News

It’s been another eventful week for investors, with the big news coming from the United States, where a second quarter of falling economic output has economists, policymakers and investors wondering if the world’s largest economy has fallen into a recession.

In Australia, the focus has again been on the Reserve Bank (RBA), who, as expected, increased interest rates by another 0.50% at their meeting held on Tuesday 2nd August. This brings rates in Australia to 1.85%, with the RBA having now raised interest rates at their last four meetings.

We look into these events, and the implications for pink diamond demand in more detail below.

Recession on the way?

It’s been a tough year for investors in 2022. Stock markets have seen significant falls, the bond market is having its worst year on record, inflation is soaring, and cryptocurrencies have crashed.

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Inflation results to the end of June in Australia are due for release this week (this report was completed prior to their publication), with forecasts suggesting that the inflation figure, when released, will show that prices in Australia have risen by 6.3% in the year to end June.

It will bring inflation rates to their highest level in decades, as per the chart below, which shows annual changes in Australian consumer prices dating back to the start of the 1990s.

Australia – Annual Inflation Rate

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It’s been another eventful week for investors.

On the positive side, employment figures are rock solid, especially in Australia, with the local unemployment rate dropping to just 3.5%, its lowest level since the early 1970s.

Stock markets are also finding buyers right now, though they’ve only seen very small bounces relative to the declines seen in the first half of the year.

Negative news has included a continued rise in inflation, with headline growth in consumer prices now topping 9% per annum in the United States, though a recent pullback in energy prices has many hoping we will soon see the peak in this inflationary cycle.

Meanwhile in Australia, housing markets have continued to weaken, with prices now declining across the East Coast, with Sydney and Melbourne leading the fall.

In this week’s article, we discuss the launch of a new pink diamond fund providing investors with a new way to access the pink diamond market.

We look at both what the fund launch means for demand and the potential price trajectory of these unique assets, as well as how funds like this compare to the more traditional way of investing in diamonds, including the services we offer at Australian Diamond Portfolio.

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No matter which way you look at it, the last financial year represents a major turning point for investors, in particular from the volatility seen in the last six months.

We touch on this in the below market update, taking a look at the returns delivered by a range of asset classes across the last 12 months.

We also share three charts which demonstrate clearly that the ‘easy money’ era in traditional assets is over, and why hard assets, including pink diamonds, have been, and will likely continue to be one of the few sources of return for investors going forward.

We also touch on the relative scarcity in the diamond world, and why news that the Ellendale mine will be going back into production only reinforces the bullish outlook for pink diamond prices in the new financial year.

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Happy new financial year!

After a very rough first six months of the year, with stocks, bonds, and cryptocurrencies all suffering meaningful price falls, investors will be hoping for a kinder run in the back half of 2022.

It might be easier said than done though, with interest rates continuing to rise (with the RBA hiking the local cash rate by 0.50% to 1.35% on Tuesday this week, with more increases on the way in coming months), inflation continuing to bite, consumer confidence falling, and warning signs of a recession that may hit by next year.

Despite the gloom, there are always pockets of opportunity, especially for those investors astute enough to respond to the circumstances and position their capital accordingly.

Hard assets were one of the few refuges for investors in the last six months, with pink diamonds in particular offering stability, diversification, and ongoing capital growth.

In this week’s market update, we highlight five reasons that this can be expected to continue going forward!

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2022 is shaping up to be a clear turning point for investors.

Despite the odd period of volatility, which was usually short-lived, traditional financial markets were by and large very kind over the past ten plus years, with large gains seen in stocks, real estate and in bonds.

New age assets like cryptocurrencies also soared, as low interest rates encouraged rampant speculation.

Cost of living pressures were also largely contained, with the period between 2010 and 2020 marking one of the slowest decades on record for increases in inflation.

It was in many ways the perfect world, and perfect time to invest.

All that is over now though, with 2022 the year that we are seeing large scale losses across multiple asset classes, plus soaring cost of living, or inflation pressures.

This new investing world, which may last for some time, has solidified in the minds of many astute investors exactly why they need to own hard assets, so that they can protect their portfolio through this period.

This continues to be a source of support for pink diamond demand, and for pink diamond prices. We expect this will continue to be the case, due to the latest inflation and investment news, which we explore below.

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It’s hard to believe that we are almost half way through 2022, with the end of June and the end of the current financial year hitting next week.

And while there have been some positive signs on the economic front, the most notable of which is a multi-decade low in the unemployment rate, there have also been a range of headwinds, with ballooning inflation rates making cost of living pressures an everyday reality for more and more Australian households.

And while COVID-19 restrictions have by and large been lifted in Australia, the pandemic is still causing issues, particularly in our most important trading partner, China, which has seen parts of the country locked down for large parts of 2022.

Turning to financial markets and it’s fair to say that, so far, 2022 has been a disaster for most investors whose portfolios are concentrated in traditional asset classes.

Stock markets globally have fallen, with the ASX 200 down almost 15% (global markets have done even worse), while cryptocurrencies have been obliterated, culminating in the price of Bitcoin falling below USD $20,000 at one point in the last few trading days, eliminating almost all the gains that date back to the end of 2017.

Pink diamonds are one of the few asset classes that have prospered throughout this period, with our Australian Diamond Portfolio Pink Diamond Index (ADPPDI) suggesting the overall market grew by approximately 15% in the first nine months of the calendar year.

We expect this outperformance will continue, for while we’ve seen some calm return to the markets in the past few trading days, and a short-term bounce wouldn’t be unexpected, there are major warning signs continuing to bubble away.

These warning signs, which we’ll touch on below, only reinforce the reasons why investors may wish to consider looking at hard assets, such as pink diamonds, as we head into the new financial year.

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This week is shaping up as a historic one for financial markets, and not in a good way.

The release of inflation data in the United States late last week, which showed prices are now rising at more than 8.5% per annum, has sparked a crash in global asset prices.

Australia is not immune.

In this week’s market update, we’ll look at what’s happened in global markets in the past few days, and why there might be more pain ahead.

We also look at why these developments, as uncomfortable as they are, only reinforce the need for owning hard assets like pink diamonds in a portfolio today.

Markets are sinking!

No matter where you look, financial markets are sinking, and appear on the verge of imploding.

In Australia today (note that this report is being written on Tuesday 14 June), the ASX 200 is down almost 5%, having now fallen toward 6,500 points, a level it first reached some 15 years ago.

That translates into a decade and a half of zero capital growth in Australian shares. 

The move on the ASX today mirrors weakness seen in the United States, and on global stock exchanges, with the S&P 500 now down 9% in the last 5 trading days. As per the chart below, it’s down over 20% year-to-date.

Factor inflation in, and it’s lost a third of its value.

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It’s been a big week in the pink diamond world, with exciting news that Rio Tinto, the owner of the now closed Argyle Mine, has launched an iconic new program as part of its continued support for, and promotion of pink diamonds from Argyle.

Suffice to say, that it has us feeling very encouraged that the recent strength we’ve seen in pink diamond prices is not an anomaly, and that the market should continue to see meaningful price increases.

We also look at another illustration of how hard investors in traditional markets are finding it in 2022, which reinforces why the demand for hard assets, including pink diamonds, should continue to rise as investors look to diversify their portfolios.

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