Non-Fungible Token Fancy Coloured Diamonds - Really?
After more than 12 months of relative inactivity, fancy coloured diamond prices are on the up according to data from the Fancy Colored Diamond Research Foundation (FCDRF), which shows changes in the wholesale price of all yellow, pink and blue fancy-coloured diamonds, irrespective of specific classifications, such as clarity, cut, tone and colour saturation.
This comes at the same time as the launch of the first public global tender of secondary market Australian Pink Diamonds by yourdiamonds.com, as well as the launch of Icecaps Investment Grade Diamond Non-Fungible Tokens, which are blockchain-based tokens that document ownership of assets.
Coloured diamonds are incredibly rare; approximately 1 in every 10,000 diamonds is considered fancy coloured, as stated by the Gemological Institute of America, the worlds most trusted name in diamond grading and gem identification. However, this poses a problem for the new diamond platform-based launches, as according to WWW International Diamond Consultants, at least 5,000 carats of similar attributes need to be traded to have a reliable gauge for a stones value, which given their scarcity, is impossible for fancy coloured diamonds.
Amma Group, fancy coloured diamond fund managers with over 60 years of experience in the diamond and luxury sector, set up its first fund 13 years ago. Open only to qualified purchasers and accredited investors, Amma Group believes that something of such high value and with general market opacity should not be traded by people or to people without the knowledge and expertise of fancy coloured diamonds, the necessary buying and selling procedures, transportation, safe keeping, insurance and naturally the financial regulations that must be followed when trading in this asset class.
Coloured diamonds range from brown, which is mostly used for industrial purposes, to yellow, through to orange, green, pink, blue, purple and the rarest of all, red. Of these colours, each is further classified by its intensity and depth of colour, the best of which is fancy intense to fancy vivid.
Unlike white, also known as colourless diamonds, whose increased value is attributed to the lack of colour, coloured diamonds attribute their value to the presence of colour, with fancy intense to fancy vivid being the most valuable.
“It takes in-depth knowledge and skill to know what you are dealing with.” said Mahyar Makhzani, Joint Founder and Managing Director of Amma Group. “For example, take a 1 carat Light Pink and a 1 carat Fancy Vivid Pink, assuming all other characteristics are the same, there could be a price differentiation of 100 times.”
Philip Baldwin, Joint Founder and Managing Director of Amma Group added “We only ever buy and sell stones with certification that is no more than 6 months old. Even as experts, seeing a certificate is just part of the story. We also ensure a realistic net asset value ‘NAV’ by gaining valuations from three independent coloured diamond experts on a quarterly basis.”
Fancy coloured diamonds are a natural and therefore exhaustible resource. With scarcity and rarity constantly increasing, prices at auction have shown a steady rise over the last decade and more. This combined with over 60 years of knowledge and skill along with some interesting buying and selling strategies have resulted in Amma Group receiving some notable recommendations with one client saying, “The Coloured Diamond Fund produced impressive returns with the additional attraction that they were not correlated to those of traditional mainstream asset classes.”
Makhzani went on to say “We bought one stone, with a per carat price of $500,000. We thought that if we re-cut and polished it, in other words, reduced its size, we might be able to achieve a better, more intense colour. We did just that; it was re-certified and sold for a per carat price of over $3.5m.”
With the depletion and subsequent closure of the Argyle mine in Australia, which was the source of 90% of the world’s pink diamonds, prices for one of the rarest of coloured diamonds are expected to increase, but as Baldwin ends, “With such opacity in the coloured diamond market, you really have to be knowledgeable about what you are buying and from whom.”
Pink Diamond Colour Scale by Scarcity & Value
The graph shows how scarcity and value are impacted across the colour scale spectrum.
The Argyle Prima© Fancy Red Pear Shaped Diamond
Previously under management by Amma Group