The 2018 collection of the finest pink, red and violet diamonds from the iconic Western Australian mine continued its trajectory of double digit price growth. Sold to an undisclosed buyer, Lot Number 1, the Argyle Muse™, a 2.28 carat Fancy Purplish Red diamond is the most valuable diamond in the Tender’s 34 year history.
Amongst the record breaking diamonds sold in the 2018 collection was Lot 2, the Argyle Alpha™, the largest and most valuable Vivid Pink diamond in the history of the Argyle Pink Diamonds Tender. The Argyle Alpha™ was won by Singapore based Argyle Pink Diamonds partner Glajz THG.
Managing director John Glajz said “I am honoured to be custodian of this record breaking gem, a diamond that embodies the rarity, beauty and provenance of Argyle pink diamonds.”
Over the past 18 years the value of Argyle pink diamonds sold at Tender have appreciated over 400 per cent, outperforming all major equity markets.
Rio Tinto Copper & Diamonds chief executive Arnaud Soirat said “The 2018 Argyle Pink Diamonds Tender was highly sought after with record results that underscore the value of these gems in the history of rare coloured diamonds.”
Matthew Aldridge, chief executive of Gemcut Geneva, a successful bidder on a number of diamonds in the 2018 Tender including Lot 5, the Argyle Odyssey™, a 2.08 carat Fancy Intense Pink diamond said “I have been bidding at the Argyle Pink Diamonds Tender since 1987 and continue to be amazed by the magnificent potency of colour of these unique diamonds from this extraordinary mine. As an avid collector of the world’s finest fancy coloured diamonds I was especially delighted to win the Argyle Odyssey™, a match for another diamond that was sold in the Tender over fifteen years ago.”
Almost the entire world supply of rare pink, red and violet diamonds come from Rio Tinto’s Argyle diamond mine in the remote east Kimberley region of Western Australia. Current estimates indicate sufficient economic reserves at the mine to support production through to the end of 2020.
In this week’s “Commodity in Chief,” Bloomberg’s Alix Steel and Emma Chandra discuss the diamond operations of the Rio Tinto Group. Chandra sits down with the company’s copper and diamonds CEO, Arnaud Soirat, to discuss the recent sell of pink diamonds. (Source: Bloomberg)
Bonhams has sold a pink diamond for US$583,551 per carat, a world-record price for its colour category, the company reported.
The 5.03-carat, fancy-pink VS1 garnered US$2.9 million at the auction house’s Fine Jewellery sale in London last week. The previous record for a fancy-pink diamond was US$528,021 per carat for a stone sold at Sotheby’s in 2016.
“Large pink diamonds are continuing to increase in value year on year,” said Emily Barber, director of jewellery at Bonhams UK. “They are highly desirable to discerning collectors given their rarity and limited supply.”
The stone’s value lies in its even colour saturation, cut and size, Barber added. It is exceptionally rare to see pink diamonds over five carats on the market, she explained.
Other notable items at the auction included a three-stone ring featuring an old-brilliant-cut, 0.95-carat, fancy-blue diamond surrounded by two marquise-cut, fancy-yellow-orange diamonds weighing 0.51 and 0.56 carats. The piece sold for GBP 168,750 ($218,750), well over its original estimate of GBP 80,000 to GBP 120,000 ($103,704 to $155,556).
Two tiaras also exceeded expectations. A Belle Époque diamond headpiece designed by Spanish royal jeweller Ansorena in the classical Greek meander style achieved GBP 162,500 ($210,650) against a presale estimate of GBP 80,000 to GBP 120,000, while a Hennell Art Deco tiara went for GBP 81,250 ($105,320), beating its valuation of GBP 40,000 to GBP 60,000 ($51,850 to $77,780).
In all, Bonhams sold 89% of the lots available at the auction, bringing in total proceeds of GBP 6.9 million ($9 million).
The next Bonhams Fine Jewellery sale will take place in Hong Kong on November 25.
Miner Rio Tinto unveiled the largest pink diamond from its Argyle mine in Western Australia this summer. The 3.14 carat “Argyle Alpha”, found in 2015, is part of a package of 63 brightly coloured red and violet diamonds shown to potential buyers in Hong Kong this month.
The stones are becoming ever more scarce as the mine, which upended the heavily controlled diamond market when it opened in 1983, is set to come to the end of its life in 2020.
The closure marks a turning point for the diamond market as there are few comparable replacements in the pipeline. Analysts expect the supply of diamonds to peak within the next 10 years, as demand continues to grow.
“Rio Tinto’s Argyle mine is the world’s only source of these highly coveted pink, red and violet diamonds and we expect considerable interest in this year’s collection,” Jean-Sébastien Jacques, Rio Tinto’s chief executive, said in a statement.
“You’re seeing the real significant depletion of the very economic mines” – Paul Zimnisky, Diamond Analytics
He added that the constrained supply will “support significant value appreciation for Argyle pink diamonds”. The tender will travel to New York next month, with bids closing on October 10.
Prices for high-quality pink stones have outperformed those of other diamonds over the past decade because of their rarity, according to Paul Zimnisky of Diamond Analytics in New York. He estimates pink stones account for less than 0.01 per cent of the world’s diamonds by volume — the Argyle mine produces close to 90 per cent of these.
The wider diamond market is expected to feel a squeeze, too, however. RBC Capital Markets forecast last year that total supply would increase 4 per cent to 145m carats this year “before retreating as older mines begin to reach the end of their lives”.
A pink diamond weighing in at almost 19 carats is set to go on tour before being auctioned in Geneva and could fetch a record price of between $30 million and $50 million, Christie’s auction house announced on Tuesday.
The rectangular cut Pink Legacy is rated “vivid”, the highest rating for a diamond’s colour, and weighs 18.96 carats, making it the largest fancy vivid pink diamond Christie’s has ever offered for auction.
It was once part of the Oppenheimer collection, Christie’s said, referring to the family who built De Beers into the world’s biggest diamond trader.
“Its exceptional provenance will no doubt propel it into a class of its own as one of the world’s greatest diamonds,” said Rahul Kadakia, international head of jewellery at Christie’s.
Only four vivid pink diamonds of over 10 carats have ever been offered for sale at auction, with a record price per carat set last November when Christie’s Hong Kong sold “The Pink Promise”, an oval-shaped diamond of just under 15 carats, for $32,480,500.
The Pink Legacy will be shown in Hong Kong, London and New York before being auctioned by Christie’s Geneva on Nov. 13.
Rio Tinto will offer a 3.14-carat, vivid pink diamond at its 2018 tender, the largest stone of its color in the history of the annual sales event.
The emerald-cut Argyle Alpha (pictured) is one of 63 rare pink, red and violet diamonds — weighing a combined 51.48 carats — featuring in this year’s Argyle Pink Diamonds Tender. It is part of a collection of six “hero” diamonds the miner will offer at the sale.
“Rio Tinto’s Argyle mine is the world’s only source of these highly coveted pink, red and violet diamonds, and we expect considerable interest in this year’s collection,” Rio Tinto CEO Jean-Sébastien Jacques said Thursday. “The combination of strong demand and extremely limited world supply continues to support significant value appreciation for Argyle pink diamonds.”
This year’s tender, which the company has called Magnificent Argyle, also includes the Argyle Muse, an oval-cut, 2.28-carat stone, which is the largest purplish-red diamond ever offered at the tender, and came from a 7.39-carat rough. A second diamond, cut from the same stone, will also be up for sale.
The other hero diamonds include the square-radiant-shaped, 1.29-carat, fancy vivid purplish-pink Argyle Maestro; the princess-shaped, 1.57-carat, fancy dark grey-violet Argyle Alchemy; the Argyle Odyssey, a round brilliant, fancy intense pink stone weighing 2.08 carats; and the radiant-shaped Argyle Mira, a 1.12-carat fancy red.
Rio Tinto will unveil the gems at a world exclusive preview in Sydney, and will also showcase them in Hong Kong and New York. Bidding for the diamonds closes on October 10.
The company held its first Argyle Pink Diamond Tender in 1984.
Rio Tinto is launching one of its last ever pink diamond tenders as it prepares to shut the only pink diamond mine in the world.
The miner has put 63 of its rare pink diamonds from its West Australian-based Argyle mine up for tender, with prices expected to run to nearly $100 million for the entire lot.
Rio Tinto has 63 rare pink and blue diamonds up for sale in 2018. Photo: Copyright Rio Tinto 2018
Every year, Rio Tinto selects its best pink diamonds to sell to the world’s wealthiest people, and this year’s auction features the largest ever vivid pink diamond since its sales began in 1984, Rio Tinto’s chief executive Jean-Sébastien Jacques told Fairfax Media.
The largest diamond in the 2018 tender is the Argyle Alpha diamond, weighing 3.14 carats, which was actually uncovered in 2015.
Before it was cut, the Alpha pink diamond weighed 5.88 carats.
The Argyle Pink Jubilee. Photo: Jason South
While the process of creating regular diamonds is well understood – with diamonds able to be synthetically created – it is not yet known why pink diamonds are pink.
The largest ever pink diamond recovered from the Argyle mine, the Pink Jubilee, weighed 12.76 carats.
Although Rio Tinto has not set a price on Alpha, the record price achieved for a pink diamond was $US2.2 million per carat, potentially valuing Alpha at around $US7.9 million ($10.7 million).
The most expensive gem ever sold at auction was the 59.6 carat Pink Star diamond, sold for $US71.2 million last year.
The buyers are typically the super-wealthy, or luxury jewellery businesses from around the world. They are allowed to bid by invite only.
“It’s a niche market, there are very few people who are invited to bid. All the bids will be received before the 10th of October, and at that point, we will disclose who are the winners,” Mr Jacques said.
“Last year’s auction was very good and we expect 2018 to be even better.”
Rio Tinto CEO Jean-Sebastien Jacques inspects the Argyle Muse Diamond in Sydney on July 12, 2018. Photo: Dominic Lorrimer
The tender starts in Sydney before moving to Hong Kong and finishing up in New York.
However, this could be one of the last auctions with pink diamonds.
Mr Jacques said the world is about to lose its main supply of pink diamonds as its Argyle mine is approaching the end of its supply. Argyle accounts for about 90 per cent of the world’s pink diamonds, with the remaining 10 per cent being random finds in other diamond mines.
“This is the only mine which has consistently produced these types of diamond,” Mr Jacques said.
“It took only a few billion years to produce them all. The mine has only a few years left, about three years.”
While Rio Tinto is shutting down the Argyle mine, it still operates the Diavik diamond mine in Canada’s frozen far north.
“We like diamonds, which is why we have comprehensive exploration for diamonds. It takes a lot of time and a lot of dedication, and we hope to find a new mine like Argyle, but we have to be patient,” Mr Jacques said.
It depends, SMSF technical expert and general manager at Super Concepts Graeme Colley told Nest Egg.
He said the diversification prospects offered by investing in precious gems need to be worth the liquidity risk and administrative burden.
“Of all the around 20,000 funds we’ve got [at Super Concepts], we’d have around about 10 that would have diamonds in them and they range from clear diamonds right through to the more expensive coloured diamonds,” Mr Colley said.
“They’ve made a choice to invest in that. It’s not a particularly large percentage of the fund, even though diamonds are relatively expensive, so what they look at is the diversification of the investment.”
He said larger SMSFs are generally more suited to investing in diamonds in order to spread the risk and warned that liquidity can be a problem if the fund is overweight in diamonds.
Anna Cisecki, executive director at specialised diamond brokerage Australian Diamond Portfolio, agreed that liquidity poses a risk, along with choosing poor-quality or common stones.
She said red, blue and pink diamonds are the best bet for would-be investors, given their rarity and potential for future price appreciation.
Noting these stones have seen performance rise by nearly 13 per cent per annum over the last 12 years, Ms Cisecki predicts this growth will continue given the nearing closure of the Argyle Diamond Mine, which produces more than 90 per cent of the world’s pink diamonds.
“Diamonds also tend to hold their value even when financial markets are volatile, so they provide some diversification benefits when looked at in the context of an overall SMSF portfolio,” she added.
“Diamonds are not best suited to short-term investors, as they don’t offer daily liquidity like shares, so investors should ideally have a three to five-year plus timeframe if they’re looking at this sector.
“To help ensure you’re picking a quality diamond, most investors like SMSF trustees will work with a specialised diamond broker… who will source a diamond on their behalf, and ensure they diamonds are independently assessed and valued by a certified diamond laboratory.”
Mr Colley said SMSF trustees should also be aware of the different restrictions and requirements on investing in diamonds.
Trustees need to understand the difference between investment diamonds and jewellery.
“With an investment diamond you can stick it in your back pocket if you’re that excited … whereas if it’s jewellery, it falls under the artworks and collectibles rules in the superannuation legislation and they’ve got to be stored in a particular way and they’ve got to be insured,” Mr Colley said.
“You can’t use them as jewellery personally because it’s in breach of the [sole purpose test] rules as well.”
He said most people with investment diamonds store them in a bank vault, or in a personal safe.
Diamonds owned by a member can’t be put into an SMSF.
“Grandma’s ring, if it came to you after her death, can’t go into the fund. That’s an important consideration, it’s not only things that you might own personally going into your own fund but also any other trustees of the fund,” Mr Colley said.
SMSFs need to have the assets valued at market value every year, Mr Colley said. Members may need to prove the existence and storage of the diamond and may also draw the attention of auditors.
“Being able to justify or certify where they are can be an important consideration as well,” he said.
“For those that are thinking of going ahead with it, they really need to look at it as to whether it’s a true investment or they’re just doing it because their heart’s telling them to do.
“Be sensible, diversify your investments and make sure it’s a good investment.”
The pear-shaped, dark grey-blue gem, known as The Farnese Blue, is believed to be one of the most important historical diamonds left in private hands until today, which was the first time the stone was put up for sale.
Found at India’s Golconda mines, it was given to Elisabeth Farnese, daughter of the Duke of Parma, in 1715 to mark her marriage to King Philip V of Spain.
The royal couple descendants owned the Farnese Blue, as they married into other European families, travelling from Spain to France, Italy and Austria. During more than 300 years, nobody — except from close relatives and the family jewellers — knew of the gem’s existence.
This was the first time The Farnese Blue, passed down through European royalty, went on sale. (Image courtesy of Sotheby’s)
“All this time, it was hidden away in a royal jewellery box,” Philipp Herzog von Wurttemberg, chairman of Sotheby’s Europe, said in a statement.
Anna Cisecki, Executive Director of Australian Diamond Portfolio, was asked to contribute to Equity magazine, a monthly publication issued by Australian Shareholders’ Association (ASA), the peak body representing independent investors in Australia.
With growing interest in pink diamonds, the article below outlines the main reasons to invest in pink diamonds, an overview of performance, as well as some tips on investing.
Over the last 15 years, demand for investment grade pink diamonds has soared, with investors all over the world, including in Australia, seeking to purchase these truly unique assets.
Australian Diamond Portfolio (ADP) has had a front row seat facilitating the growth in this sector locally, and has helped thousands of Australians source, store and trade pink diamonds.
In this article, we look at some of the benefits, & logistics, of investing in this asset class.
There are many benefits that pink diamonds bring to a well-diversified investment portfolio. For Australian investors with a SMSF, we see three key reasons why these precious stones should be on the radar.
Pink diamonds offer potential for capital gains
Over the past decade and more, anyone that has purchased a pink diamond has seen a significant appreciation in value on their investment. This is captured in the chart below, which highlights the growth in prices across several categories of investment grade pink diamonds since 2005.
All categories have appreciated in a similar manner over the period, averaging between 12-20% per annum.
Whilst international equities and other more traditional asset classes have appreciated strongly in the past few years, the returns from pink diamonds since 2005 exceed most listed assets.
We expect the strong capital gains to continue in the years ahead, as a wave of new demand is likely to coincide with a spectacular decline in supply.
On the supply front, it is important to note that almost 95% of annual natural pink diamond supply is mined right here in Australia, at Rio Tinto’s world-famous Argyle Mine. In operation since the early 1980s, the mine is scheduled to completely cease production by 2020, as supply has been exhausted.
This pending closure of the world’s primary source of pink diamonds is a major bullish factor for the investment diamond market.
On the demand side, whilst equities have had a great run since early 2009, valuations are now increasingly stretched (especially in the United States), whilst bond yields are still hovering near multi-generational lows.
With inflation starting to stir, and cash accounts in most of the developed world still paying close to zero in real terms, every day more and more investors are turning to alternative hard assets, including diamonds, as returns in more traditional assets are likely to be limited in the years ahead.
Given the supply constraints discussed above, higher demand can only be met through higher prices.
Pink Diamonds provide protection from market volatility
Pink diamonds have shown very good stability and consistency of performance over the long-term. Unlike more volatile assets such as shares, they do not suffer the violent ups and downs that can understandably rattle investors.
This can also be seen in the previous chart, which highlights the fact that there has been almost no downward movement in the 13 or so years of market data the chart covers, including the period that encompassed the worst of the GFC.
Instead, pink diamonds offer many years of relatively modest gains, interspersed with years where investment demand and prices soared. These are valuable attributes in any investment.
Pink diamonds provide an Australian dollar hedge
As diamonds are priced in US Dollars, they will benefit from any fall in the Australian dollar, which will increase the price of the diamonds domestically.
Given many economists expect the AUD to fall in the coming years, currency diversification, is becoming increasingly important to SMSF trustees.
Diamonds offer a relatively straightforward, and unique way of achieving this currency diversification, whilst simultaneously giving the investor exposure to an uncorrelated hard asset.
Adding all this together, whilst diamonds are a non-income producing asset, and are definitely not best suited for short-term traders, they can play a role in a portfolio, as the potential for capital appreciation, the protection from market volatility, and the Australian dollar hedge combine to provide important diversification benefits for Australian investors.
Tips for Investing
Whilst many might imagine that investment grade pink diamonds are the preserve of ultra-high net worth individuals, the market is actually very accessible to a far wider pool of investors, including SMSF trustees.
At a minimum, investors would need to commit to AUD $20,000 per stone, though in our experience, most investors accessing this space tend to start with an investment closer to AUD $50,000, and often work their way up to portfolios of AUD $100,000 or more.
Given the average SMSF is these days holding close to $1 million in assets, portfolio allocations tend to be in the 5-15% range.
We encourage clients to see investment diamonds as a minimum 3-5 year investment, as this timeframe will give them the best chance of partaking in the upside the market has to offer.
Selling diamonds is also very straightforward, and typically takes 3 months at a maximum, about the same time it takes to sell real estate. ADP’s brokerage service upon completed sale totals 5%.
Finally, from a compliance and reporting perspective, diamonds owned inside a SMSF are required to be ‘securely stored’, and insurance and regular valuations are .
Companies like ADP provide a solution covering all these requirements, including independent valuations on an annual basis, fixed-rate storage for $272 pa as well as facilitation of insurance through our vaulting partners for an approximate fee of just 0.20%-0.36% p.a. of the diamond portfolio value.