Initiated by Eden Rachminov, The Fancy Color Research Foundation was officially launched in 2014, along with the new price trend index. Eden Rachminovis the author of The Fancy Color Diamond Book and winner of the National Color Diamond Association (NCDIA) education award.
Need for the Formation
The Foundation has been formed to promote fair-trade, ethics and transparency in the fancy color diamond retail, wholesale and mining, industry, commented EdenRachminov. He further added that fancy colour diamonds are an exceptional product that requires deep and extensive knowledge to successfully trade and purchase. By promoting greater understanding of fancy colour diamonds through education, explanation of long term price trends and driving fair trade principles through the value chain the Foundation hopes to benefit the whole fancy colour diamond industry.
Structure and Governance
The Board of Advisors guides the policy and activities of the Foundation.The Board of Advisors for The FCRF comprises leading figures in the fancy colour diamond industry from throughout the value chain including Eden Rachminov, Tom Gelb from the NCDIA, Jim Pound from Dominion Diamonds and Irene Leung, Director of the Gemmological Association of Hong Kong, President of GIA Alumni Association and the General Manager of Bossa Jewellery.
The Board of Advisors is supported by a secretariat that manages the membership and implements the foundation’s initiatives.
On his role in the Foundation…
The foundation was initiated by me. As a non-executive member of the Board of Advisors, I am using my expertise of the fancy colour diamond industry for the benefit of the Foundation. Ambitions and activities of the FCRF will be guided and evaluated by an experienced board of advisors throughout the diamond pipeline. In addition, all tools developed by the Foundation will be verified by expert third parties and the board of advisors benefits from expertise from throughout the diamond value-chain.
Also, I would like to add that there is absolutely no conflict in me being the managing owner of Rachminov 1891, as the Foundation and Rachminov 1891 are totally unrelated from an operational and governance perspective.
Activities
There are three key areas that the Foundation will focus on – firstly, greater clarity of fancy colour diamond valuation and long term price trends with proprietary analysis of over 60,000 fancy colour diamond transactions since 2005; secondly, education through publications and digital tools such as The Fancy Color Diamond Book and upcoming publications that cover the evaluation of fancy colour diamonds and; thirdly, promotion of fair trade through the fancy colour diamond pipeline.
Path Ahead
We have a number of high quality initiatives planned. These will utilise the board of advisors expertise, new technology in the delivery of education and the clarification of long-term pricing trends in fancy colour diamonds.
Foundation and Charitable works
The Foundation’s work will support the Make-a-Wish Foundation, a children’s charity with close links to the jewellery industry. In addition to the charitable activities, the promotion of fair trade through the fancy colour diamond pipeline is also an important aspect of the Foundation’s work.
How is The FCRF different from the NCDIA?
The two organisations are very different. The Foundation is focused on education and understanding of fancy colour diamonds through high quality research, greater transparency and increasing fair trade throughout the value chain. While NCDIA also seeks to deliver education and its aims are more focused on the consumer.
On membership
There are a number of founder members who are listed on the website. The membership packages are on the website. There are no limits to the number of members that the Foundation can have however, we want the members to play an active role in the development of the Foundation’s activities so there is a natural limit to the scale of the membership.
The Fancy Color Diamond Index
This index is a first-of-its-kind tracker of changes in the market prices of yellow, pink and blue fancy colour diamonds; the three most commonly traded fancy colour diamond categories. The index is a composite representation of changes in price points gathered since 2005, based on a statistically significant sample size (over 65,000 diamonds). It offers insight into variations in the appreciation of diamonds of different colours and sizes. Currently, the index includes five primary outputs which are offered free of charge to collectors, retailers and traders:
1. A colour composite fancy colour diamond index (including a breakdown to yellow, pink and blue diamonds)
2. Yellow fancy colour diamond index – which tracks the changes of three yellow saturations (Fancy, Fancy Intense and Fancy Vivid)
3. Pink fancy colour diamond index – which tracks the changes of three pink saturations (Fancy, Fancy Intense and Fancy Vivid)
4. Blue fancy colour diamond index – which tracks the changes of three blue saturations (Fancy, Fancy Intense and Fancy Vivid)
5. A size composite fancy colour diamond index (including a breakdown to the performance of different sized diamonds)
6. Market prices are wholesale transactions taking place in one or more of the global diamond trading centers.
The Foundation collects large scale product sample data from a select group of fancy colour diamond experts in three main trading centers: Hong Kong, New York and Tel Aviv. Raw product information is collected, cross-referenced, verified and documented daily by the Foundation staff. The analyst team then conducts various analyses using the raw data and develops periodic publications.
Date sourcing
Core pricing data is collected from a group of fancy colour diamond experts that trade a significant volume of rare fancy colour diamonds, based in three diamond trading centers: Hong Kong, New York and Tel Aviv. Each index data set is based on diamonds traded and evaluated during each six month time period. As of January 2015 and going forward, data will be evaluated over a three month time period. Information shared by the parties is verified and compiled by The Fancy Color Research Foundation. Separately, the prevalence data necessary for weighting the different price data points in order to reach a composite index, was developed by an independent consulting firm which conducted an in-depth research of the fancy color diamond sources and availability.
More on the index…
The index focuses on the most important saturation levels (Fancy, Fancy Intense and Fancy Vivid) and the most commercially common size categories (1ct, 3ct, 5ct, 10ct). While not covering all existing fancy colour saturations and sizes, this sample provides an extensive view of the entire fancy colour diamond segment.
The fancy colour diamonds are consistently priced across the globe. They are traded by thousands of independent trading businesses worldwide daily, generating a significant volume of rare fancy colour diamonds transactions. This high level of fragmentation creates high efficiency in this market and prevents price inflation or monopolistic behavior.
Usage
The index can be used to understand and track the historical price behaviour of different rare fancy colour diamonds. This is useful for the consumers and collectors trying to estimate the change in value of a diamond they own; for traders and retailers who seek an indication of current market prices based on their previous purchases or for estimating changes in their inventory value; and for the investors who are deciding between several options of rare fancy colour diamonds for investment
For Collectors
The index helps collectors estimate the change in retail replacement value of the most traded fancy colour diamonds over time. In order to extrapolate data from the index to an individual diamond, the user will need to obtain: 1) The basic characteristics of the diamond (as they appear in the GIA report) and 2) Date of purchase
The user should first identify the most appropriate graph to use according to the diamond’s colour and saturation. After calculating the appreciation on the graph since the time when the diamond was purchased, the appreciation should then be applied to the valuation. Please note that specific stone characteristics may result in a variation from the suggested index appreciation.
For Retailer
The composite index represents changes in market prices throughout this period. In order to better estimate the value of existing inventory, it is important to calculate the expected appreciation of each stone individually, using the appropriate graph for each stone evaluated. While the index may offer a good indication of price behavior of the inventory, the accuracy may vary depending on whether the inventory was purchased above or below market
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