Why the wealthy and bored are splashing out on $500,000 jewels during Covid-19

Collectible jewellery sales have soared online in recent weeks as rich investors shop for bracelets and necklaces as a 'pick-me-up'

A 1930s Cartier bracelet, known as a 'Tutti Frutti" has an estimated value of $600-$800,000. Courtesy Sotheby's

Catharine Becket, a specialist at Sotheby’s in charge of its “magnificent jewels” sale in New York, had been working on obtaining a specific 1930s diamond and enamel bracelet by Cartier for five years.

“We’d always hoped it might come to auction,” she says, “and it was just this winter that I spoke to the client, and she decided it was time to sell.”

The bracelet, known as a “Tutti Frutti” for its multicoloured, Mughal-cut stones, is one of the most recognisable designs Cartier ever made, and several bracelets of the same style and from the same period have sold for millions of dollars.

Ms Becket says her client had inherited the bracelet years ago and she’d worn it “I think once". After some discussion, the client agreed to put the piece of jewellery up for auction at the major spring sale at Sotheby’s New York, which was supposed to be held in late April.

And then the coronavirus pandemic hit.

Live auctions were called off and Sotheby’s pivoted to online sales. With global economies faltering, US equity markets whipsawing and people stuck at home indefinitely, the success of online jewellery sales was far from certain. Ms Becket called the bracelet’s owner “and told her that we would evaluate if it should be put in an online sale or deferred to a live auction at a later date.”

But to Ms Becket’s astonishment, collectible jewellery sales started to do well – very well. Speaking to her wealthy clients, she discovered they were buying jewels as a sort of pick-me-up.

“Clients are sequestering at home and, generally speaking, leading relatively dreary lives,” she says. Some, Ms Becket adds, told her “they’re wearing their big diamonds inside their homes because it brings joy".

Everyone, she says, “is waiting for this to be over, and I suppose knowing that a million-dollar piece of jewellery is waiting for you is a fulfilment of when things return to the new normal".

The results speak for themselves. Since the beginning of March, Sotheby’s has run four online sales. Of them, 92 per cent of every lot sold, and 61 per cent of the lots exceeded their high estimates. In total, the sales brought in $6.1 million (Dh22.4m), above the high estimate of $5.7m.

“What we’re finding is that anything of good quality is performing well,” Ms Becket says, “and actually better than it would have just a couple of months ago.” A 1930s-era diamond ring that carried a high estimate of £90,000 (Dh412,544) sold for £162,000; a yellow-diamond ring that carried a high estimate of HK$1.6m (Dh0.75m) sold for HK$2m; a pair of emerald and diamond earrings from Graff sold for £50,000, above a high estimate of £32,000.

Given the strength of these sales, Ms Becket decided that “I could call the client with complete confidence and say to her that I thought we’d do a great job [selling the Tutti Frutti bracelet] online". The bracelet will be offered in a stand-alone sale, with online bidding open from April 24 to April 28. The estimate is $600,000 to $800,000.

The rise in online collectible jewellery sales comes at a time when the price of raw diamonds has sunk precipitously. Prices at industry auctions for rough diamonds have sunk from 15 per cent to 25 per cent, according to an April 7 release from the Rapaport Research Report. Demand for polished diamonds has also plummeted.

“Polished exports from India fell 41 per cent year-on-year in February,” Rapaport wrote, while “shipments from Belgium dropped 38 per cent". Meanwhile, “inventory rose among diamond manufacturers and dealers, with new supply becoming available while demand stayed frozen. We estimate that midstream inventory increased 20 per cent from the beginning of the year to mid-March".

If buyers are looking for an alternative asset to place their cash, in other words, diamonds, at least for the moment, are not an obvious safe haven.

“I don’t think people were buying for the sake of investment,” Ms Becket says. “We had a recent sale in Hong Kong, online, that was pretty much exclusively diamonds, and it did incredibly well.” It’s true, she continues, that “there has been a softening” in the auction market for jewellery as the value of loose stones has declined. But demand has stayed strong, Ms Becket says, for lots with a compelling provenance, a prestigious maker, or a uniquely compelling aesthetic element to the object.

“The Tutti Frutti bracelet is a case in point,” she explains. “The stones in a Tutti Frutti bracelet are pretty modest in intrinsic value,” because Cartier purposefully chose flawed coloured stones to contrast with the brilliant diamonds and settings. “So the Tutti Frutti jewellery we value more as works of art.”

Now the question is whether or not buyers are willing to spend almost a million dollars on a bracelet they’ve never seen in person. Traditionally, Ms Becket says, people are most willing to buy things with which they’re familiar: a Cartier “Love” bracelet or pieces made by famous jewellers such as Graff or Bulgari.

In the past few sales, though, Ms Becket has seen a “broadening” of what’s done well at auction. “A multicoloured pair of ear-clips, something we wouldn’t think would do that well online, suddenly has a number of bids,” she says. So the Tutti Frutti bracelet may well be the ultimate test of buyers’ willingness to take leaps of faith at online auctions.

“If these kind of pieces continue to do well, it will mean the pandemic has forced us to arrive at the place we were heading anyway,” she says, “where people have become more and more comfortable buying things online, sight unseen.”