Is jewelry a good investment

Photograph by Don Penny; Stylized by Will Kahn

“If you buy quality gemstones and have a little patience, you won’t lose money.”

Henri Barguirdjian is optimistic about jewelry. He has the right to be. For the past 16 years, Barguirdjian has served as CEO of Graff Diamonds North America, where he had access to the world’s finest specimens and also honed his eye on the rarest. In October he announced his “retirement” from Graff to form Arcot Finance – described as a gemstone investment firm – with Harbinger Capital hedge fund magnate Philip Falcone. The creation of Arcot highlighted the role of stones and jewelry as a new class of assets. As Women’s Wear Daily explained in October, “While many private collectors buy stones as an investment, it is difficult to identify a financial business solely focused on buying stones for profit.”

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This 25.59-carat stone, signed and numbered by Cartier and in its original case, sold for $30.4 million at Sotheby’s Geneva in May 2015, setting a world ruby ​​record.

Don Penny

The team behind Arcot is uniquely qualified to lead this way. “Phil has been a good friend of mine for years,” Barguirdjian says of the sometimes-controversial Falcone. “We started talking one night about the prices of rare colored stones. There’s a play right now because there’s a cash crunch in the jewelry business.”

Barguirdjian continues, “A lot of big banks have pulled out of the industry because all the due diligence can be too expensive. This leaves a lot of people without a source of funding who still need money every month because they have to buy stones when they become available Falcone’s resources and my combined knowledge made this a great concept.

Barguirdjian’s role is to look for investment opportunities in very high quality colored stones or diamonds. He says that Arcot might even eventually make a piece of jewelry to sell or present at auction. “We bought a beautiful Burmese ruby,” he says. “Not very big, but not heated, a real gemstone. I just made an offer on a sapphire from Kashmir. We’ll see if I get it. These stones will keep their value.”

The notion of stones and jewelry as an asset class is one that has only recently caught on in America, says Bill Noble of William Noble Rare Jewels of Dallas. According to Noble, among the stones that can be considered an asset class are Fancy Vivid pink or blue diamonds over three carats and showing a straight color and no alterations, preferably emerald or round cut; white diamonds over five carats that are D Flawless or Internally Flawless; Vivid yellow diamonds over 10 carats; rubies from Burma and sapphires from Kashmir over five carats; and Colombian emeralds over 10 carats without treatment.

Jewelry is an investment that you can wear for 30 years and then resell. What else can you do this with?

“These types of gemstones are not only a hedge against inflation,” he says, “but the supply is so limited that their value cannot be influenced by government interference or price manipulation, because there is no hidden stock or mine”.

To illustrate his point, Noble cites the Shirley Temple Diamond, a 9.54 carat Fancy Deep Blue bought in 1940 for $7,210 and recently valued at $25-35 million. “Americans were the last to realize that gemstones provide a concentrated form of wealth that approximates real currency, as they are rare, transferable, durable, and portable.”

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David Webb Necklace ($93,000), davidwebb.com

Don Penny

The legends of Russian and French aristocrats fleeing the revolution with diamonds sewn into their hemlines still resonate. “I know people who want to buy diamonds to store them. They know that in uncertain times they can sell them quickly,” says jewelry expert Chris Del Gatto, whose eponymous company specializes in buying. and the sale of private collections. He has bought and sold more coins than almost anyone on the market. “They also know they can take the rocks with them. You can’t do that with a building. It’s a bunker mentality.”

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The Oppenheimer Blue sold for $57.7 million at Christie’s Geneva in May 2016. The size and quality of the extremely rare blue diamond explains its record price.

Don Penny

Barguirdjian certainly has experience with the idea of ​​stones as a solid investment. Clients have asked him for prizes worth $1 million for each of their grandchildren, to be stored in safes, knowing they will increase in value. “They see it as a haven of peace,” he says. Even barring disaster, however, Barguirdjian understands the complex market value of scarcity and how to manage it wisely.

“There are important rules for investing in stones and jewelry,” he says. “It’s not unlike the art market: anything really special will always be expensive. If you’re a private individual and you buy a stone and you expect to make a profit in three no. You have to be patient, and most importantly you have to be very strict about the quality of the stones you buy. Even if it is a small stone, if it is of high quality, it will retain more value than a larger stone of poor quality.

Barguirdjian insists on this point: “If something is not quite right but it looks good, when you try to sell it years later, everyone will give you their opinion on what is wrong. do not go.”

For colored stones, the site of origin is also decisive: Burmese pigeon’s blood rubies, cornflower blue sapphires from Kashmir, deep green Colombian emeralds. The formation educates the eye and separates the pretty from the truly rare. “There could be three Picassos in the room,” Baguirdjian says. “One is worth $18 million and the other is worth $3 million. A diamond is similar. It’s not just about D Flawless. One is a work of art, the other is not is only a 40 carat stone. They may look the same on paper, but a trained eye can tell the difference. This is where things get tricky and a little knowledge can be dangerous.

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Graff has unveiled its latest treasure: the largest heart-shaped diamond in the world. The stone weighs 118.78 carats and has the coveted D Flawless classification.

Don Penny

And what about the finished pieces that the individual customer buys to wear – can they also be investments? Barguirdjian values ​​the magnificent Art Deco and Art Nouveau pieces by Fabergé, Lacloche and Cartier, pieces finished like haute couture garments. Del Gatto agrees. “Finished jewelry will retain its value, but it depends on what you buy and where you buy it. Smart money gets dumb when it comes to jewelry. I know rich people who see something that they love and have a copy made on 47th St. Twenty five years later, they realize that if they had bought a real original, they would have gotten back the price they bought it for and more. “

Signature pieces that represent the “best in class” are the wisest investments, according to Del Gatto: Cartier from the 1920s, the Van Cleef ballerina or “mystery set” pieces from the 1940s, one-off JARs, or of lower quality. masters known as Raymond Yard, Gattle or Oscar Heyman.

Along with decades of experience, Del Gatto brings candor to the equation: “Jewellery may never work like real estate or an S&P fund, but it’s the best buy you can make in the industry. luxury. It’s an investment you can wear for 30 years and then resell. What else can you do that with? Do you have a 1968 suit?”

“There’s also the simple fact,” he adds, “that in addition to quality workmanship, you should buy what you love. It’s something that will pay a dividend every time you do it.” will put.”

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A piece of classic craftsmanship like this 1925 Art Deco bracelet from Boucheron, complete with documentation, is one of the wisest investments a jewelry client can make. (Price upon request), Siegelson, NY, 212-832-2666

Don Penny

This article originally appeared in the February 2017 issue of City & Country.

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Wendy R. Taylor