As investors, you are constantly on the lookout for assets that show the greatest stability and potential for high returns. With the price of diamonds increasing exponentially in the last 2 decades, is there opportunity in investing in these colored stones? Can their prices rise even higher? And if yes, how much higher can they get?
In this article we will be looking at:
- How diamond rarity translates to value
- What we can learn about market demand and the industry by examining the Argyle Tender
- Final thoughts on the future of colored diamond prices
Rarity Translates to Value
The price of fancy colored diamonds has seen a steady increase since the early 2000's with even the most common colors (like yellow) seeing massive value spikes. However, the colors that have seen the quickest and highest price increases are reds, blues, and pinks.
Stones of these color categories make headlines every year and even manage to continuously set new records, be it in their price per carat, or total sale price.
What Can We Learn From The Argyle Tender
We have extensively covered the various happenings of famous auction houses such as Sotheby’s and Christie's, however, another extremely noteworthy annual event is the Argyle Diamond tender.
While this prestigious event does not get as much coverage as the other two auction houses we just mentioned, it is very indicative of the direction of the market.
Image credit: Rio Tinto
For those that didn’t know, the tender showcases the mine’s elite red and pink diamonds, with the occasional blue and purple making an appearance. Although the final selling prices of the diamonds at the tender are not usually disclosed, reports are sometimes released announcing the value percentage increase over the previous year or covering an extended period of time.
This is perhaps one of the only ways it is possible to track the year to year price evolution of Argyle Diamonds.
According to official announcements, 2018 was the most lucrative year for the tender, experiencing the highest prices ever paid for their diamonds, during its 34 year existence. Seeing a remarkable 400% diamond price appreciation, the 2018 Argyle Tender managed to surpass 2017's "The Custodians of Rare Beauty" and 2016's “Chroma Collection.” This is surely a sign that competition for such exclusive colored diamonds is increasing rapidly.
Image credit: Rio Tinto
But can and will this be sustained? According to Rio Tinto, the Argyle is slowly exhausting its resources and is said to be ceasing operations after the next year. This will have severe implications not only on the diamond industry, but for investors as well.
The closing of the mine will mean that Argyle diamonds are now finite, and by following the fundamental laws of economics, their value can potentially skyrocket.
If you are interested in learning more about the implications of the Argyle Mine’s Closure in 2020, we have an article speculating who the event might affect the industry as a whole.
So, if prices are already so high, can their prices rise even further? As any financial adviser or investment professional will tell you, when supply is low or even slowly diminishing but demand continues to grow, prices will also increase respectively.
Real talk for a moment, seeing how the diamond market has been evolving over the past 2 decades, and how more and more investors are slowly turning their heads towards fancy colored stones as investment alternatives, there is truly no foreseeable end for demand of pink, blue and red diamonds (especially those produced by the Argyle mine.)
Image credit: Rio Tinto
This, coupled with the fact that there have been no new significant diamond mines discovered for a long time (diminishing supply) can only lead us to the conclusion... that diamond prices can only continue to increase from this point forward.
Please note that this is all just speculation, it is impossible to accurately predict what is going to happen in the future. If you are planning on investing in colored diamonds, always perform extensive research. Feel free to contact our team at 866-821-5508 to discuss your interest further. We have over 50 combined years of experience and welcome sharing it with you.
Do you have any questions? Let us know. And as always feel free to follow us on Twitter and LinkedIn.
For more insight on the world of colored diamonds be sure to check out the links below:
- 3 Things You Need If You Want To Invest In Fancy Colored Diamonds
- 29 Factors Every Investor Should Know: What Affects Diamond Price? Part 1
- What To Look For In A Diamond Investment
- Fancy Colored Diamonds: How Modifiers and Undertones Affect Price