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Hidden DepthsAs a career gemologist Anna Cisecki has held some of the most impressive

precious stones ever to be dug out of the earth. Now as the head of brokerage firm

Australian Diamond Portfolio (ADP) she’s teaching others to recognise their true

value, as Tracey Porter discovers.

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In many ways he was the ideal first client.

When he knocked on the door of Sydney diamond sourcing agency ADP he was a partner in a successful Melbourne-based legal practice whose money was largely tied up in property and shares.

But he’d decided to diversify by dabbling in a bit of gold. Being an attorney, he was wise to the volatility in the markets and was looking for a low-maintenance but stable asset where he could park his money and watch his investment grow.

Seeking initially just to test the waters, he brought with him a $200,000 investment budget, sharing his plans to eventually build to a $2 million portfolio.

Based out of Sydney, the ADP team set to work and soon after managed to source him a lustrous purplish pink cushion cut diamond for which he paid the not-insignificant sum of $195,000.

Just two years later his little investment has appreciated by 45 percent and he has again called on ADP to procure for him the second addition to his sparkling portfolio – this time a deep violet blue coloured diamond, valued at around $1 million.

But it’s not by chance that investors seeking to put their money into something tangible are looking at precious gems.

According to the Fancy Colour Research Foundation (FCRF), from 2006 to 2014, fancy coloured diamonds – or in layman’s terms pink, yellow, and blue diamonds - experienced an average total appreciation of 154 percent.

While the Diamond Prices Index confirms colourless, white diamond increased by 62 percent during the same period.

ADP executive director Anna Cisecki says changes in the world economy are helping to fuel demand for investment diamonds by Asian investors while the supply squeeze is further driving price growth, particularly in the area of fancy coloured diamonds.

While the majority of ADP clients are Australian-based, she says the company has a growing number of clients from China, Hong Kong and the Middle East. Most have personal and/or professional ties to Australia and are seeking to move a portion of their wealth to this country and make investments. All high net worth individuals, their professions range from top-end medical and legal to furniture retailers and aviation.

“Australia has an ideal political and economic environment for safe storage of physical assets: we have a stable political climate, minimal national debt, and we’re one of the last few remaining nations with a AAA credit rating.

“With regulations around foreign property investment becoming more stringent in Australia, overseas investors are now more than ever seeking alternative opportunities here.”

All of which is good news for Cisecki – who gained her certification from the Canadian Institute of Gemmology but later held management roles in the only accredited diamond-grading lab in the country, the Diamond

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Certification Laboratory of Australia (DCLA) - and her boutique team of specialised diamond investment advisors.

Having launched in 2013, ADP runs its Australian operations out of the Sydney’s MLC Centre but also has offices at the DCLA where viewings are held and clients afforded the chance to get a “behind-the-scenes” look at how diamonds get graded, tested, certified and valued.

In addition it conducts high-security private consultations and diamond viewings at Guardian Vaults by appointment.

Increasing demand for its brokerage services means the firm is on schedule to open a branch in Hong Kong midway through next year while plans to open in Dubai in 2017 are well under way.

Cisecki believes much of the reason for ADP’s early success has come because of the level of consultation that goes on prior to any purchase.

She says there is much more than meets the eye when making an investment of this type with colour, weight, shape, intensity, measurement, polish, symmetry and clarity just some of the factors needed to be taken into consideration. Cisecki says the decision to start a diamond portfolio, and the level of investment, is one that must be made wholly by the client taking into consideration their entire portfolio of investments with circumstances varying from person to person.

But, she says, it’s important to note there is a minimum recommended entry level.

“Not all diamonds can be considered investment diamonds, meaning those that will maintain and grow in value over time; the majority of diamonds on the market are actually quite common, and realising a resale value even close to the purchase price requires specialised knowledge.

“Only about one in 10,000 are coloured diamonds, and while prices for different colour and size combinations vary significantly, to buy one of a rarity sufficient to be considered for investment potential clients are looking at the $50,000 mark, depending on the hue,” she says.

Cisecki says when determining value of colourless diamonds, carat, cut, colour and clarity are important. However there is much more to be considered with coloured diamonds.

“For colourless diamonds, cut is king. When you’re buying a diamond for fire, life, and sparkle; it has the greatest effect on a diamond’s appearance, even though price is dictated more significantly by carat weight, clarity and colour. For example, you can have a top D-colour, IF-clarity diamond that’s very rare and expensive, but if it’s not cut well it will actually look dull and lifeless. [With] fancy coloured diamonds, it’s all about the colour. The more beautiful and rare the colour, the more valuable the diamond.”

A number of factors give diamonds their colour, including atomic-level substitutions, proximity to natural radiation or the strain in the lattice structure during their formation – that takes place over thousands of years.

If a diamond is overexposed to natural radiation while it is forming, it can develop colours ranging from green to green blue. A distortion of the lattice

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structure in response to physical stresses can result in diamonds appearing pink or brown. Colour can also occur as a result of the replacement of carbon atoms in the lattice - when nitrogen replaces carbon, the diamond is yellow; when the replacement elements is boron, the diamond can appear blue.

Fancy coloured diamonds generally boast one of 12 distinct hues (or ‘primary’ colours): Yellow, Pink, Blue, Green, Orange, Brown, Violet, Gray, Purple, Red, Black and White. But there are also more than 230 colour combinations in which the primary hue is modified by a secondary overtone ie ‘Purplish Pink’.

In addition, the saturation and tone of each colour must be specified according to scale of intensity – Faint to Very Light, Light, Fancy Light, Fancy, Fancy Deep, Fancy Intense, and Fancy Vivid.

While there are many nuances to colour, they are not difficult to understand, she says.

“The more rare and beautiful the colour, the more valuable, though there is some leeway for personal taste when it comes to desirability.”

When it comes to financial investments, one of the basic concepts is to detach the emotional or sentimental from the intellectual aspects of the decision making process, she says.

In principle, this is a great ideal; in reality, there is usually an element of sentimentality in any investment decision, and fancy coloured diamonds are no exception.

“Just like most investors need to have a property appeal that ‘speaks’ to them in some special way, so too a diamond has a voice - many are often surprised by just how much. Saying that, when it comes to diamond investment I don’t believe there’s anything wrong with falling in love with a particular colour or stone, particularly if the investment is also for wear in jewellery; the key is to balance that with grounded professional advice.”

Cisecki and her team have been credited with going the extra mile for their clients with potential purchasers taken through a comprehensive education experience prior to any money changing hands.

The process begins with a consultation to educate the client and determine their level of investment before ADP gets to work sourcing an appropriate diamond. Next the buyer is presented with what ADP calls its Diamond Investment Portfolio Proposal, which includes an independent Diamond Grading Report, a separate valuation report and relevant certificate of authenticity. Once accepted, the client pays a 10 percent deposit to secure the diamond. Once full payment is made and ADP has physically acquired the diamond, the DCLA undertakes what is called a

‘diamond verification process’ to match the diamond against the Diamond Grading Report, and confirm that the diamond has been unaltered and undamaged in any way. Only once this is complete is the diamond then handed over to the purchaser.

To this end ADP works hard to develop strong relationships with its extensive network of suppliers – which include diamond cutters, brokers, dealers, auction houses and site holders.

As with most legitimate diamond traders, ADP requires that each stone is ethically sourced and as such the business demands that all suppliers provide a written warranty as per the Kimberley Process Certification Scheme - created by a global organisation of governments, industry, and human rights groups to prevent the sale of conflict diamonds – stating their diamonds come from Kimberley-certified sources and are not involved in funding conflict.

Cisecki is herself a member of the World Federation of Diamond Bourses, meaning she is subject to the stringent set of trading practices that govern acceptance and continued membership. These rules include sourcing diamonds from trusted and reputable industry members, those who subscribe to industry-wide standards of disclosure regarding products and who subscribe to a System of Warranties that all diamonds are conflict-free, amongst a host of other undertakings.

While being close to the coalface does has its advantages, Cisecki says the stones ADP deals with are in such scarce supply there are no real discounts with tight margins leaving little room for “mate’s rates”.

That is, of course, unless you’re dealing with a high-end retail jeweller that has some room to come off their brand mark-up.

Cisecki says ADP follows auction results closely in order to keep on top of the prices, but the majority of its business is direct with the mines and the manufacturers.

While auctions are the best way for investors to divest of their diamond assets, when purchasing a diamond margins are more competitive the closer you get to the source – basically, the less hands a stone passes through, the better for the end client, she says.

“The general rule is that the closer you get to the mine, the better the price – as brokers, we seek stones from a global network of mines and manufacturers to ensure our clients receive the best possible price to meet their investment needs.”

And it seems that while investment pieces for her clients are always her top priority, Cisecki admits to having a few stones in her sights for personal use.

“Well, I’m a lady – I have my own, but I could always use more.”

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