Eden Rachminov, who is the founder and managing partner of Rachminov Diamonds, is considered as one of the world’s leading experts in fancy color diamonds, as well as the most ardent supporter of these gems.
Rachminov published ‘The Fancy Color Diamond Book’ in 2010 and launched his second book, ‘Fancy Color Diamonds - The Pricing Architecture’ in June 2016.
He is the founder of Fancy Color Research Foundation (FCRF) and currently serves on the board of the organization.
Here, in an interview with Rough&Polished, Eden Rachminov talks about the industry; his books; the FCRF and comes forth with his opinions regarding various aspects of color diamond trade.
Some excerpts…
According to you, in which consuming market are natural fancy colored diamonds most popular? In demand terms, what is your forecast for color diamonds in comparison to white diamonds?
The High Net Worth Individuals travel the world frequently and thus the purchasing location of colored diamonds is very fragmented. We do know however that the majority of buyers are Asian, whether the purchase is made in New York, Paris, Vancouver or Shanghai. If I may, the question shouldn't be "in which market" rather "who is the main buyer (the profile)".
The diamond industry is currently experiencing a moderate recession compared to the one of 2008. The industry follows a cycle and in no doubt demand will slowly climb back up. Compared to previous recessions, the decrease in demand and in turn in prices has been very moderate. In colored diamonds the prices have been more stable than colorless diamond prices. I recommend you refer to the Fancy Color Diamond Index to look at color diamond price behavior over time.
Please spell out the demand pattern for colored diamonds in the last few decades? Which country/ies have shown good potential to grow in color diamond consumption?
In the past (approximately 15-20 years ago) the majority of demand came from the US, Europe and the Middle East. In recent years, there is continuous growing demand from Asian buyers.
Prices of fancy colored diamonds have been on the rise globally. Where do colored diamonds stand in terms of being an investment vehicle? Are investors now looking at colored diamonds to invest?
The investment community has realized the investment potential of fancy color diamonds years ago, especially due to the rarity factor. Furthermore, investors today are seeking more stable investment vehicles and fancy color diamonds answer that need.
Asians are supposedly major investors in colored diamonds, while the westerners are slow in showing interest in them. According to you, what could be the reason? Lack of promotional activities could be the reason?
As far as we know there is not much change in the demand for fancy color diamonds from Western buyers. However, there is continuous growing interest from Asian buyers and since there are so many Asians HNWI (high net worth individuals), that growing number is well noticed.
It is said that investors are not very keen on colored diamonds as they are difficult to sell due to the premium prices of the stones. Instead, it is said that white diamonds are preferred, as they are easier to liquidate when necessary. Your take?
Completely untrue. Colorless diamonds are more abundant and the price behavior is relatively volatile. When liquidating colorless diamonds within the diamond industry in many cases an investor will most likely have to sell the diamond below its cost. In fancy color the situation is different, most investors could sell with a profit any fancy color stone they purchased in recent years (see image of the FCDI attached comparing colorless diamonds price behavior and the fancy color aggregated price behavior - blue, pink and yellow in all saturation and sizes).
What steps are you taking to retain consumer confidence besides ensure transparency by selling ‘certified’ stones. What is the secret behind your company’s success?
My company's motto and ongoing practice is to educate our clients on fancy color diamonds, how to market them and present them to the end consumer. We provide on-site training as much as needed. I most recently published my second book, Fancy Color Diamonds – The Pricing Architecture shedding light on the evaluation process of fancy color diamonds. Highlighting the important features to consider when evaluating a stone and explaining what should be ignored, using a much broader scope than the basic 4 Cs. Another important organization which was actually established to increase consumer confidence is the Fancy Color Research Foundation which I am proud to sit on its board of advisors. The FCRF strives to implement transparency, fair-trade and high ethical standards to the fancy color diamond wholesale and retail segments, as well as enhance consumer and retail confidence through research and education. Not only does the FCRF invest heavily in research and education it also donates any proceeds to the Make a Wish Foundation.
Currently, which color diamonds are selling fast? What would be your recommendation to a new investor in color diamonds? What aspects should he be careful about before investing in a high-end color diamond?
This really depends on one’s budget and personality. Investing in yellow diamonds is relatively more conservative but they generate a lower return. Investing in blue or pink diamonds will require a larger budget and more patience.
What is important to remember is that the unexperienced investor tends to refer to the 4Cs as the defining criteria which is a typical mistake. In fancy color diamonds there are a few parameters to consider that are not presented on the diamond report but have great impact on the value of the diamond. There is a detailed explanation regarding this subject in Fancy Color Diamonds – The Pricing Architecture book.
Do you think lab grown diamonds are a threat to natural diamonds? Artificially colored diamonds / treated diamonds are also being sold fraudulently. What steps should be taken to curb such practices? Your comment…
Not really. The production of lab grown diamonds is continuously advancing and becoming less and less costly and thus the product is becoming less of a luxury. I believe that the affect lab grown diamonds will have on natural diamonds is less than the affect a high-end fashion brand "fake" has on the originals. And in the case of fancy color diamonds, even less. The most remarkable aspect of fancy color diamonds aside from their beauty is their rarity, so artificially colored diamonds are even less of an issue.
All that is needed is a diamond report from a respected lab certifying that the diamond and its color are untreated – thus natural.
Courtesy of "Fancy Color Diamonds – The Pricing Architecture" by Eden Rachminov
Color diamonds have shown immense inflation in prices since the ‘90s, where do you see demand for color diamonds/jewellery, say 10 years down the line?
If supply of fancy color diamonds will continue to decrease and the number of HNWI will continue to grow than prices will definitely continue to increase.
I hear that your ‘The Fancy Color Diamond Book’ is practically a reference book for color diamonds. Can you elaborate more on this book and tell us how the idea to publish it came about?
I'm assuming you are referring to my second book - The Pricing Architecture - which was written to serve as a reference book.
Presently, many retailers selling fancy color diamonds employ a relatively narrow professional vocabulary derived from the colorless diamond world. A thorough read of this book and its Appendix will enable the reader to evaluate any fancy color diamond using a much broader scope beyond the basic four Cs and embrace a far more accurate conceptual pricing valuation. It will also provide advanced selling and talking points to enhance the sales process and raise consumer confidence. The idea to write such a book was a result of continuous questions asked by my clients which made me realize that as professional as they are, they lack deep understanding of the evaluation process of fancy color diamonds and that needed to be addressed.
My first book, The Fancy Color Diamond Book was written also with the goal of educating the reader on the important aspects of fancy color diamonds. It was initially published in 2010, reprinted in 2011 and has actually sold out last year.
Also, The Fancy Color Research Foundation’s ‘Fancy Color Diamond Index’ seems to be the best thing that has happened in matters related to color diamonds in recent years. More so, since the prices of color diamonds have been an enigma to the buyers who are looking to invest. Can you run us through this price index briefly for the benefit of our readers?
The Fancy Color Diamond Index (FCDI) which is updated quarterly, shows fancy color diamond price behavior over time for pink blue and yellow diamonds in all saturations and in various sizes.
The FCDI’s main benefits are:
- Estimate the present value of an historical purchase.
- Provide in-depth information for a client who is curious about the investment factor including a comparison with other indexes
Can you tell us about your company Rachminov Diamonds and its activities for the benefit of our readers? From where do you source your diamonds? Do you trade as well as manufacture color diamonds?
Rachminov Diamonds 1891 is focusing solely on fancy color diamonds. We service mainly the high-end jewelry brands and jewelers. We source and manufacture the higher end goods in a very wide range of sizes and colors.
We source rough diamonds directly from mines and tenders in Africa which we manufacture but we also purchase polished on the open market.
Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough&Polished
