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What Does the “Restart” Look Like for Pink and Other Colored Diamonds?

Posted by Tony Cathaway on 4/24/20 4:29 PM

As the world tries to navigate through the pandemic, there is a raging debate occurring between maintaining health and restarting the economy.

Hypothetically speaking, even if the global economy were to open “tomorrow,” things could not immediately go back to the way they were before. Thus any economic restart won’t be “a flick of a switch.”

There are many layers, subtleties and nuances to this debate. In this post, we are going to take one tiny part of that and explore it further with you.

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The topic we are going to explore focuses on how a “restart” might look for investors of naturally colored diamonds, more specifically, the pinks. We’ll explore this through a Q&A format using some of the questions that we’ve been addressing.

During economic turmoil, how might you secure your wealth?

One path investors tend to follow during these times is an increased focus on tangible treasure assets like gold, silver, and art among others to protect their wealth.

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, but more on that in a bit.

Bonus! If you are interested in getting additional colored diamond insight, be sure to download our free Colored Diamond Investment Guide below or schedule a meeting with one of our seasoned diamond experts:

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One of the best things you can do as investors is to study and learn from history. With that in mind let’s look at a historical example from about a decade ago.

The last significant time of financial turmoil was experienced during the 2008 financial crisis, and subsequent recession. 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.

colored diamond index 2019

 

So why isn’t everyone with this knowledge scrambling to find diamonds to invest in?

The answer is they are, but there is a problem.  The problem is that the current COVID-19 situation is also affecting the diamond industry. Contrary to the 2008 recession, today’s financial crisis is mainly due to a complete logistical lockdown, blocking shipping and other industry logistics. As such, this situation prevents the conveyance of diamonds from producers, to sellers, to buyers.

According to the FCRF chairman, Mr. Eden Rachminov, the unprecedented government restrictions, as a result of COVID-19, have brought fancy colored diamond trading to a temporary halt. Cargo flights are not operating, logistical centers are closed, and orders in the pipeline cannot be fulfilled due these limitations. Having said that, Mr. Rachminov added that trade is expected to resume later in the year, but the time is currently unknown.

How is this situation affecting the Argyle mine? We know the Argyle mine is closing this year, are they shut down too?

Another factor that is expected to significantly impact the price of pink diamonds is the closure of the Argyle mine later this year.  The Argyle mine is the largest producer of pink diamonds in the world, and is the source of the famous Argyle pink diamonds; stones with an extremely rare, and rich “bubble gum” hue unrivaled by any other worldwide.

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As of the date this article was posted, Rio Tinto (owner of the Argyle Mine) has been granted permission by the Australian government to proceed with operations as normal. This means that the closure date, set for later this year, likely won’t change.  Thus the iconic Argyle pink diamonds will cease to be mined by the end of this year.

The mine is open but the Argyle Tenders do seem to be somewhat affected, with the most recent tender being cancelled in March, and being rescheduled to May.

Given the economic turmoil and closure of the mine combined with a greatly reduced global trade, how might this all “restart?”

Short answer is, it never all completely closed. 

Despite many avenues being closed, and retailers facing logistical issues, there are still ways to acquire a diamond, but you need to be careful. The diamond market has always been riddled with scams, and now might be the time that you need to be the most careful.

Perhaps the most important thing to look for when purchasing a diamond of any sort is proper and reliable certification from reputable third-party gemological institutes such as the GIA or similarly relevant certifications. This is important for three reasons.

  • First, it shows you that that the seller is trustworthy in that they have had their stock graded and certified, and are indeed offering you a diamond of quality.
  • Second, it will assure you, that what you are getting is of advertised quality.
  • Finally, having a certificate from a reputable institute will also make selling your diamond much easier in the future, as buyers prefer diamonds with proper provenance.

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Source: GIA

 

The Restart – Possibly later this year but…

Those that never shut down are still selling. However, the global market will reopen at some point, perhaps as soon as later this year as the FCRF noted.  This won’t be all at once though. The rest of the world will slowly start to come online but fear about the potential re-emergence of the virus could slow this down or even reshut everything completely.

And… that takes this conversation back to those that never shut down.  They are providing investment grade opportunities to buy and sell now.  Just make sure they are trusted resources.  Who do we tend to do business with? Those we trust. Be aware and purchase smart. Until the world comes fully back, invest, purchase and sell with those you know and trust.

Knowledge is power in any circumstance, and colored diamond purchasing is no different. Do your research, speak with professionals, appraisers, and jewelers and understand how colored diamonds are truly valued, and why.

We stand ready to work with you!

With over 50 years of combined experience, Arpege Diamonds strives to provide industry leading insight, stay on top of the latest trends, and provide high quality colored diamonds to all our customers. If you would like to get some additional information regarding colored diamonds or if you are in the market to purchase one please feel free to schedule a meeting with one of our leading professionals and we would be happy to talk with you.

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Topics: Colored Diamond Investment, Investing

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