Whilst it’s been a quiet week in terms of pink diamond specific news, there has been no shortage of activity in all financial markets, from disappointing job results in the United States, to continued volatility in cryptocurrency markets.
In this update, we wanted to share with you some insights from financial news media that we’ve consumed in recent weeks, with some important takeaways for actual and prospective clients of Australian Diamond Portfolio.
This media is very relevant to the investment case for pink diamonds in the decade ahead, and deals with a range of topics, from the potential for a major stock market crash, to a continued bull market run in commodities, and the almost certainty of more money printing, or Quantitative Easing (QE) as it’s called by central banks, including here in Australia.
It’s hard to believe that we are almost half way through 2021.
At times, it seems like 2020 never really ended, with the first five months of this year characterised by a seeming start-stop-start-stop approach to reopening the global economy, with vaccination rollouts competing with continued COVID-19 outbreaks around the world.
Australia, despite our “success” (or should we say luck) in limiting the spread of COVID-19, is well and truly caught up in this trend, with Victoria entering yet another lockdown this week.
Meanwhile, our chances of meaningfully opening our borders to international visitors continue to be hampered by our incredibly slow vaccination rollout, which lags behind almost all developed market countries, with some analysts now expecting we won’t be opening the borders until mid to late 2022 at this stage.
Whilst stock markets have by and large looked through the continued disruption caused by COVID-19, there is no doubting there will be a price to pay at some stage.
Astute investors are preparing for this already, which is one of the factors propelling pink diamond demand, and pink diamond prices, higher in 2021.
It’s been another interesting week in financial markets, with inflationary threats continuing to build, commodity prices getting crunched, and cryptocurrencies collapsing, with many having now dropped by close to or in some cases more than 50% in the last month.
Whilst all those factors support the investment case for pink diamonds, our latest market update rightly focuses on the incredibly exciting news that Rio Tinto have released the very last Argyle Pink Diamond Tender.
Below, we cover news about the Tender, and what the impact of this Tender, and the closure of the Argyle Diamond Mine more broadly means for pink diamonds, and the investment opportunity they offer.
A stunning RED Argyle Signature Tender diamond recently sold by Australian Diamond Portfolio.
It’s been another volatile week in financial markets, with cryptocurrency prices crashing, and equity markets starting to fall as well.
The biggest news of the week was the much higher than expected US inflation result (over 4% year on year), which showed prices rising at their fastest level in over a decade.
The chart below, which comes from ING, highlights inflationary trends over the past 8 years, with the speed of price gains accelerating dramatically in the past few months.
As regular readers of our market reports will know, we see higher inflation as one of the key catalysts that will send pink diamond prices soaring in the decade ahead.
Seeing higher rates of inflation, and record low interest rates, it is only natural that investors will respond, and will increasingly look to rotate money out of cash, and into hard assets that offer the kind of capital gains that not only match, but indeed exceed inflation rates.
It’s been another eventful few days in financial markets, with the most media attention paid to the appearance of Tesla CEO Elon Musk, who hosted Saturday Night Live (SNL) in America over the weekend just gone.
His hosting of SNL was widely anticipated for a number of reasons, the most notable being his recent commentary (primarily via Twitter) on cryptocurrencies, especially Dogecoin.
For those who haven’t followed the crypto market that closely, Dogecoin was originally created several years ago as a joke, with a price that is determined by nothing other than speculation.
In the last few months, the Dogecoin price has risen to stupendous heights, outperforming nearly all cryptocurrencies, including the more high-profile ones like Bitcoin and Ethereum.
This rally, which has mostly been fuelled by Musk’s tweets, at one point saw the market value of Dogecoin hit approximately USD $80 billion last week, making it “more valuable” than companies like Kraft, Ford and Honda.
Unsurprisingly, given that all bouts of market euphoria end in busts, the price of Dogecoin crashed over the weekend, dropping 36% in about half an hour, with the following price chart highlighting the crazy volatility in this market.
Whilst this kind of price activity in illiquid unregulated asset classes is capturing lots of media attention, most smart investors realise this is nothing more than gambling, with most people playing this game likely to burn their money.
More importantly, it is distracting some investors from the far bigger picture they should be keeping their eyes on. And that big picture, which deals with what is happening in the real economy, and with inflation, remains very troubling.
It’s also why the next decade is likely to be so rewarding to pink diamond investors.
It’s hard to believe that we are already a third of the way through 2021, with the weeks and months just flying by. The threat from COVID-19, and the limitations it continues to place on freedom of movement sadly remain ever-present, even if we in Australia have largely (and thankfully) been spared the worst of the disease itself.
In financial markets, we see signs of euphoria everywhere, from stocks to crypto to real estate and SPACs.
In this week’s update, we continue our Investment Series, and highlight a range of special diamonds we are now offering clients at Australian Diamond Portfolio.
We will start though with a detailed look at the various metrics by which investors may wish to compare pink diamonds vs. the share market as investments. This is something that we believe is highly topical for clients of Australian Diamond Portfolio, as you will see below.
Despite all of our wishes, it seems that the challenge posed by COVID-19 is still before us, with lockdowns in parts of Australia and limitations to freedom of movement coming back into effect this week.
Globally, whilst some countries have almost vaccinated their entire population, others, most notably India, are facing a crisis, with latest estimates suggesting up to 350,000 people a day are being diagnosed with the disease.
Given this backdrop, it seems entirely likely that the economic challenge posed by COVID-19 will continue for much, if not all, of this year, which will likely necessitate more government stimulus, more central bank money printing, and an even greater desire by investors to protect their wealth with hard assets.
In this week’s update, we look at various metrics by which investors, including clients of Australian Diamond Portfolio, may wish to compare two high profile hard assets: pink diamonds, and gold!
Pink Diamonds vs. Gold
When it comes to pink diamonds and gold, there are a range of characteristics by which both can be measured in their own right, and in comparison with each other.
The most high-profile event in financial markets last week was the NASDAQ listing of crypto-currency exchange Coinbase, which caused peak exuberance in the Bitcoin community, with the price of the world’s most famous cryptocurrency surging to more than USD $60,000 per coin.
Whilst those who are hyper-bullish on Bitcoin proclaimed that the Coinbase listing was the beginning of a new era for cryptocurrencies, and were busy rushing out ever higher price predictions, risk conscious investors were seeing it as a potential bubble warning sign, as it is the kind of market activity that often coincides with multi-year tops in an asset class.
So far, the risk conscious investors look like they may be right, with the screenshot below, taken from a pro-trading screen over the weekend, showing the price of Bitcoin at just over $56,000, having fallen almost 10% in a matter of hours.
It got worse in the hours that followed, with the cryptocurrency falling down toward USD $50,000 at one point, a decline of roughly 20% in the space of one day.
This frenzied activity marks the perfect time in our Investment Series to focus on a comparison between Bitcoin, and cryptocurrencies more generally, and our asset class of choice, pink diamonds.
Pink Diamonds vs. Bitcoin
Below, we list several characteristics by which one can, and indeed should compare pink diamonds to Bitcoin, both of which have been very profitable investments.
It’s been another interesting week in financial markets, with the biggest news in Australia being the bungled attempts by the Federal Government to secure a reliable supply of COVID-19 vaccinations.
The situation has become so dire that the major vaccine we were planning on using, produced by AstraZeneca, is now no longer going to be used in most cases for people under 50, whilst according to some reports, doctors are refusing to administer it given their concerns about potential legal liabilities.
Whilst we appreciate the politics around COVID-19 itself, and the vaccine rollout are contentious, they are worth mentioning in the context of their financial market impact, as this is relevant for all investors, including clients at Australian Diamond Portfolio.
To that end, the challenges Australia is facing on the vaccine front are beginning to show up in foreign exchange markets, with the Australian dollar beginning to weaken versus the USD in the last few weeks.
After topping out at USD 0.797 in late February, the AUD has fallen just over 4%, and closed last week at USD 0.761.
Whilst that is by no means a large fall, it could well be a sign of things to come, with the local currency at risk of a more meaningful pullback in the months ahead.
It’s worth remembering of course that in March last year, the AUD was only trading at USD 0.557, with the local currency almost 40% higher than it was just over a year ago, with recent moves in the FX rate seen in the chart below.
AUD vs. USD FX Rate
That strength in the AUD, which is unlikely to persist, is one of the reasons clients at Australian Diamond Portfolio are busy adding to or beginning their diamond portfolios now.
Financial markets appear set to keep investors on their toes for all of 2021, with the first quarter of the year throwing up no shortage of surprises.
The bond market had one of its biggest sell offs in decades, whilst commodity prices and inflation expectations continued to increase. Cryptocurrencies were also very strong across the quarter, whilst supposed safe havens like gold crashed, suffering their worst quarter in twenty years.
Finally, despite the volatility that we saw in some stocks like Tesla, the overall stock market continued to climb, with the S&P 500 in the United States topping 4,000 points in early April.
In the diamond world, we have continued to see strong demand for pink diamonds, in particular those from the recently closed Argyle Diamond Mine, with investors looking to add these to their portfolios.
News that select Argyle Pink Diamonds typically sold via tender are fetching more than a million dollars each at auctions will help keep this unique asset class front of mind for a growing pool of would be investors, all of whom are looking to protect and grow capital in the years ahead.
In this week’s update, we kickstart our Pink Diamond Investment Series by looking at pink diamonds, and comparing them to superannuation, an investment that is of immense importance to every working Australian.