New data from the Fancy Color Research Foundation shows that colored diamonds are remaining strong and consistent in price levels, while overall diamond prices have declined in recent months. The Fancy Color Diamond Index, which measures market value of the colored diamond industry, tracks pricing data and relative popularity of the growing market for colored stones.
For this Pursuitist Q&A, we spoke with Eden Rachminov, a third-generation “diamantaire,” managing partner of Rachminov Diamonds, one of the largest manufacturers of natural fancy color diamonds and author of the Fancy Color Diamond Book to learn more about the marketplace as well as trends in the colored diamond market.
Why are colored stones ranked separately from standard measurement scales like GIA, IGI and EGL?
The vast majority of FCDs are accompanied by a GIA report. In my opinion, IGI and EGL are not really relevant for fancy color. In order to determine the quality of a fancy color stone in comparison to other stones, we look at the uniqueness of its combined attributes. It’s never only the color or only the saturation or clarity; it’s always a combination of all of these elements that creates the overall aesthetic and rarity and value of a diamond.
What do you think has brought about increased interest in these fancy color stones? 
Fancy color diamonds are mainly being bought as a third or fourth piece of jewelry as part of a personal collection. In general, high-net-worth-individuals purchase fancy color jewelry because they are looking for one of a kind pieces and it’s very easy to meet this desire with fancy color. The investment element is also a factor. They realize that fancy color is a good investment and that it will appreciate in value over time.
Your index points to declining inventory of fancy colored stones — what does the supply pipeline look like for these stones?
Fancy color rough supply is fragmented; they don’t come from only one or two sources, so it’s impossible to track down the exact supply of fancy color. Having said that, we know that the general supply for diamonds in the world is decreasing every year, so it’s easy to assume that fancy color rough supply is decreasing as well.
Were I to choose a colored diamond, is there one I should consider for investment value?
The index does not indicate prices, but rather the change in prices over time. It demonstrates that pink diamonds have appreciated the most in value over time compared to blue and yellow, and other asset classes.
Your index tracks yellow, pink and blue diamonds, but I know green diamonds also exist. How many colors of diamonds exist, and why does this occur?
Fancy colour diamonds can be blue, green, yellow, pink, red and orange – and combinations of more than one color. The reasons for these color variations lie in their complex formation over millions of years and exposure to different elements. Diamonds with a green hue, for example, have spent many millions of years in contact with a radioactive source. The reason the index does not cover colours outside of yellows, blues and pinks is that they are so rare that the number of transactions would not make the index statistically valid.