Dec 102012
 

50.01 RadiantFor the vast majority of people I believe diamonds are not an investment.  If you buy an engagement ring you should not expect the resale value to exceed your purchase price for a long, long time.  If you have excess cash, try stocks, bonds or gold.

Are there exceptions?  Apparently so, lets take a look at a diamond that sold at auction today at Christie’s New York.

The diamond sold was a rectangular-cut diamond, weighing 50.01 carats with a GIA report stating the color as D and the clarity as VVS2 along with a work diagram indicating that the clarity may be internally flawless if recut.

The selling price was $8,370,500 (or about $167,000 per carat).  An expensive stone, no doubt.  But this is not the first time this diamond has been sold.

Back on April 12, 2005 the same diamond was sold at auction (also by Christies’s New York) for $4,216,000 ($84,000 per carat).  Back then it had a GIA report stating the diamond had flawless clarity, so someone must have been wearing it or using it and the diamond suffered a bit of damage since the sale in 2005.  Even with the damage the diamond increased in value by 99%, try finding another investment from 2005 through today with that type of return.

The GIA report number in 2005 was the same report number as the GIA issued again in 2012, so we know the diamond was submitted for a report update and not sent in for a new report.   Had it been sent in for a fresh report, the diamond would have obtained a new report number.

But wait, there is more to this story.  This diamond gets around.  This diamond was also sold on November 17, 1994 in Geneva for $2,545,000.    The value did not increase at such a quick rate as in the last decade but still from 1994 through 2005 the incredible diamond increased 66%.

Had you bought the diamond in 1994 and held it through 2012 you would be up 229%.

So who buys these diamonds?  Often if it is a private buyer they often remain anonymous, but for each of these sales the buyer was Laurence Graff of Graff Diamonds.