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2020 was certainly an eventful year to say the least.  In times of great change, it's very easy to get lost in everything moving around us.  Routines are gone, tried and true solutions have changed, and the comfort of "certainty" has vanished.  Ironically, one of the oldest clichés tends to ring true, "The more things change, the more they stay the same." 

In this post, we'll explore that cliché in the context of the world of the alternative investor.

 

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During economic turmoil, how might you secure your wealth?

 

As investors in colored diamonds, it is indeed true that this year has been filled with tremendous change but in many ways, that was to be expected. 

If we look back to December 2019, the focus was on an impending change that was going to occur; the Argyle Mine was going to cease operations during the year and this was something that was known for at least a 1/2 dozen years.  What no one could have anticipated was the global pandemic and the impacts that might have.  The one outcome that everyone could agree on would be a level of economic uncertainty not seen since the "Great Recession."

"The more things change, the more they stay the same."

The alternative investment community has experienced these challenges before. One path the investor tends to follow on to secure their wealth during these times is increasing their focus on tangible treasure assets like gold, art, and collectibles among others.  

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How have colored diamonds performed within that approach?

 

Among these treasure assets, colored diamonds have risen to the forefront as one of the most stable investments with strong potential appreciation. Pink diamonds in particular have seen the largest growth and are expected to continue to do so.

Let’s look at a historical example...

As can be seen from the graph below, pink diamonds (highlighted with the pink line) saw a significant increase in value, as investors turned to treasure assets to diversify and strengthen their portfolios during the Great Recession.

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"The more things change, the more they stay the same."

While the economy may not be in the exact same state as it was 12 years ago, what we saw then was that pink diamonds accelerated their value during the financial turmoil. As opposed to other investment assets, colored diamonds, with pinks diamonds in particular, have proven to be strong safe havens for securing one’s wealth.  During 2020, this has been shown to ring true again.

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Why are Pink Diamonds a Safe Haven?

 

There are multiple instances supporting pink diamonds as a safe investment.

The first, and perhaps most important reason is that they are getting exceedingly rare. Pink diamonds have always been among the rarest natural colored diamonds in the world, but now we have also lost the largest contributor of pink diamonds, the Argyle Mine. After 37 years of producing some of the rarest, most beautiful, and most sought-after colored diamonds the world has ever seen; the iconic Argyle Mine ceased operations on November 2, 2020.

A truly influential mine in the industry, the Argyle Mine set the bar for quality in the diamond world. The Pink “Bubble Gum” hue of the Argyle Pinks, and the saturation of the colored diamonds it produced was truly unrivaled worldwide.

With supply having come to a halt and demand for these precious stones increasing exponentially in the last decade, intense escalation of pink diamond value can be expected. This statement can be further supported by the fact that the annual Argyle Tender prices have experienced a 500% increase from 2000 to earlier this year, a truly astronomical change.

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Private tenders though aren't the only supporting example of pink diamond value rising. The very first public auctions of 2020 also showed great promise.

"The more things change, the more they stay the same."

In July 2020, the colored diamond market once again demonstrated how well it performs during periods of economic uncertainty. The month held two large auctions by Christie’s and Sotheby’s respectively, and not only did the results greatly exceed expectations, they provided a resoundingly bullish statement about the future of the diamond industry, especially during a period of unprecedented turmoil.

Despite blue diamonds taking the spotlight, pink diamonds were also among the top lots presented, and sold for a considerably higher amount than their pre-auction high estimates. What makes this even more important is the fact that both top lots for pink diamonds featured stones with unfavorable characteristics, yet they still managed to fetch incredibly significant dollar amounts for their size, color and saturation levels.

Remember, these prices were realized during a global pandemic that saw operations come to a halt, impacting mining performance and ultimately resulting in delays to the shipping and processing of diamonds.

$26 million pink diamondThe Spirit of The Rose Diamond

The upward trend continued with another record shattering pink diamond surfacing in November 2020. An incredibly rare, 14.83 carat, Internally Flawless, oval-cut, Vivid Purple-Pink diamond known as “The Spirit of the Rose” was sold during the Sotheby’s Geneva auction for a staggering $26.6 million. Benoit Repellin, head of the Magnificent Jewels auction was quoted during a press release saying:

“It fully deserves the price achieved tonight, which is also testament to the growing appreciation, and awareness of the great scarcity of pink diamonds around the world.”

 

The Verdict

 

Pink diamonds are a unique investment opportunity, especially during times of economic uncertainty. Their rarity makes them a stable selection, and the closure of the Argyle Mine will only continue to impact their value. While no one can accurately predict what the future holds, all signs do point towards pink diamonds being a very safe alternative asset to invest in, in the future.


For more reading on colored diamonds, see the links below:

 

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