Diamonds Could Become The New Gold

Fortune: Diamonds Could Become the New Gold
http://nws.mx/Pvqn06

Dealer Activity 

The activity at the dealer level so far this spring can be summed up with one word: brisk. Sales through the dealer network of good quality pinks, yellows, blues and champagnes continues to outpace supply and certain color categories, such as highly graded greens, oranges and purples are very difficult to source in the market as dealer asking prices continue to rise in the major trading centers in Tel Aviv, Antwerp and New York.

Some of the interesting dealer offerings we have seen in the last month: 
•    We saw a 1 carat plus I1 graded, heart shaped Fancy Vivid Orange Yellow offered for over $50,000 USD per carat. 
•    0.74 carat Fancy Intense Blue Flawless diamond asking $300,000 per carat. 
•    0.65 carat Fancy Intense purplish Pink of VS clarity asking $141,500 per carat.
The main trade shows in the last couple of months have been the Hong Kong show in early March and the Basel show in Switzerland in later March and early April. In Basel, one of the main themes was fair-mined products and supporting local communities where natural resources are sourced. This has been particularly important in the campaigns for Argyle Pink diamonds and Yellow diamonds from the Ellendale mine in Australia, two mining operations that have done the most to support their local communities.

Several new jewelry lines were introduced at Baselworld and the traffic and activity at the Colored Diamond Pavilion was reported to be very strong, with dealers from India, Hong Kong, Dubai and Tel Aviv having a large part in the activity, well the US and Belgian dealers definitely played their part as always.

At the Hong Kong show, the market saw strong sales of quality polished goods in smaller sizes and the sentiment is within the next five years, increased Chinese demand will revolutionize the global jewelry market growth including diamonds, says Australia's Rio Tinto. China's growth has led to a thirst for resources to feed their infrastructure, but as the middle class continues to grow the appetite for more luxurious diamonds is also growing. One of the big trends in the market is colored diamond jewelry pieces, which up until recently was a smaller percentage of the jewelry market. But several campaigns have been developed over the last three years to bring colored diamonds in jewelry to market and all of the hard work is starting to pay off with strong sales for champagnes and yellows in the US, Argyle Pinks in Asia and rare, valuable pieces in the biggest markets of Europe.

Christie's to Auction Off World's Biggest Blue Diamond

Rahul Kadakia, head of Jewelry for Christie's Auction House holds "The Blue" diamond in New York, April 11, 2014. Christie's New York is displaying the largest flawless fancy vivid blue diamond ever to appear at auction. The diamond is pegged at $21 million to $25 million and is the highlight of an upcoming Magnificent Jewels sale in Geneva.

The world's largest blue diamond will go under the hammer in Geneva next month, with the rare gem expected to fetch up to $25 million, auctioneers said Friday. "The Blue", a shimmering pear-shaped rock the color of cobalt and weighing 13.22 carats was described by Christie's as "the largest fancy vivid blue diamond in the world." The privately-owned diamond is a "sensational stone," the auction house said, adding that the seller wanted to remain anonymous. The gem will be the centerpiece of the auction house's "Magnificent Jewels" sale in Geneva on May 14, with an asking price of $21-25 million (15-18 million euros). If recent auctions in Geneva are any indication though, it could fetch far more. 

When the world's largest orange diamond, a 14.82-carat gem called "The Orange", went under the hammer last November at Christie's, it raked in $35.5 million compared to its $17-20 million price tag. And a Sotheby's auction the next day saw the world's largest pink diamond, known as the Pink Star, fetch $83 million -- $23 million above the asking price.  The auction house was, however, forced last month to take back the Pink Star after the buyer defaulted on the payment. Christie's said its auction next month would comprise 250 pieces at a joint estimated value of $80 million.

Among other notable gemstones will be a 5.5-carat vivid blue-green diamond named "The Ocean Dream", estimated to be worth up to $9.5 million. Christie's said the stone was the largest diamond of its kind, stressing that "the combination of its size, natural origin, hue, and saturated color makes it an extremely unusual occurrence."

A 76.51-carat pink diamond set as a necklace valued at up to $10 million, and a 75.97-carat flawless colorless diamond estimated to be worth up to $15.5 million will also be there to titillate bidders.

Competitor Sotheby's will meanwhile hold its Magnificent Jewels sale next door on May 13, auctioning off one of the world's largest yellow diamonds.

The Graff Vivid Yellow, the color of a daffodil and weighing 100.09 carats, as been valued at up to $25 million.

A 31.34-carat colorless gemstone called the Victory Diamond will also go under the hammer at the Sotheby's auction. Named in honor of the Allied victory in World War II and once the property of famous jewellery collector Florence Gould, it is expected to fetch up to $8.0 million.

Argyle Pink Diamonds: Rare Wealth Does Come In Small Packages

The Rio Tinto's Argyle mine, which produces more than 90 percent of the world's natural pink diamonds, is expected to be closed by 2020. Supply has declined by an average of 50 % at the mine in the last 6 years. 

On October 14, 2013 Argyle held its annual sale to invited members of the trade: a single bid per stone for each of the 64 lots on offer. Although two price records were broken at the 2013 Argyle tender, most of the stones sold in the ranges of $30,000 to $50,000 USD.

In fact, of the 64 stones, sold, 43 of those stones were less than 1 carat in size and 11 of those stones were less than a ½ carat. Yet every stone sold, with multiple bids on each stone.

One prominent Israeli dealer, who acquired 14 stones at the 2012 tender, only won 4 stones this year, despite bidding 15 to 20 % more than last year.

Although investors think they have to buy a 2 carat pink for $500,000 dollars, there is an active market for ¼ of a carat to ½ carat quality, Argyle pink diamonds at a relatively affordable level starting at $15,000 to $20,000 USD.

Pink diamonds comprise about 0.03 per cent of global diamond production. Almost all of these come from Rio Tinto's Argyle mine in Western Australia where, in turn, less than 0.01 per cent of production is pink. In turn once more, 1 per cent of that 0.01 per cent are the finest "fancy pinks" destined for some of the world's most costly jewelry.

At an average production of 14 million carats in the last 6 years, that translates to only 140 carats of quality pink diamonds for the entire global supply, with almost half of those selling at the Argyle tender each year.

The 2013 tender, of just over 60 stones, toured from Perth to Hong Kong, Tokyo, New York and beyond - the diamond world does like to be rather cryptic about specifics. Bidders such as Graff, Tiffany & Co, Calleija and Moussaieff faced competition from the likes of Bollywood jeweler Nirav Modi and China's Chow Tai Fook.

John Glajz, a diamond wholesaler and seasoned bidder who bought the Argyle Phoenix along with another nine stones. "I expected to win more stones as I bid quite bullishly," he said. "I have seen the demand for these rare and beautiful stones continue to grow over the past years. The perception that they may become extinct in the not too distant future is a factor."

Wealthy individuals have been investing in diamonds as a secure asset in an uncertain environment of low interest rates, runaway deficit spending and concerns about currency devaluation, according to Wealth-X, a consulting and research company.

Why Own Colored Diamonds?

Diamonds have long been considered the ultimate form of wealth-a private and easily transportable international currency. The colored diamond market can be traced back centuries to royalty and the merchant classes. 

These rare items have always adorned royalty and the wealthy classes as symbols of power and prestige. Elizabeth Taylor and the Sultan of Brunei can be counted amongst those with a passion for rare colored diamonds.
And for the five reasons listed below, this asset could prove to be a smart buy for the savvy investor.

Diamonds Are Discreet 

If you're concerned about protecting the privacy of your wealth, consider colored diamonds. Most countries do not require the ownership of colored diamonds be disclosed to any government authority. 

The certificates are in bearer form, which means that no record is kept elsewhere about ownership-physical possession of the diamond is the sole evidence that you own it. 

Diamonds Are Easily Transported

Colored diamonds are one of the safest forms of concentrated wealth in the world...and offer one of simplest ways to transport wealth anywhere in the world.  After all, you can transport millions of dollars' worth of diamonds in your pocket or in a small envelope. Or you could have them set into a piece of jewelry and literally wear your wealth at all times.

Diamonds Can Help Protect Your Legacy

Colored diamonds can be part of a long-term strategy of estate planning and preserving your wealth for generations to come. You can easily and discreetly pass colored diamonds from one generation of your family to the next. 

Diamonds Keep Their Value

Historically, colored diamonds have been valued by collectors and investors because they hold their value, and that's still the case today. Even during times of financial hardship, owners of colored diamonds are reluctant to sell their collections. That's because this asset tends to hold its value in recessionary times and in stable or healthy economies they appreciate in price. The rarity of fine colored diamonds and the advantages of holding them as an asset mean that collectors will sell other assets before parting with their diamond collection.

Diamond Prices Keep Rising

For the last couple of years, diamantaires (diamond producers) have seen the price of colored diamonds increase at a rate of more than 18% per annum.  Last year alone major auction houses sold three colored diamonds at record-breaking prices that made international headlines. 

Natural colored diamonds are rapidly increasing in rarity and value, as mines producing them near depletion. Currently, colored diamonds comprise just 0.001% of all diamonds mined in the world each year-and supply is set to fall further.   Because of the rarity, decline in supply, and the steady increase in demand for quality colored diamonds, prices should continue to rise for the next decade.

According to the owner of the Aurora Collection-one of the largest and most famous collections of colored diamonds in the world-it's possible to get a 20% return on the right gem if demand stays strong and the investor seeks the advice of a colored diamond expert to select the investment gems.

Champagne Diamonds - Rio Tinto

The United States, the world's largest diamond jewellery market, has demonstrated a large appetite for champagne diamonds. More and more manufacturers and retailers are using champagne diamonds as part of their standard offerings.

Market research indicates that the retail consumer finds natural color champagne and cognac diamonds an appealing alternative to more traditional white diamonds. This is particularly true of experienced diamond consumers who wish to try something new. Champagne diamonds are associated with status, good taste, romance and the finest things in life; they are typically purchased for fashion, rather than for investment, by financially independent, style-conscious women. Rio Tinto Diamonds continues to drive the demand for champagne and cognac diamonds, particularly in the United States, focusing on establishing a number of dedicated retail programmes for the product.

In addition to the major US market, champagne diamonds are also gaining prominence in the domestic Indian market. From the platform of our representative office in Mumbai, we are undertaking considerable research with our customers in creating occasions for champagne diamond purchasing in India.