Lab Grown Diamonds: If & When You Should Consider Buying

KATE WATERHOUSE EXPLAINS THE LAB GROWN DIAMOND MARKET

There has been a deluge of advertising and conversation lately around the phenomenon of the “lab grown diamond (LGD),” also known as “lab created diamonds,” “engineered diamonds,” “cultured diamonds,” and even “eco diamonds.” But what are we purchasing precisely, and in practical terms, what should we consider before buying? Most importantly, should jewelry collectors be buying lab grown diamonds at all?

What EXACTLY IS A LAB GROWN DIAMOND?

The advertising is correct: A lab grown diamond is chemically a diamond and not a synthetic such as cubic zirconia or moissanite (both of which can yellow over time or become cloudy with age). Using a small sample of a natural diamond and adding a process such as High Pressure High Temperature (HPHT, which has been on the market for decades for other diamond purposes and treatments) or Chemical Vapor Deposition (CVD), it was discovered that a diamond could be “grown” within the lab.

It is worth confirming that lab grown diamonds have similar characteristics to natural diamonds. However, a buyer would still want and must be mindful of color, clarity, cut, and potential fluorescence. Like with a natural diamond, these characteristics will also affect the value (i.e., a lower color and clarity grading).

The difference is that LGB diamonds are not created by nature’s magic process occurring over millions of years but could be a “quick fix” for those looking for an affordable diamond option.

HOW ARE THEY VALUED: LAB GROWN DIAMONDS VS NATURAL DIAMONDS

When we are exploring beyond natural diamonds, consideration should be given to the LGD market; however, only if we appreciate and realize that the LGD is not a natural diamond.

Understanding the differences between these categories is essential because natural diamonds are valued based on their rarity and the current market trading price. The lab grown market does not yet have the historical trading charts to watch the long-term growth and contraction and thus should be approached and considered for purchase with caution, knowing that the future is entirely unknown and currently unregulated.

COMPARABLE MARKETS: NATURAL VS CULTURED PEARLS

We could discuss a different example where the product looks, smells, and acts like a genuine product. One immediate example is the natural saltwater pearl vs. the cultured pearl.

Authentic saltwater pearls develop within a mollusk (oyster) through a natural process. In contrast, a cultured pearl develops when a shell bead or natural irritant is introduced to the mollusk. The culturing process creates layers of luster (known as nacre) over years of care to produce the beautiful, cultured pearls we adore. By default, the origin story of those pearls has taken a different path to create a gem with which we are so familiar, and the buying public is comfortable with this category.

The issue with a lab grown diamond is similar. However, the difference is that instead of a cultured pearl being crafted on a farm, the LBD is created by technicians in a lab. The origin story differs from a diamond created by nature’s forces and thus is likely to effect the long-term potential value.

WHEN YOU SHOULD CONSIDER A LBD OVER A NATURAL DIAMOND

Many retailers will suggest that deciding what kind of diamond to acquire depends on what one can afford. A 2-carat lab grown diamond will cost approximately $2,000, while a natural diamond will cost upwards of $20,000 for the same weight, color, and clarity. In addition, some will try to encourage you to think “carbon neutral” or conflict-free. The answer to this lies entirely in the intended use.

VINTAGE & SECONDARY DIAMOND MARKET: SUSTAINABLE CHOICE WITH LONG-TERM VALUE

For those interested in sustainability, I offer the example of the secondary market to solve the problems of carbon neutrality, conflict-free, and affordability. I have had the pleasure of putting many brides into beautiful, vintage diamonds purchased privately or at auction.

The result is a purchase with an intrinsic value that has stood the test of time for generations, an addition to one’s portable wealth portfolio with historical data and fewer unknown factors in the general jewelry and gem marketplace.

However, if your goal is to purchase a large, attractive, and chemically identical diamond without concern for long-term financial viability, then the LGD market could be a good option for you.

Technology will evolve, and LGDs will continue to exist, as has the NFT, cultured pearls, and synthetic sapphires or rubies. But as with all of the above, jewelry advisors will continue to monitor the markets appropriately, recognizing that many lab grown diamond retailers have already begun to discount these goods. The market continues to stabilize, and new retailers will enter lab grown gem space.

I will end with a reminder to consumers to consult a jewelry advisor before any large diamond purchase. A jewelry advisor will clarify any confusion between the markets and assist you in better understanding your long-term financial goals related to your jewelry collection.

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• Watch TFG’s New York Luxury Week 2023 Webinar: Top Jewelry Picks & Lots to Watch

OUR SERVICES

Offering expert Advisory across sectors, our dedicated Jewelry Advisory Team combine strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.

SUCCESS FOR TFG CLIENT AT MAGNIFICENT JEWELS SALE

The Fine Art Group was thrilled to be able to share this important jewelry collection with Sotheby’s bidders. The jewelry collection was created in love and partnership between the consignor and his wife over many years. The couple collected a stunning array of unusual jewels by Cartier during one of the luxury brand’s most prolific periods of the 1980s/1990s, as well as high jewels by famed fashion house Dior, designed by Victoire de Castellane. The original estimation range was from $854,000 to $1,076,000, and the final sale total with an aggregate of $1,465,696.

We are so pleased that these pieces have found new and happy homes in the next chapter of their history.

THE JEWELRY COLLECTION

Total: $1,154,000
Original Estimate Range Total: $854,000-$1,076,000

SOLD JEWELRY LOT TOTALS (inclusive of aggregate):

1. Eighteen karat yellow gold and diamond bracelet, Cartier: $69,850
2. Eighteen karat yellow gold and diamond earrings, Cartier: $53,340
3. Colored diamond and diamond earrings: $152,400
4. Colored diamond and diamond ring: $190,500
5. Eighteen karat yellow gold Bamboo bracelet and ring, Cartier: $44,450
6. Pair of eighteen karat yellow gold and diamond Bamboo bracelets and earrings, Cartier: $60,960
7. Colored diamond and diamond ‘Rose’ necklace and bracelet, Dior: $48,260
8. Diamond ear clips, Dior: $69,960
9. Ruby and diamond ring: $127,000
10. Diamond riviere necklace: $177,800
11. Eighteen karat yellow gold and diamond Babylon necklace, Cartier: $190,500
12. Eighteen karat yellow gold and diamond Panther ring, Cartier: $33,026
13. Eighteen karat yellow gold and diamond bracelet and ear clips, Cartier: $69,850
14. Eighteen karat yellow gold jewelry suite, Cartier: $38,100
15. Eighteen karat yellow gold and diamond Panther suite, Cartier: $139,700

Highlights From the CLIENTS’ SOLD COLLECTION

Click here to view the rest of the sold collection, lots 1 to 16.

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• Watch TFG’s New York Luxury Week 2023 Webinar: Top Jewelry Picks & Lots to Watch

OUR SERVICES

Offering expert Advisory and Sales Agency services across sectors, our dedicated Jewelry Advisory Team combines strategic insight with transparent advice to guide our clients seamlessly through the market. We always welcome the opportunity to discuss our strategies and services in depth.

Images: All images courtesy of Sotheby’s.

Patti Wong, founder of Patti Wong & Associates, is profiled by Penta Magazine, an imprint of Barron’s. She discusses her incredible over 30-year-long career, her impact on Asia’s rising art market, and the opening of her new Hong Kong-based advisory business Patti Wong & Associates.

Click here to read the full article on PENTA on Barron’s.
Full article

Philip Hoffman and Freya Stewart recognized by Spear’s Magazine

The Fine Art Group is honored to have Philip Hoffman and Freya Stewart recognized by Spear’s Magazine as top recommended professionals in their fields, Art Advisory and Art Finance. They have been ranked as experts in the art market and art finance industry for high-net-worth individuals in the UK.

VIEW EACH LIST AT SPEAR’S MAGAZINE

Spear’s 500 Best Art Advisors List
Spear’s 500 Best Art Finance Advisor List

Originally published on Tiger21.com, May 31, 2023

ANITA HERIOT DISCUSSES ART INVESTMENT & THE STRUCTURES AVAILABLE TO COLLECTORS

Investing in art has become an increasingly popular way to diversify investment portfolios. Over the last 10 years – apart from the disruption during the Covid pandemic – the art market has consistently outperformed the S&P 500.

However, post-Covid, the art market declined less than the anticipated 22% in 2022. In the second half of the year, it bounced back to stronger than pre-pandemic levels. This proves that the value of art is not necessarily subject to the same fluctuations as the global economy. Hence, it can be used as a sound hedge against inflation and recession.

Further to the potentially high returns (the average annual return across all The Fine Art Group’s investments is 14%, versus the average annual return of 8.9% on the S&P 500), investing in art can be a means to support local and global cultural institutions, to pursue the passion of collecting, and to establish a legacy. For more on creating a legacy through art collecting, read our blog.

What type of art should I invest in?

For investors, the right piece of art is critical to a positive return. In recent years, the market has seen a shift towards contemporary art. Works by emerging and mid-career artists are gaining popularity and driving up sales. In 2020, contemporary art accounted for 55% of total sales, up from 49% in 2019.

Returns rely heavily on purchasing the right artwork – the right artist, subject matter, condition, size, and countless other criteria. Advisors can help investors navigate the market to source the right artwork, negotiate optimal prices, arrange tax-efficient storage as required, and eventually purchase the piece. For key criteria to consider when investing in art, click here.

Different Investment Structures for Investing in Art

In recent years there has been a surge in the number and types of structures available through which to invest in art. An art advisor, especially with experience in the art investment space, can be very well placed to guide investors. They not only provide due diligence on the investment structure, but offer a more granular level of advising on the artwork and the price level at which it is purchased.

Art Funds

Art funds are investment vehicles that allow investors to pool their money together to buy art. These funds are managed by professional investment managers who have expertise in the art market. Art funds can provide investors with access to a diverse range of artworks, as well as provide professional management and expertise. However, they often require high minimum investments and charge high fees due to the requirements to have audits and general partners overseeing the fund.

Private/Direct Investment    

Private accounts are managed by individual investors (or their advisors) who buy and sell art on their own. This art investment method requires a significant amount of expertise and knowledge of the art market, as well as access to private auctions and galleries. Private accounts can provide investors with greater control over their art investments. However, they also require a substantial amount of time and effort. An advisor can alleviate the requirement for the investor themselves to source, negotiate, and carry out due diligence on every artwork.

Fractionalization    

Fractionalization allows investors to own a portion of a larger artwork. This can provide investors with access to valuable works that they may not be able to afford on their own. Fractionalization can also allow investors to diversify their art portfolios, as they can invest in multiple artworks with smaller amounts of capital. However, fractionalization can be complicated, and fees can be high.

Co-Investment

Co-investment allows investors to pool their money together to buy a single artwork. This can provide investors with access to larger, masterpiece artworks that they may not be able to afford on their own. Co-investment can also allow investors to share the risks and rewards of an investment with others. However, like fractionalization, co-investment can be complicated and does require legal expertise to set up.

How To Invest Sensibly in Art   

With the influx of players into the art investment market and greater choice for the investor also comes an increasing number of pitfalls for investors to navigate. Read our tips on how to buy art like an expert, and mistakes to avoid, here.

For investors wishing to pursue investment themselves — via a private/direct investment — it may be prudent to find an advisor who can provide thought-leadership, education, and access in the art market, a notoriously opaque market to penetrate.

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• The Fine Art of Determining Value
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• The Fine Art Group’s Art-Secured Financing Solutions Continue to Meet Increasing Client Demand

Learn, Access, Connect: TIGER 21 Members gain access to expert insights from global thought leaders at the top of their field. For more on the TIGER 21 Member Experience, click here.

Nothing contained in this article shall constitute, or should be construed as, constituting investment advice or a recommendation by any of the authors, “Anita Heriot” her company, “The Fine Art Group,” or TIGER 21.

THE FINE ART GROUP EXPANDS REACH TO AUSTRALIA AND NEW ZEALAND

The Fine Art Group is the largest art advisory company in the world. Its new alliance with Australian-based Roger McIlroy takes its reach into the Pacific region as McIlroy accepts position as Chairman, TFG, Australia and New Zealand.

TFG Founder and CEO, Philip Hoffman says, ‘Roger has achieved an international reputation for excellence in the art world and is one of the most trusted individuals in the field. His experience, knowledge and extensive global networks make him the ideal new TFG senior resource in the region and we are delighted to have him join the team’.

Roger’s successful 30-year association with Christie’s led to the establishment in Australia of his leading independent art advisory business. Equally recognized for his expertise in the fine art auction room, Roger will continue his prominent role as head auctioneer of Deutscher+Hackett, Australia’s top auction house.

ART CONTINUES GLOBAL GROWTH AS ALTERNATIVE ASSET

This exciting new collaboration between TFG and Roger McIlroy reflects the global growth of art as a recognized alternative asset. TFG is the first international art group to respond to this shift and to move into Australia and New Zealand, providing unrivalled service and access to all aspects of the international art market. This development follows TFG’s expansion into Asia through a joint venture with former Sotheby’s executives Patti Wong and Daryl Wickstrom, and their collaboration with preeminent New York art advisor Allan Schwartzman and his team at Schwartzman&.

In Australia and New Zealand, Roger McIlroy will work in association with TFG Vice President, Leticia Hoffman, a member of TFG since 2014. With over a decade of experience in the art world, Leticia has handled some of the world’s finest artworks, gemstones, and jewels. Notably, Leticia aided with the sale of the Cartier ‘Sky Blue Diamond’ for $18 million.

The Fine Art Group, Australia & New Zealand

Roger McIlroy

Chairman, Australia & New Zealand

Leticia Hoffman

Vice President, Australia

With their combined skills and expertise, Roger and Leticia will continue to deliver private and corporate clients informed advice for the management, building, care and development of their art and tangible asset collections. Roger’s and TFG’s international alliances provide unrivalled leverage, offering Australian clients premium opportunities to sell, buy and secure finance across diverse categories within the art market.

Roger and Leticia will be supported by a team of 80 specialists and advisors from around the world, covering virtually every type of collecting category and available to provide ready assistance.

GLOBAL ART SERVICES POWERHOUSE

For over two decades, TFG has maintained an unrivalled track record across the art world. TFG helps clients navigate all aspects of the art market, from providing assistance with collection strategies, acquisitions, appraisals and the selling of works of art, through to art financing. This new collaboration with Roger McIlroy adds to the definition of TFG as an art industry innovator now available to meet new market demands in the Pacific region.

Download the full press release here.

This spring signed jewels and stunning gemstones take focus at Sotheby’s, Christie’s, and Phillips. Such an abundance of property on the market can cause buyer whiplash. Please join Senior Specialist and Director of Jewelry and Watches for The Fine Art Group, Kate Waterhouse, while she presents her ‘Top Picks’ from the spring season for New York’s Luxury Week and ‘Lots to Watch.’

PANELISTS

Kate Waterhouse

Senior Jewelry Specialist, Director

Shane David Hall

Director, High-Profile Division

Newsfeed image credit: Luxury Week, May-June 2023 | New York. Courtesy of Sotheby’s.

Philip Hoffman, Founder and CEO of The Fine Art Group, speaks with Artnet News about the Sotheby’s Modern Evening Auction results and discusses what this could mean for the future of the art market.

Click here to read the full article on Artnet News.
Full article

Newsfeed image credit: Auctioneer Oliver Barker coaxing bids from the rostrum at Sotheby’s on May 16. Courtesy of Sotheby’s.

Morgan Long, Managing Director of The Fine Art Group, spoke with Barron’s about what the low number of guaranteed works at significant spring sales may suggest about current collectors, dealers, and auction houses.

Click here to read the full article on Barron’s
Full Article PDF

Newsfeed image credit: Gerhard Richter’s 4096 Farben, part of the artist’s Color Chart series. Tristan Fewings/Getty Images for Sotheby’s.

Salma Shaheem, Director of The Fine Art Group’s Middle East Office, speaks with Spear’s Magazine about the growing interest in fractional art investment.

Click here to read the full article and more about fractional art investment.
Full Article

Newsfeed image credit: Pablo Picasso’s Les Demoiselles D’Avignon in the Museum of Modern Art in New York City. Image: Shutterstock. Courtesy of Spear’s.