A COMPLETE GUIDE TO BUYING BLUE DIAMOND

Parth Shah
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WHERE DO BLUE DIAMONDS GET THEIR COLOUR FROM?

The colour of diamonds is the most important aspect. Almost all the natural fancy coloured diamonds are already very rare. Foreign particles trapped during the process of crystallisation alters the chemical process and provide the outcomes in the form of beautiful, rare and exceptional diamond with unique colourings.

BORON IS THE ELEMENT THAT GIFTS THE DIAMOND A BLUE COLOUR.

Different impurities are present in diamonds that provide them with a unique colour. Boron is similar to the size of carbon that can easily be found in diamonds. Thus, all it takes the trace of boron to absorb red light for a diamond turning it to blue. However, with boron present in the diamond, the level of nitrogen is often very low. Besides this, a high concentration of hydrogen or the presence of nickel may also result in providing the diamonds a blue colour. This indicates that the blue diamonds may also be unrelated to boron.

WHERE ARE BLUE DIAMONDS FOUND?

MAJORITY OF THE BLUE DIAMONDS ARE FOUND IN THE MINES OF RIO TINTO’S ARGYLE MINE IN AUSTRALIA AND PETRA DIAMONDS’ CULLINAN MINE NEAR PRETORIA, SOUTH AFRICA, AND A SMALLER NUMBER FROM GOLCONDA MINE IN INDIA.

Blue diamonds, the second rarest fancy coloured diamonds, are considered rare and valuable if they are natural. The blue diamond that is mined with its blue colour already present in the natural blue diamond. However, since the year 1950, the methods have been developed to change the appearance of a diamond including colour addition to the stone. Over the past few years, a record number of blue diamonds have been found and sold. Mined blue diamonds are often rare and thus, can easily cost up to $100,000 per carat or even more.

WHICH ARE THE FAMOUS BLUE DIAMONDS IN THE WORLD?

Colours indicate emotional attributions and blue is among the most dominant colours. Some of the MOST FAMOUS BLUE DIAMONDS IN THE WORLD are:

  • The Blue Moon Diamond
  • The Blue Heart Diamond
  • The Hope Diamond
  • The De Beers Millennium Star
  • The Wittelsbach-Graff Diamond

HOW RARE ARE BLUE DIAMONDS?

Blue diamonds are considered as the rarest form of diamonds. It has been found that blue diamond constitutes to only 0.02% of the overall mined diamonds. This is because of the fact that blue diamond is extremely hard to find and have high value because of their rarity. Dividing the blue diamonds based on the rarity scale of coloured diamonds, blue diamond after red, violet and purple will be at the tip of the second rarest. Approximately less than one-tenth of a percent of all the coloured diamonds are blue. Being rare, these blue diamonds are considered praiseworthy. Thus, the blue diamond sold at auction has achieved record high prices.

HOW DOES OVERTONE AFFECT THE PRICING OF THE BLUE DIAMOND?

Within the diamond world, the increasing competition among collectors and investors ultimately leads to an extreme rise in prices. A 3 carat blue diamond with higher saturation is sold at a price of approximately one million dollars or above.

It should be noted here that the secondary hues are some of the impurities that occur within a diamond, however as compared to the original colour of the diamond determined by its primary hue. This is subsequently called the overtones. Natural blue diamond often comes in different secondary hues which determines their prices. The rarity of the overtone when comparing with the primary hue in a diamond dictates for its price. For instance, the grey hue in a blue diamond can reduce its price. This is because of the fact that grey hues in a blue diamond are highly abundant within diamonds. On the other hand, rare hues and overtones such as violet in blue diamond increase its prices.

WHAT ARE THE INTENSITY GRADES BY GIA FOR BLUE DIAMONDS?

INTENSITY LEVELS FOR BLUE DIAMONDS:

  • Faint
  • Very Light
  • Fancy Light
  • Fancy
  • Fancy Intense
  • Fancy Vivid
  • Fancy Deep
  • Fancy Dark

 

Since blue diamonds are extremely rare. Their colour is caused by the presence of high boron impurities thus, those having strong colours are some of the rarest gemstones. The more the presence of boron in a diamond, the deeper will be the colour of the blue diamond. The more vivid the colour, the rarer will be the diamond. Although the tone range for blue diamonds is relatively wide, the intensity of blue diamonds in comparison to the other coloured fancy diamonds is relatively low.

INVESTMENT IN BLUE DIAMONDS

The highest value of blue diamonds has led to an ultimate increase in the prices. Both the high rarity of the blue diamonds as well as their higher prices have made them more popular among the investors.

These investors are probably the one that desires to have certain remarkable, extraordinary and astonishing creation. There are the others too that know how it feels to enjoy the constant increase in the value of a thing and to turn it into profit. Throughout the past few years, a significant rise in the prices of blue diamond has been observed, an annual increase of 12% to 17%.  Within the category of blue diamond, the two depth colours, the rarest deep and vivid blue diamonds have shown the highest increase in price ranges. However, the bigger the diamond is, the rare it is. The diamonds are sold both at auctions and in private transactions.

The fancy light blue diamond weighing 1.07 carat was sold in an auction for about $22,600 per carat in 1999. In 2016, the similar fancy light blue diamond of 5.06 carat was sold, at the same auction, for $286,000 per carat. The figures are continuously increasing as the blue diamonds with much higher saturation will now come at more astronomical prices of millions of dollars.

 

Price Comparison (1.0 carat blue Diamond)

 

The figure mentioned above is the trend of prices for blue diamond over a period of a year while an increasing trend is quite visible. It should be noticed that the vivid blue diamond weighing more than 3 Carats are sold at auctions with the worth of $1 million per carat

A UNIQUE AND NOBEL INVESTMENT

Blue diamond of every shade is amongst the rarest and expensive of all the fancy coloured diamonds as there are not too many diamond mines, throughout the world, that produce these stones. The investment potential is apparent with the existing strong demand for blue diamonds. As the mines have started to deplete and no new mines of blue diamond are being developed, the supply side of the diamonds is becoming more and more constrained. On the other hand, the investment potential of these rare blue diamonds especially in India, China and America is an indication of the strength of the position of the demand side. The natural and rare blue diamonds have become an investment form after the increase in their demand. Within the past few years, blue colour diamond investment has been imperative especially to the wealthy individuals as a part of their asset allocation.

As discussed earlier, there are various hues for blue diamonds from light blue to fancy deep blue. The rarity, as well as the value of these diamonds, kept on increasing as the colour depth becomes stronger. The cost of just some of the smaller blue diamonds can easily rise up to thousands of dollars, while for the larger ones the cost may rise up to millions of dollars. Why? Because the bigger the diamond, the rare it is. However besides size, for the coloured diamonds, the shade of the colour together with the intensity of colour and purity of diamond all are an indication of the value of the diamond.

RECORD HIGH PRICES OF BLUE DIAMOND

The auction prices for blue diamond keep on increasing and setting new records since these diamonds, particularly natural blue diamonds are highly uncommon.

THE INVESTORS PREFER PURCHASING BLUE COLOURED DIAMONDS FROM THE AUCTIONS.

The prices of coloured diamonds are, most of the times, determined at the auctions. It, however, is also important to remember that these auctions might not reflect the real value market value of diamonds. The end prices of blue diamonds, based on their scarcity, often tend to be very unrealistic. The average price appreciation for blue diamonds can vary from 15% to 20% per year. Today, there are more buyers than sellers and an interesting fact here is that there is almost no new supply available. The limited supply of blue diamonds have made them highly desirable and thus is resulting in an increase in their prices in millions. The desire for the people to invest in blue diamonds is pushing the prices up even more.

HOW BLUE DIAMOND HAS OUTPERFORMED?

As previously mentioned, the highest rate of return as an investment has been shown by the two depth colours, fancy intense blue and fancy vivid blue. The fancy intense blue diamonds, when considered in terms of colour and weight, has shown a swing in the value at auction. Starting from the auction of blue diamonds in 1995, a 1.15 ct size Fancy intense blue diamond was sold in a Christie auction for about $117,000 a carat followed by $234,500 per carat for 1.29 ct fancy intense blue diamond in 2006 and then down to $187,000 for 1.25 ct diamond fancy intense blue diamond in 2010. All these fancy intense blue diamonds were sold at auctions. This decrease in prices does not mean that investing in blue diamonds is not a good decision rather it is an indication that there are not enough blue diamonds to be sold at public auctions.

The fancy intense blue diamond of 1.04 ct, IF clarity and cushion shape, on the other hand, has shown an increase of almost 371% over a period of almost 20 years. Comparing the market value of the fancy vivid diamond with that is sold at the auction, the results seemed very different. This is how the fancy vivid diamond has been sold in previous years. 1.01 ct fancy vivid diamond is sold at auction for about

  • $127,000 per carat in 2002.
  • Increased to $244,600 per carat in 2007.
  • Increased to $532,400 per carat in 2013.
  • $1.1 million per carat in 2015.
THE FANCY VIVID BLUE DIAMOND HAS MAJORLY OUTPERFORMED IN THE AMERICAN MARKET.

Now comparing the fancy vivid blue diamond of 7.96 ct that was sold in $443,000 in 1999 and a diamond of 9.75 ct size was sold at $3.35 million per carat in 2014 demonstrating a return of around 656% over a period of 15 years.  Considering some larger blue diamonds, such as the fancy intense blue diamond of 5.15 ct size that was sold for $197,000 per carat in 1997, the diamond of 5.51 ct size that was sold for $985,300 in 2013 demonstrating a return on investment of about 399% over a period of almost 16 years.

The price of blue diamonds has continuously displayed an incredible strength at the auction market. In a similar manner, these blue diamonds have shown an excellent depth of investment potential together with the liquidity. Thus, when it comes to selecting a diamond for investment purposes, there would be no other better or suitable option than blue diamonds. Blue diamond is in demand for over half a millennia and as reflected by the continuous increase in prices. Investing in blue diamonds can be considered as one of the last supports of sanity in this uncertain world of debt.

The market of blue diamond has always been a strong, stable and worthy of the investment market. The diamond market has an insatiable appetite mainly for the blue diamond due to the reason that it is among rarest of all the other coloured diamonds. They are one of a kind asset, beautiful and is experiencing no price depreciation since the past few years. In this way, the blue diamonds present one of the most unique and worthy investment opportunities to the investors. Fancy coloured diamonds, in this way, have proven themselves to be considered among the rarest but the strongest asset axaaa in the market. An important thing to note here is that they, including the blue diamond, has outperformed almost all of the other major assets such as platinum, gold and silver.

 

 

 

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