any other asset in the world.
In the coming weeks, I will take a closer look at each different color in the fancy diamond spectrum and examine some of the highest profile stones around the world.
The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified adviser.
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Diamond industrialist Ehud Arye Laniado is a man passionate about diamonds. From his early 20s in Africa and later in Belgium honing his expertise in forecasting the value of polished diamonds by examining rough diamonds by hand, till today four decades later, as chairman of his international diamond businesses spanning mining, exploration, rough and polished diamond valuation, trading, manufacturing, retail and consultancy services, Laniado has mastered both the miniscule details of evaluating and pricing individual rough diamonds and the entire structure of the diamond industry. Today, his global operations are at the forefront of the industry, recognised in diamond capitals from Mumbai to Tel Aviv and Hong Kong to New York.