In this week’s update, we take a look at the latest developments and trends in the pink diamond market.
It’s an opportune time to do this, given that we are approaching almost two years to the day since the Argyle mine ceased production in late 2020.
We also highlight several key reasons why we think the future of the pink diamond market remains every bit as sparkling as its past.
What’s happening in the pink diamond market
There is little doubt that the last two years have been a boom period for the pink diamond market, not only for those who work in the industry, but more importantly for the buyers who have acquired these assets and who have seen notable price appreciation.
Evidence of this shone through clearly in a recent Jewellery World Magazine article titled; “The post Argyle Pink Diamond panorama”.
The article included information and insights from several leading players in the local pink diamond market, including commentary from myself given Australian Diamond Portfolio’s position as one of the largest diamond brokers in Australia, and my role as the Executive Director of the company.
Some key insights from the report include widespread acknowledgement among industry insiders of the price increases seen for these assets, with one article participant noting that prices for certain stones “have increased from 40 percent to 80 percent in approximately the past two years”.
Another commented that they had seen “a spike in pink diamond prices of some 30 percent” in the year after Argyle ceased production, adding that when it came to bidding in the last few Tenders from Argyle, making bids with these kinds of percentage increases was still not necessarily enough to be “winning the bids”.
Statements like this give further credence to the results that we’ve published for the Australian Diamond Portfolio Pink Diamond Index (ADPPDI), which over the last two years has shown an average growth of approximately 55% for the market as a whole.
Scarcity, combined with persistently strong levels of demand is also a key theme that emerges when reading the article, with one commentator noting that; “I have found this demand [for pink diamonds] to be increasing consistently over the last five years, and sourcing the stones is becoming ever-increasingly difficult.”
They also speak to the dual nature of pink diamonds as both a luxury good and an investment, noting that; “from those who wish to have a pink element in their jewellery, to those who wish to invest in Argyle-certified diamonds, there is a spectrum and no sign of dwindling demand.”
The article also alludes to the very strong levels of demand for pink diamonds from Australia, with one overseas supplier noting that they are selling stones in Australia every week right now.
The future for pink diamonds
The booming demand for pink diamonds and the impressive price growth that they have demonstrated over the past fifteen-plus years, including the surge higher since the Argyle mine closed is clear for all to see.
Indeed, it’s something that we live first-hand on a daily basis at Australian Diamond Portfolio, helping ever more clients with their diamond acquisition journey.
Impressive as the past has been, it’s just as, if not more important, to have an eye on the future.
The industry participants interviewed in the Jewellery World Magazine article were all positive on the outlook for the sector, with developments including the creation of Rio Tinto’s “Icon Partner” program boding well for the years ahead.
We are of the same view as other industry participants when it comes to the outlook for this most rare, and most beautiful of assets.
Our optimism is driven by several factors, starting with the fact that supply will obviously remain tight given so few pink diamonds will be mined going forward now that Argyle is closed.
Demand meanwhile will likely be supported by;
- Displays of wealth: Because they are exquisitely beautiful, people are proud to own and showcase a pink diamond that they own.
- Rarity: Because they are extremely scarce, the limited supply of pink diamonds from Argyle enhances the likelihood that they will maintain their value over time. This is something that is always important, but if our interactions with clients are anything to go by, it is something that many people see as particularly attractive in periods of higher inflation, like we are living through today.
- Investment appeal: While they are not traditional investments in the sense that they pay a dividend or generate a regular cashflow, there is little doubt that more and more people want to own pink diamonds in their portfolio. There are multiple drivers of this, including the strong capital growth that they have generated (which we allude to above), the fact that they have historically been uncorrelated to shares, that they are not volatile like shares are, and because they are seen as being inflation proof, given their scarcity.
As always, we hope you’ve enjoyed this week’s edition of “In the Loupe” and we look forward to any questions or comments you may have.