29 May 2019

Why its not too late to Invest in Pink Diamonds

In this week’s update, we wanted to share some insights from the overwhelmingly positive feedback we received at last week’s Australian Shareholders’ Association (ASA) National Conference, as well as key questions we were asked at our recent Diamond Master Class held in Sydney.

Combined, they reinforce why the outlook for pink diamond prices is so positive for the years ahead.

Starting with the ASA conference, aptly titled; “Investing in the Age of Uncertainty,” it was a real pleasure to speak to several hundred knowledgable and passionate investors about the opportunities pink diamond investments offer.

ASA Conference 2019 speakers

Speakers at this year’s Australian Shareholders’ Association Conference.

There were a handful of key themes we picked up on in our conversations with the investors who attended, and they all bode well for the future direction of pink diamond prices.

 

1) People didn’t realise they could buy diamonds in their SMSF

The fact that you could invest in pink diamonds was news to a lot of the attendees, who didn’t realise they could diversify their portfolios with this asset class. Given SMSF’s as a whole have over AUD $700bn of funds to invest, we think there is still plenty of diamond buying demand to come from this section of the market.

 

2) Hardly anyone knew the Argyle Mine was set to close

The fact that the Argyle mine is set to close in 2021 was a real eye-opener for many of the investors we spoke too. These people are savvy enough to have accumulated large portfolios over their working lives, and they understand what a massive reduction in supply can do to the price of an asset class that is seeing strong demand.

 

3) Investors are looking for alternative assets

Most investors are happy the stock market has had a good few years. But they still remember the GFC, and with markets uncertain, and property prices now falling on the East Coast, they are looking for alternative assets, which include tangible safe havens like pink diamonds.

 

4) Investors are looking for something to invest in rather than sitting in cash

This was one of the big talking points. Many of the attendees have plenty of money sitting in cash, which is essentially going backwards after inflation. The fact it looks like the RBA will cut rates by 0.50% to 1% lower in the next year means investors are looking for something to do with this money. Diamonds stand to benefit from this.

 

5) Investors are still worried about political uncertainty

The election is barely a week old, and we already have the government announcing more reviews, with the “guilty party” this time Treasurer Josh Frydenberg saying he was looking at holding another review into the superannuation system. This kind of uncertainty encourages investors to seek out discrete physical assets like diamonds.

 

6) Diamond Returns are Eye Catching

The final thing that caught everyone’s attention was the returns on pink coloured diamonds, which as you may know, have appreciated by an average 12% per annum over the last 14 years. Most investors at the conference were only too happy to admit they’d not been able to generate returns like that, with the diamond market outperforming shares, property and other traditional assets.

 

Sell-out Investor Master Class in Sydney

Moving on from the ASA National Conference and we finished the week conducting a Sold-Out Master Class on Pink Diamond Investment, which we held in our Sydney vault.

These Master Classes are always great fun, as we run through some of the key reasons investors are buying diamonds, and the unique services we provide at ADP, which have seen us become Australia’s leading pink diamond brokerage.

There was one question which really stood out this week, and it’s arguably the most important of all; Is it too late to invest in Pink Diamonds?”

From our perspective, we can’t but help but think the very best years for diamonds are ahead of us. As was reinforced to us at the ASA conference, the vast majority of investors are yet to discover this asset class, with enormous amounts of capital able to be invested.

This will add further buying pressure to the demand we are seeing in Eastern markets, with a recent article in the South China Morning Post (SCMP) stating that “there is steady demand for coloured diamonds in China, with sophisticated buyers seeking these gems for their intense colours,”

The price rises over the past decade and a half have of course been incredibly impressive, but those have taken place alongside a growing supply of diamonds.

All that is about to change, for as that article in the SCMP stated, pink diamond prices “are likely to shoot higher when Australia’s Argyle mine stops production.”

We couldn’t have said it better ourselves.

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