The 4 Cs of Investing in Diamonds
The 4Cs of investing in diamonds
Thousands and thousands of websites give similar explanation of what the 4Cs of diamonds are. Some are quite unique, giving a personal touch to it, while others are just generic. Well, what about the 4Cs from an investment perspective? The broader investment community is looking into acquiring a piece of the 4Cs for the investment portfolio, but most don’t how to choose the right one. What to look for? How unique the 4Cs must be, or a.k.a. “Rare”? Color, Clarity, Cut, and Carat Weight. Sure, the 4Cs will tell you all about the diamond, but what about the 5th C? “THE” C that most people don’t describe? Still asking yourself what this 5th C is? Let’s tackle it a bit later. For now, let’s review the 4Cs in terms of investment grade diamond, for both Colorless and Fancy Color Diamonds.
Color
Like any other system in the world, there must be a balance between the opposites. For Colorless diamonds, the most desired color is absolutely NO color. We all know the standard GIA Color chart going from D-Z, D being the clearest (clean as a snow flake), to Z which would have a yellow or brown tone to it. but what would be considered an investment grade color?
http://www.4cs.gia.edu/en-us/diamond-color.htm
On the other hand, for fancy color diamonds, we want to keep the most color inside the stone so just the opposite from colorless. Even in fancy color diamonds there are many color intensities (Faint, Very Light, Light, Fancy Light, Fancy, Fancy Intense, Fancy Vivid, Fancy Deep and Fancy Dark). These are referred to as Hue, Tone, Saturation. The same question applies here! What color intensity would be considered an investment grade color?
http://www.gia.edu/analysis-grading-sample-report-colored-diamond
http://www.leibish.com/assessing-diamond-color-article-389
Clarity
There are 11 different grades for clarity, divided into 6 categories; the cleanest being Flawless, while the lowest, or I for included. All under the condition of being viewed in a 10x magnification. I will not into further details, you can read more about it…(let them view the clarity section in website) What clarities would be considered Investment Grade?
http://www.4cs.gia.edu/en-us/diamond-clarity.htm
For fancy color diamonds, the same categories and grades apply. Due to the overall rarity of Fancy Color Diamonds (being only 1% of the overall supply), it is accepted that inclusions within the diamonds are “normal”
http://www.gia.edu/analysis-grading-sample-report-colored-diamond
Cut
Without going into the technical side of the Cut (you can read about Brightness, Fire and Scintillation here), there are 5 scales for a diamond cut grade; Excellent, Very Good, Good, Fair and Poor. How many grade levels can be considered investment Cut Quality?
http://www.4cs.gia.edu/en-us/diamond-cut.htm
in Fancy Color Diamonds, since the objective is to keep as much color as possible inside the stone, it is accepted that the Cut of diamond, may be different, and not always the best. To keep the color inside, we rely on physics, and therefore lower cut grades are accepted.
http://www.leibish.com/fancy-color-diamond-cut-article-498
Carat Weight
In colorless diamonds make up over 99% of supply, and therefore are less rare than Fancy Color Diamonds. In Colorless diamonds, size does matter! As diamond size increase so is its rarity in that size category. Rapaport’s RAPI Diamond Index follows 4 sizes of diamonds, being 0.30 carat, 0.50 carat, 1.00 carat and 3.00 carats, all round shape and IDEX mostly follows the 1.00 carat weight, also round. In colorless, the most desired shape is the round, since this shape allows the most light to escape.
http://www.4cs.gia.edu/en-us/diamond-carat-weight.htm
For Fancy Color Diamonds, due to rarity, in some colors, smaller diamonds may have a relative higher value than its counterpart colorless. Rounds are also the rarest due to that same fact mentioned above.
Investment Grade diamonds
Now that we covered the 4Cs and their impact on investment, we still need to address what should be considered an investment grade diamond…
For colorless, that spectrum will be quite narrow and different from Fancy Color Diamonds. Due to the relative large supply of colorless diamonds, investment grade diamonds need to be the best of the best. Having said that, the below is what we would consider being an investment grade diamond:
Colorless Diamonds:
Color: D,E,F
Clarity:F, IF, VVS1, VVS2
Cut: Excellent, Excellent, Excellent; A.K.A. Ex Ex Ex.
Carat Weight: the minimum weight should be 3 carats
The shape is not as important at this point, since any diamond in the 3 carat + category is rare. Round would be the most common.
Fancy Color Diamonds:
Due to rarity of Fancy Color Diamonds, investment grade diamonds will mean different things based on color. Some color are not so rare, therefore the investment criteria will be different than a rarer color.
According to our research that spans over 20 years of data, we have found, that a fancy color diamond to be considered an investment grade, must have a balance between rarity and liquidity. Although investing in diamonds should be considered a long term investment, we still have to take into account that one day, the investor would want to either realize the gain on his diamond investment, or would like to re-balance his portfolio.
The following are rare fancy colors that are investment grade including their hue and intensity:
Blue:
Fancy Blue, Fancy Intense Blue, Fancy Vivid Blue.
Put here images of the 3 types of blue.
Pink:
Fancy Pink, Fancy Intense Pink, Fancy Vivid Pink
Put here images of the 3 types of pink.
Red:
Fancy Red, Fancy Purplish Red
Put here images of the 3 types of red.
Yellow:
Fancy Intense Yellow, Fancy Vivid Yellow
Put here images of the 2 types of yellow.
One group of diamonds that I consider to be of investment grade would be diamonds mined from the Argyle mine. This is the exceptional group of diamonds, where a secondary color (also known as modifying color) would be acceptable due to the rarity of such diamonds. Read more about Argyle Diamonds.
Collectors:
Some Fancy Color Diamonds are as rare as just mentioned above, but due to the lack of liquidity, I would rather place them in the collector’s type of diamonds. Their value is as important I not more, but there is no balance between rarity and liquidity. A collector is less likely to want to dispose of an item, and so for him, liquidity is not an issue.
Green:
Fancy Green, Fancy Intense Green, Fancy Vivid Green
Put here images of the 3 types of green.
Orange:
Fancy Intense Orange, Fancy Vivid Orange
Put here images of the 3 types of orange.
Purple:
Fancy Purple, Fancy Intense Purple, Fancy Vivid Purple
Put here images of the 3 types of purple.
Violet:
Fancy Violet, Fancy Intense Violet, Fancy Vivid Violet
Put here images of the 3 types of violet.
You can grab an image of each of these: http://www.leibish.com/world-of-colors
Where did that 5th C hide?
I mentioned earlier that for the purpose of understanding Investment grade diamond we needed a 5th C….i’d like to introduce to you Concentration of wealth as the 5th C.
How does the 5th C fit into our discussion? Just like anything of value, we need to measure how much value we can accumulate into a well determined volume, otherwise known as concentration of wealth. See below a chart describing visually what concentration of wealth is all about:
These Charts demonstrate how Diamonds (both colorless and fancy color) are in the top 1 and 3 spot in our concentration of wealth index. Both measured in different times.
We have also created a chart showing the concentration of wealth using the current list of record breaking diamonds sold at auction:
Need to create this chart….
On my next article, I will review the performance of fancy color diamonds against other investment vehicles, such as global indices, other commodities, and major corporations.
Related Posts
- Luxury Asset Lending & Borrowing: Diamond Works (Part 1)
- Bain & Co. 2019 Diamond Industry Report: Strong Origins a.k.a. Provenance, Stricter Financing and a 50 year review (Strong Origins: Current Perspectives On The Diamond Industry, Plus A 50-Year Review)
- Bain & Co. 2018 Diamond Industry Report: Seeing The Light At The End Of The Tunnel (A Resilient Industry Shines Through)
- Fancy Green Diamonds: Their Mystical And Hidden Value
- Diamond Investment & Intelligence Center to Present at the Antwerp Summer University; Innovation & Diamonds
The 4 Cs of Investing in Diamonds
The 4Cs of investing in diamonds
Thousands and thousands of websites give similar explanation of what the 4Cs of diamonds are. Some are quite unique, giving a personal touch to it, while others are just generic. Well, what about the 4Cs from an investment perspective? The broader investment community is looking into acquiring a piece of the 4Cs for the investment portfolio, but most don’t how to choose the right one. What to look for? How unique the 4Cs must be, or a.k.a. “Rare”? Color, Clarity, Cut, and Carat Weight. Sure, the 4Cs will tell you all about the diamond, but what about the 5th C? “THE” C that most people don’t describe? Still asking yourself what this 5th C is? Let’s tackle it a bit later. For now, let’s review the 4Cs in terms of investment grade diamond, for both Colorless and Fancy Color Diamonds.
Color
Like any other system in the world, there must be a balance between the opposites. For Colorless diamonds, the most desired color is absolutely NO color. We all know the standard GIA Color chart going from D-Z, D being the clearest (clean as a snow flake), to Z which would have a yellow or brown tone to it. but what would be considered an investment grade color?
http://www.4cs.gia.edu/en-us/diamond-color.htm
On the other hand, for fancy color diamonds, we want to keep the most color inside the stone so just the opposite from colorless. Even in fancy color diamonds there are many color intensities (Faint, Very Light, Light, Fancy Light, Fancy, Fancy Intense, Fancy Vivid, Fancy Deep and Fancy Dark). These are referred to as Hue, Tone, Saturation. The same question applies here! What color intensity would be considered an investment grade color?
http://www.gia.edu/analysis-grading-sample-report-colored-diamond
http://www.leibish.com/assessing-diamond-color-article-389
Clarity
There are 11 different grades for clarity, divided into 6 categories; the cleanest being Flawless, while the lowest, or I for included. All under the condition of being viewed in a 10x magnification. I will not into further details, you can read more about it…(let them view the clarity section in website) What clarities would be considered Investment Grade?
http://www.4cs.gia.edu/en-us/diamond-clarity.htm
For fancy color diamonds, the same categories and grades apply. Due to the overall rarity of Fancy Color Diamonds (being only 1% of the overall supply), it is accepted that inclusions within the diamonds are “normal”
http://www.gia.edu/analysis-grading-sample-report-colored-diamond
Cut
Without going into the technical side of the Cut (you can read about Brightness, Fire and Scintillation here), there are 5 scales for a diamond cut grade; Excellent, Very Good, Good, Fair and Poor. How many grade levels can be considered investment Cut Quality?
http://www.4cs.gia.edu/en-us/diamond-cut.htm
in Fancy Color Diamonds, since the objective is to keep as much color as possible inside the stone, it is accepted that the Cut of diamond, may be different, and not always the best. To keep the color inside, we rely on physics, and therefore lower cut grades are accepted.
http://www.leibish.com/fancy-color-diamond-cut-article-498
Carat Weight
In colorless diamonds make up over 99% of supply, and therefore are less rare than Fancy Color Diamonds. In Colorless diamonds, size does matter! As diamond size increase so is its rarity in that size category. Rapaport’s RAPI Diamond Index follows 4 sizes of diamonds, being 0.30 carat, 0.50 carat, 1.00 carat and 3.00 carats, all round shape and IDEX mostly follows the 1.00 carat weight, also round. In colorless, the most desired shape is the round, since this shape allows the most light to escape.
http://www.4cs.gia.edu/en-us/diamond-carat-weight.htm
For Fancy Color Diamonds, due to rarity, in some colors, smaller diamonds may have a relative higher value than its counterpart colorless. Rounds are also the rarest due to that same fact mentioned above.
Investment Grade diamonds
Now that we covered the 4Cs and their impact on investment, we still need to address what should be considered an investment grade diamond…
For colorless, that spectrum will be quite narrow and different from Fancy Color Diamonds. Due to the relative large supply of colorless diamonds, investment grade diamonds need to be the best of the best. Having said that, the below is what we would consider being an investment grade diamond:
Colorless Diamonds:
Color: D,E,F
Clarity:F, IF, VVS1, VVS2
Cut: Excellent, Excellent, Excellent; A.K.A. Ex Ex Ex.
Carat Weight: the minimum weight should be 3 carats
The shape is not as important at this point, since any diamond in the 3 carat + category is rare. Round would be the most common.
Fancy Color Diamonds:
Due to rarity of Fancy Color Diamonds, investment grade diamonds will mean different things based on color. Some color are not so rare, therefore the investment criteria will be different than a rarer color.
According to our research that spans over 20 years of data, we have found, that a fancy color diamond to be considered an investment grade, must have a balance between rarity and liquidity. Although investing in diamonds should be considered a long term investment, we still have to take into account that one day, the investor would want to either realize the gain on his diamond investment, or would like to re-balance his portfolio.
The following are rare fancy colors that are investment grade including their hue and intensity:
Blue:
Fancy Blue, Fancy Intense Blue, Fancy Vivid Blue.
Put here images of the 3 types of blue.
Pink:
Fancy Pink, Fancy Intense Pink, Fancy Vivid Pink
Put here images of the 3 types of pink.
Red:
Fancy Red, Fancy Purplish Red
Put here images of the 3 types of red.
Yellow:
Fancy Intense Yellow, Fancy Vivid Yellow
Put here images of the 2 types of yellow.
One group of diamonds that I consider to be of investment grade would be diamonds mined from the Argyle mine. This is the exceptional group of diamonds, where a secondary color (also known as modifying color) would be acceptable due to the rarity of such diamonds. Read more about Argyle Diamonds.
Collectors:
Some Fancy Color Diamonds are as rare as just mentioned above, but due to the lack of liquidity, I would rather place them in the collector’s type of diamonds. Their value is as important I not more, but there is no balance between rarity and liquidity. A collector is less likely to want to dispose of an item, and so for him, liquidity is not an issue.
Green:
Fancy Green, Fancy Intense Green, Fancy Vivid Green
Put here images of the 3 types of green.
Orange:
Fancy Intense Orange, Fancy Vivid Orange
Put here images of the 3 types of orange.
Purple:
Fancy Purple, Fancy Intense Purple, Fancy Vivid Purple
Put here images of the 3 types of purple.
Violet:
Fancy Violet, Fancy Intense Violet, Fancy Vivid Violet
Put here images of the 3 types of violet.
You can grab an image of each of these: http://www.leibish.com/world-of-colors
Where did that 5th C hide?
I mentioned earlier that for the purpose of understanding Investment grade diamond we needed a 5th C….i’d like to introduce to you Concentration of wealth as the 5th C.
How does the 5th C fit into our discussion? Just like anything of value, we need to measure how much value we can accumulate into a well determined volume, otherwise known as concentration of wealth. See below a chart describing visually what concentration of wealth is all about:
These Charts demonstrate how Diamonds (both colorless and fancy color) are in the top 1 and 3 spot in our concentration of wealth index. Both measured in different times.
We have also created a chart showing the concentration of wealth using the current list of record breaking diamonds sold at auction:
Need to create this chart….
On my next article, I will review the performance of fancy color diamonds against other investment vehicles, such as global indices, other commodities, and major corporations.
Related Posts
- Fancy Green Diamonds: Their Mystical And Hidden Value
- Diamond Investment & Intelligence Center to Present at the Antwerp Summer University; Innovation & Diamonds
- What Is All the Fuss About the Rapaport Investment Diamonds Report (IDR)?
- Fancy Color Diamonds Guide
- Fancy Color Diamond Manufacturer Eden Rachminov Sheds Light on Price Structure
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投资钻石的4C准则
投资钻石的4C准则
成千上万的网站都对钻石的4C准则做出了类似解释。某些网站非常特别,对此做出了个性化的诠释,而其他网站则说法趋同,略显一般。那么,从投资角度出发,何谓4C呢?投资界出于投资组合需要,正努力确定4C中的其中一条,但大多数都不知道如何选择正确那一个。该找什么?这4C又该多么独特,或者说“罕有”?事实上,4C准则指的就是成色(color),净度(clarity),切割(cut)和克拉(carat重量)。当然,4C准则会告诉你关于钻石的一切,但第五个C呢?这个大多数人都不会提及的标准又是什么呢?你是否还在问你自己第五个C是什么?让我们稍晚解决它。现在,针对无色和彩色钻石,让我们先从投资级别的钻石的角度审视一下4C准则。
成色
无论是世界上的哪个系统,两个对立面间必有一个平衡点。对于无色钻石来说,最令人满意的颜色绝对是完全没有颜色。我们都知道美国宝石学院的标准色卡(http://www.4cs.gia.edu/en-us/diamond-color.htm
)是从D到Z依次递进的,D代表最清澈(干净如雪花),而Z则为淡黄色或淡褐色。然而什么样的钻石会被归为投资级别的钻石?
另一方面,就彩色钻石而言,我们希望尽量保持钻石内的颜色 ,即正是无色的反面。即使是彩钻,也有不同的颜色密度,从发暗、高亮、明亮、淡彩、杂色到浓彩、艳彩、深彩乃至暗彩。这些被称为色彩、浓度和饱和度。(http://www.gia.edu/analysis-grading-sample-report-colored-diamond, http://www.leibish.com/assessing-diamond-color-article-389)
同样的问题出现了!拥有怎样颜色密度的彩钻会被视为投资级别的钻石?
净度
净度分为6个类型,11个等级。最清澈的即是无瑕级,最低的则为内含级。全部都被放置在10倍放大镜下进行观察(http://www.4cs.gia.edu/en-us/diamond-clarity.htm
)。我不打算在此详述,你可以在网站上关于净度的一栏获得很多信息。那么问题来了,拥有什么样净度的钻石会被视为投资级别的钻石?
同样的分类和分级标准也适用于彩色钻石。由于彩色钻石的整体稀有度(仅占钻石总体供应量的1%),一致公认彩钻中有内含物实属“正常”。(http://www.gia.edu/analysis-grading-sample-report-colored-diamond)
切割
不讨论切割的技术层面(您可在这里获得有关亮度、火彩和闪光的信息),就钻石切割等级来说,它分为五个等级,分别是:极优(Excellent)、优良(Very Good),良好(Good),尚可(Fair)和不良(Poor)(http://www.4cs.gia.edu/en-us/diamond-cut.htm
)。符合什么样切割等级的钻石是投资级别的钻石呢?
对于彩钻,由于我们的目标是尽可能地保持石头内的颜色不变,人们认可彩钻的切割可能有所不同且不一定总是追求最高等级的。为了保持钻石内的成色,我们依赖于其物理特性,因此较低的切割等级也是可以接受的。(http://www.leibish.com/fancy-color-diamond-cut-article-498)
克拉重量
由于无色钻石占钻石供应总量的99%以上,因此它们不及彩色钻石珍稀。对于无色钻石来说,大小非常重要!钻石越大,它在其对应的大小等级中就约稀有。Rapaport的RAPI钻石重量标准将钻石大小分为四类,分别是0.30克拉,0.50克拉,1.00克拉和3.00克拉,皆以圆形钻石为例;IDEX则大多以1.00克拉分类,也是用圆形钻石作为范本。无色钻石中,最受欢迎的形状是圆形,因为这种形状可以最大程度上地令钻石迸发光彩。(http://www.leibish.com/fancy-color-diamond-cut-article-498
)
而彩钻由于其稀有度,较小的带有个别颜色的钻石可能比同大小的无色钻石价值更高。基于上述同样的事实,圆形钻石也是最为稀罕的。
投资级别的钻石
在概述4C标准及其对投资的影响后,我们仍然需要厘清何谓投资级别的钻石。
对于无色钻石来说,此范围非常狭窄且与彩色钻石有所不同,由于无色钻石的供应量相对较大,必须是最最优质的才可被视为是投资级别的钻石。如此一来,下列钻石就是我们眼中的投资级别钻石:
无色钻石:
- 成色:达D、E或F色
- 净度:达F、IF、VVS1或VVS2级
- 切割:达极优、极优、极优级,即3EX级
- 克拉重量:不少于3克拉 钻石形状在此刻并不太重要,因为任何属于3克拉及以上类别的钻石都是非常稀有的。圆形钻反而是最常见的。
彩色钻石:
鉴于彩钻的稀有度,投资级别的彩钻基于不同颜色会有不同标准。由于某些钻石的颜色并不太珍稀,因此其衡量标准也会与颜色相对更珍稀的钻石有所不同。
我们对20多年来的数据进行研究,结果发现彩钻若是要被视为是投资级别的,必须在珍惜度和清澈度之间取得平衡。尽管钻石投资应被视为长期投资,我们依然需要考虑未来某天,投资者可能想实现其钻石投资收益,又或者重新平衡其投资组合。
下列就是我们认为的投资级别的珍稀彩钻,包括了色彩和密度方面的标准:
蓝钻:
- 淡蓝色、浓蓝色和艳蓝色
- 这三种蓝色如图所示
粉钻:
- 淡粉色、浓粉色和艳粉色
- 这三种粉色如图所示
红钻:
- 淡红色、淡紫红色
- 这两种红色如图所示
黄钻:
- 浓黄色和艳黄色
- 这两种黄色如图所示
我认为从阿盖尔钻石矿山开采的钻石皆属投资级别。它们超凡夺目,世所罕见,因此即使有次生色(也称修正色)也是可以接受的。点击这里了解更多关于阿盖尔钻石的信息。
收藏家类钻石:
某些彩钻和上述钻石一样稀有,但是由于不够清澈,我更倾向于将它们归为收藏家类钻石。它们的价值同等重要,只是没在珍稀度和清澈度间达成平衡。由于收藏家不太可能像转卖其藏品,因此对于他来说,清澈度并不是一个问题。
绿钻:
- 淡绿色、浓绿色和艳绿色
- 这三种绿色如图所示
橙色:
- 浓橙色和艳橙色
- 这两种橙色如图所示
紫色:
- 淡紫色、浓紫色和艳紫色
- 这三种紫色如图所示
紫罗兰色:
- 淡紫罗兰色、浓紫罗兰色和艳紫罗兰色
- 这三种紫罗兰色如图所示
你能从下列网站获得上述任何一张图片:http://www.leibish.com/world-of-colors
所谓的第五个C藏在哪里?
我早前提过,为了理解投资级别钻石,我们需要第五个C。在此我想向你介绍财富集中(concentration of wealth)即为第五个C。
第五个C如何适用于我们的讨论?任何有价值的东西,我们都需要衡量我们可以累积多少价值从而最终达到一个定量规模,否则即为财富集中。下表生动直观地为我们呈现了财富集中的内涵:
这些表格说明了为什么钻石(无论是无色还是彩色)可以位居我们财富集中指标的第一和第三名。两个数据是在不同时期测量得到的。
利用当前的钻石(均是在拍卖会上创下了价格记录的)列表,我们还编制了一份展现财富集中的表格:
(需要制作该表格)
在我的下一篇文章中,我将回顾与其它投资工具(如全球指标,其它商品和主要的投资公司)相比,彩色钻石的业绩表现。
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