Building an Investment-Grade Jewellery Collection

November 22, 2023

By JILL NEWMAN

“When a Middle East royal recently let it be known that he was looking to invest upwards of $100 million in gemstones, word spread quickly and soon more than one well-connected dealer was jetting to the region with heavily insured valises. What might be most intriguing about this royal’s request is not the nine figures at play or even that all that cash was to be stashed in diamonds, rubies, and the like, but rather that this kind of high-dollar venture is not uncommon; in fact, it’s a growing trend. Top brokers say that since the start of this year, which has been marked by chaotic global events, more and more clients have been looking to invest in hard assets—namely jewellery and loose stones.

Jewelry, after all, has long been a safety net. When currencies were devalued and stock markets plummeted, a top-quality diamond or other precious gem remained global currency. That still holds true today. “With bank and crypto failures and inflation, I definitely see more interest from clients who are thinking of jewelry as a store of wealth,” says Lee Siegelson, the current proprietor of the century-old New York dealer specializing in vintage pieces and rare stones that bears his family name.

When someone has tens of millions to invest, historically experts have advised putting it into fancy-coloured diamonds and untreated rubies, emeralds, and sapphires—essentially the equivalent of blue-chip stocks. For those who have followed that advice, relax: Their stability hasn’t changed. But as the number of billionaires expands exponentially and people who were never serious collectors seek to diversify their portfolios with jewels, the most prized gems are becoming scarcer.

And that’s driving a shift in the market. New opportunities are emerging, and new collectors are embracing a very different approach to jewels than that taken by their parents. They still want rare pieces, of course, but they’re after bijoux they can wear and enjoy, not banish to a vault.

A notable example of this change in attitudes was the record-breaking sale of the Estrela de Fura ruby, which fetched $34.8 million at Sotheby’s in June. Unquestionably magnificent with fiery-red brilliance, the 55-carat sparkler was the largest gem-quality ruby ever to hit the block. But it had been discovered in a Mozambican mine, which raised eyebrows among the cognoscenti.

Previously, for a ruby to be considered investment-worthy, it simply had to be unearthed from the ancient Mogok Stone Tract of Myanmar (formerly known as Burma). But the reality today is, if you want a sizable, untreated, pigeon’s blood (a designation that describes the richest red hue) Burmese ruby or a pair of 10-carat D-flawless diamond earrings from India’s historic Golconda mines, known for producing the world’s purest stones, plan to spend months (or years) tracking them down—and then expect the prices to be commensurate with the rarity. The Burmese ruby that wore the auction crown before the Estrela de Fura sold for $30.3 million in 2015—only $4.5 million less, despite being under half the carat weight.

Another name familiar to insiders is Martin Travis, owner of London-based Symbolic & Chase, who advises investors and collectors as well as museums. His clients include a half dozen families who have each spent $10 million to $50 million on pieces over the past 10 to 15 years, and they’re still adding to their caches. While he won’t discuss the specifics of his clients’ collections, it would be easy to surmise that they are among the lucky handful to possess pieces by the elusive designer Theodoros, as Travis serves as one of the jeweller’s few agents.

Other serious collectors are following in the tradition of Elizabeth Taylor and Lily Safra, passionate aficionados who were among a set of women who built well-rounded troves that ticked all the boxes. Qatar’s Sheikh Hamad bin Abdullah Al Thani, for instance, assembled the world’s largest collection of Mughal Empire treasures at lightning speed, beginning in 2009, when he was still in his 20s. Highlights of his 6,000 historic jewels and objects have been exhibited at the Metropolitan Museum of Art and the Victoria and Albert Museum in London over the past decade.

Regardless of whether your motivation is profit, collection-building, or merely possessing a show-stopping trinket to wear with abandon, approach the field with the same clear-eyed logic you would your stock or real-estate portfolio—and with the following key categories in mind.

Don’t expect prices to peak anytime soon, says Moris Hadjibay, an owner of Bayco, his family’s New York–based company, which has been in business 42 years. When a client recently inquired about investing in gemstones, Hadjibay recommended an untreated-exceptional-ruby ring and matching earrings (the set sold for around $3 million). “You can’t replace them,” he says. Though these rubies are Burmese, Hadjibay notes that the Estrela de Fura was no anomaly; top-quality rubies from Mozambique are increasingly appealing to collectors. Another stone to watch in his view: Paraíba tourmaline, known for its Windex-blue hue. But it still doesn’t come close to the prestige of rubies, emeralds, and sapphires.

Tiffany & Co. has solidified its position as one of the world’s top consumer sources for rare diamonds since being acquired by LVMH in 2021. It now has the buying power to secure first dibs on some of the best stones coming to market directly from the mines, such as a 71-carat fancy-vivid-yellow rough it purchased this year from the Ekati mine in Canada, where it was uncovered. Before even working on the stone, Tiffany chief gemologist Victoria Reynolds privately showcased it to a select few clients with the taste and means to consider acquiring it.

Finally, it was cut and faceted into two elongated emerald stones, one over 20 carats and the other over 15 carats; the buyers will collaborate with the house’s designer to set them in bespoke pieces. Tiffany also acquired 35 pink diamonds this year from the Argyle mine—among the last lots uncovered.

As for colourless diamonds, the most reliable investment is Golconda Type IIa diamonds, known as the purest, most transparent and beautiful specimens from India’s Golconda mines. India was the world’s only diamond source for 2,000 years, and Golconda delivered the finest examples until the mines were depleted and closed in the 18th century. (The main excavators of diamonds today are Botswana, South Africa, Namibia, Canada, and Russia.) Golconda produced stones with a total lack of nitrogen, the element that gives diamonds a yellowish tinge, and classified them as Type IIa. Word of caution: Travis says misinformation on what’s actually a Golconda Type IIa abounds. Type IIa diamonds have, on occasion, been unearthed elsewhere and mislabeled as Golconda, but only stones originating in the Indian mines may bear that name. Scientific testing can identify Type IIa diamonds, but only old-cut diamonds mined hundreds of years ago can be considered Golconda.

For the most bang for your buck, experts advise investing in a D-flawless diamond over a larger stone of even slightly lesser quality. The designation remains rare and historically has not only held its value but also continued to rise in price. A similarly sized F-colour VVS1 diamond, which to the untrained eye looks identical to a D-flawless, is worth 30 to 40 percent less.

Take note, however: The market for extra-large diamonds—over 100 carats—has softened, says Travis, because new X-ray technology at the mines identifies top-quality rough before it goes through the crusher. Once a novelty, big high-quality diamonds are now popping up more often, and subsequently, the prices aren’t as robust.

Pedigree, however, entails more than the mine and the designer. Hailing from a vaunted collection also carries weight. Then there are holy-grail pieces, such as Siegelson’s Drexel Heart Diamond: a 31-carat D-color internally flawless heart-shaped Golconda diamond in a signed Harry Winston setting. Valued at $7.5 million, it belonged to the prominent Drexel family of bankers from Philadelphia and comes with a dossier of documentation, which ups its value exponentially.

New collectors are changing the once-sacrosanct rules: A great ruby doesn’t have to originate in Myanmar’s Mogok mines, and bigger diamonds aren’t always more desirable. The thrill is in the hunt for the most exceptional stones on the planet and discovering exciting new talents designing pieces coveted for their contemporary beauty and distinctive style. For all but the pure speculators, the rest is gravy. “People usually buy jewels because they love them,” says Hadjibay. “And if they purchase the right piece, then the odds are in their favour that its value will increase over time.””

Excerpts from Robb Report

www.robbreport.com