07 Oct

Raise a glass to Argyle Pink Diamonds

14Be it the uncertainty in markets, or the continued challenge posed by COVID-19 and the associated lockdowns, times like this make me very happy that I work in the pink diamond industry, given as an asset class they are truly rare, beautiful, and have a history of protecting wealth and outperforming other assets.

These views, and why it makes so much sense to be a pink diamond investor today were only reinforced by a great write up in the ABC late last week, which focused on the pink diamond market, and the finalisation of the last ever Argyle Pink Diamonds Signature Tender.

We look into that in more detail below.

An Argyle 'Signature Tender' pink diamond from the 2019 Tender.

An Argyle ‘Signature Tender’ pink diamond from the 2019 Tender.

Raise a glass to Argyle Pink Diamonds

As we’ve been saying for the better part of a year now, the closure of the Argyle Diamond mine would kickstart a wave of media coverage, with this extra attention helping to propel the surge in prices that saw pink diamonds return 30% on average in the last financial year.

Last week we saw more great coverage of this truly unique asset class, with a long article in the ABC discussing the pending completion of the last ever Argyle Pink Diamonds Signature Tender, which closed this week.

The article looked at the history of the mine, how long it took to get it into production, how the Argyle brand has been built across the decades, and of course how valuable pink diamonds are, with one commentator noting that pink diamonds are on average 35 times the value of a white diamond.

While we often discuss the rarity of pink diamonds with our clients at Australian Diamond Portfolio by pointing out that less than 1% of diamonds produced at the Argyle Diamond mine were coloured diamonds, the ABC article shared two other perspectives that help illuminate their rarity, which is of course a huge part of their (ever increasing) value.

The first of those had to do with diamonds and their role in high end jewellery. Unlike white diamonds, where jewellers first design a piece of jewellery, and then find a diamond to fit, pink diamonds are so rare, that jewellers reverse their process, working out what pink diamonds they have available to work with as a starting point, and then designing the jewellery around it.

The second perspective was just as illuminating, with the article noting that two champagne flutes alone would be large enough to fit the more than three decades worth of the coloured diamonds that have been deemed prestigious enough to be part of the annual Tender.

This, from a mine that has produced 865 million carats of diamonds in total, with enough ore dug out of the ground to fill 38,000 Olympic size swimming pools is a testament to the extreme rarity of pink diamonds, and the value that can be found in this unique asset class.

Given pink diamonds are also highly accessible, it is no wonder astute investors are adding them to their portfolio every day.

Market leading performance

While the Argyle Diamond Mine story itself is fascinating, and a unique part of Australian history, it’s the investment results that ultimately matter, especially to our clients at Australian Diamond Portfolio.

And on that score, pink diamonds have proved themselves to be market leaders, with the ABC article noting; “Since 2000, the prices of the pinks sold at the annual tender have increased by 600 per cent. That’s growth the Dow Jones, Hang Seng or the ASX share indices could only dream of.”

This statement is backed up by the chart below, which highlights the performance of the pink diamonds that have made up the Argyle Tender stones over the last twenty years, versus a range of share market indices.

 

Argyle Pink Diamonds Tender price have outperformed major equity indices 

Chart of Argyle Pink Diamonds Tender price outperforming major equity indices

Source: Argyle Pink Diamonds

 

As you can see, the outperformance of pink diamonds has been breathtaking, especially given they’ve been able to achieve their growth without anything like the volatility that shares, and other commodities have experienced.

The supply crunch caused by last year’s closure of the Argyle Diamond mine, combined with the favourable and increasing media coverage and the notable increase in investment demand suggests that the outperformance of pink diamonds vs other assets is only going to grow in the years to come.

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.

 

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