RARE AND COLLECTABLE

In the world of luxury products, Argyle pink diamonds are likened to works of fine art, hidden treasures, rare books and unique icons.

As global financial markets show volatility and instability, affluent investors and collectors arounf the world are taking a closer look at rare, hard assets to diversify their portfolio and protect their weath.

Argyle pink diamonds fulfil this criteria an, as supply dwindles, international collectors and investors continue to aquire these rare pieces for their personal holdings.

To know a diamond’s origin is to know its real story – a chronicle that will be carried with it for eternity. An Argyle pink diamond tells a delightful and intriguing narrative of nature’s forces, geological evolution and the destinies of all who have guarded it on its journey.

Each one is like a miniature piece of fine art, expertly, intricately and lovingly crafted from rough diamond to rare polished stone, but not before it travelled a journey of epic scale, from deep within a land as rare as the diamond it yields. The Argyle pink diamond is a luxuriously rare gem, and to own one is to own is to possess a beautiful and lasting treasure.

“PINK DIAMONDS ARE AMONG THE MOST INTRIGUING AND HIGHLY VALUED GEMS IN THE WORLD, BOTH BECAUSE OF THEIR RICHNESS OF COLOUR THEIR RARITY.”

Dr. James E. Shigley,
GEMOLOGICAL INSTITUTE OF AMERICA (GIA), 2009

The Argyle Diamond Mine is the only consistent source of pink diamonds and accounts for over 90% of the world’s pink diamond supply; although this treasure trove will not continue in perpetuity. With limited mine life remaining, these rare pink diamond are becoming ever rarer. This paper places that rarity in context, a context shaped by the forces of supply and demand, and one that speaks volumes about collectability, the potential for wealth creation and a legacy for future generations.

Market Fundamentals

The market for pink diamonds is quite separate to white diamonds, and due to their rarity, pink diamonds typically command prices far in excess of their colourless counterparts.

To put this rarity perspective, of the approximately 20 million carats produced from the Argyle Diamond Mine, less than 1% are pink. Remarkably, this small production represents over 90% of the world’s pink diamond supply.

This rarity is reflected in the prices of pink diamonds. It has been cited that some medium quality pink diamonds attract prices 20 times higher than their white diamond equivalents. This gap has been known to widen for higher qualities of Argyle pink diamond.

It is difficult to draw parallels with price performance of pink diamonds and the price performance of published commodities. In fact, Argyle pink diamonds appear to defy logic and to defy gravity.

Rarity, uniqueness and a finite nature drive the value of the Argyle pink diamond in much the same manner as art. It is therefore unsurprising that the price performance of pink diamonds more closely resembles that of the price performance of some of the world’s finest masters. Both assets share similar virtues and belong in the world of connoisseurs and collectors.

n the supply side there are structural constraints that will limit the production of rare pink diamonds and contribute to a widening demand overhang.

These include:

  • A steadily declining mineral reserve base, compounded by limited exploration success and relatively high barriers to entry.
  • The chances of any future mine discovery replicating the unique properties of the Argyle Diamond Mine are extremely low.
  • Currently there are no other consistent sources of pink diamonds, and even if another deposit of pink diamond-bearing ore is discovered, it would take on average 10 years for a mine to proceed from discovery to production.
  • Inventories of diamonds are at historically low levels globally.

Unlike for white diamonds, there is no list price that determines the value of a pink diamond. Each pink diamond is uniquely different and cannot be commoditized. As with rare fine art, set rules do not apply.

What can be said however is that Argyle Pink Diamonds Tender stones have appreciated steadily over the past decade. This is a reflection of the fundamental economics of pink diamonds and the increasing demand for a truly scarce product.

PINK DIAMONDS OUTPERFORM WHITE DIAMOND PRICES

White diamonds have shown moderate price rises, while pink diamonds have
demonstrated a steeper price gradient over the same period.

Source: www. polishedprices.com, Gemdax Consultants; Argyle Pink Diamonds

APD vs MAJOR EQUITY INDICES

Over the 27 years that the Argyle diamond mine has been producing rare pink diamonds there have been numerous economic cycles that have influenced most investement vehicles. Throughout this time, pink diamonds have retained their value and after adjusting for quality, Tender prices for Argyle Pink Diamonds have outperformed major equity indices

Purchasing pink diamonds can reap considerable rewards, indeed as the tumultuous recession of 2008 was materialising across the world, Rio Tinto recievied the highest price ever for a pink diamond from the Argyle Diamond Mine.

APD HAVE OUTPERFORMED MAJOR EQUITY INDICES

3.

Pink diamond prices are slightly countercyclical in nature, and have outperformed equity markets, albeit with greater price volatility.

Source: Gemdax Consultant; Argyle Pink Diamonds

WORKS OF ART

Parallels are often made with Argyle pink diamonds and fine art – not only because each polished stone is in itself a work of art, but due to the allure and perpetual value associated with both. Historically fine art and Argyle pink diamonds have sustained their worth and each maintained their status as a definitive collectable, regardless of market condition.

PINK DIAMONDS HAVE TRACKED ART PRICES GENERALLY WITH LOWER VOLATILITY

After the financial crisis of Q4 2008, art prices experienced a 30% price fall as investor liquidity dried up and appetite for the asset diminished. While pink diamond prices followed suite 2010, prices only fell by 16% reflecting the lower volatility of this collectable product.

Source: AMR Art Top 100 index (©Art Market Research Consultants; Argyle Pink Diamonds)

In 2005, Rio Tinto commited $1Billion dollars to expanding their Argyle diamond mine, shifting to underground mining. This will extend the mine for at least a decade or until 2020.