The Colored Diamond Market


The most expensive diamond ever sold was the Graff pink diamond for $46 million in 2010.

Similar to the colorless diamond we all know so well, natural fancy colored diamonds are just as authentic and incredibly impressive. In fact, they are mined in the very same fashion from many of the same diamond mines around the world. Only, natural colored diamonds only represent approximately 0.1% of all the colorless diamonds mined each year.

Within the World of Color there are 12 different main colors, over 90 secondary hues, 9 intensity levels, and over 230 color combinations. However, as a result of the rarity of these stones the supply is low, and considering the addition of the increasing market demand, the value is often considered much higher than that of a colorless stone with similar characteristics.

Well Established Goods.

Diamonds have been collected by royalty, the rich, and the most famous dating back to almost 3,000 years ago in India. They are publically acknowledged for the significance of wealth and importance. They were, and still remain commonly traded international goods and managed to retain their value over time. They do not lose value once owned and they never lose their color or shine.

Impressive History of Price Performance.

The prices paid over the past 10-15 years in both the public auction houses as well as the private companies have steadily increased in an almost consistent pattern. Since fancy colored diamonds are such as private asset, prices are not publically posted or kept on diamond lists like we see with colorless goods. The prices are defined according to public auction results, supply and demand, and obviously competition.

Even during the global financial crisis of 2008, because they are a tangible asset which one can take into his position, they managed to retain their value without taking a loss.

Portability.

Fancy colored diamonds have adopted the description of being the most concentrated form of wealth on earth. Since the diamond material is among the most durable natural substances on the planet, they are extremely resilient to any danger such as fire, flood, or any other natural disaster. Still, they are a precious gemstone which is susceptible to bodily harm and should be well kept so they are not lost or scratched. Needless to say, it would be considered wise to insure the investment because it is so small.

Outlook on the Diamond Future.

At least in the near future, things are only looking positive for the colored diamond investor. Among the most valuable and highly recommended investment stones today is the Argyle Pink Diamond. The Argyle diamond mine, located in Australia, currently belongs to the Rio Tinto group (Stock Profile - ASX:RIO), which is the third largest diamond miner in the world.

Rio Tinto has already publically announced the upcoming end to the Argyle mine which is famous for the production of the finest pink diamonds in the market. The company has been trying to sell the Argyle mine for almost a year now in the hope that someone else would take over the remaining seven years of the mines life, but has been unsuccessful. As reported recently by Sky News, the company is now trying to raise hundreds of millions of pounds through a separate listing of the unit in order to float the business.

The Argyle diamond mine produces over 90% of the pink diamonds in today’s market and there is no other mine with capabilities to do the same. Even if another mine was found today, it would take close to ten years before they were up and running to full capacity.

The international diamond market seems to constantly be on the move. Petra Diamonds Ltd. (Stock Profile - LSE:PDL), which owns eight mines in South Africa and Tanzania and an exploration program in Botswana, has a clear focus on mass production. They are aiming to be the largest producers in Africa, and already hold fame to the ownership of five of the twenty-four most productive mines in the world. In fact, they recently announced the discovery of a 25.5 carat blue diamond from one of their most successful mines, the Cullinan mine in South Africa.

Concluding Results.

Even with the current financial troubles the world shares, the diamond market appears to be on the rise. Especially is Asia, more specifically China, Singapore, and India, demand for high quality investment worthy diamonds has dramatically increased. US consumers as well are recovering their confidence. The industry has not seen any major discoveries of diamond fields for about two decades, which keeps supply low while demand is high.

At the moment, diamonds in general, and fancy colored diamonds more specifically, are shining bright in the eyes of the investor.

John Peterson, Guest Contributor to MiningFeeds.com

About the author: John Peterson works with Leibish & Co., colored diamond experts based in Israel.

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