FROM LEFT: Fancy pink and blue diamond earrings, Stephen Russell. 970 Madison Ave., 212-570-6900. Emerald-cut pink diamond drop earrings with white diamonds in platinum, Tiffany & Co. 727 Fifth Ave., 800-526-0649

Assessing a Gem
When a veteran like Bronstein picks up a new colored diamond for the first time, he considers the same elements that he would while looking at a colorless stone, but focuses on the quality of color foremost. To be an impressive gem, carat weight matters, as does clarity—two of the famous “four Cs” of evaluating diamonds. When it comes to the other two—cut and color— purchasers of colored diamonds need to check their preconceptions at the door. For those buying a colorless diamond, purity is at a premium—a tiny hint of yellow or brown is a flaw that can cause the stone’s value to plummet. In contrast, an element of green in a yellow diamond, or of blue in a green diamond, may simply give the stone a different personality, which may be attractive to a given collector, assuming that it’s large and brilliant enough.

The cut is also different, says Jordan Fine, secretary of the Natural Color Diamond Association. The cutters who specialize in working with colored stones try to maximize the gem’s color saturation, making it as intense as possible, even if that means the stone is less brilliant. “It’s tricky: If you take a reddish stone and recut it so the angles are different, it can look more brown, or the color can change completely,” says Fine. “Green diamonds are that color because of contact with natural radiation, but very often that color goes only partway through the stone, and the inside is white, creating a challenge for the cutters.”

Perhaps the best-known dealer to have built a reputation and business around colored diamonds is the jeweler Laurence Graff. He has purchased some of the most famous diamonds to come up at auction, including the Wittelsbach diamond, a 35-carat fancy deep grayish blue piece whose first recorded owners were the Habsburgs. Graff snapped up the diamond at a Christie’s auction in London in December 2008 for the equivalent of $24.3 million—well above the $15 million estimate—and turned it over to specialist cutters for a face-lift. The stone that emerged, now known as the Wittelsbach-Graff diamond, lost a few carats in weight (final weight was 31.06 carats), but Graff had enhanced its clarity and brilliance, and possibly its value.

Given their rarity and the prices the best stones have fetched at auction, it’s not surprising that jewelers like Graff and auction house mavens like Rahul Kadakia talk earnestly about the importance of colored diamonds as investments. A Saudi prince or African dictator contemplating the prospect of a hasty forced exile might well be happy to slip one of these stones into a pocket to help him maintain the lifestyle to which he has been accustomed. Some lucky individuals have discovered that jewelry they once thought contained semiprecious stones, in the days before colored diamonds grabbed the spotlight, actually contained blue, pink, or green diamonds. Kadakia recalls that a few years ago, an elderly woman brought a ring to a Christie’s representative to value, hoping to sell it for about $5,000. The mysterious blue stone in the middle turned out to be a seven-carat blue diamond. The ring brought her $5 million.

Some buyers, especially those at the top end of the market, snapping up the outsize and vividly colored gems that make it to auction, may do well to view these as great investments; these stones aren’t likely to suddenly become more common. And there’s constant demand: Russian oligarchs are drawn especially to pink diamonds, some say, while Schuler has noticed a trend among Asian men interested in buying a blue diamond of up to six carats in size and setting it in a ring that they will wear themselves. “It’s the ultimate in portable wealth.”

An Elite Group
But just as not every Cubist painting is a Picasso, the vast majority of colored diamonds aren’t premier-quality gemstones. “The ‘supergems’ have their own separate market, just like a Monet does,” says Bronstein. “Just because a stone is called a fancy colored diamond doesn’t mean it’s desirable or valuable, or if it is these things, that it will hold that value.”

The same characteristics that make the colored diamonds so compelling are precisely the ones that make the market so complex to navigate. Just ask Gary Schuler. Last summer, one fancy intense blue diamond fetched an impressive $650,000, well above the $500,000 estimate Sotheby’s had placed on it. For another blue diamond from the same necklace, a fancy intense grayish blue, Sotheby’s placed a much lower estimate, $175–$225,000, and it sold for $302,500. That shows just how variable colored diamonds can be, and how tricky it can be to treat them primarily as investments if they aren’t one of the storied, headline-grabbing stones. Nonetheless, Schuler still hopes to hear that the owners of the necklace’s two remaining stones are interested in selling their blue diamonds, which he still hasn’t seen. But with the world clamoring for colored diamonds and sale catalogs to fill, two more blue diamonds would make his day.

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