Do you know why color diamonds always are the big winners at auction or how color diamonds get their high auction prices?

GIA’s Russell Shor recently reported that auction house executives and industry observers agree on a number of reasons why fancy-color diamonds can achieve such high prices, even during an economic hardship. Some reasons are the international reach of auction houses, the rarity of top gems, and the greater number of private buyers going to auction.

Of the millions of diamonds mined each year, only .0001 percent can qualify as fancy colors and only a handful can achieve the top grades of Intense and Vivid. An even smaller percent are larger than one carat, let alone five carats. So the auction houses deal in true rarities.

GIA was interviewed by Harpers Bazaar China, for their April edition, about fancy-color diamonds and why these rare finds can only be purchased at auction. Here is what they had to say:

Q: Given the current fancy-color diamonds grading trend, can you analyze the trend of color diamonds value and investing value?

GIA: GIA does not do diamonds appraisal. Diamond prices are determined in big auction houses. The auction prices of big fancy intense color diamonds or fancy vivid pink and blue diamonds have exceeded $1,500,000. And the growing trend of investing in color diamonds can be proved by the big increase in color diamond grading demand. The demand has increased 102% since 1999.

Q: Why are auction houses the only place where you can find the finest fancy-color diamonds?

GIA: This seemingly simple statement is due to the long history, good command of global auction trends, good sense of finding rare stones and long-term accumulated people contacts of those renowned international auction houses. First, Geneva, New York and Hong Kong, the three major markets always attract global customers. Rare color diamonds are always sold for record-breaking prices at these auction houses. Second, Sotheby and Christie’s have the most insights on those top-notch rare diamonds; in other word, real, treasured diamonds are circulating here.  Lastly, the number of private buyers is increasing.

Q: What’s the GIA standard grading process of fancy-color diamonds?

GIA: An outstanding color diamond is very rare and the quality is determined on the density of color and the attractiveness of color. Different from using the 4Cs to grade colorless diamonds, GIA uses a distinct grading system to grade color diamonds. It starts grading from the hue, for example, yellow, and then if there’s a bit of greenish blemish in it, this will be called a greenish yellow diamond. Then it’s the density of the color, from faint to fancy intense, fancy vivid, etc. GIA will also grade if the color is natural. GIA color diamond grading report will include color grades, whether the color is natural, carat weight, clarity and clarity diagrams.