The $83 Million Pink Diamond Default

Mar 1 2014, 7:59pm CST | by

The $83 Million Pink Diamond Default
Photo Credit: Forbes Business

Diamond cutter Isaac Wolf outbid three rivals for the 59.6-carat “Pink Star” diamond, offering about $83.2 million, a world record for any gem sold at auction. He renamed it the “Pink Dream.” Unlike many who would make a purchase like this, he revealed his identity and explained why he bought the gem. In fact, he did everything in a proper manner except for one thing: He never paid for it.

Sotheby’s, in its annual report Thursday, said the flawless fancy vivid pink diamond is now part of its inventory valued at approximately $72 million.

According to a report on CNBC, the auction house had to buy back the diamond for $60 million because it had guaranteed that price to the original seller of the diamond.

In a conference call with investors Thursday, Patrick McClymont, Sotheby’s CEO, said the auction house is still talking with Wolf about the future of the diamond.

“We are currently in discussions with the buyer while also considering other alternatives,” he said. “In the meantime, we are comfortable with our valuation and see real value in owning the diamond at this price.”

Wolf in a YouTube video explaining the purchase said he was representing a group of investors and considered the diamond to be worth about $150 million, based on current prices for fancy vivid pink diamonds of similar quality.

“It’s not that I’m buying this with the money that I have in my piggy bank,” Wolf said. “It’s basically a group of investors—financial people—that are backing me on this and they are doing this as an investment, and hopefully to make a big profit.”

The diamond is graded as Type IIa, which is rare for any pink diamond, much less one of this size and color. It is twice the size of any pink diamond ever brought to auction and the largest known pink diamond in the world. David Bennett, chairman of Sotheby’s Jewellery Division in Europe and the Middle East and chairman of Sotheby’s Switzerland, said the diamond is one of the most important gems he has seen in his 35-year career.

“It is difficult to exaggerate the rarity of vivid pink diamonds weighing only five carats,” he said prior to the auction. “So this 59.60 carat stone is simply off any scale, and passes, I believe, into the ranks of the earth’s greatest natural treasures.”

The oval-cut gem was the highlight of the November auction in Geneva. It was estimated to fetch more than $60 million. The bidding opened at $48 million.

The diamond was originally mined in South Africa in 1999 as a 132.5-carat rough by De Beers. It was cut by the Steinmetz Diamond Company over a two-year period and was formerly known as the “Steinmetz Pink.” In 2003, it was shown publicly in Monaco and was displayed at the Smithsonian Institute as part of its “Splendor of Diamonds” exhibit. The Pink Star was sold privately in 2007, according to Wikipedia.

Please join me on the Jewelry News Network blog, the Jewelry News NetworkFacebook Page, and on Twitter @JewelryNewsNet.

Source: Forbes Business

 
 

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