Factors That Affect the Price of Color Diamonds

A natural colored diamond is a miracle. Usually, diamonds formed naturally inside the earth is colorless. But, when trace elements interact with the carbon atoms,during the formation of the diamonds, it permanently alters the color of these gemstones. 1 in 10,000 diamonds are naturally colored and some of the colors are so rare that handful of them exist throughout the globe.
In past, other colored gemstones like ruby, sapphire or emerald were much more popular. In the last few years there is an upsurge in demand for vivid colored diamonds. The demand is so strong that brown diamonds once used only for industrial purposes can now fetch a price of thousands of dollars. On 4th April, 2017 a new auction world record was set when a Pink Flawless Diamond sold for $71.2 million in Hong Kong. How the prices of these fancy colored diamonds are determined?

Pink color oval diamond in a ring the is held by hands

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For diamonds, rarity determines the value. This is true for colorless diamonds as well as its colored counterparts. But, the pricing patterns of these two diamond varieties are different. While cut is the most important factor in colorless diamond pricing color plays the major role in the price of the colored diamonds. Let’s see the variables that are considered in pricing these vivid colored diamonds:
Fancy diamond color is categorized into three different parameters.
·  Hue
·  Tone
·  Saturation
Hue is the actual color of the stone. Red, green, purple and orange diamonds with medium to dark tones are extremely rare and come with huge price tags. Next in the list are the pink and blue diamonds. Yellow and brown are relatively common fancy colors and therefore much more affordable.
Tone is the darkness or lightness of a color. Saturation is the strength of the color.The strength or saturation of color is measured from faint to fancy vivid. This is a nine point scale and subtle differences in color can largely influence the grading on this scale.It goes without saying stones with higher saturation are rare and valuable.

Diamond colors wheel

Fancy colored diamond's hues

Fancy yellow diamond's color and saturation scales
Fancy Yellow Hue Tone & Saturation scale

Color is certainly the dominant factor while the question of pricing arises in case of fancy color diamonds. But, cut can influence the color. The larger diamonds offer much more path for the light to travel in. This results in more rich and intense colors. Cushion cuts and radiant cuts are commonly found shapes among the fancy colored diamonds.
Large fancy color diamonds are rare and valuable than the smaller ones.
Clarity is not such important in case color diamonds. Even diamonds with inclusions can be priced highly if the color is intense. Inclusions are often not visible because these blend with diamond color.
An understanding of how the diamond will be accepted in the market also helps in determining the price of fancy color diamonds. Black diamonds are much cheaper few years back, but with the rise in demand the price has appreciated.
In 2008, when there was an economic downturn, investors were looking for investment alternatives other than stocks and shares. Gemstone emerged as a good alternative. The price of color diamonds remains unaffected with market fluctuation and fetches good return on investment. This factor increases the demand as well as the price of these gemstones.
Unlike colorless diamonds, fancy color diamonds are not much available in the open market. Either auction is held to sale naturally color diamonds or few renowned sellers retain them. So, even if you are planning to invest in a fancy color diamond, it is very hard to obtain.

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