In late January or early February of next year, we will publish a more detailed look at the state of play in investment markets and in the economy, detailing the many reasons why pink diamonds remain an investment of choice for astute looking to sensibly balance risk and return in the years ahead.
Short-term, the sea of liquidity that is being pumped into markets could see them continue to trend higher, though with many stock markets priced at or near all-time highs, the outlook for returns in the five to ten years ahead is far less rosy, with many investors at risk of losing substantial sums of wealth.
Whilst stock markets are getting the attention, the investment case for hard assets like pink diamonds continues to build, with a number of positive developments taking place over the last few weeks.
In this market update we look at these developments, and why they support the idea of including pink diamonds in a well-diversified portfolio.
This article originally appeared in Australian Mining December 2020. You can view the original article here, pages 22-23.
No mine in the world has produced rare pink diamonds that can compete with the vibrancy and colour depth of those unearthed at Rio Tinto’s Argyle mine in Western Australia.
The pink diamonds found in the mines of India, Brazil and Russia also don’t compete with the character of Argyle’s famous gems.
The abundance of Argyle’s pink diamonds fit into just a small bucket in any given year, with Australian Diamond Portfolio executive director Anna Cisecki saying they represent only one of every 10,000 gem-quality diamonds produced at the mine.
Further, they represent less than 1 per cent of the world’s supply of diamonds, putting them in a much-elevated position to yellow diamonds that comprise around 60 per cent of the fancy-colour diamond market.
This scarcity has given pink diamonds inflation protecting qualities and steadily increased their prices by 11 per cent in the past 15 years, outperforming the Australian Securities Exchange, which returned 7.9 per cent.
Stock markets are moving higher, with the Dow Jones climbing above 30,000 points for the first time ever overnight. Optimism regarding the outlook for the global economy in 2021 continues to build, as this week we saw the announcement that yet another company has come up with promising results regarding a vaccine for COVID-19.
This time around it was drug maker AstraZeneca, who in conjunction with Oxford University released the news that their vaccine was up to 90% effective. Whilst that isn’t quite as high as the vaccines being developed by Moderna and Pfizer, the Oxford/AstraZeneca vaccine does appear to have two distinct advantages over its competitors.
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To learn more about The Legacy Collection, and buys diamonds from it, visit https://www.legacypinkdiamonds.com.au.
In this week’s market update, we look at the good and bad news regarding COVID-19, and why the economic fallout from efforts to limit the spread of the disease reinforces many of the reasons astute investors are turning to pink diamonds.
We also look forward to Christmas 2020, with a reminder about our recently launched Legacy Collection of pink diamonds, which will make the perfect gift this year.
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This article originally appeared on the Daily Mail and can be accessed here.
The price of pink diamonds is expected to soar after the Argyle Diamond Mine which produced nearly the entire world supply closes this week.
The world’s largest pink diamond mine began when a group of geologists stumbled across a stone in the Kimberley region of Western Australia in the 1970s.
Since owner Rio Tinto began production in 1983 the mine has produced 95 per cent of the world supply of the rare diamonds.
Twinkling from rose through magenta to purple, the stones have commanded some of the diamond market’s highest prices. read more
This article originally appeared on the ABC and can be accessed here .
A WA mine which makes up 90 per cent of the world’s source of pink diamonds is closing.(ABC News: Charlotte Hamlyn)
They are unfathomably rare “freaks of nature” that have taken 1.6 billion years to emerge from the earth’s mantle and end up on master jeweller Rohan Milne’s work bench.
“They speak for themselves,” Mr Milne said while polishing a ring at his Leederville workshop.
“When you’re putting a beautiful vivid pink diamond into a piece and you’re polishing it up, the colour just jumps out at you and it’s amazing.” read more
© 2021 Australian Diamond Portfolio. All rights reserved. Diamond image on investment guide cover © Rio Tinto 2021.
Euphoria for Pink Diamonds
We hope that you had a lovely break over Christmas and the New Year.
We’d like to welcome you back to our regular In the Loupe market updates, which will again be published on a weekly basis this year.
Speaking of this year, and whilst the calendar has ticked over into 2021, much of what we’ve seen take place in the first few weeks of January represents a continuation of the issues that plagued us in 2020.
These include continued problems with COVID-19, mutations of which are beginning to develop, and spread across the developed world. This means lockdowns are likely to continue, with economic activity continuing to suffer as a result.
Political tensions are also still evident, despite the change in the White House, which is particularly relevant for Australia given our reliance on commodity exports to China (more on this below).
Most importantly, we are seeing a continued euphoria in markets that is now completely divorced from economic reality: Whether it be Bitcoin, shares in companies such as Tesla or GameStop, or the proliferation of capital being raised via Special Purpose Acquisition Vehicles (SPAC), there are numerous examples of investor exuberance in the markets today.
Perhaps the best way of visualizing this is looking at the chart below, which shows movements in the CitiGroup Panic and Euphoria Index from 1987 through to the start of 2021.
The Panic/Euphoria Model
Source: Haver Analytics, Pinnacle Data, and Citi Research – U.S. Equity Strategy
There are multiple inputs into this model, but in essence, it is a very easy way to visualize the ‘mood’ of the market at any point in time, and whether or not investors are feeling optimistic (euphoric) or pessimistic (panic) on the whole.
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