Last week, I attended the Argyle pink tender in New York City as a guest of veteran colored diamond dealer Alan Bronstein of Aurora Gems.
For those in need of a refresher, each year the tender sells the best pinks—and a smattering of reds—produced by the Perth, Australia–based Argyle mine. Through a quirk of nature, the Rio Tinto–owned mine unearths not only smaller stones, but a generous amount of colored diamonds, particularly pinks. (It’s produced reds and blues, as well.) Of course, with colored diamonds, generous is a relative term; these diamonds remain, and will likely always be, extraordinarily rare. In the 30-year history of the Argyle mine, only around 1,650 pinks have ever been sold at the tender, says Josephine Johnson, manager, Argyle pink diamonds.
Going to the tender gave me some insights into how these stones are produced and marketed.
– How are these stones priced? It’s complicated.
For many dealers, the best thing about fancy colored diamonds is they are so rare they lack a price list, which means more margin. But that also makes dealing in them challenging. They can be hard to value since there are so few reference points.
The tender does have reserves, and, for the last few years, has provided buyers with estimates based on past prices. (These are ultra-confidential—I even had to turn off my tape recorder when they were discussed.) And while Argyle doesn’t publish its final results—even to participants—it will give losing bidders a ballpark sense of how their bid stacked up against others. (There has never been an actual tie at the tender, Johnson says, but “we have had people miss out by a few dollars.”)
“It’s difficult to predict prices year to year,” admits Johnson. “It’s like an important piece of art. The price can change dramatically. It’s about the appreciation of the piece, what the buyer falls in love with, the appreciation of its rarity.”
When Argyle has compared the behavior of pink diamond prices to that of other commodities, it’s found they behave very similarly to fine-art prices (and are not that closely correlated with white diamond prices). “You have seen a very nice appreciation without the volatility you have seen in rest of the diamond market,” Johnson says.
Following the 2008 financial crisis, there was a greater interest in pink diamonds as a store of value. But Argyle doesn’t necessarily welcome that kind of talk.
“They are not liquid like stocks and shares,” Johnson says. “I don’t think it’s healthy when there is a lot of overly speculative discussion about the value of the stones. You do need to understand them. Yes, they are great stores of wealth, but it’s a very specialized field. You do need to know about the diamonds to make an informed purchase.”
When calculating how much to bid, Bronstein says past prices don’t matter to him. “I never come in looking at anything with any relevance to what has happened in the past,” he says. “In order to know what anything is worth, you have to have a little knowledge of what the market is doing and what similar stones that exist in the market are worth.”
Whether the stone is marketable means a lot. If Bronstein has a buyer in mind, he will pay more. Argyle also adjusts its estimates based on possible end buyers. If a diamond seems like the kind of a stone a retailer like Harry Winston might sell, that will factor in the estimate (and reserve).
– Who wants them?
The people who have the money, and inclination, to own these diamonds are a select group—and their numbers are almost as few as the gems themselves.
“I do know of avid collectors who love them and pursue collections,” says Johnson. “They have suites of all the colors.” New York City is known as a collector’s market. “A lot of the diamonds that end up here never leave their box,” she says.
Some of them do get resold, but less so lately. “With the end of mine life approaching there are people who have seller’s remorse because they don’t know if they can replace them,” Johnson says. “They are becoming quite sticky.”
– The names matter.
The company has been naming the stones since 2008—for instance, this year’s “hero stones” are dubbed the Cardinal and the Plume. A team now generates lists of ideas for possible names.
“Usually there is something about the diamond that evokes the name,” Johnson says. “It sounds really trite, but they do all have different personalities and they do really speak to you.”
But this is more than a fun exercise; the names now carry some economic weight.
“Everyone is naming their diamonds now,” Bronstein says. “But when Argyle puts a name on it, that has clout. They give it a push with its provenance and pedigree.”
– There is no substitute for seeing them up close.
Even with high-res photography and digital imaging, most dealers want to view the gems face-to-diamond-face.
Every dealer has his own method for viewing them. “Some people come in and close the curtains,” Johnson says. “Others go up to the light.”
To get a better sense of the stone, many dealers try to separate it from the rest of its similarly hued brethren. For instance, the Cardinal—a 1.21 ct. fancy red—really won Bronstein over when he examined it.
“This is one of the best red diamonds I have every seen,” he says. “Away from the rest, under the loupe, it really shows its true face. That’s a great stone.”
Courtesy Rio Tinto
– They are all given two grades.
The diamonds received two grades—one from the GIA, and the other from Argyle, based on the mine’s more extensive color scale. In the U.S., the GIA scale is most important; in other markets, people look to Argyle.
In the end, though, the mine hopes the diamonds do the talking. “We love to see when people get so excited about the diamond and don’t check the cert,” Johnson says.
– They are cut by a select group.
The gems are cut by a select group of locals, who have done the polishing since the beginning. “They have got a bit of a signature,” says Johnson. “I know who did what.”
– It’s tough to get jaded at the Argyle pink tender.
The Argyle tender features some of the rarest and most beautiful gems in the world—not something you see every day. Even veterans dealers always leave impressed.
“I have never been disappointed with an Argyle tender,” Bronstein says. “I have never seen a tender that is not a resource for the most beautiful and rare pink diamonds. Everyone wants to be a winner, but from the perspective of being in the presence of so many beautiful stones, it is just one of the honors of being in the diamond business.”
“I feel totally blessed,” says Johnson. “We are part of a big Rio Tinto company, but there are only 16 of us in Perth, we are a very small team. So when the rough comes in we look at it, and we get very excited about the ones that have special potential. And sometimes when the polisher finishes, we will all pile in there and look at the stone, and it’s fabulous.”
“It’s really special,” she says. “I can’t imagine what I’d do after this.”Follow JCK on Instagram: @jckmagazine
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