Top traditional investment performer of the vivid yellow category
Most categories of yellow diamonds are considered more of an ornament. Hence they are more sensitive to end consumer spending, and thus more reactive to economic swings.
Since yellow diamonds are the most commonly known colour among natural coloured diamonds (and for a good reason), we decided that preparing a guide for our clients on how to specifically buy them is a must.
Natural coloured diamonds are extremely rare. Only one out of approximately 10,000 carats is a natural coloured diamond. Among the rainbow of colours you will find the romantic pinks and purples, the dazzling blue, the intriguing green, the energetic orange and off course the shiny and brilliant yellows.
Within the niche of colour diamonds yellows are the most common. Estimations are that they make up to 60% of the coloured diamonds. However, putting things in perspective, it means that approximately 1 out of 16,500 carats that are mined is a yellow diamond - so yes, yellow diamonds are rare.
Yellow diamonds are a family of colours on their own. Coloured diamonds often don't come in a pure form but rather as a combination of colours.
When the GIA (Gemological Institute of America) grades a coloured diamond it states the exact colour description. This colour description can be comprised of two and even three colours plus the intensity level.
The most common colour combinations found in yellow diamonds are: Brown Yellow, Green Yellow and Orange Yellow. The last colour that is mentioned in the colour description is considered the dominant one.
This means that if a diamond is graded as a green yellow diamond it is a diamond that is yellow and has a secondary tone of green in it while a yellow green diamond is a green diamond with a secondary tone of yellow. It is important to understand that between the two diamonds mentioned here there is a vast difference in appearance, in rarity and in pricing.
Most people looking for yellow diamonds do not understand or look for diamonds with secondary hues. Because colour combinations in coloured diamonds is a very complex matter.
One of the many attributes we consider when we grade and evaluate a diamond that are outside the 4Cs is fluorescence. Most people know that fluorescence is considered a flaw and reduces diamond prices. This is true in white diamonds but not exactly true in coloured diamonds with the exception of yellow diamonds. Unlike in other coloured diamonds, fluorescence does reduce the value of yellow diamonds, even dramatically.
Pure things such as diamonds with no fluorescence are rarer and therefore cost more. Secondly, fluorescence in yellow diamonds is usually blue. If you look at a yellow diamond with strong blue fluorescence it does seem to affect the colour but not always.
Faint fluorescence reduces the price a bit (up to 10%), Medium or Strong reduces a lot (even 15% - 30%).
While Pink and blue diamonds were unaffected over the GFC, yellow diamonds suffered a 45% decline in value between January 2008 and January 2009 as most retail consumers lowered their spending and demand plummeted and supply remained steady.
However, the following year, yellow diamonds increased 52% in value and continued to increase in value to fully recover their pre-recession value by January 2012. They continue to perform consistently, and have outperformed many traditional investments, particularly in the top Vivid Yellow category.