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Tracking the D-Flawless

Dec 3, 1999 10:53 AM   By Gail Brett Levine
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By Gail Brett Levine

A s we greet the future, symbolized by the much heralded millennium, we also have the impulse to look back over the past decades of the twentieth century and review the progress of history. The jewelry industry is no exception to this phenomenon, and tracing diamond pricing records is one way of gaining that historical perspective.

We will loosely divide the century into periods, using the one-carat D flawless diamond as a touchstone to weave through the decades.

Diamond Awakening, 1900 to 1920

An abundance of diamonds yielded by new discoveries in Africa and Brazil allowed the average person to become a diamond owner, a privilege previously reserved only for European royalty and American aristocracy. De Beers had gained firm control over diamond distribution and began to establish an organized world market.

The most famous blue diamond, firmly entrenched in the American memory, is the Hope Diamond, which started its twentieth century journey in November, 1901, when it was valued at 18,115 British pounds to satisfy the personal debts of Lord Hope. In June, 1909, diamond dealer Roseau sold it to Cartier who, in turn, sold it to Evelyn Walsh Maclean for $80,000 in 1911.

Collector stones were sought after by the wealthy and influential, but at the same time, a “good one-carat perfect” sold for $100 (this was before GIA nomenclature) according to Jewelers Circular Keystone Centennial Issue, June, 1969.

Diamond Fluctuations, 1920 - 1929

The 1920s in the United States was a period of economic growth and expansion until the stock market crash of 1929. The preceding Edwardian era and the Art Deco period relied heavily on the use of diamonds in a white on white pattern (diamonds in platinum) in all sorts of jewelry uses. As a result, prices began to rise. The average person was able to accumulate diamonds due to the development of mass production cutting techniques and more diamond deposit discoveries.

By the mid to late 1920s, the one-carat “blue white perfect” (D flawless) was up to approximately $500 per carat.

Depression and War, 1929 to 1945

Economies were recuperating from the crash and the winds of war were blowing in Europe. During the actual war years, activities in the gemstone and metal industries were being diverted to the war effort. The buying and selling of diamond jewelry was not on the collective consciousness.

Economic Expansion, 1946 to 1960

There was a focus on rebuilding Europe and Japan and United States industries were supplying the world with goods and services. Due to this expanded economy, personal wealth was increasing and diamond prices rose. In 1948, the slogan “A Diamond is Forever” turned the diamond into a commitment with which every couple declared their engagement.

During the 1950s through the 1960s, jewelry firms developed into large corporate entities: Zales, Gordon, Sterling. Chain stores grew rapidly, as did family jewelers. Diamond distribution became really big business due to mass production techniques and new business management applications.

Interestingly, Joseph Schlussel, Editor of The Diamond Registry Bulletin, recalls his first edition in 1969 where he mentions that “top quality” one-carat diamonds in Paris were selling for $1,600 per carat. Even though the GIA terminology was established, it was not universally used as it is today. This “top quality” in most cases equates to clarity grades F, IF and VVS, and D to F color diamonds.

Investment Era, 1970 - 1982

Individuals were accumulating money and were looking for places to invest. Investment opportunities in hard assets had previously been reserved only for the wealthy. Now, suddenly, these appealing avenues were opened to the public. Investment buying of diamonds and precious stones became rampant and a D flawless one carat topped at $63,000! The Rapaport Diamond Report, created in 1978, became the trade pricing bible and more and more diamonds were being sold with lab certificates.

In March 1981, David Federman, then editor of Gemstone Price Report, listed an 18-month price history for a D flawless one-carat diamond:

• September 14, 1979 $30,000 per carat

• March 5, 1980 $62,000 per carat

• February 20, 1981 $41,000 per carat

By 1982, the coveted D flawless had fallen to $18,800 per carat listed by Rapaport Diamond Report, December 31, 1982. Once the investment bubble burst, the D flawless one carat plummeted to an all-time low of $7,000 per carat according to Howard Rubin, who was then Vice President of Leer Gem Corp. Many investment companies specializing in diamonds went bankrupt and the jewelry trade was left to take the blame for not buying back the merchandise it had sold.

During this period of economic upheaval, the auction market reflected the same vagaries as the marketplace. In the realm of famous colorless diamonds, the Jonker IV has a rich auction history, weighing in at 30.70 cts, with D VVS2 quality. A pre-investment year sale price at Sotheby’s October, 1975, was $570,000. At the post-investment gemstone era, the Jonker IV was sold again at Sotheby’s December, 1987, sale for $1,705,000. Be aware that this was after “Black Monday” on the stock exchange!

Sustained Growth, 1985 to 1990

Prices began to rise again in the mid 1980s, and they continue to steadily rise. In 1988, Argyle Diamonds sold a 1.51-carat round diamond described as intense purplish red for $800,000 per carat to an unnamed buyer in a private sale in its Antwerp office. Christie’s New York in its April, 1987, Magnificent Jewels auction, sold a 0.95-carat red diamond for the highest per-carat price ever — a whopping $926,315 per carat!

Also, in 1988, the Hope Diamond was graded by a GIA GTL team as VS1 Fancy Dark Grayish Blue. When you reflect that in the Christie’s October, 1999, Magnificent Jewels sale, a ring with a 4.80-carat pear shape fancy dark bluish gray diamond surrounded by white diamonds, sold for $200,500, it boggles the imagination to figure the possible monetary value the 45.52-carat Hope Diamond would have today if it was to be brought to the auction marketplace.

The Technical/Scientific Era

Today, the one-carat D flawless is quoted at $16,500 in the current issue of Rapaport Diamond Report, and DeBeers is tightening its distribution policy. Branding and collecting will become more of a factor and it remains to be seen if investing will again become a consideration.

Looking forward to the 21st century of diamond dealing, we must evaluate the effects of new synthetics, as well as treatments which are now entering the market, for both fancy color and colorless diamonds. Until now, diamond substitutes and treatments have had little effect on natural diamond prices. But during the last few years, we have been affected by tremendous technological innovation and change. It will be interesting to see if these challenges will have any effect on the natural diamond business. This past century has turned the diamond into the staple of the jewelry industry, and I believe that, in the century now opening, it will continue to be so.
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Tags: Argyle, De Beers, Economy, Flawless Diamond, GIA, Japan, Jewelry, Production, Sotheby's, United States
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