News

It’s hard to believe we are almost half way through September, with Christmas 2021 fast approaching. Like all of you no doubt, we hope that the situation with COVID-19, and the lockdowns and restrictions on our freedoms and movement are but a memory by the time Santa comes to town in a few months, and that 2022 is a better year for us all.

In this week’s market update we look at some interesting economic data which serves as a real wake up call for those thinking that the global economy is surging right now.

We also look at some interesting statistics on global diamond production, which reinforces why it’s so important to specialise in pink diamonds when investing in this unique asset class.

A wake-up call!

Two data points that we came across last week highlighted how fragile the global economy remains, which has important implications for how to invest in the years ahead.

In the United States, we saw the latest non-farm payrolls report, which is the most widely reported employment figure that market participants in the United States look at.

read more

While it may feel like Groundhog Day in New South Wales and Victoria right now, investment markets continue to move.

Late last week, attention turned to US Federal Reserve (The Fed) Chair Jerome Powell, who spoke about the outlook for the US economy, and for financial markets, in light of the spread of the Delta variant of COVID-19.

For some time now, market players have expected The Fed to announce that they would soon taper their quantitative easing program, which would involve The Fed printing less money going forward.

Turns out we aren’t likely to see meaningful change for some time to come, as The Fed noted that there were still considerable risks in the economy,  and that they weren’t too worried about higher rates of inflation, even though inflation is over 5% per annum in the United States right now.

This lack of urgency from The Fed suggests that those inflation rates, and the fear of higher inflation, are likely to persist for some time to come.

Higher rates of inflation are of course one of the catalysts (though not the only one) that we think will support much higher pink diamond prices in the years to come, alongside the continued attention that this asset class is continuing to generate.

More on this below.

read more

With the challenges posed by COVID-19 and the associated lockdowns in Australia unlikely to be resolved soon, we want to again begin this article by passing on our best wishes to all of our clients and readers.

We hope you and your families, loved ones, friends and colleagues are safe and in as good a spirit as is possible, and we look forward to better days for all of us soon.

In this week’s market update, we focus on a recent article published in The Australian, discussing the closure of the Argyle Diamond Mine, the last ever Argyle Pink Diamonds Signature Tender, and most importantly, the continued investment case for pink diamonds.

As you’ll see, the outlook remains spectacular, with a key decision from Rio Tinto highlighting just how much faith they continue to have in this truly rare asset class.

Last chance to buy world’s rarest asset

Last week, the Australian published a great article, titled “Last chance to buy world’s rarest asset.” Pleasingly, the article quoted figures from Australian Diamond Portfolio, with our research suggesting that prices have risen about 500% in the last 20 years, with annual gains of between 10-15% depending on the specific stone.

The subheading to the article succinctly captured the brilliant performance of pink diamonds since the turn of the century, and why prices are set to soar in the years ahead, noting that “With Rio Tinto’s Argyle mine now closed and its final tender now in progress, demand for pink diamonds is set to skyrocket.”

read more

It seems like the COVID-19 situation and the associated lockdowns are going from bad to worse in Australia, with the ACT joining Victoria and NSW in ordering citizens to stay at home.

In NSW, the situation continues to deteriorate, with the Premier all but admitting that the virus can no longer be contained, and the significant economic disruption caused by lockdown set to continue for months.

On behalf of the team at ADP, I’d like to send our very best wishes to all of you reading this who are affected by this situation, and hope that things begin to normalise as we head toward Christmas this year.

In the meantime, while the economy is largely closed, the markets remain open. In this week’s update, we look at building inflationary pressures across the economy, the impact it will have on investment portfolios, and why higher inflation will support pink diamonds.

Inflation beast is stirring

In periods where inflation rises, very few asset classes, from cash to shares to property actually do well, with most going backwards in real terms. Hard assets tend to be one of the few investment refuges in such an environment, with the desire to protect against higher rates of inflation one of the key reasons investors are turning to pink diamonds.

read more

Despite the good news that Queensland looks like it will be easing restrictions and hopefully coming out of lockdown soon, much of the east coast of Australia remains “shut”, with attempts to limit the spread of COVID-19 likely to remain in place for months at this stage.

The economic cost, which we alluded to last week, is starting to express itself more directly on the employment front, with the latest data suggesting the country lost just over 175,000 jobs in July across all the mainland states.

Research from Roy Morgan also suggests there are now 2.76 million Australians, approximately 18.8% of the workforce, that are either unemployed or underemployed.

Given this backdrop, it’s safe to say that it will be a long-time before the economy can properly recover, with households likely to be particularly cautious when it comes to their finances, while businesses will remain reluctant to invest.

The impact on the Australian dollar is also likely to be negative, though it will of course support assets like pink diamonds.

We explore this in more detail below.

read more

It’s been another troubling week of developments on the COVID-19 front, with large parts of Queensland looking like they may join New South Wales in a multi-week lockdown, while variants of the disease are again causing problems in countries like Israel and America.

In financial markets volatility is again becoming a factor, with the Australian dollar for example beginning to suffer, while iron ore, our key commodity export here in Australia, now down about 20% from its all-time highs earlier in the year.

Last week also saw further evidence that inflationary pressures continue to build across the economy, with the latest data suggesting prices in Australia increased by almost 4% in the year to end-June.

Compare that to current bank interest rates which are close to 0%, and you can see why investors are increasingly looking for alternative ways to protect and grow wealth.

Pink diamonds will remain one of the key assets set to benefit as these trends play out in the years ahead, particularly as the costs caused by COVID-19, and the lockdowns designed to prevent its spread are only set to grow.

Lockdown costs will grow!

Given the length of the lockdown residents in New South Wales are currently going through, and the lockdowns seen in Queensland, South Australia and Victoria of late, there is no doubt we are going to see a massive hit to economic output in Australia.

read more

While the COVID-19 situation in Victoria, South Australia and Queensland appears to be improving, things are going from bad to worse in New South Wales, with lockdowns quite possibly set to be extend into September.

The social, economic and financial market impact of these lockdowns, which is already profound, will only grow more severe the longer it lasts, with more debt and more money printing absolute certainties at this point.

Financial market volatility is also set to increase, which is encouraging astute investors to look at the best ways to protect and grow wealth.

This week’s report reinforces why pink diamonds are a sensible investment opportunity, especially in the current investment climate, looking at some of the tailwinds that will support hard assets in the years to come, and the latest trends which highlight how strong the pink diamond market is today.

Investors to shift asset allocations in the years ahead

Earlier this month we came across an interesting report looking at the way institutional investors allocate client money, and how that is likely to change going forward.

These institutional investors would include the Australian superannuation funds managing your retirement money (unless you have a SMSF, which a lot of clients of ours either do, or are looking at getting).

The chart below comes from that report and shows the percentage of each portfolio that is invested in a range of asset classes today, from equities to commodities to cash, and what the percentages are expected to be three years from now.

In our view, the chart highlights an interesting trend that will support the case for hard assets, including pink diamonds, in the years to come.

read more

It’s hard to believe that yet another financial year has begun, with July almost over already.

Given the ongoing disruption in Australia due to COVID-19, many could be forgiven for thinking it’s Groundhog Day.

But while day to day life might seem like it’s on hold, financial markets, and the opportunities they offer investors, are as fast moving as ever.

Indeed, now is the perfect time to take stock of one’s portfolio, and make sure you are best positioned to maximise the profitable opportunities available in the investment marketplace today, while avoiding the multiple risks that are also on display.

The Australian Diamond Portfolio Annual Report

We are proud to use this week’s market update to launch our latest Australian Diamond Portfolio annual report.

As usual, our annual report is packed with a range of must-see information for any diamond investor, including:

• A review of financial markets and the global economy over the last year.
• Analysis of the latest developments in the Australian economy, including a look at share and property markets, superannuation funds and the Australian dollar.
• An update on the performance of pink diamonds, utilising pricing data Australian Diamond Portfolio has collated covering upwards of 10,000 pink diamonds.
• The closure of the Argyle Diamond Mine.
• The outlook for investment going forward, and why pink diamonds are one of the best investment opportunities available to investors today.

 

Download Report

 

As always, we hope you’ve enjoyed this week’s edition of “In the Loupe” and look forward to any questions or comments you may have.

Despite our best wishes, it looks like the disruptions caused by the spread of COVID-19 are here to stay. In New South Wales, we are now likely facing a prolonged period of lockdown, while other states are likely to keep borders shut and/or restrict the free movement of people until a much larger percentage of the population are vaccinated, which is months away at best.

While it might feel like we are stuck in Groundhog Day given the ongoing COVID-19 restrictions, and the blanket media coverage of every case diagnosed, the investment world, and the threats and opportunities it provides for our portfolio, is moving on.

To that end, we wanted to share a couple of insights this week which reinforce the risks posed by traditional asset classes, and why pink diamonds remain a great way to both protect and grow wealth in the decade ahead.

Two warning signs for investors

It’s hard to believe, but the stock market in the United States has now doubled since the first quarter of last year, when the original COVID-19 panic caused global markets to tank.

It’s one of the fastest and most impressive stock market rallies on record, with the year on year increase in the S&P 500 (the main stock index in the United States) to the end of June almost equalling the highest ever year on year move seen in 50 years.

Sadly though, this stock market rally hasn’t been fuelled by a genuine economic recovery or a huge increase in earnings or capital investment by the companies that make up the S&P 500.

read more

It goes without saying that the COVID-19 situation in Australia has gone from bad to worse to disastrous in the space of the last week. Lockdowns and restrictions on movements that were at first limited to 4 local government areas in New South Wales, where Australian Diamond Portfolio is headquartered, have quickly spread up, down and across the nation.

As I write this note on Tuesday 29 June, nearly the entire country is affected in some way, with Queensland, Perth, New South Wales and the Northern Territory all in various states of lockdown, whilst there are restrictions in place in South Australia and Victoria.

The rather sad image below sums it all up!

Whilst we all wish this scenario wasn’t unfolding, this week has smashed once and for all the idea that 2021 would see a return to normal, with the loss of personal freedoms, and the economic dislocation caused by COVID-19 now likely to be a factor well into next year.

Indeed, this time it could be worse, at least in an economic sense, with most of the emergency stimulus that was deployed last year to keep the economy going having now ceased, with nothing as yet to take its place.

All this uncertainty will no doubt have investors reassessing their portfolios, with a greater focus on wealth preservation.

Whilst pink diamonds have a well-deserved reputation as a safe haven asset – they offer far more than that to astute investors wanting to build a portfolio of profitable assets.

We explore in more detail below.

read more