Rio Tinto has just announced that its 2020 Argyle Tender results were the best to date. This success follows the miner’s recent closure of the Argyle mine early November which will create a vacuum in the pink diamonds supply globally. Up to now the Argyle mine was supplying roughly 90% of the world’s pink (and red) diamond supply. The question we are facing now is what mine, if any, can replace the supply or will that create a substantial price increase in these unique and rare diamonds; if so, at what pace?
Can we consider that these Argyle diamonds can now be considered somewhat the Bitcoin of Pink diamonds? why not? Bitcoin is finite in coins and as demand soars and supply is what is out there currently, would the Argyle diamonds not react i the same way? what is happening to the price of Bitcoin right now? will it be the same moving forward? will the Argyle diamonds be considered in the same manner?
The 2020 tender had 62 diamonds with a total of 57.23 carats. The viewing of the diamonds was limited to Antwerp, Singapore and Perth (Australia), due to the current Coronavirus limited travel restrictions.
A the end, Rio Tinto announced record prices on average with a few world record prices achieved like the 2.24 carat, Fancy Vivid Purplish Pink diamond, Argyle Eternity which was lot 1 and the top Hero of the tender which was acquired by Hong Kong Fancy Color Diamond dealer Kunming Diamonds.
Other than the 2.23 carat, Fancy Vivid Purplish Pink diamond, Kunming Diamonds has successfully acquired another 34 diamonds at the tender. Leibish & Co. from Israel had a glorious victory as well after it won 16 diamonds at this tender including the 1.84 carat, Pear Shape, Fancy Vivid Purplish Pink, Argyle Sakura. The Argyle Sakura is one of the six heroes from this years’ Tender. It was offered recently on their website for almost $2.6 million or $1.4 million per carat, before being removed.
Together, Kunming and Leibish have acquired 51 diamonds together or over 80% of the lots offered. An estimated 12 bidders in total sent bids on the Tender offering, leaving 11 diamonds for the rest of the 9 bidders.
Rio Tinto confirmed that the prices at its Tender has appreciated above 500% over the last 20 years, outperforming equity markets. As Rio Tinto does not reveal the prices paid at its tender nor does it mention who the buyers are (unless given strict approval by the buyer), it leaves the door open to further analyze the performance.
John Calleija, a jeweler from Australia successfully won the bid for the 12 sets of miniature rare diamonds totaling 13.90 carats as part of the Petite Suites.
The challenge now is moving them forward and selling them to other collectors, investors and jewelry aficionados worldwide for even higher prices with the hopes that their value will further increase over time. As an advisor, I would recommend investors be cautious and not jump too fast onto the argyle band wagon. I am not saying that the Argyle Tender diamonds are not unique or rare or that their value do not have the potential to increase, rather I am saying to be careful and look at alternative acquisition possibilities within the Fancy Color Diamond world. Perhaps there are opportunities to acquire another rare diamond which has a greater potential of value creation. There have not been enough Argyle diamonds offered on the secondary market to really properly assess its value increase from an investment perspective.
From a financial standpoint, time is ticking now for both Kunming and Leibish. I assume that some of the tender diamonds were pre-ordered by customers, others will be offered on the dealers respective websites, and offered to their top tier customers. Some will sell in the days and weeks to come, but some may stay in inventory for months and years similar to previous years tender diamonds. From a financial analysis, every year that a tender diamond does not sell, it costs the respective dealer at least 10% in opportunity costs. Eventually every tender diamond will sell.
Should you be interested in an independant analysis and recommendation on Investing in Fancy Color Diamonds including an argyle tender, feel free to contact us. Our job is to work for you, the collector and investor, rather than the dealer. We guide investors to make an informed decision based on facts and current market conditions.
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