Tender in Pink

December 1998

diamonds:News

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.

The Process
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" or "reds."

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.

– RW

– by Robert Weldon, G.G.



Copyright © 1998 by Bond Communications.


 

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