What is an Investment-Grade Diamond?

As an asset manager for diamonds as an asset class, I define Investment-Grade Diamonds as high-quality rare diamonds with a resale spread that increases over time. The industry definition of “rare” is a rough stone that yields a polished diamond that will trade for a minimum of $1 million.

Our diamonds stay in our clients’ collections for a minimum of 5 years, though we prefer holding onto diamonds for 10+ years to maximize the collection’s worth. Like real estate, the longer you retain your investment, the more the value and equity will increase.

All Investment-Grade diamonds must be GIA-certified and appraised by an independent appraiser.

Provenance

Provenance plays a huge role in a diamond’s worth. Diamonds from the Argyle mine are extremely coveted because these diamonds showcase a deep color that is unmatched by diamonds from any mine around the world. Argyle diamonds are hard to find because the mine closed in 2020, so no new production is offered in the markets. Many Argyle diamonds are less than 1 carat and worth millions.

Investors will want to steer clear of conflict diamonds that have a sad or troubling history. Also, with U.S. Sanctions currently in place, we do not source diamonds from Russia.

On the flip side, if a diamond was owned by a celebrity, or has historical significance, it will dramatically impact the cost and worth of a diamond.

Color

The most important factor for us is color. We only consider diamonds with the rarest colors including orange, red, pink, blue, and green. It is very rare that we would consider a yellow diamond unless the diamond is very special.

For colorless diamonds, we would only consider pure colorless: D Flawless diamonds.

Demand

To expand on the subject of color, just because a color may be rare, does not automatically mean there is demand. For instance, white diamonds and black diamonds are very rare, but there is not a large demand for them because they lack translucence and sparkle. You could have the rarest of anything at all, but if there is no market of buyers willing to purchase your goods, then it holds no value.

Intensity

Color saturation refers to the intensity of a diamond’s color. It is among the first of a diamond’s attributes that is examined. The more saturated the color the rarer the stone and the greater its worth. Notable differences in saturation levels can impact prices significantly.

If a diamond is categorized as deep or dark, it will not necessarily command higher prices. It depends on how much fire and sparkle the diamond can hold.

Cut

The two main cut categories are Round Brilliant and Fancy Shapes. All shapes other than Round Brilliant are referred to as Fancy Shapes. Fancy Shapes are grouped into 4 main categories: Round-edge fancies (oval, pear, marquise, and heart), step cuts (emerald, Asscher, carre, baguette, trapezoid, etc.), modified cuts/modern shapes (princess, radiant), and mixed cuts.

Cutting a fancy color diamond is a very different process than cutting colorless diamonds. The difference is how the light hits. When cutting a colorless diamond, you want the light to pass through in a way that makes the diamond shine and sparkle. With color stones, you want the light to stay in the diamond for as long as it can.

When cutting a fancy color diamond, the cut needs to enhance the intensity and beauty of the diamond's color. The angles, proportions, and arrangement of the facets in the design is required to lengthen the path of light as it passes through the stone. The further the passage of a light ray through a fancy color diamond, then the more it is able to pick up - and deepen - the color of the stone. Color is everything.

Radiant cuts and oval cuts are prevalent cuts for fancy color diamonds. Radiant cuts are square or rectangular, with angled corners. The nature of the cut aids the concentration of the color and can push a fancy colored diamond into a higher fancy category of color.

Carat

Diamond carat is less important when considering fancy color diamonds. As stated above, Argyle diamonds rarely weigh above 1 carat. Despite this, they often command prices above six figures. Fancy color diamonds are extremely rare to begin with, so fancies that are large in size and carat weight are even rarer. If you have a large diamond, the price per carat will increase accordingly. Just know that the larger the stone, the harder it is to set in wearable jewelry.

Clarity

Clarity’s impact on prices pales in comparison to other factors. Its effect has grown in recent years as collectors increasingly carry the importance of clarity in colorless diamonds over to the fancy color space. In practice, hue and size influence the impact of clarity on price. In most cases, the rarer these two features, the less of an impact clarity will have on the stone’s valuation.

The reason why clarity is less of a factor in fancy color diamonds is that while large and obvious inclusions and blemishes can detract from a diamond’s beauty, these imperfections are less obvious and often masked or even hidden by the diamond’s color intensity. The value is therefore impacted most by the color’s richness or saturation. With colorless diamonds, clarity holds more weight because even the slightest inclusions are easier to see with the naked eye.

If you are lucky enough to have a rare stone (vivid orange, pink argyle, or deep red, for example), then the clarity grade will have very little impact on the investment diamond’s price. This would explain why a 1 ct vivid blue VVS2 and a 1 ct vivid blue SI1 would be similar in price even though the clarity ratings are very different.