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.”
As we have often discussed with clients at Australian Diamond Portfolio, pink and red diamonds are the rarest of the rare.
To reinforce this, consider that while the pink and red diamonds sourced from the Argyle Diamond Mine represented over 90% of total global supply, they only represented less than 0.1% of the total diamond output from the mine itself.
The article itself quite rightly addressed the rarity factor of pink diamonds with Michelle Sherring, the Diamond Sales Director for Rio Tinto noting that; “I think the fundamentals of that rarity just speaks volumes, they’re such flukes of nature that like rare art, they come few and far between.”
Continuing on with this theme, and speaking to the potential for continued price gains, Sherring also noted that; “I don’t think anyone could have foreseen how astronomically the price would have gone, and I don’t think it will stop here. None of us have a crystal ball but when we’re talking about these stones potentially becoming the diamond artefacts of the future, with no other, at this point in time, source of this type of stone, it will no doubt continue to increase over the years.”
Naturally, the article also discusses the last ever Argyle Pink Diamonds Signature Tender, which this year includes more than 70 diamonds, with over 60% of them over 1 carat in size.
While the Tender process is not yet complete, there is a chance it may be purchased in its entirety this year, something that has only happened three times in its circa 40-year history.
All of this is incredibly positive for pink diamond investors, with the attention that the Tender is generating, as well as stories highlighting the fact that the Argyle Diamond Mine is now closed, reinforcing why investors should act now.
Ultimately, you want to make sure you have a seat at the table before the new supply of pink diamonds grinds to a halt.
For as the last six to twelve months have demonstrated, that supply crunch, when met with skyrocketing demand, can only express itself through much higher pink diamond prices.
So, while it may not technically be the last chance to buy these truly rare assets, it is the last chance to buy them at the kinds of prices they are still available for today!
Actions speak louder than words!
The article in the Australian contained another important piece of information for investors in this rare asset class, which also speaks volumes about the growth potential it continues to offer.
For while the Argyle Diamond Mine is now closed, and the last ever pink diamond tender will be over in a matter of months, Rio Tinto has made the very significant decision to retain the Argyle Pink Diamond brand rather than to sell it.
As Rio Tinto’s Michelle Sherring noted, the fact the company wishes to “continue to support the legacy of these stones speaks to the significance of them and the significance of the brand to Rio Tinto.”
We see this as a massive vote of confidence in the long-term future of pink diamonds, and another illustration of how profitable an investment they can be.
After all, in deciding to hold onto the Argyle Pink Diamond brand, Rio Tinto (who are a multinational mining company after all) are in effect declaring that they see continued upside potential in pink diamonds.
So do we, and it’s why we are so excited to work with our clients at Australian Diamond Portfolio, to make sure they access the highest quality investments at the best possible prices.
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.