Pink Diamond Investment 2020 Guide
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PINK DIAMOND INVESTMENT 2020 GUIDE WHY PINK SUPPLY HOW TO DIAMONDS & DEMAND INVEST Diamond Image © Rio Tinto 2020 Tinto Diamond Image © Rio “Buying a pink diamond is like buying a painting by Pablo Picasso while he was alive. You know at some point they will run out and increase in value. We have always known it was a limited source and that a time would come when this fabulous fluke of nature would end, but there is a lack of appreciation for what this will mean. In another decade the Pink Diamond will emerge as the new Faberge egg, the thing myths are made of. The value of rarity is the most priceless factor.” Contents Director’s Foreword 1 About Australian Diamond Portfolio 2 Our Expert Team 3 Reasons to invest 1. Strong history of capital appreciation 5 2. Opportunity for long-term outsized gains 8 3. Protection from market volatility 11 4. An alternative to cash 13 5. Currency hedging 14 6. Estate planning & wealth preservation 17 7. Self-Managed Superannuation Funds 18 A word on blue diamonds 20 Introduction to investment grade products Not all diamonds make the grade 23 Process of investing in physical diamonds Starting a diamond portfolio 28 Storage and insurance 29 Liquidity and selling 31 Our end-to-end solution 34 What our clients are saying 39 Next steps 40 Disclaimer: The information contained in this document is purely educational in nature and does not take account of your personal objectives, situation or needs. The information is objectively ascertainable and does not constitute financial product advice. In particular, it is not intended to be a recommendation or statement of opinion or to influence you in relation to making any decision about a financial product. Australian Diamond Portfolio Pty Ltd, its officers, agents, representatives and employees do not hold an Australian Financial Services Licence (AFSL). If you require advice about a financial product, you should contact a properly licensed or authorised financial advisor. Any prices, quotes or statistics included have been obtained from sources deemed to be reliable, but we do not guarantee their accuracy or completeness. Director’s Foreword Welcome to the Australian Diamond Portfolio’s Pink Diamond Investment Guide 2020. Today’s global economic landscape is quickly changing; we are living in uncertain financial and political times unlike any the world has experienced before, and investors are becoming increasingly concerned about the risks in traditional investments such as property, stocks and bonds. The flight to alternative and tangible hard assets that provide reliable returns and safety from market turmoil continues to grow, with pink diamonds now well established as an asset class of choice for shrewd investors. Australian Diamond Portfolio is a specialist diamond brokerage helping investors capitalise on the potential gains of this unique asset class. With a focus on client education, we help clients create physical Diamond Portfolios ranging from thousands to millions of dollars and it would be our pleasure to share our expertise in this field with you. This guide is designed as an introduction for Australian investors interested in exposure to physical pink diamonds as part of a diversified portfolio. It focuses on 3 key areas: 1. The benefits that pink diamonds bring to an investment portfolio 2. What to look for when buying investment diamonds 3. How to invest & the Australian Diamond Portfolio solution We hope you find this guide useful, and look forward to discussing the opportunity with you further. Anna Cisecki Executive Director t v About Australian Diamond Portfolio 2 About Australian Diamond Portfolio Australian Diamond Portfolio is an independent investment diamond brokerage that specialises in the acquisition of rare pink diamonds. We provide investors with an easy, end-to-end solution that encompasses every step of the investment process. The highly experienced and expert team at Australian Diamond Portfolio are here to help clients from the first steps; learning about pink diamond investment, through the buying and storage process, and are on hand right through to eventual end sale. Our mission is to make rare coloured diamonds accessible to all investors, providing diamond investment education and transparent market information that empowers potential and first-time diamond investors to better understand diamonds as a hard asset class. About Australian Diamond Portfolio 3 Our Expert Team Anna Cisecki | Executive Director Anna is an Accredited Diamond Expert (C.I.G.) with nearly 15 years experience in the diamond and precious metals industry. As the former Laboratory Director of the internationally recognised D.C.L.A. (Diamond Certification Laboratory of Australia) from 2006 to 2013, her experience was focused on consumer and industry education, and bringing greater transparency to diamond investment. Her background also includes gemmological work with the E.G.L. USA Group and consulting roles for both diamond and precious metals investors such as the DCLA Diamond Exchange and First Gold, Australia’s first investor accumulation plan for precious metals. Anna holds an AGSM Executive M.B.A. from the Australian School of Business and is a member of the DDCA (Diamond Dealers’ Club of Australia) and the Canadian Institute of Gemmology. She is an ardent diamond connoisseur with a passion for educating clients and industry professionals alike about fancy coloured diamonds, and arming them with the information and tools they need to invest in diamonds the smart way. David Burger | Principal Consultant David is a globally acclaimed Master Diamond Polisher, with experience that is second to none in the diamond industry. Having spent 52 years polishing diamonds in South Africa and Australia, his specific area of expertise is with pink and red diamond cuts, in particular the large and important Tender diamonds. Over the course of his almost three-decade career, David has polished a large number of Tender diamonds from the Argyle mine, master crafting the rough into the works of art they eventually become, accumulating thousands of hours of experience in polishing along the way. In addition to his experience at the diamond polishing wheel, David has a well- known passion for promoting the diamond industry, and provides unique insider knowledge on the investment opportunities it offers. MAIN REASONS TO INVEST IN PINK DIAMONDS Strong history of capital appreciation | Reasons to invest 5 1 Pink diamonds have a strong history of long-term capital appreciation The primary investment appeal of pink coloured diamonds is their potential for capital gains. Over the past fifteen years, anyone that has purchased a pink diamond has seen a significant appreciation in value on their investment. This is captured in the chart below, which highlights the growth in prices across several categories of investment grade pink diamonds since 2005. As you can see, all categories have appreciated significantly over this time period, with gains between 10-15% per annum on average. PINK DIAMOND HISTORIC APPRECIATION Growth across investment pink diamond categories to 2020 600 600 500 500 400 400 300 300 200 200 Percent (%) Growth Percent 100 100 0 0 Jan ‘05 Jan ‘10 Jan ‘15 Jan ‘20 Fancy Pink / Fancy Purplish Pink Fancy Intense Pink / Fancy Intense Purplish Pink Fancy Vivid Pink / Fancy Vivid Purplish Pink Source: Fancy Colour Research Foundation (FCRF) Pink Diamond Investment Guide 2020 Strong history of capital appreciation | Reasons to invest 6 Performance from 2005 Just how strong the returns for pink diamonds have been, on both a relative and absolute basis is captured in the following table. It highlights returns for several classes of pink diamonds, as well as a variety of other asset classes, including shares, cash and property where investors tend to concentrate a large portion of their portfolio. As you can see, pink diamonds have significantly outperformed all traditional asset classes. This performance has been driven by a number of factors, with market fundamentals on both the supply and demand side suggesting this period of strong performance will continue in the years ahead. RETURNS ACROSS ASSET CLASSES 2005-2019 Asset Class Total Growth (%) Annualised % p.a. Pink Diamond Index (All Pinks) 366.2 10.8 Intense Pink Diamonds (All Intense) 371.5 10.9 Vivid Pink Diamonds (All Vivids) 415.1 11.5 Silver (USD) 164.8 6.7 Cash 77.5 3.9 Australian Shares 212.8 7.9 International Shares 183.7 7.2 Balanced Managed Funds 139.7 6.0 Growth Managed Funds 175.9 7.0 Australian Listed Property 104.9 4.9 Australian Bonds 129.7 5.7 International Bonds 157.2 6.5 Gold (USD) 247.7 8.7 Sources: ABS, FCRF, World Gold Council, Yahoo! Finance, Market Index, Chant West, ASX. Pink Diamond Investment Guide 2020 “The best-known pink diamonds are from the Argyle diamond mine in Western Australia. That mine, which supplies 90 to 95 percent of the world’s pink diamonds, will be exhausted by 2020, and the scarcity has driven up prices. Pink diamonds outperform any other, they’re less and less available and more and more in demand.” Opportunity for long-term outsized gains | Reasons to invest 8 2 Pink diamonds offer opportunity for long-term outsized gains Over 90% of the world’s annual natural pink diamond supply is mined from one single source: Rio Tinto’s Argyle Mine in Western Australia. The mine has been in operation since the early 1980’s but is scheduled to completely cease all mining operations by the end of this year. In anticipation of this closure date, investors buying pink diamonds are seeing an average appreciation of 10-15% on their diamond portfolios each year. The Argyle Mine: Why is it closing? In the world of diamonds and precious gemstones, the Argyle mine has assumed a brand of its own.