One of the rarest gems in the world, a flawless blue diamond, has sold for US$7.98 million (3.91 million pounds) at a Sotheby's auction in Hong Kong, making it the most expensive gemstone in the world, per carat, sold at auction.

After intense bidding, the 6.04 carat, internally flawless blue diamond fetched HKD61.9 million (3.91 million pounds), or US$1.32 million per carat. The price smashed a 20-year-old record held by the "Hancock Red" -- a red diamond, which fetched US$926,000 per carat at the time, Sotheby's said.

Sotheby's said the buyer was "Moussaieff Jewellers" in London which has a reputation for acquiring extremely rare and costly gemstones. The seller was a private Asian collector.

Blue diamonds have long captivated the rich and powerful -- shimmering with a certain dark mystique. The famous "Hope Diamond", a 45.52 carat grey-blue beauty, was passed down through the ages by King Louis XIV of France, Marie Antoinette and American heiress Evalyn Walsh McClean among others. It now rests in the Smithsonian Institute in Washington D.C.

The Sultan of Brunei reportedly bought another massive "blue" which surfaced briefly in the 1980s.

While not a large stone, the Sotheby's diamond has an esteemed cut and "fancy vivid blue" hue, factors which contributed to its blockbuster price -- roughly 10 times the per-carat price of regular white diamonds.

The blue hue is a result of trace amounts of boron in the stone's crystal structure.

Other coloured diamonds with pink and red hues can be mined in multiple locations across the globe including Brazil, India and Australia, but "blues" are mostly found at just one site on earth -- the Premier Mine in South Africa.