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Coloured Diamonds: A buyer’s guide

Diamonds have long been considered an attractive investment among investors, however coloured diamonds hold a mystique and appeal of their own. Only one diamond in 10,000 is classed as a coloured diamond, making them both incredibly rare and desirable. Certain coloured diamonds such as pinks, blues and reds are so rare in fact, that only a handful of investment grade quality stones weighing over 1 carat are found each year.

What Causes the Colouration in Coloured Diamonds? 

Coloured diamonds get their colour from foreign particulates that are trapped during the crystallization process from which diamonds are formed. These alter and affect the chemical processes causing the diamond to change colour.  Whilst scientists have been able to identify the exact particulate that causes certain diamonds to get their colour, it is still a mystery as to how red and pink diamonds are formed.

How Are Coloured Diamonds Graded?

Like colourless diamonds, coloured stones are graded on the four C’s; colour, carat clarity and cut. The difference being that colour grading becomes a much more important factor when assessing the value of coloured diamonds.  Coloured diamonds have a colour grading that ranges from faint or very light to fancy intense, fancy deep and fancy vivid. The more vivid or intense the diamonds colouring, the higher the price it can expect to fetch at auction.

Appreciation in Value

Over the last decade, awareness of coloured diamonds has increased significantly, helped in no small part by record-breaking auction sales, and extensive media coverage. In 2017 the pink star diamond, a beautiful 59.60 carat, oval cut, Fancy Vivid Pink stone was sold for an incredible $71.2 million at Sotheby’s auction in Honk Kong. The year previously, a magnificent 14.62 carat rectangular cut, Fancy Vivid Blue diamond became the most expensive blue diamond in history fetching a staggering $57 million. When you consider that even a 1 carat pink  or blue diamond is likely to fetch prices upwards of £100,000, it is little surprize to see that coloured diamonds popularity has surged among investors in recent times. In the last 10 years, pink diamonds have appreciated in value by over 300%, whilst blue and yellow diamonds have both appreciated by figures of more than 100%.   Across China and the Middle East, demand for coloured diamonds is at an all-time high due to rising income levels and increased awareness of coloured stones.  

The Future of Coloured Diamonds

Currently there are only a handful of mines around the world, unearthing enough coloured diamonds to keep up with demand. The Argyle Mine in Australia is currently the biggest source of coloured diamonds and is responsible for over 90% of the world’s pink diamond production. In just under a years’ time this mine is set to close due to the increasing costs of extracting the stones and dwindling resources. This means that the value of coloured diamonds, in particular pinks stones is likely to rise exponentially during the foreseeable future. For Investors this represents an incredible opportunity and one that many are looking to capitalize on. 

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