Natural Colored Diamonds: Facts, Value, Grading and Formation

Facts

Natural colored diamonds are the rarest and most valuable gemstones in the world on a per-carat basis.

  • Colored diamonds are so rarely found in nature they are valued at 20 to 25 times the price of the finest quality white diamond.
  • For every 100,000 carats of flawless white diamonds found on Earth, only one carat of gem-quality colored diamond is ever found.
  • Only the most exquisite natural colored diamonds achieve investment-grade status.
  • At the Argyle Mine, for every million carats recovered, only one pink carat qualifies for the prestigious Pink Diamond Tender.
  • Colored diamonds, collected by royal dynasties and wealthy connoisseurs, have inspired awe and wonder for centuries.Exceptionally rare natural colored gems will have no fixed price -- As with fine art, their value is determined by their extraordinary rarity and quality.

Color and Value

The value of natural colored diamonds is primarily determined by their hue (color), tone (lightness and darkness) and saturation (intensity). Diamonds occur in all colors of the spectrum, with some rarer than others. Color is due to trace impurities of nitrogen and/or hydrogen (yellow and brown), boron (blue), radiation exposure (green), or irregular growth patterns within the crystal  causing microscopic imperfections with the lattice structure (pink and red).

  • All colored diamonds are rare, but some are extremely rare and, therefore, more valuable. Red diamonds are the rarest of all, followed by blue, green, orange, pink and yellow.
  • The more intense the color, the rarer and more valuable the diamond will be, in most cases. Natural colored diamonds with vivid hues and intense saturation have the highest value and are the rarest diamonds on Earth.

Grading Colored Diamonds

The Gemological Institute of America (GIA) color grading system based on attributes of hue, tone and saturation is a mandatory baseline for evaluating colored gems.

  • Hue refers to the primary or characteristic color of the diamond. Saturation refers to the strength or weakness of the primary hue or color. Tone is the amount of light or dark coloration present in the diamond.
  • Under controlled conditions, a grader determines the stone's Hue from one of the 27 hues, such as red, pink, blue and green through to brown and black. 
  • The fancy grade describes the stone's Saturation and Tone in this order: Faint, Very Light, Light, Fancy Light, Fancy, Fancy Intense, Fancy Deep, Fancy Dark and Fancy Vivid.
  • In contract to the grading scale for clear diamonds, which is alphabetical with D as the best grade, Fancy Vivid is the highest grade of colored diamonds.  

The 4Cs used by the Gemological Institute of America (GIA) to grade colorless diamonds — Cut, Color, Clarity and Carat — apply to colored diamonds to some extent, but color is more important than carat weight, and clarity is considered secondary to cut as most colored gems have slight inclusions and the cut of colored diamond's enhances the play of light within the diamonds lattice. The shape of the cut for a colored gem is the one that will best emphasize its beauty and color. Most are cut into fancy shapes that amplify color such as Radiant, Cushio, Pear or Oval. Round shapes are less common and generally more valuable because of cutting losses.

Diamond Formation

Diamonds are carbon atoms — originally derived from stars — that crystallized on Earth billions of years ago at depths greater than 150 kilometers under conditions of extreme temperature and pressure. After their formation, explosive eruptions of deep-seated magma transported the diamond-bearing source rocks to Earth’s surface. Only a few diamonds survived this journey, and fewer still were of gem quality. Rarest of all are colored diamonds. For every 100,000 carats of flawless white diamonds discovered on Earth, only one carat is a gem quality natural fancy colored diamond.

Diamond mine discovery and development requires years of intensive detective work. Geological formations known as kimberlites or lamproites are known to host diamonds; however, from early discover it can take another 10-15 years for technical and environmental studies to be completed before a new mine is put into production.

On a global basis, only 14% of all kimberlites or lamproites contain diamonds, while only 3% contain commercially viable diamond grades.

With demand for colored diamonds outstripping mine supply, prices for quality gems have increased year-over-year  for decades, with the rarest and most vivid raising the fastest and highest in appreciation.