News

It’s hard to believe that it is already February.

We hope that you had a wonderful and relaxing holiday period with family, friends and loved ones, and are now fully re-energised to take advantage of the opportunities this year will bring.

On behalf of the entire Australian Diamond Portfolio team, we look forward to serving you again in 2024, which we believe is shaping up as another wonderful year for pink diamond investors.

We touch on some of the reasons why we have such an optimistic view of the pink diamond market below, with future versions of these market updates delving into these factors in more detail in the coming weeks and months.

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This will be Australian Diamond Portfolio’s final market update for the year, with the year fast drawing to a close.

As we highlight below, 2023 has been another very pleasing year for the pink diamond market, with investors in these assets continuing to see growth, despite the many economic and financial market challenges that have been faced across the course of the year.

This is something we expect to see carried over into the new year and beyond, with the natural scarcity of these assets, combined with their sheer beauty, and growing demand all contributing to continued price growth.

We touch on these issues below, as well as give our heartfelt thanks to all our clients at Australian Diamond Portfolio who make this job so very enjoyable.

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It’s hard to believe we have already reached December, with Christmas now just two weeks away, and a New Year fast approaching on the horizon.

This time of the year is usually the perfect time to take a break, spend time with loved ones, and recharge ahead of another year that will no doubt bring further challenges, as well as opportunities for all of us, including in the investment world.

To that end, many Australians will be saying a silent thank you that the Reserve Bank of Australia (RBA) decided to keep interest rates on hold at their meeting last week, with the local cash rate still sitting at 4.35%.

While this is good for anyone with a mortgage, it is too early to pop the champagne, as rates may still go higher in early 2024. It also poses an ongoing challenge to one of the other great threats that investors are facing today: inflation, and how to protect and grow wealth in an environment where the real value of many of our assets, and the savings that we have in the bank are being eaten away.

Enter pink diamonds. Not only are they tangible, beautiful, stable and proven performers over the long-term, they are also trusted inflation hedges with a strong history of protecting purchasing power in environments like the one we face today, where consumer prices are rising at a rapid pace.

And, as we will highlight below, the outlook for pink diamonds, and the support underpinning this market is only strengthening, with results from the recent Rio Tinto pink and red diamond tender blowing the market away.

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Christmas 2023 is now officially less than a month away, with the calendar ticking over to December today.

And while we hope all of our clients will get plenty of time for relaxation, as well as quality time with family, friends and other loved ones, there are still investments to consider, risks and opportunities to weigh up, and portfolios to manage, both over the next month, and as we look forward to 2024.

From our vantage point, we’ve been more than satisfied with the performance of pink diamonds this year, with the market continuing to see price growth, the pool of potential investors continuing to grow, and the rationale as to why you’d invest in this niche asset class only strengthening as we approach the new year.

We discuss this in more detail below, looking at a market warning sign we should all pay attention to, and news that highlights the support that the pink diamond market is seeing today.

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We’ve often stated that pink diamonds are like a piece of art, crafted by nature over millions of years.

We were reminded of that when we came across a recent article in The Sunday Times. Provocatively titled, “Red diamonds are not forever”, the article discussed the majestic beauty of these truly rare assets, with one jewellery connoisseur noting that valuing pink diamonds was like pricing, or valuing a piece of art.

The article also noted how pink diamonds have outperformed many stock markets over time, and how resilient they are in the face of adversity, with one commentator noting that when it comes to assets like cars, wines, paintings or pink diamonds, if you “buy the best of the best there will always be customers for that, regardless of recessions.”

We couldn’t agree more, with the long-term case for pink diamonds looking as safe, as strong, and as important as ever as we head toward the festive season and another new year.

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With less than two months to go in 2023, this year has on the whole been very kind to investors, even as higher interest rates and cost of living pressures cause challenges in the broader economy.

In this week’s update, we touch on returns across investment markets this year, the risks that continue to build, and how that may impact asset markets as we head toward the new year.

We also look at the many factors that support investment into pink diamonds, from their tangibility and beauty, to the diversification benefits they bring a portfolio, and their and inflation-hedging qualities.

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In this week’s article, we look at three factors we expect will support the pink diamond market in years to come.

We also look at why investors and would-be investors in pink diamonds will need to be patient, with the two-speed market (which we referred to in our most recent update a few weeks ago) likely to continue for a while.

Interest rates, inflation and currency markets

For many Australians with debt, especially those under the age of 35, the last two years must have felt very strange. For the first time in their adult lives, interest rates have gone up.

Indeed, not only have they gone up, but they’ve risen at one of the fastest rates that we’ve seen in decades, with the Reserve Bank of Australia (RBA), hiking rates from just 0.10% in May of 2022 to 4.10% by June 2023, a time period of just over one year.

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We are almost into the final two months of 2023, with market volatility picking up again, geopolitical conflict a front-page news item again, and the twin challenges of higher inflation and higher interest rates continuing to spark investors to ask the most important question of all…

What should I do with my portfolio?

Given the broader economic and financial market backdrop, combined with the unique supply and demand fundamentals underpinning the pink diamond market, we believe that this niche asset class remains a go-to solution for at least a portion of any portfolio.

This week, we are delighted to share some news from the pink diamond industry itself which highlights the enduring legacy of these assets, and why their investment potential remains undiminished.

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It has been another eventful week for investors, with 2023 looking like it will end with renewed volatility in a range of asset classes.

This volatility, and the need to both protect against it, as well as the need to find fresh avenues to generate growth in a portfolio, have been some of the key drivers of pink diamond demand over the last few years.

The volatility in asset classes is best seen in global share markets, which are again beginning to sell-off, after a stronger than expected start to the year.

In the United States, the S&P 500 is down 6% in the last month, while the ASX 200 in Australia is down by a similar amount, and now back below 7,000 points, a level it first reached back around 2007.

Oil prices have also moved sharply higher, last trading near $90 per barrel, which is one of the key reasons that inflation is not falling as fast as we’d all like, with recent data suggesting prices in Australia were rising by 5.2% per annum in the year to end August.

Meanwhile interest rates also remain at problematic levels for most households, with the likelihood that this will get worse before it gets better. This was made clear last week by the Reserve Bank of Australia.

Despite keeping interest rates steady at 4.10% at their meeting last Tuesday, they warned of the likelihood that they may raise rates further before the year is out, specifically noting that, “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe.” 

We delve into the challenges investors and households are facing, and their likely impact on the pink diamond market, below.

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It’s hard to believe, but 2023 is almost three quarters over, with the calendar fast approaching the end of September.

The year has been characterised by several trends that have impacted Australian investors, including persistently high inflation, a falling Australian dollar, higher interest rates and low consumer confidence.

Despite these challenges, property markets, and the ASX 200 have held up relatively well, leading some investors to become far too complacent. There are signs now that weakness is beginning to return to these markets, with property listings surging due to mortgage stress, while the share market looks like it has peaked.

These factors have led to what is effectively a two-tiered outlook for pink diamonds. In the short-term, greater uncertainty, combined with reduced liquidity and reduced free cash flow amongst households means that there has been significantly less turnover in the pink diamond market.

Over the long-term, these factors support a continued bullish long-term outlook for alternative hard assets like pink diamonds, which should eventually benefit from demand as investors seek diversification, risk-protection, inflation hedging and outright sources of profit in their portfolios.

In this week’s article though, we focus on the primary source of pink diamonds over the past few decades, the now shuttered Argyle Diamond Mine.

Specifically, we look at a newly released study on the formation of this world famous diamond deposit that not only highlights how unique it truly was, but even more importantly, why the supply of these unique assets is set to remain so scarce going forward.

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