Precise colour of Sky Blue Diamond seen as a key focus at November sale
Ehud Laniado, principal of Mercury Diamond and chairman of Cora International LLC, tells David Brough that he is optimistic about the outcome of the sale of the 8.01-carat Sky Blue Diamond at Sotheby’s auction in Geneva on November 16.
Ehud, what is the outlook in your view for the mid-November Geneva auctions? Are you optimistic that the Sky Blue Diamond will achieve its pre-sale estimate?
“Overall, the Sky Blue has a very bright future ahead and I am optimistic about the outcome of this sale. I haven’t seen the stone in the flesh and I haven’t been able to find a published certificate for it, so I don’t know its exact colour. But what is clear is that since I was fortunate enough to sell the Blue Moon in November 2015 for $48.4m, a price which retains the world record for the highest price ever paid per carat for a diamond sold at auction ($4.1m), owners of rare and precious diamonds have been coming forward to capitalise on the re-sale value of their diamond treasures. In the last 12 months, we’ve witnessed the sale of the De Beers Millennium Jewel 4, the record-busting Oppenheimer Blue sale in May at Christie’s, and even the attempted sale of the Shirley Temple Blue.
The precise colour of the Sky Blue is bound to affect its final price. Very, very few diamonds in the world are clear, vivid blue, with no secondary colour. The difference between diamonds graded as vivid, the most prized of coloured diamonds, and those referred to as deep coloured diamonds, is that a deep coloured diamond retains the ray of light that shines on it without reflecting it back out. The legendary Hope Diamond is certified as vivid deep blue. In my opinion, the fact that the Shirley Temple Blue is deep in colour and not vivid is the reason why it ultimately failed to sell. Although it was estimated by Sotheby’s to sell at between $25m to $35m, the bidding stopped at $22m, prompting a collective gasp in the New York sale room this April.
If the 8.01 carat Sky Blue diamond is 100% vivid blue, something which is impossible to ascertain from even a high resolution computer screen, I am surprised at the low estimate price and I am confident it will sell for $25m, or even exceed that price if bidders compete for it.”
What is your feeling about the outlook for the top end of the diamond market? The 1,111-carat Lesedi Larona rough diamond failed to sell at auction in London in June. Was that a special case in an otherwise robust market for top tier diamonds?
“The outlook for top end diamonds as a store of wealth and a long term investment is establishing itself and is on the up. But the main problem is this. The Lesedi la Rona, which Sotheby’s estimated would sell in June for in excess of $70m, did not fail to sell. We, the public, failed to buy it. After digging all over planet Earth since 1905, the year the Cullinan, the only larger, rough gem-quality diamond in all of history was discovered, the public failed to buy the Lesedi la Rona and there is only one reason why. Unlike the art world, we, the diamond industry, have failed to educate people about the re-sale value of diamonds. Apart from the fantastic job done by Sotheby’s and Christie’s largely on sales of rare coloured diamonds, in general the diamond industry does not publish the prices of similar transactions of rare diamonds, many of which take place privately behind closed doors between manufacturers, diamond dealers and private individuals. The public is therefore simply not ready for the Lesedi la Rona. This diamond is still too avant garde. If I was the owner of the Lesedi la Rona, I would do exactly the same as the owner has done, which is to hold onto the diamond until the market is ready for it. One day, the Lesedi la Rona will sell and I believe wholeheartedly that it deserves to reach its reserve price.”
A number of high-profile rare blue diamonds have come to market in recent months, such as the Blue Moon and the Oppenheimer Blue, and now the Sky Blue Diamond. Is this purely a coincidence, or does it reflect the strong appeal of blue diamonds at the top end of the market?
“The sale of the Sky Blue is no mere coincidence and it is part of a growing desire for world-class blue diamonds. Since the sale of the Blue Moon, a re-sale market for diamonds has begun emerging before my eyes. It’s a market in which a rare diamond is increasingly being perceived as a store of value and an asset, rather than an expense or even a piece of jewellery. My dream is to see the entire diamond industry commit itself to educating the public on the rarest top tier stones. I say this with both coloured and white diamonds in mind, because while sales of very rare coloured stones receive a lot of attention, even a white one carat D flawless diamond is a rarity.
Admittedly, when people sell diamonds privately, they save themselves a commission that could be otherwise directed to Sotheby’s, but it’s only when prices remain visible to the public, as they do in the context of a high-profile public auction, that people understand the re-sale value of expensive diamonds and in the long term that will be positive for everyone. When the public is exposed to the prices of high tier diamonds, the market will be allowed to flourish. Since this is not yet the case, the public has missed out on the opportunity to acquire it and I believe it’s a crying shame.”
What impact is uncertainty over the Chinese economy having on the market for top-tier diamonds?
“A combination of factors has negatively affected top tier spending in China, from economic instability, to the anti-corruption laws and China’s move away from a manufacturing-driven economy towards a service-based economy. For example, the graph attached, shows that the price of a one carat diamond today is lower than it was in 2010, while the Mercury Diamond Global Tracker indicates that the prices of far larger diamonds are 10% higher than they were in 2010. The Chinese are not buying the diamonds they used to buy, both in terms of price points and volume. We are seeing the same trend in India and the US, where there is a concentration of demand around 0.3 carat to 3 carat diamonds.”Source: Mercury Diamond MDGT