Leonardo Da Vinci Stole Away The Investors From Geneva To NY

Although our research generally revolves around fancy color diamonds, the truth is that we are deeply interested in all alternative investments. Many types of alternative investments are sold in the same manner – by auction house. This is because unlike standard investments, the markets for these pieces are less standardized in the sense that they are not bought and traded so frequently, and their values span across an enormous range. Auction houses run their auctions all year round, and generally split the auctions according to what is for sale, i.e. one for paintings, another for jewelry, another for wine, and so on. This past week was the legendary diamond and jewelry auctions in Geneva that earn the highest prices possible all year for such stones. However, the ultimate sale prices were not as record breaking as was expected, and the reality is that this year there was major competition elsewhere. At a Christie’s art auction in NY, the last privately held Leonardo da Vinci painting in the entire world went under the hammer, and the individuals most likely to bid high on an art investment were probably there and bidding for it.

Of all the artists in history, Leonardo Da Vinci is probably the most famous and up until less than 5 years ago, it was assumed that all of his paintings were already in museums. When this one came to light, it was painstakingly restored and is only now offered at auction. Leonardo Da Vinci lived from 1452-1519, and painted “Salvator Mundi” circa 1500. “Salvator Mundi” sold in New York on November 15, 2017 for a record price of $450 million, and the battle to win it took just about 19 minutes, although it felt like the 500 years since it was painted, for some. This painting broke the record by far, as the last record was held by Pablo Picasso’s “Les Femmes d’Alger” which sold at Christie’s for $179.4 million. It seems that when a buyer wants something badly enough, there is no ceiling to the price that they are willing to pay – a concept that we see time and again in fancy color diamonds (and in many other passion investments).

 

Pablo Picasso’s “Les Femmes d’Alger”          Image credit: Christie’s

 

Leonardo Da Vinci’s “Salvator Mundi”          Image credit: Christie’s

In the World of Fancy Color Diamonds

In addition to the excitement in NY at Christie’s over the Da Vinci painting, there was a diamond and jewelry auction in Geneva held by Sotheby’s (and an auction held by Christie’s Geneva as well). The top lot sold during the Sotheby’s Geneva auction was the superb 33.63 carat Fancy Light Pink diamond set in a ring designed by Harry Winston. It was estimated to sell for a price between $8 million to $13.9 million, and it ended up selling for $12,818,240 or $381k per carat. It broke 2 records that night. It was sold for the highest total price ever paid for a Fancy Light Pink diamond, and it also broke the record price per carat for that color. The previous record holder for these 2 categories was held by the 40.30 carat Fancy Light Pink diamond that was sold on November 16, 2016 during the Sotheby’s Geneva auction session.

 

The 33.63 carat Fancy Light Pink Harry Winston diamond          Image credit: Sotheby’s

 

The 40.30 carat Fancy Light Pink diamond          Image credit: Sotheby’s

 

Based upon our review of the diamond, with the added factor of the price that was ultimately paid, it can be deduced that this diamond will end up being re-polished and its color upgraded to Fancy Pink. At this carat weight, even if it loses 10% of its weight, (more than which is unlikely) and remains above 30 carats, it will probably be valued at above $600k per carat due to the color and clarity (which will also be upgraded to Internally Flawless). Therefore, at a potential selling price of above $18 million, the nearly $13 million investment is well worth it, especially considering that it will probably take less than a year to re-polish and be offered on the market. Most likely it will resell privately.

 

 

The next highest price paid for a fancy color diamond was for the 25.35 carat Fancy Intense Yellow VVS2 pear shaped diamond set in a pendant by Cartier. It was valued at $598k to $800k total, or $23.6k to $31.6k, which is the standard market price range for a good color Fancy Intense Yellow diamond. It ended up selling for $1.2 million, or just shy of $48k per carat. It exceeded its price expectations and the reason why is clear. The yellow diamond will be re-polished and upgraded to a Fancy Vivid Yellow with an IF clarity since on the original diagram, it is mentioned that the VVS2 clarity can be improved.

 

The 25.35 carat Fancy Intense Yellow VVS2 pear shaped diamond          Image credit: Sotheby’s

 

Similarly, another Fancy Intense Yellow diamond with upgrade potential sold well at the auction. The 19.22 carat Fancy Intense Yellow VVS2 diamond was valued at $547k to $841k or $28.5k to $43.8k per carat but exceeded even the highest estimate when it sold for $927k, or $48.2k per carat. This Fancy Intense Yellow diamond will also be upgraded to Fancy Vivid Yellow by carefully polishing some facets to optimize the color intensity of the yellow in the diamond. Since yellow diamonds are more readily available in the market than the rare pink diamonds and blue diamonds, in most cases any premium paid for yellow diamonds means that there is a strong potential of an improvement to be made to the diamond.

 

The 19.22 carat Fancy Intense Yellow VVS2 diamond          Image credit: Sotheby’s

 

The last fancy color diamond that was sold and worth mentioning is the beautiful 2.60 carat Fancy Light Pink VVS2 step cut diamond set in a ring designed by Cartier. It was estimated by the auction house to sell at a price between $203k to $400k total, or $78k to $154k per carat. It ended up selling for $502k total, or $193k per carat. It sold for above the price I was willing to buy it for (I am being transparent here…), as it has a strong potential to be upgraded to a Fancy Pink. If you look at the price that way, then there is value to be gained here and the price is justified. However, the sold price it is nearing the top value at this point in time, considering that some carat weight will be lost. The risk/reward balance at this point was not worth it for me to acquire it. On the other hand, an investor that would have been interested to buy it, improve it and then hold it for some time, could be very well rewarded. The ring is also signed by Cartier, which has some value to it.

 

The 2.60 carat Fancy Light Pink VVS2 step cut diamond          Image credit: Sotheby’s

 

The Noteworthy Unsold Diamonds at Sotheby’s Auction

Three very important diamonds did not sell when they went under the hammer at Sotheby’s in Geneva. In other words, they did not meet their minimum reserve price.

The top lot of the evening, that we discussed at length prior to the auction was the 37.30 carat Fancy Intense Pink “Raj Pink” diamond. It is the largest documented Fancy Intense Pink diamond in the world.

So why did it not sell?

The answer is short and simple; it was not perfect. Two main things were wrong with it. The first, and most important, is that it has a strong blue fluorescence. The majority of investors are not keen on fluorescence, especially when it does not compliment the diamond color. In some cases, depending on the color, fluorescence is ok, and even in some rare cases, it actually enhances and compliments the diamond and makes it more attractive. The second reason is its clarity. At VS2, it is quite a low quality. If the color would have been strong enough, most likely the VS2 clarity would have been ignored.

 

The 37.30 carat Fancy Intense Pink “Raj Pink” diamond          Image credit: Sotheby’s

 

The Raj Pink Diamond was valued at a price between $19.8 million to $29.7 million, or $531k to $798k per carat. The highest bid was only $14.1 million, which was well below the seller’s minimum reserve price of $18 million. Perhaps the sellers should have accepted an offer they had prior to the auction, which was north of $20 million, and then they would have both sold the diamond, and received a higher amount for it!

The Donnersmarck Diamonds also did not sell, as they also did not reach their minimum reserve. They were valued at a price between $8.9 million and $13.9 million. It seems that in this case, the highly important provenance did not matter and investors did not see the potential in the diamonds for re-polishing.

 

The Donnersmarck Diamonds          Image credit: Sotheby’s

 

The last important item to go back home to its owners was the 7.41 carat Fancy Vivid Blue diamond by Moussaieff. It is an oval modified brilliant cut diamond with an exceptional Internal Flawless clarity. It was valued at $13.9 million to $17.85 million total or $1.87 million to $2.41 million per carat. The highest offer came in at $12.5 million total, which is only $1.69 million per carat. This is an exceptionally low value. Investors are looking for perfection, and here the issue was in its final make. The diamond was most likely originally a marquise shape, that both ends were polished, so the girdle is slightly thicker on the 2 ends. Most likely, there were some imperfections and the clarity was lower in its previous incarnation. It seems that it had a major effect on the decision making, although I would have gladly paid much higher if I had had the required capital.

 

The 7.41 carat Fancy Vivid Blue IF diamond by Moussaieff          Image credit: Sotheby’s

 

In this Fancy Vivid Blue Diamond, like the Raj Pink diamond, the seller privately had a higher bid than its minimum, but decided to offer it in auction hoping for a better result.

What can we learn from this auction? In my humble opinion, we have to remember that the auction is not always the best venue to sell a diamond, even if it is a high value and rare diamond. Sometimes, the seller can get a much better result selling it via professionals that have access to other private buyers. When a diamond does not sell at auction it can set a precedent, and when the diamond will eventually be offered on the market, it will be recognized and the eventual buyer will refer back to the auction last bid, or the low end valuation and will know what to offer.

 

The 14.54 carat Fancy Vivid Blue and the 16.00 carat Fancy Intense Pink “Apollo Blue” and “Artemis Pink” diamonds

Image credit: Sotheby’s

 

I was exposed to the Blue/Pink diamond pair that were offered at the Geneva auction back in April. The 14.54 carat Fancy Vivid Blue and the 16.00 carat Fancy Intense Pink were offered to me the previous summer (in 2016), and the owner wanted a certain price. We counter-offered a lower but still extremely generous offer, which was declined. The seller preferred trying her luck at auction only to ultimately lose tens of millions of dollars. The pair also ended up selling and remaining together as a pair.

Choosing to go the auction route is a risk that is occasionally rewarded but not always. Got any comments about whether diamonds sell at auction, or any questions about it? Write to us in the comments section!

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