Post on 14-Apr-2017
A R G Y L E P I N K D I A M O N D S
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A R G Y L E P I N K D I A M O N D S
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The Argyle Diamond Mine is the only consistent source of pinkdiamonds and accounts for over 90% of the world’s pink diamond
supply; although this treasure trove will not continue inperpetuity. With limited mine life remaining, these rare pink
diamond are becoming ever rarer. This paper places that rarity incontext, a context shaped by the forces of supply and demand,
and one that speaks volumes about collectability, the potentialfor wealth creation and a legacy for future generations.
Market FundamentalsThe 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% arepink.
Remarkably, this small production represents over 90% of theworld’s pink diamond supply.
A R G Y L E P I N K D I A M O N D S
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A R G Y L E P I N K D I A M O N D
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It has been cited that some medium quality pink diamonds attract prices 20times 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 diamondsand 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 pinkdiamond in much the same manner as art. It is therefore unsurprising that
the price performance of pink diamonds more closely resembles that of theprice performance of some of the world’s finest masters. Both assets sharesimilar virtues and belong in the world of connoisseurs and collectors.
Unlike for white diamonds, there is no list price that determines the value ofa pink diamond. Each pink diamond is uniquely different and cannot be
commoditised. As with rare fine art, set rules do not apply.
What can be said however is that Argyle Pink Diamonds Tender stones haveappreciated steadily over the past decade. This is a reflection of the
fundamental economics of pink diamonds and the increasing demand for atruly scarce product.
P I N K D I A M O N D S O U T P E R F O R M W H I T E D I A M O N D P R I C E S
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P I N K D I A M O N D S V S W H I T E D I A M O N D S
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On the supply side there are structural constraints that will limitthe production of rare pink diamonds and contribute to awidening demand overhang.
Source: AMR Art Top 100 index (©Art Market Research Consultants; Argyle Pink Diamonds)
These include:
A steadily declining mineral reserve base, compounded by limitedexploration success and relatively high barriers to entry.
The chances of any future mine discovery replicating the uniqueproperties 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 isdiscovered, it would take on average 10 years for a mine to proceedfrom discovery to production.
Inventories of diamonds are at historically low levels globally.
P I N K D I A M O N D S V S M A J O R E Q U I T Y I N D I C E S
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Over the 27 years that the Argyle diamond mine has beenproducing rare pink diamonds there have been numerous
economic cycles that have influenced most investment vehicles.Throughout this time, pink diamonds have retained their valueand 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 received the highest price ever for apink diamond from the Argyle Diamond Mine.
Pink diamond prices are slightly countercyclical in nature, andhave outperformed equity markets, albeit with greater price
volatility.
Source: Gemdax Consultant; Argyle Pink Diamonds
P I N K D I A M O N D S V S M A J O R E Q U I T Y I N D I C E S
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P I N K D I A M O N D S V S M A J O R A R T
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Parallels are often made with Argyle pink diamonds and fineart – not only because each polished stone is in itself a work ofart, but due to the allure and perpetual value associated with
both. Historically fine art and Argyle pink diamonds havesustained their worth and each maintained their status as a
definitive collectable, regardless of market condition.
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.
In 2005, Rio Tinto commited $1Billion dollars to expanding theirArgyle diamond mine, shifting to underground mining. This will
extend the mine for at least a decade or until 2020.
Source: AMR Art Top 100 index (©Art Market Research Consultants; Argyle Pink Diamonds)
P I N K D I A M O N D S V S M A J O R A R T
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A R G Y L E P I N K D I A M O N D T E N D E R
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A R G Y L E P I N K D I A M O N D T E N D E R
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A R G Y L E P I N K D I A M O N D T E N D E R
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A R G Y L E P I N K D I A M O N D T E N D E R
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A R G Y L E P I N K D I A M O N D
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A R G Y L E P I N K D I A M O N D
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A R G Y L E P I N K D I A M O N D
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A R G Y L E P I N K D I A M O N D
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L A C E C O L L E C T I O N
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L A C E C O L L E C T I O N
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