seeing RED? Newnan GA

RAREST OF THE RARE: ALL DIAMONDS FROM THE ARGYLE DIAMOND PINK TENDER, 2007.

You're greeted, discretely, at the appointed hour in the lobby of an historic New York hotel. Escorted up to a suite guarded by men with a rare mixture of friendliness, respect, and physical menace, you're invited into a retrofitted master bedroom where 65 encased diamonds lay on a large wooden table. There, for an hour, you luxuriate among the world's purest and most valuable rarities. It's the Argyle Diamond Pink Tender, 2007.

Gavin Pearce is the senior sales executive who coordinates the tenders, from the rough to cutting to the worldwide tours (limited this year to Perth, Hong Kong, and New York), then the silent bidding by which these diamonds are sold. He keeps a respectful, quiet distance while you view the 65 stones, looking more like a Louvre guard than the world's top expert and arbiter of pink diamonds, answering questions briefly, seemingly with as little authority as he can muster. Amid such value and rarity—it's been said that prices of $400,000 per carat are not unknown here—you are in terra incognita. Indeed, only 15 of the 45 stones were given identical grades by GIA and AGT Gem Laboratory of Tokyo, the two labs listed on the case descriptions. In this room, you must make up your own mind.

Until your eye is riveted, that is, by a certain stone's intensity and you ask after its grade or depth. Or color—and this year's tender was all about color, particularly red, rarest of all colors. An unprecedented five reds lay on this year's table, and at least two other stones seem worthy of a second look, or perhaps recutting, to achieve the grade.

Then Pearce's enthusiasm, mastery, and assuredness overtake his professional remove, and as he speaks, you clue in that something very special is going on in this year's tender—as with fancy diamonds at large, but particularly the pinks. "This year the diamonds received an unprecedented level of interest and competition was fierce," says Jean-Marc Lieberherr, general manager of Rio Tinto. "As only a handful of such high-quality diamonds are produced each year, they are also a smart investment choice, guaranteed to grow in value." That interest (and many a successful bidder of past years found himself priced out in 2007) is the demand half of this tender's specialness.

"The best of the fancy colors, the pinks, blues, reds, and greens, are as recession-proof as you're likely to find," says Simon Abraham Zion, fancy specialist of New York's Dehres LLC. "And even though we know blues to be rarer—and you could argue for certain hues of green as well—the pinks are clearly strongest in the private sector, and will continue to be so in the coming years."

"I personally would never guarantee any outside investor that these, or any other stones for that matter, will be worth more in the future," says New York fancy expert Alan Bronstein. "That said, there is interest in fancy colors, at the super-wealthy, hedge-fund level, that we've never, ever seen before."

Australia is not the only source of pinks, but Argyle pinks are demonstratively different—less purply, on average, than Russian pinks and deeper, pinker, and redder than Brazilian or Guinean. That pedigree offers security the serious dollar investor would be hard-pressed to find elsewhere, as does their rareness. It's said the yearly production of Argyle pinks could fit in a baby's fist. "Maybe a toddler would be more accurate?" says Pearce. With live mining concluding in 2018, leaving only a decade for further recovery, what is on display on this table is the perfect flowering both of a rare commodity and a market opportunity—like a Chateau Petrus entering its five-year period of perfect drinking, or buying a Monet when he was in his 20s.

You see the other half of this supply/demand miracle most clearly in the depth of color in the 2007 tender. All but 15 of the 45 stones are deep or vivid—and a few of the larger fancy intense pinks may soon be recut to ratchet the grade up. The ratio would be 35:45 were it not for the red profusion. "No red diamond," as Zion reminds me, "has ever gotten better than a fancy grade."

Lot 28, an AGT certed 0.77 carat fancy red I1 hexagon, is the stone that, for me, best sums up the supply half of the 2007 tender. GIA, which also graded the stone, called it a fancy deep pink. While I certainly see that depth, the pinkness escapes me. It's one of those love at first sight stones, its color, shape, and intensity combining for rarity beyond rarity, and I feel almost resentful at the downgrade. Pearce, while leaning toward the AGT grade, explains the complexity of calling color on such rarity—a unique lesson on how a fancy color's graining, banding, and balance of saturation and hue play into the method by which a grader, banking on his personal experience and his lab's inventory of similar stones, comes to define the ineffable in a few generic words.

To illustrate, Pearce lays the five reds side by side at the edge of the table by the north-facing windows. Feeling like a kid on spree in a candy shop, I soak in the lesson, particularly of banding: Because color in pinks comes from what is known as "plastic deformation" (of the carbon lattice structure), both intensity and hue reveal themselves under 10x magnification in striated linear bands of color. If the stone is red, even if it's modified (which reds almost always are), these bands can approach the redness of a stop sign, a color no cutting technique yet arrived at can bring out as the stone's "body color." The closest a stone has come to pure red body color (a 1987 tender .95 carat purplish red) is said to have fetched well over $1 million per carat at a recent auction.

Lost in these red bands, I become aware that I'm handling the loupe and tweezers like an imbecile. Aside from the gemological fascination, the value of these stones—the whole specialness of this tender—has unnerved me. I feel like I'm looking at the beating heart of money in these red bands, and though it's a dumb question, I keep asking it of myself: What are these little things worth?

"Roughly $1 to $2 million apiece at retail," says John Calleija, who should know. The Australian celebrity designer (recent sales included a 1.81 pink radiant to Luciano Pavarotti on his final trip to Australia) hit paydirt this tender, his 11th. Three of the five stones he won, from "15 or so bids," were the reds, including the .77 carat hexagon. The other two went to fellow countrymen. "Australia and Japan," Pearce explains, "account for 80 percent of worldwide consumption for pinks. Part of that is they're a local product—though indeed many of the sales are to tourists. Even more important, it shows what consumer education can accomplish."

AN INTANGIBLE QUALITY

It's a Wednesday afternoon a month or so after the New York leg, and Calleija's studio in Marina Mirage, on the Gold Coast, south of Queensland, is abuzz. The stones have arrived, in plain parcel papers, and his 12 jewelers are taking their time with them. "There's so much excitement," Calleija says. "You can strategize all you want, package bids together, whatever, and get beat by $1. They sometimes make their announcement as early as midnight of the final day, and I was wide awake, texting Gavin. He got back to me: 'Sorry, no decisions yet, but get the checkbook ready.'"

The success was crucial for Calleija, soon to become the first Australian jeweler to open a door in London. The location, in Bond Street's historic Royal Arcade, will have a strong Argyle message, with pinks, particularly the tender signature pieces, crucial to "driving the media interest as the season comes upon us," says Calleija. "Customers love that it's a tender piece, in a way that no other defining factor can. And if the diamond is significant enough to have its own photo [in the sumptuous annual limited edition book that Argyle prints each year], it stands out as much, even more, than a piece we give a full-page photo to in our catalog."

Already brainstorming jewelry ideas for the stones won, Calleija is still regretting a few not won. Lot 27, a .77 carat fancy deep grayish violet shield, was one he'd already set in his mind. "I love pairing violets, when I can get them, with pinks. It's so beautiful." Even harder-lost was a 1.74 carat fancy purplish red oval, probably the most expensive stone in the tender, with a huge story behind it. Struck from an unheard of 6.5 carat red rough, the stone had defied the cutters in Perth attempting to bring out the color. They cut and recut until a piece of roughly 1.5 carats simply cleaved off, and was lost. "It went to one of my friends here," Calleija says, "for a client in the U.S. And then there was lot 58, also to one of my friends . . ."

One of the stones Calleija won, likewise, was for a client in Melbourne. It's soon headed out the door, and the others not far behind. An Antwerp diamantaire once showed me a 6.5 carat D flawless briolette, which he wasn't getting the price for. "I've always hated 'a diamond is forever,'" he said. "It just means it's still in the safe." For Calleija, amid the joy of the tender wins, is the opposite emotion. "I really don't want to part with these stones," he says. "I've won them, and now I have to, strange word, lose them? So the only solace is to keep buying. I'm 44, and I swear it wouldn't matter: If I were 84, on my death bed, I'd be buying."