Billionaire investor Warren Buffett famously stated that “diversification is protection against ignorance.” At the moment it seems pretty hard to make money in most of the usual asset classes. Many of the most historically reliable investment vehicles, such as shares or property have failed to deliver spectacular results in the last few years. But you don’t have to be a billionaire like Warren Buffett to start investing in pink diamonds. The Pink diamonds have been increasing by 20%-30% every year for the last 5 years, which is a return that many fund managers would envy. What we have found is that the price of the investment pink diamonds has at least doubled over the last 5 years. Every year I go to buy pink diamonds I am always amazed at how much they have increased. Of course, it would be remiss of me if I did not mention that this is not legal or financial advice and you should seek your own advisor that can determine if this strategy is right for you. Clients today are looking to acquire Pink diamonds not just in their personal names, but in other investment vehicles such as a Self-Managed Super Fund (SMSF). Whatever your reason, whether it is diversifying your portfolio, saving for your own retirement or looking to acquire a family heirloom, The Pink Diamonds can be a solid investment.
Why are Pink Diamonds Increasing so rapidly?
There are 5 main reasons contributing to the year over year price increases.
1. In 2013 Argyle Transitioned from an above ground mine to an underground mine. The Argyle mine and processing plant operate 24 hours a day, 365 days of the year. All of these factors contribute to increasing running costs, which have an inflationary pressure on the rough cost of Pink diamonds. Furthermore, with underground mining, there is always the risk of a fatal accident which could see the mine close earlier than expected.
2. The kimberlite pipe where Argyle diamonds are found looks similar to a funnel. As they move further down the pipe, they are finding fewer and fewer diamonds. This leaves less rough to be cut into the desired round brilliant cut diamonds, which are in the highest demand.
3. Similar to the above point, as they find less and less diamonds the number of high quality deep pink diamonds they are finding is getting less and less. This is causing the deep pinks to increase at a faster rate than the mid – light pinks.
4. The demand for pinks is ever increasing. With this stunning Australian product attracting more and more attention, locally and internationally, more clients are seeking them out, not just for investment, but for personal use as well.
5. Projected end date. With the well-documented end date of 2020 predicted by Argyle, there is a finite timeframe in which to acquire them. While no one has a crystal ball, the prediction is that they could increase markedly after this end date, or when the mine is exhausted.
Grades of the Pink Diamond
There are 4 main colour grades when it comes to classifying Pink diamonds. Purplish Pink, Straight Pink, Pink Rose and Pink Champagne. The colour scale ranges from 1 -9, with one being the deepest pink diamond and 9 being like a decaf, skinny soy latte (or as I call it a ‘why bother’) Almost all pink diamonds have a primary colour and some have a secondary colour. Sometimes this secondary colour can give a little extra kick to the diamond. In the Purplish Pink scale, the purple hue can make a pink diamond look one shade deeper on the straight pink scale. So a 4PP pink diamond can sometimes look like a 3P. In the case of the Pink rose, it is often a brownish undertone that gives the diamond its stronger colour. A good tip when looking to buy a loose pink diamonds is to turn them upside down in a white sleeve to see the secondary colours.
Investing in Pinks
If you are looking for Investment Pink Diamonds the ideal range that I recommend is to aim for a 4P or 4PP to a 5P or 5PP. This allows for capital appreciation and can still be an affordable entry point, not just for you, but the purchaser you wish to sell the diamond to down the track. While deeper pink diamonds might be rarer and also appreciate in value at a greater rate, the number of potential buyers down the track will be less. Budget permitting, if a portfolio of pink diamonds is something that you would be interested in the minimum amount that I recommend would be $100,000. The aim here is to put together a selection of diamonds that will allow you to sell certain portions of the portfolio at a future point in time if you so wished. That way you can either neutralise the initial investment or greatly reduce it, while still leaving a portion of diamonds to further increase in value.
If you are ready to take the next step in your pink diamond investment journey, please feel free to contact me for complimentary 10 min pink diamond investment call or request our Investment Pink Diamond report. Alternatively, visit us in our Queen St Mall Diamond boutique to see a selection of pink diamonds for yourself. About Karl His international award-wining book, ” Rock Her World” is available now. If you would like help, in choosing the perfect diamond and would like an amazing experience around jewellery there is a lot of great information in “Rock Her World” Karl believes that choosing a piece of jewellery should be a phenomenal experience, and over the last 21 years has helped more than 5800 clients choose a special piece of jewellery that tells their story. Come and experience their brand new diamond boutique in the Queen St Mall.