In the third and final installment of our Pink Diamond tribute, we will be focusing on the reasons behind the exponential appreciation of pink diamonds. We'll explore pink diamonds and what constitutes an investment grade diamond for different audiences.
The Exponential Increase of Pink Diamond Prices Within The Past Decade
Over the past decade, naturally colored diamonds have seen an exponential increase in value, steadily surpassing other forms of popular investment assets such as gold, stocks, oil, and classic cars.
Needless to say, pink diamonds are no exception. Since 2005, naturally colored pink diamonds have been showing tremendous appreciation, experiencing an incredible 600% increase in value.
But why is this happening (especially in terms of Argyle Pink diamonds)?
How Rarity Affects the Price of Argyle Pink Diamonds
Although their magnificent appearance plays a great role, such exponential appreciation is more likely attributed to increased operational costs as well as the laws of supply and demand.
The 2013 transition towards underground mining operations has caused a substantial increase in operating expenses and ultimately causing the cost of pink diamond roughs to inflate. However, despite expanding operations underground, miners are finding less and less diamond rough to be extracted and processed. Not only that, the pink diamonds that are found will be of subsequently lesser quality compared to those mined closer to the surface.
These facts can be further backed up by an Argyle Tender analysis for the period between 2010 and 2015. The incremental price pink diamonds were experiencing was initially believed to be caused by exponentially heightened product quality; but this was not entirely true. The stones presented seemed to be less vibrant and proportionately smaller, especially when compared to those of 2 decades ago.
As is the case with every mine, the Argyle mine’s resources are slowly being depleted and will eventually run out. This further supports Rio Tinto’s (owner of the mine) decision to cease operations around 2020.
The aforementioned, coupled with a steady (or even increased) demand will undoubtedly cause positive price fluctuations.
In addition to making Argyle Pinks potentially finite, the closure will also cause the cessation of the famous Argyle Annual Tenders, further limiting investor opportunities to get hold of these truly one-of-a-kind stones. Nonetheless, this ultimately translates to even greater escalation of pink diamond value for owners in the years to come, as well as, severely reducing chances for depreciation.
Are the Argyle Pinks Worthy Investment?
What the above mentioned essentially translates to is even greater potential escalation of pink diamond value for owners in the years to come, as well as, reduced chances for depreciation, making the Argyle Pinks an extremely valuable investment asset. Keep in mind, the increasingly finite nature of these stones, coupled with heightened demand, and diminishing gem quality, calls for immediate action. So if you are wondering when would be the “ideal” time to invest in these stones; the answer is “sooner rather than later.”
What Grades Should You Focus On?
Having said that, which types of pink diamonds should you focus on when deciding upon an investment?
From the chart below we can see that there are four color grade categories for Argyle Pink diamonds; Purplish Pink, (plain) Pink, Pink Rose, and Pink Champagne. Moreover, the intensity of the hue ranges from one to nine, with one being the deepest, richest pink and 9 being barely present.
As we mentioned in Part 1 of our tribute, oftentimes pink diamonds have a secondary hue (color modifier) which can further affect its overall value. For instance, the existence of a secondary purple hue can make a pink diamond look richer even though its color may be farther down the quality scale.
(Tip: We are predisposed towards certain hues, which in turn affect the stone’s value. In order to more accurately spot the secondary color when considering a loose stone for purchase, turn the diamonds upside down and place them on a white surface. This will make detecting the color modifiers much easier.)
If you are the kind of investor that wants to buy a diamond, enjoy it for a period of time, and then sell it for a potential profit; perhaps the ideal range you should consider is from a P4, PP4 to a P5, PP5. This will ultimately allow your stone to appreciate at a healthy rate, all the while still being affordable to the purchaser you will eventually sell to in the future.
Having said this, those of you who are willing to spend a much higher amount for a long term investment that will appreciate at a much greater rate, the higher the grade the better. However, keep in mind that the number of potential buyers down the line may be less (and of course the opposite is true for lesser grade diamonds).
For more reading on colored diamonds, see the links below:
- Investing in Natural Pink Diamonds: What You Need to Know
- GIA Report: What You Need To Look For
- Colored Diamonds Investment: Comparison To Gold
- Need To Know: How To Invest In Colored Diamonds