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Adding a Little Ice to Your Portfolio

Tuesday, 14 Dec 2010 | 10:11 AM ET

Diamonds may be a girl's best friend, but for the ultra wealthy, they're an investment of a lifetime where the right gem could return staggering results.

Over the last couple of years, we've seen one record breaking auction sale after the other. Just recently, London dealer Laurence Graff obliterated all records with the $46 million sale at Sotheby's auction house for a 24.78-carat pink diamond.

"The Graff Pink" as it is now called is the most expensive jewelry ever sold at auction. I decided to sit down with Henri Barguirdjian President and CEO of GRAFF to talk about not only this latest acquisition, but how the luxury jewelry is doing this holiday season.

HB: The jewelry market is still going strong. It is following art. Whatever is fine and rare in jewelry reaches unbelievable prices. Prices we could have never imagined five years ago. Auction houses give us a good barometer of what is going on in the real world.

LL: What are the drivers of this bullishness?

HB: The consumer is very wealthy and they are seeking refuge. There is a lot of cash available at the moment. They are seeking refuge in areas that they know are continuing to grow. I mean, see what is happening to all of the commodities- gold, platinum, so the same thing is happening with diamonds. More and more people not only in America but around the world as well; even in Asia, realize that putting a small percentage of your capital in precious stones is actually a very good investment. The price of fine quality diamonds, I'm not even talking about colored diamonds which are off the charts- but white diamonds D,E,F which is the cream of the crop have gone up over 300 percent in the last seven years and it continues to do so as we speak.

LL: In terms of "Graff Pink", what do you plan on doing with it?

HB: At the moment we are very happy to own it because it is by far the rarest, most extraordinary pink diamond ever on the market available. The stone is a VVS2 and we think with minor, minor re-polishing we can make it flawless which is probably what we are going to do. But after that, we'll see. Its going to be in the GRAFF collection. Sooner or later we are going to sell it, but right now its not our intention to sell it. Its value will continue to go up but eventually its going to get sold.

LL: Let's turn to your consumer. How are sales this holiday season versus last year?

HB: Sales are up compared to last year. What's interesting is they are up and the average sale is up in a very, very big way. In other words we only sell important stones, or jewelry with intrinsic value in the stones themselves. My flagship New York Store (on Madison Avenue) is up 30 percent from last year. That's a huge number. Its an outstanding year and counting.

LL: The surge in China continues to garner headlines. How important is China to your business?

HB: Its huge. We opened last year in Shang HI, two years ago in Hong Kong, and next year we are opening two stores in Beijing and one in Taipei. so you can we are bullish and we believe in our presence in that market . It's going to be a very, very, big component in the future of our company. IT is the market of the future. There is no question about that. Everyone understands that in luxury retail. Our colleagues from LVMH, and the big retail companies understand that as well.

A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."

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