After Leonard Joel first set and then subsequently broke its three auction records for the four most valuable auction sales of diamonds in Australia, I find myself no longer fielding emails of congratulations but questions from clients about what one needs to consider and how one should go about securing a significant diamond, and perhaps also, why?
To begin with, it is indisputable that the larger the stone (and I speak of quality stones) the rarer they are in nature and the more valuable they become. Stones larger than 5 carats are a good starting point for those considering this alternative asset class and with stones above 10 carats, the rarity factor becomes even more pronounced.
Once you have set, hopefully, not just your mind but your heart on such an acquisition you can also take comfort in the fact that the market for diamonds has been a largely stable one for almost half a century, this is supported by its enduring and dominant status as the most desirable of the precious stones globally and the one that enjoys the most developed regulatory and price monitoring environment. In short, it is the obvious store of wealth if one is considering a precious stone purchase.
In simple terms you have essentially four levels for sourcing. Direct from the cutting factory through a broker intermediary, where one can expect to pay a “market” price with accompanying brokerage or sourcing fees; through a wholesale dealer where sellers’ margins are naturally higher to account for the stock holdings and overheads, and then there is the retail marketplace with its numerous costs associated with design and manufacturing in addition to significant costs that come with a retail setting—rent, interest, insurance, staffing and marketing. And lastly, the secondary market largely represented by volume by the auction industry wherein the previous add-on costs have been stripped away, and the value in such a transaction lies in the enduring value of the diamond itself and little to do with its prior primary market-place maker.
Our Important Jewels department based in Sydney, provides clients with a curated supply, unique to Australia, of large diamonds at “market” price; meaning they have been sourced from both primary suppliers (sometimes known as sight-holders that are converting rough to polished) and more generally sourced on the global second-hand marketplace for diamonds. This global market is a fascinating mix of diamond production houses, individual traders who travel the world with their stock, and brokers who move diamonds between important private clients and commercial sellers. For us at Leonard Joel it is continuously all about sourcing diamonds at the best possible world-wide price before presenting the large diamonds to our clients and simultaneously providing the buyer with the unique advantage of a transparent margin on our hammer price.
The liquidity of the diamond market is underpinned by the globally accepted independent certification that is available through the Gemmological Institute of America (GIA) and the concise manner in which every diamond is characterised and quantified by a recognised standard for its cut, carat, clarity, and the all-important colour.
At this level of transaction, it is understandable (and a given) that prospective buyers would want to have a long conversation with an expert about understanding what underpins the pricing of their diamond of choice. Hamish Sharma, Head of Important Jewels in Sydney, is just such an expert with a lifetime of global experience in the world of diamonds and fine jewels and long conversations have underpinned all our large diamond auction sales. I invite you to have such a conversation; both because it’s a fascinating insight into the international diamond trade and, like me, once armed with that knowledge you too will realise how reliable and comprehendible the market is.
Apart from the obvious, that the wearer enjoys the glamour and magic of wearing a spectacular diamond, there are other drivers that gravitate individuals to valuable diamonds. The obvious one and a psychology familiar to those that have endured war, or crisis or displacement, is that just like rare coins or wristwatches it is an ideal store of portable wealth. Add to this the unique beauty and sheer rarity of these larger stones and you have a purchase that compares favourably, and arguably better, to that of other exotic and collectable asset classes.
So, if you have wondered about a big diamond, my first advice is a long conversation with an expert and if you are in Sydney in April, Hamish Sharma is there for just such a conversation.
JOHN ALBRECHT / Chairman & Head of Important Collections
Banner Image: An Important Diamond ‘La Principessa’ 25.82 carats Ring, Musson | $1,100,000 – 1,500,000