23 Jun

ADP on the ABC

It seems that despite our strongest hopes, Australia will be grappling with COVID-19, and the disruption it can cause for a while longer, with the last week seeing cases of the disease spreading along the Eastern seaboard, and restrictions and mask mandates being brought back into our home state of NSW.

Meanwhile, financial markets are seeing heightened volatility, from equities to currency markets (the Australian dollar fell almost 5% last week), to cryptocurrencies and even precious metals.

By comparison, the pink diamond market remains a sea of tranquillity, with prices continuing to steadily increase, both due to the limited supply, and the uptick in demand we continue to see, which in many ways dates back to the closure of The Argyle Diamond Mine in last 2020.

Pink diamonds themselves have also been in the news again over the last week, with Australian Diamond Portfolio featuring heavily in an ABC News article on the investment opportunities this truly scarce asset class offers.

We explore in more detail below.

ABC News headline

ADP on the ABC

Last week, the ABC ran an article focusing on the pink diamond market, which was prompted by the news that a special private collection is being put to Tender right here in Australia.

The majority of the collection, which is estimated to be worth almost $20 million in total, and contains more than 30 stones, has been in the hands of the current owner since the early 1980s, back around the time the Argyle Diamond Mine was first opening.

The ABC article also focused on a handful of other factors, from recent demand trends, to the investment case and the outlook for pink diamond prices, in the years ahead now that the Argyle Diamond Mine has closed. We were quoted a few times in the article, with the journalist particularly keen to get our insights into the state of the market locally, given our unique position as the largest independent pink diamond brokerage in Australia.

From our perspective, the closure of the Argyle Diamond Mine has been a catalyst kickstarting both heightened demand, and a surge in prices, which we are seeing directly through an increase in investment clients. Indeed, we noted this in the article itself, highlighting the fact that “since the announcement that the mine has ceased operating, we’ve seen an almost 50 per cent uptick in demand in the first half of this year.”

Some of this has come from existing clients adding to their diamond portfolios, though the majority has come from first time investors, with the article noting “we’ve had many clients walking through the door over the past six months saying they’ve been thinking about investing for a while, but that now really does feel like that last opportunity to get into the market.”

From our perspective at ADP, the rationale as to why you’d invest in pink diamonds gets stronger by the day; given the 10% per annum increase in prices we’ve seen for most of the last two decades, and their “inflation-protecting qualities and ability to generate strong long-term returns make them attractive investments in their own right.”

Given this backdrop, we think these trends in the market will remain in place for years to come, noting to the journalist that; “going forward we’re feeling pretty incredibly optimistic on the outlook of the stones and expect that a very robust secondary market is going to emerge in pink diamond trading.”

You can read the article in full by clicking here.

A reminder of the value of pink diamonds!

This last week has served as an excellent reminder of the value of pink diamonds, and the multiple reasons they can play a unique and valuable role in investors’ portfolios.

One of those reasons is stability, with pink diamonds steadily climbing in value, delivering strong long-term returns, without experiencing the kind of short-term volatility other assets suffer from.

By comparison, last week we saw a handful of other markets get clobbered, including precious metals like gold and silver, with gold falling by more than USD $100 per ounce, or more than 7%.

Cryptocurrencies fared even worse, with Bitcoin, the most high-profile of them all, falling by more than 12% last week, and now some $30,000 (circa 45%) below the price it traded at a few weeks ago.

Pink diamonds suffered no such setback.

This stability, and the sense of safety that it offers to investors who put some of their money in this unique asset class, will be one of the many factors which propel prices higher in the years to come.

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.


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