Rapaport Magazine

The Flawless Factor

D Flawless diamonds regularly make headlines, but how rare are they really?

By Ettagale Blauer
The D Flawless term is tossed around so easily, it would seem to be a stone that anyone with enough money could buy. But D Flawless (D, FL) and D Internally Flawless (D, IF) diamonds are nearly as scarce as unicorns. D, FL is the most transparent and perfect of diamonds — no visible flaws at 10-power magnification and no discernible body color — and because of those qualities, it represents the very pinnacle of the diamond pyramid. D, FL diamonds add glamour and excitement to the diamond industry and give buyers and sellers an almost unattainable benchmark for quality, beauty and desirability. 
   A stone earns the Internally Flawless grade, referred to as IF, when it has minimal flaws at the surface, scratches and other marks that come with wear. These slight imperfections are easily polished away and don’t have a significant impact on the clarity of the diamond.
   The value of diamonds of this color and clarity is magnitudes greater than stones with ever so slightly less exalted diamond grades. According to dealers, the difference in price between a D color and an E color stone of the same clarity and weight is 30 percent to 35 percent. This is why Benjamin Goldberg, chief gemologist of William Goldberg, the New York City company founded by and named for his grandfather, says, “You go for the D, FL rather than lesser clarity at more weight; the price difference demands this.”
   Just below these two universally coveted D, FL and D, IF grades is the designation VVS1, indicating a stone with slightly more imperfections than D, IF but still with very, very slight imperfections. A lab may add the magic word “potential” to its diamond-grading certificate for a VVS1 stone, which indicates that by a bit of repolishing, perhaps removing just a few points in total, the stone could be upgraded to IF. If requested, the Gemological Institute of America (GIA) and other labs will provide working diagrams, indicating where these flaws are located, as a guide to repolishing.
   According to Saul Goldberg, son of William Goldberg and president of the firm, the market is “male driven” — and male shoppers want only the best for bragging rights — “it’s easier to sell the best.” For this reason, cutters will keep working the rough until they get that D, FL clarity grade — assuming it’s there, somewhere, in the rough material. That’s why, says Goldberg, “it may be easier to find ten pear-shaped D, IF than the same number of similar stones graded E, VVS1.”

How Many Are There?
   Just how many D, FL and D, IF stones are out there? The answer is an educated guess, based on interviews with experts across the industry, starting with GIA, the lab that grades the greatest number of stones every year, and therefore the lab most likely to see and grade D, FL and D, IF stones.
   John King, chief quality officer for GIA, says: “GIA takes in half a million stones over 1 carat annually; less than one-half of 1 percent of those stones would be D, IF or D, FL.” Do the math and you get 2,500 stones. In total, GIA’s nine labs globally take in about two million stones of all sizes to grade annually, including about 1.5 million stones under 1 carat. GIA accepts stones as small as 15 points to 20 points for grading. According to GIA’s estimates, the percentage of D, IF or D, FL stones under 1 carat is about double that of the larger stones, closer to 1 percent of the total submitted. King says clients are willing to pay to certify even small stones because the D Flawless grade has become a branding tool and a way to market the diamonds.
   Across the ocean at the Gübelin Gem Lab in Lucerne, Switzerland, where a much smaller number of diamonds are graded, the percentage of D, FL and D, IF is around 20 percent to 30 percent, although the absolute number of stones is miniscule, no more than 50 to 100 in a year, says Pierre Hardy, one of the lab’s gemologists. “Our reputation attracts more of the high-end goods,” he notes, especially from overseas clients. While local European clients may send in smaller stones to grade, “U.S. and other customers send only their most important stones to Gübelin.” Hardy notes that the lab also certifies stones submitted by its sister company, the Gübelin jewelry brand, and says 5 percent of those diamonds are D, IF. Much of the lab’s work is focused on colored gemstones, as well as fancy color diamonds.
   The American Gem Society (AGS) reports that one-quarter of 1 percent of the stones it grades fall into the D, FL or D, IF category. At AGS, as at most labs, any large stone sent for grading is examined by three people and they must be 100 percent in agreement on the grade. If they cannot agree, the stone goes to other graders until there is unanimous agreement.
   Peter Yantzer, executive director of AGS Laboratories in Las Vegas, and formerly with the GIA in Los Angeles, says D, IF stones come in “fairly frequently.” Even so, he adds, a diligent search of the AGS database since the AGS lab opened in 1996 found that slightly less than one-quarter of 1 percent of all the stones the lab has graded were D, IF or D, FL. This is a very exclusive club, indeed.
   When asked how many D, FL or D, IF stones come through his lab, Jerry Ehrenwald, president of IGI-USA, says it varies, but notes that “In the past 30 days, we’ve had a 5-carat D Flawless and a pair of 4-carat newly cut D Flawless pear shapes come in.”

At Auction
   While the number of D, FL and D, IF stones sold at auction is tiny — Christie’s and Sotheby’s each list only about 25 to 30 stones, 2 carats or above, sold in all their venues worldwide for each of the past four years — their impact on the market is huge. Three recent headline grabbers show this category at its glittering height. The 76.02-carat D, IF cushion-shaped Archduke Joseph diamond, cited as a Golconda stone, sold in November 2012 at Christie’s Geneva for $21.5 million. A 101.73-carat pear-shaped D Flawless set a record as the largest stone with this grade ever sold at auction when it found a buyer in May 2013 at Christie’s Geneva for the price of $26.7 million. That record, in turn, was shattered in October 2013 in Hong Kong when Sotheby’s sold a 118.28-carat D, FL oval-cut diamond for $30.6 million.
   Also included in the auction high-sellers are the occasional VVS1 and even VVS2 if they have the “potentially flawless” notation from the grading laboratory. That designation virtually guarantees the stone will earn the higher grade if it is repolished according to drawings provided by the lab. Dealers say the price for such stones at auction is comparable to IF stones, so sure are they that the stone will be upgraded once it is repolished.
   While dealers bring their years of experience to deciding what to spend at auction, most of the buying today is done by private clients, who often rely on certificates to fill in the gaps in their knowledge. This is an unfortunate trend, according to Henri Barguirdjian, president of Graff USA, who notes that “You can see two stones in the same auction — one is a work of art and one is not. That can be appreciated only by people looking at the stones themselves. Some people look only at the paper.”


Finding The Best
   Although diamonds were known in the Golconda region of Hyderabad, in south-central India, as far back as the fourth century B.C., historically, the most limpid, pure white D, FL or D, IF diamonds were found in alluvial diggings in the area around the fifteenth century. For a long time, this region was the only known source for diamonds, and particularly for the remarkably clear, type IIa stones that bear no trace of nitrogen. The Golconda designation remains a significant and valuable selling point to this day,
   In the twentieth and twenty-first centuries, D, IF and D, FL diamonds were produced by the Premier mine in South Africa, renamed the Cullinan Mine on its 100th anniversary in 2003. Since it reopened in 2004, the Letseng mine of Lesotho has produced D color diamonds in enormous sizes, including a 550-carat rough named Letseng Star.
   According to a statement from Graff Diamonds in London, which purchased and cut the Letseng Star, these stones are “analyzed in much the same way as a surgeon studies a brain in an MRI machine. Hundreds of radio images are taken of the stone in cross section in order to compile an accurate map of the impurities and stresses in the stone.” The computer is able to journey inside the diamond model, calculating the maximum possibilities of every cut while avoiding each flaw.
   While the supply of D Flawless and D Internally Flawless stones remains small, the number of clients clamoring for them is constantly on the increase, assuring that competition within this niche market will intensify and continue to make headlines around the world.
   “Our problem is supplying the demand, which is going through the roof,” says Barguirdjian. “When we started Graff USA almost 13 years ago, we carried a much larger inventory of these stones than we do today. The demand has been exceeding the offer year after year.” Barguirdjian cites a remarkable statistic in explaining that demand from the world’s wealthiest: “Seventy percent of the top 1 percent made their money in the past ten years. Art, real estate and diamonds are the three refuges where people can park their money.”

Precious Few
   In spite of this small number of D Flawless and D Internally Flawless diamonds — or perhaps because of it — these diamonds have become the glittering stars of the auction scene, the most visible stage for the buying and selling of fine, rare diamonds.
   They’re also the stars at very high-end retail jewelers, such as Jacob & Co., located on New York City’s elegant 57th Street. Chris Del Gatto, Jacob & Co. chief executive officer, sums it up: “For our clients, owning the best is like having a blue chip stock. D Flawless diamonds are never easy to find but that’s the definition of something rare. A trained eye can see the difference between a D and an E color. The D is just beautiful.”

Article from the Rapaport Magazine - November 2013. To subscribe click here.

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