Putting a Price on Colour

Coloured diamonds are increasing in popularity and some are fetching extraordinary prices at auction. It is becoming apparent that the market has deemed these to be collectable and are willing to pay for the privilege of ownership of these wonderful gems.

Pricing of coloured diamonds at times can be difficult and a valuer will need access to relevant pricing information, resources and networks that they can refer to if needed, such as GemGuide, Fancy Color Diamonds — The Pricing Architecture by Eden Rachminov, and websites like ben-yona.com, leibish.com and israel-diamonds.com.

These resources will give indications of prices; however, prices can vary depending on market influences in your locality such as in Australia or Canada where premiums can be achieved for diamonds originating from that country.

When undertaking a valuation a few steps need to be considered:

Take in — in my view the most important. Ask the client for supporting documentation such as grading reports, sales receipts, or previous valuations.

Verification — verify the validity of the documentation, is it from a reliable source e.g. GIA, HRD, IGI, Argyle etc.? Is the diamond laser inscribed? Check and verify.

Documentation unavailable — check for coatings or treatments then consider is the diamond natural or synthetic and/or is the colour natural or treated. Often at this stage you may need to consider sending it to a laboratory for advanced testing to confirm. These tests will include — UV Vis, FTIR and Raman spectroscopy.

Once the identification process has been completed the challenge is then to accurately grade the colour (if not certified) and discern a price, with some colours more difficult than others. 

The below table it shows, how the difference in colour grade can affect the value, and that, if you had 0.50ct total weight of 0.01 – 0.03ct pink diamonds you could have around an estimated $6000 – $15,000 AUD in retail value difference without taking into account any jewellery branded margin.

However, if we are to use the same scenario for yellow diamonds, the colour intensity has a lesser effect on the prices as seen in this table.

UNRELIABLE CERTIFICATION

The diamond set bracelet in figure one came in for valuation and was presented with certification stating 22.04ct fancy yellow – fancy intense yellow as the colour grade. Upon examination of the bracelet the diamonds had yellow gold cup galleries in all the settings except for the clasp (2). It can be clearly seen that this diamond was much lighter in colour than stated on the certificate (3). After discussion with the client this diamond was removed so colour grading could be completed. The loose diamond on the right is far lighter than the GIA graded FIY (4).

Being that this bracelet had just over 22ct of just yellow diamonds this made a considerable difference in the value. In fact, this bracelet valued much less than the price paid. Whilst this may be an extreme example because of the amount and size of the diamonds care should always be taken when relying upon certificates.

Care should be taken when colour grading set coloured diamonds. As you can see by this example, the setting can influence the face up colour of the diamond – in this case enhancing the yellow – giving the appearance of a far stronger colour.

PRICING

Prices have especially increased in the pink diamond market, this is also due to the closure of the Argyle Diamond Mine in Western Australia.

An example of the increase in price would be a 2010 Argyle #51 tender diamond 1.17cts 1PP (purplish pink) P1 round brilliant cut — this diamond was released onto the market at wholesale in Australia in February 2011 and, over a six year period, it increased in wholesale value by 58%.

This requires a valuer to carefully examine and research what is happening within the market at the time of valuation and correctly prepare documents for the purpose and function required. This can prove difficult at times because of the limited supply now available. Therefore, when quoting for this type of work, the valuer will need to take into consideration the extra time it will take to perform the valuation or report.

THE ARGYLE GRADING SYSTEM

The pink colour grade referred to above is linked to the Australian Argyle grading system, however, worldwide most people are more familiar with the GIA grading system (5). Argyle developed its own grading system when it became apparent that they had a relatively consistent supply of pink diamonds.

The GIA colour grading system is vastly different as it uses a word description.

The valuer should always take care when pricing and trying to make comparisons, especially when using the GIA system. For instance, some colour categories will have varying intensities of colour, which can make a significant difference in price and, in some instances, GIA will give the same colour grade to two very different Argyle colours as seen in the examples (6 & 7). If these two diamonds were the same size, shape and clarity the 6P would be around 70 – 80% more than the 4PR even though they both have the same GIA colour grade.

In conclusion, the valuer needs to take care that they have the experience and knowledge required to value coloured diamonds. The public bring items to you as the expert and it is your job to know when to ask for help or decline the assignment if it is beyond your area of expertise.

About the Author:

Kym Hughes IMJVA, Principal of Symmetry Valuations and Spectra Gem Laboratory  is one of Australia's most experienced jewellery valuers with specialist knowledge in all areas of gem and jewellery valuation including watches. Kym is a International member of the Jewellery Valuers Association regularly delivers workshops and presentations for the JVA and other professional organisations around the world.

This article featured in the Gemmological Association of Great Britain (Gem-A) Gems & Jewellery Winter 2020, as condensed version of the presentation delivered by Kym at the JVA Conference On-Line in October 2020.

Cover photograph image is the Heiress Ring, courtesy of Calleija Jewellers