Rapaport Magazine

Jittery in Geneva

Privates prevailed as dealers took a back seat at the Geneva jewelry auctions.

By Elyse Zorn Karlin
RAPAPORT... How quickly things can change. The November jewelry sales in Geneva came on the heels of devastating financial news around the world and stock markets that were skidding downward. So it is no surprise that a number of the top lots at both Sotheby’s and Christie’s auctions failed to sell. Perhaps the wonder is that Sotheby’s managed to attract buyers for 60 percent of its lots and Christie’s, for 50 percent.

As recently as May of this year, Christie’s hit a world per-carat record for the sale of the largest fancy intense blue diamond ever auctioned. The 13.39-carat rectangular, mixed-cut stone, bought by a private buyer, achieved a price of $8.8 million. In the November 19 sale at Sotheby’s, a fancy deep blue briolette flawless diamond of 10.48 carats, estimated to sell for $6 million to $9 million, did not attract a buyer — although it did receive one bid — nor did a 1.92-carat rare, fancy red diamond with a presale estimate of $2.5 million to $3 million.

Even before either sale began, the jittery nerves of potential buyers was palpable. Those in the diamond trade appear to be holding back and waiting to see when the worldwide financial problems will stabilize. The mix of buyers is now tipped in favor of privates dominating. David Bennett, Sotheby’s jewelry chairman for Europe and the Middle East, noted that out of the nine top lots sold, six of the purchasers were private buyers.
Eric Valdieu, senior vice-president of Christie’s Switzerland, said there were noticeably fewer Russian buyers at the auction held November 20, while European bids remained fairly strong. He also felt there was less activity from Far East bidders and indicated that the Hong Kong sale on December 2 should be watched closely. In addition, buyers from India appeared more active than in the past.

According to Valdieu, “Diamond dealers are being extremely cautious and are currently in the market only for bargains.” He believes that the direction of the market for diamonds may not be clear until mid–2009. In addition to taking a “wait-and-see” attitude about where the diamond market is heading, he pointed out that many in the trade may simply lack the cash or ability to finance purchases until the financial markets loosen up. Valdieu also stated that because diamond prices surged upward so steeply in a relatively short period of time in the early months of 2008, the market was due for a correction, regardless of additional economic factors.

Sapphire Sets Record
A cushion-shaped Kashmir sapphire of 42.28 carats set a world record of $3,489,167* against a presale estimate of $2.9 million to $3.8 million in the Christie’s sale. The strongest result for a diamond at the November auction was the sale of a Van Cleef & Arpels ring featuring a rectangular cut, 22.90-carat, D color, potentially flawless diamond selling for $2,042,500 — coming in below the presale estimate of $2.1 million to $2.9 million.

The other good news of the Christie’s sale was a rectangular cut fancy intense yellow SI1 diamond ring of 63.22 carats that sold for $1,295,833 to an American private buyer, and two Harry Winston rings. One of the rings had a pear-shaped D color, VS1, 12.95-carat diamond and brought $1,202,500. The other, with a marquise cut H color, potentially flawless diamond of 13.93 carats, sold for $502,500.

A number of other jewels with magnificent stones and high hopes pinned to them were not purchased during the sales at either auction house, while natural pearls, colored stones and signed vintage pieces fared reasonably well. At the Christie’s sale, The Lothian Emeralds, an elegant fringe necklace in the grand Napoleon style of the First Emperor, and with the provenance of having been owned by the Marquis of Lothian, was estimated at $1.5 million to $2.5 million and remained unsold. An antique diamond choker created by A.E. Köchert, the Austrian crown jeweler founded in 1814, attracted a buyer at $200,716, but a nineteenth-century sapphire and diamond suite of tiara, brooch and necklace, estimated at $420,000 to $590,000, went unsold. Nevertheless, Valdieu said that “although the level of prices is 20 to 30 percent below what it was in the spring, there was healthy bidding in the room,” resulting in a sale that totaled $22.6 million — versus a sales total of $56.9 million last May.

The third important diamond that failed to sell at the Sotheby’s sale was the Lesotho I, an emerald-cut diamond of 71.73 carats. This is the largest stone cut from the Lesotho, a spectacular 601-carat rough diamond. The stone holds a rare provenance for a diamond of its size and importance as it remained in the collection of the present owner from the time it was purchased from Harry Winston, who owned the rough and had it cut. Also cut from the same rough was the Lesotho III, a marquise-shaped diamond of 40.42 carats given by Aristotle Onassis to Jacqueline Kennedy for their engagement. The Lesotho I carried an estimate of $3 million to $5 million. However, it should be noted that Bennett reported that postsale negotiations were likely to result in the purchase of the fancy blue briolette diamond and the Lesotho I.

Transitional Times
Bennett stated that “this is a very difficult market.” Sotheby’s November Geneva sale totaled $14.8 million, down significantly from the May sale, which brought $57.1 million.

Bennett’s assessment of these results is that “the sale was assembled in the wake of a near-all-time record Geneva Jewels sale this past May. As we can see, the diamond market is currently in a period of transition.”

Bennett said that he will look to the sales in New York and Hong Kong to get a better reading on where the market is heading, which he thinks will be clear by the end of the year. But he noted that, “gemstones and jewelry have ‘portability.’ In times of recession, there are many who will put their money into stones.” He does not believe that the present situation should be viewed with negativity and notes that although there is caution being exercised, active bidders were participating in the Geneva sale, despite world events.
There were two bright stars in diamond sales at Sotheby’s. The first was a fancy pink, 8.02-carat diamond ring that sold for $1,321,107 to a private buyer. The second, a Golconda type, 11.70-carat, type IIa, D color diamond, set in a ring by JAR, which sold for $996,319 to a European private buyer. Bennett pointed out that when jewels as rare as these come on the market, they are very salable despite the economicturmoil. “These are now-or-never jewels...they are not going to come up again,” he commented.

The Sotheby’s sale also succeeded with a pear-shaped diamond ring, D color, VVS1 clarity, type IIa diamond weighing 10.50 carats, mounted in a Harry Winston ring, which brought $857,125.

Bennett says that for the short term the market will be unpredictable and added a reminder that the jewels in the sale were taken in, and estimates set, before anyone could have anticipated the precipitous decline of the world financial markets. But, he stated, “the markets will settle down. And people will always want diamonds...it is part of our culture!”

*All prices include buyer’s premium.

Article from the Rapaport Magazine - December 2008. To subscribe click here.

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