Tender in Pink
Argyle looks to U.S retailers to sell its most valuable products
The attraction of the U.S. market and the appeal of colored diamonds
joined forces in the first-ever tender offer of fancy pink diamonds in the
U.S. this fall.
The tender of 63 diamonds by Argyle Diamonds of Perth, Australia, gave
prospective buyers a chance to submit bids during the by-appointment-and-invitation-only
event in New York City. (The collection was shown also in Hong Kong, Tokyo,
Sydney, London and Geneva.)
Organizers avoided the U.S. in the previous 13 annual tender offers because
they were intimidated by the size of the market. Argyle produces too few
pink diamonds to satisfy a market as big as the U.S., they reasoned. But
the decline of Asian economies has left the U.S. a more attractive option.
The stop in New York City also gave Argyle Diamonds a chance to raise
its profile in a country where it's known more for its small, colorless
or brown diamonds. Fancy pinks account for only 0.1% of Argyle's production.
But prices of the pinks can hurtle 50 times above comparable colorless diamonds.
Prospective clients receive catalogs detailing each lot (or diamond) with
a close-up color illustration, the gem's weight and the clarity and color
descriptions from the Gemological Institute of America's Gem Trade Laboratory
in Carlsbad, CA, and the Diamond High Council laboratory in Antwerp, Belgium.
Once the dealers arrive at the tender offer (the location is kept secret
until the last minute for security reasons), the fun begins. "The dealers
and associates react differently when viewing the stones," says David
Fardon, Argyle's manager of polished sales. "Some guard their reactions
closely; others are more emotional. Some take hours inspecting the stones;
others take only a few minutes.
"They develop their own secret codes so they can refer to the diamonds
outside the viewing room without allowing others to be privy to their thoughts
and opinions. Some even fly in discreetly on private jets, place their bids
and depart to destinations unknown. The intrigue, secrecy, glamour and power
of the tender are as exceptional as the event itself."
Time to Bid
After examining the diamonds and taking notes, buyers are invited to submit
confidential, sealed bids by a specified date. The bids may be for one or
more lots or a "global bid" for the entire collection. (The firm
of Robert Mouawad of Geneva, Switzerland, bought entire collections in 1991
and 1993.) Prices are kept confidential.
While all pink and red diamonds are one-of-a-kind, this collection included
a few that are truly exceptional. The top stone, by all accounts, is a 2.66-ct.
heart-shaped diamond with an I2 clarity grade and a "fancy vivid purplish
pink" description by GIA and a "fancy intense purplish red"
description by the Diamond High Council lab.
GIA uses the word "red" in the descriptions of only two diamonds
in the collection: a 106-ct. oval with an I1 clarity grade and a 0.54-ct.
emerald cut with an I1 clarity grade.
Why Pink Diamonds Are Special
Their rarity and pleasing hue command a premium price
No other diamond locality in the world produces pink and reddish diamonds
with as much regularity as the Argyle mine in Australia. This doesn't mean
the supply is plentiful, however. Out of the millions of carats mined at
Argyle yearly, only some 700 found each year qualify as "pinks"
Fancy pink diamonds were once available only to royalty. The tender offers
conducted by Argyle Diamonds offer a way albeit an expensive one
for anyone to acquire them.
Pink diamonds are rare, though blue, red, green and orange are considered
rarer still. The origin of the color in pink and red diamonds is a mystery,
says Dr. Emmanuel Fritsch, a professor of physics at the University of Nantes,
France, and an expert on the origin of color in gemstones. In the book The
Nature of Diamonds (Cambridge Press and the American Museum of Natural
History), Fritsch explains, "The color is due totally or in part to
a color center resulting from deformation. [Editor's note: A deformation
refers to a mistake in atomic arrangement or missing atoms. These deformations
are known as 'color centers' and may also contain color-causing impurities].
However, the atomic details of the center, and whether it incorporates an
impurity, remain mysteries."
Of course, the rarity of color affects prices. The pricing of pink and
red diamonds is rarely disclosed in public, though it's not uncommon to
be hundreds of thousands of dollars per carat. A 0.95-ct. purplish red diamond
was sold at auction in 1987 for close to a million dollars, for example.
Availability also is a factor. Production of pinks is on a downward
trend, in spite of the recent rehabilitation of the Argyle mine and resulting
extension of its life span. Still, tender offers are expected to continue
for some years to come.
This exceptional 1.06-ct. oval was one of the outstanding gems Argyle
showed to prospective North American buyers at the first pink diamond tender
in the U.S.
by Robert Weldon, G.G.
Copyright © 1998 by Bond Communications.