FCD as investment 2.

[adamtal]

Hi again guys!

Maybe you will remember that I opened 25th July the thread "Diamonds as investment". At that time I was a total newbie and did not understand a lot about diamonds. Things did not change much, still a total newbie, but at least now understand a little bit more as previously

On that thread it is not really allowed to talk about fancy color diamonds this is the reason I decided to open a new thread, which is continuation of that one, but purely about Fancy Color Diamonds.

Again, I am trying to understand the usual consensus on this forum "Diamonds are not good investment, you should rather enjoy having them".

1 - From what I have seen from charts and graphs. Blue and pink diamonds were doing approx CAGR 10% (source: rarecoloreddiamonds, accresmineral, leibish). Fancy pink diamond in the past 10 years went up by 380%, which would be CAGR 17% and fancy blue diamonds in the past 10 years appreciated 180%, which would be CAGR 11% (fcresearch). Fcresearch is stated to be nonprofit independent organization with most specific data. My first question are this data and information relevant / true? That FCD in last 35 years were doing CAGR 10% and more?

2 - Why I am unable to find exact prices for exact fancy color diamonds?

3 - If fcresearch is really an independent nonprofit organization then why they do not publish actural prices rather than just % price movement?

4 - On many sites I have found information about prices and price change like this:

1ct fancy pink radiant cut IF diamond - but what intensity??? - i suppose this will be vivid probably (http://www.accresmineral.com/Investment-Grade-Diamonds/Investment-Potential)

Pink diamond prices per carat - but what clarity???? suppose it is IF???
(http://www.telegraph.co.uk/finance/businessclub/money/11216879/Rare-pink-diamonds-are-safe-haven-investment-for-super-rich.html)

Why do they not include every information? These sites are also only making up prices???

5 - I know a lot of you guys are a great appraisers here. Some of you even contributed to my previous thread and I am very glad for it. But if I would send you a GIA and Certificate what price would you actually send me back? A price for how much that diamond is usually sold on market? Or a price for how much it is appropriate to obtain a diamond - would be little less as wholesale? The price for how much I can sell the diamond? What will that price represent which you will send me?

6 - Now a bit about investment side of my thread. Everyone knows that buying a common diamond not a good investment. We could probably tell that a real diamond investment is starting at $100.000 and up, right? So, if I pick from example from Leibish a diamond worth few hundreds of thousands can we consider it as not bad investment?

7 - What price appreciation can I expect for a Fancy Vivid Pink 1ct IF Radiant cut diamond? Would the CAGR 10% be realistic? How much would you pay for such a diamond?

8 - If we suppose that Fancy Vivid Pink 1ct IF Radiant cut diamond I can get from leibish for $500.000. For how much would I be with a bit of luck be able to sell it?

9 - If I now buy a Fancy Vivid Pink 1ct IF Radiant cut diamond for $500.000 and count with a CAGR 10% appreciation (conservative approach from charts I have seen, but I am not sure they are telling the reality) then after 10years it would be $1.300.000. Would Sotheby`s or Christie`s be able to sell my diamond?

10 - Tell me something interesting

Thanks guys, I really appreciate every information shared here, because I know how "secretive" this topic is and how hard is to obtain any information on FCD.

 

[kb1gra]

It's not that there's any big secret about fancy color diamonds. There's no formula that takes all the possible variables of what a diamond is, and spits out THE price for it. The price is what someone is willing to buy it for, no more, no less.

The problem with these as an "investment" is that it's not one since you can't really cash it out.

In order to realize your "gains" you have to take a diamond purchased at retail, and somehow sell it at retail (despite not being a retailer) including these 10% gains you're discussing. The price indexes are looking at retail prices for diamonds and has nothing to do with what you could sell it for.

You, as an individual buyer, would have almost zero chance of being able to liquidate that diamond at retail or even anything close to it because your buyers will all be trade buyers who will need to buy at less than they can sell for. Especially if any time has passed because you'll have incurred expenses of insuring the stone, having it reappraised and recerted, high security shipping, etc.

And in terms of the kind of business Christie's, etc does - a $1.3M diamond is nothing, so you're unlikely to get one of their special deals where you don't pay the hefty seller's commission. So there goes another chunk of your profits. And of course, you risk a no-sale, depending on what the future diamond market looks like.

 

[kenny]

99.999999999999% of the time diamonds, ANY diamonds, are horrible investments.

Unlike gold, platinum or a bushel of wheat, diamonds are not a commodity, for which everyone pays a fixed-daily, universally agreed-to price ... plus a relatively minuscule commission added to the buyer or seller's side of the transaction.

With diamonds the public has to pay retail, but has to sell at wholesale.
HUGE difference!!!

 

[eastjavaman]

Listen to kenny, he collects FCD.
kb1gra also said it, it is difficult to buy at retail and sell at retail. Most of the time it will be buy at retail and sell at wholesale.
That being said, if you buy Graff pink diamond 30 years ago, you might make a handsome profit(then again, you might not be asking this here if you own Graff pink ). In order to be investment quality, it has to be that rare and found someone who will buy it.
Sorry, I cant buy your Graff pink no matter what I do
FCD color vary, different in sizes and vividness, little details make a difference, FCDs colors are difficult to standardize unlike their colorless counterpart, not to mention the quantity available makes it more difficult.

There was a guy selling his pink diamond in our forum, cant find the post.

 

[eastjavaman]

here it is

[URL='https://www.pricescope.com/forum/preloved-ps-jewels/0-34ct-fancy-intense-pink-oval-cut-diamond-gia-certified-t207131-30.html']https://www.pricescope.com/forum/preloved-ps-jewels/0-34ct-fancy-intense-pink-oval-cut-diamond-gia-certified-t207131-30.html[/URL]

 

[minousbijoux]

here it is

[URL='https://www.pricescope.com/forum/preloved-ps-jewels/0-34ct-fancy-intense-pink-oval-cut-diamond-gia-certified-t207131-30.html']https://www.pricescope.com/forum/preloved-ps-jewels/0-34ct-fancy-intense-pink-oval-cut-diamond-gia-certified-t207131-30.html[/URL]

And OP, please note that this stone has been for sale for a loooooooong time and he has not been able to sell it. That should tell you something about the FCD market and selling stones. Imo, he will have to drop the price significantly if he wants anyone to purchase it.

 

[kb1gra]

here it is

[URL='https://www.pricescope.com/forum/preloved-ps-jewels/0-34ct-fancy-intense-pink-oval-cut-diamond-gia-certified-t207131-30.html']https://www.pricescope.com/forum/preloved-ps-jewels/0-34ct-fancy-intense-pink-oval-cut-diamond-gia-certified-t207131-30.html[/URL]

And OP, please note that this stone has been for sale for a loooooooong time and he has not been able to sell it. That should tell you something about the FCD market and selling stones. Imo, he will have to drop the price significantly if he wants anyone to purchase it.

This person's difficulty is in part because he is asking a lot more than he paid for it, which is available info due to where it was purchased. Most people don't willingly partake in being hosed - a 0.34ct isn't so phenomenally rare that if I wanted one, I'd have to hand someone 100% profit to buy it.

 

[adamtal]

Thanks for the responses I have seen before kennys collection and it is beutiful

I know the biggest problem is with buying retail and selling then retail is not possible. Despite this I wanted to know the answers to questions I asked.

You say that price indexes are tracking the prices of retail. It does not matter for me, just would like to know, if FCD is really appreciating on average 10% p.a.? Or is it just some chosen diamonds and the other FCDs are only appreciating as much as the inflation - 4% p.a. approx?

With this particular FCD diamond isnt problem that we do not know the clarity? If we would know that the diamond is IF - which I suppose is not - then it would have been sold quite quicky, or am I wrong?

And how about the diamonds sold at auctions. At that level and that prices diamond investment is still counting for the 99% not investment grade or if we check for example this one:
http://www.sothebys.com/en/auctions/ecatalogue/2015/magnificent-jewels-n09331/lot.366.html

Would you consider this as investment grade diamond and predict with 90% certainity that the price of this will be double in 5 years (10% p.a. Based on blue price index)? Or it is absolutely crazy to do predictions and math like this?

As I said, I understand that you always tell 90% of dimonds is not a good investment, but if the price indxes would be telling the truth, the appreciation would continue in the next 10years, then you should be able to sell a FCD with some "profit". Or I am again totally wrong?

Based on this data for example:
Now youncan buy 1ct Fancy Vivid Blue VVS clarity for 1.000.000$
If the price continues to grow like before - 10% p.a. It would mean:
After 10 years: 2.600.000$
Sell for half of what retail is: 1.300.000$
That would mean 2% p.a.

1ct Fancy Vivid Pink IF 1.000.000$
Last 10 years it grow 380% = 17%p.a.
After 10 years: 4.800.000$
Sell for half of retail: 2.400.000$
That would mean 9% p.a.

I understand you can make lot more on other investments, just interested, if you agree with my calculations and would consider them as reasonable.

For me the most unrealistic part is to believe that FCDs were really making in the past 35 years on average a 10% p.a. Did they?!

 

[adamtal]

The guy who is trying to sell his pink diamond is offering it at Reasonable price, right? From what I have just quciky checked it is probably half of the retail price of similar diamond?! There is really no demand for 1/2 retail price for fancy pink diamond or here the bigger problem is that PS members discovered it was bought for a lot less and he is trying to make some profit selling this diamond?

From what I have seen usually you can sell a colorless diamond for 60% of similar (same) diamond retail price. Isnt the situation same in fancy territory?

I just cant undestand how you can not sell super quickly your diamond for 1/2 of retail

 

[eastjavaman]

The guy who is trying to sell his pink diamond is offering it at Reasonable price, right? From what I have just quciky checked it is probably half of the retail price of similar diamond?! There is really no demand for 1/2 retail price for fancy pink diamond or here the bigger problem is that PS members discovered it was bought for a lot less and he is trying to make some profit selling this diamond?

From what I have seen usually you can sell a colorless diamond for 60% of similar (same) diamond retail price. Isnt the situation same in fancy territory?

I just cant understand how you can not sell super quickly your diamond for 1/2 of retail

Then You should ask yourself, why are you not buying his diamond if it is half the retail?
The index probably track the highest price paid (I did not look at it). If you look at Sotheby's, the diamond is 6ct, and yes, for FCD, that is an enormous size and investment and collector grade. If you buy 5ct size and above untreated red diamond, or green (kenny's favorite), then you will probably get that return, if...somebody is willing to pay for it. In auction, the prize can fluctuate (that is why you have reserve price) and auction house will take 30-40% cut. You should remember that this is luxury item, not basic necessity, when economy is good people will pay for this, but then again not everyone has one million dollars sitting around to buy diamond when they can pay their mortgage and use it for other necessities. I imagine that less than 10% people have that much spare cash.
I happen to read this Japanese billionaire (Katsumi Tada) who sold his penthouse at $15 millions loss. Imagine if a billionaire (estimated at $1.7 b), can't afford $15 millions to cover his penthouse loan (or choose not to), so most people (like us) with net worth around $1 million or less will only pay $10,000 for a stone at most. Our salary also do not grow 10% annum

 

[Lady_Disdain]

Sorry, anyone who gives 90% certainty that an investment will have 10% CAGR is a scammer.

 

[minousbijoux]

Sorry, anyone who gives 90% certainty that an investment will have 10% CAGR is a scammer.

Yup!

 

[LD]

Kenny summed it up beautifully.

It doesn't matter what the market says or does - the issue is, will anybody buy your stone at a later date. The answer is probably no unless it's a steal of a deal. How often do they come around? Not often.

Diamonds and coloured gemstones are NOT good investments. There are some exceptions but I wouldn't class FCDs among them as they're always readily for sale somewhere. The only investments that MAY be fruitful in the gemstone world are stones that are top quality for their type and no longer being mined ie they are truly rare and difficult to find.

 

[adamtal]

Thanks for the responses.

Guys, I know it is not easy with me, but I still do not get it. And I think maybe I am not that stupid

You are collecting gems - diamonds. You like them and you do not buy them hoping to get a good ROI. You are looking for diamonds for pleasure. To do a jewelry from it in some cases. THEN how can you not consider a good deal and buying opportunity, if someone is privately selling his diamond for 1/2 of retail price?

For example here is this guy selling his diamond for approx 1/2 of retail and after one year was not able to sell it. PLEASE can you tell me why you did not buy it? Whats the problem for YOU with this particular stone? Isnt this a good price? Or just the fact that it was purchased for less than he is trying to sell is enough not to buy?

Eastjavaman, you asked why I am not buying that diamond, if I consider it as a quite good deal. Because I am not collecting gems. If I would, then I would for sure consider it as an opportunity to buy something beatiful and spare 1/2 of my money, if would be buying a similar diamond.

" You should remember that this is luxury item, not basic necessity, when economy is good people will pay for this, but then again not everyone has one million dollars sitting around to buy diamond when they can pay their mortgage and use it for other necessities."

I am not trying to contradict and I am really glad because of your posts, becase that means we can discuss this "stupid" idea of diamond investment. BUT, when the economy goes bad suddenly more people are looking at alternative investment opportunities - gold, art work, diamond. When there was a big crisis in 2008. Sothebys made an auction record selling the highest amount (sum of all artwors) one night. I think from that time only once they sold more $$$ during one night in 2014. So maybe your statement is true for an average people, but maybe it does not apply to the top 1% of population who desparately try to invest in something when economy is not really good.

Also most of you are telling, that someone is scammer, if gives 90% certainity that the investment will have 10% CAGR. I am sure you have also seen the rarecoloreddiamonds hystorical price tracking charts or fcresearch index. I just wanted to know if there is anyone who is long enough in diamond business and can confirm/deny that the prices of FCD diamonds were in the past 35years really appreciating in CAGR 10%. I know the past trend is not guarantee for future trend, but if the retail prices of FCDs were on average making 10% in the past and the information is true, then just knowing this fact/ denying this fact would be a valuable information for me.