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Red Diamonds

Red Diamonds
Diamonds are a girl’s best friend, and if that girl happens to be a shrewd investor, she’ll know to pick a red diamond. That way, her best friend will provide her with more than sizable profit. Who wouldn’t want a best friend like that? Leaving aside old musical references, fancy colored diamonds are hot game on international markets. For good reasons, with the ranks of the Chinese and Indian superrich swelling on a tidal wave of economic growth, the hunt for rare luxuries is open.


Non perishable
Diamonds are more than just luxuries. According to the New York Times, the trend toward using gemstones to supplement or balance an investment portfolio seems to be, as evidenced by the prices of large gemstones. Apart from the prospect of good and quick returns on investment, red and other fancy colored diamonds are more than just a trinket. At the same time, they make out an imperishable luxury item and a great investment. Real estate generates elevated costs if kept for personal use, luxury cars lose close to half their value the moment their owner drives them from the garage and stock assets remain hidden away in a digital wallet. Fancy colored diamonds increase in value even when used. Face it, nothing says success like showing off a shiny red diamond, knowing that by the end of the evening that stones value will have increased by several percentage points.
From rare to rarer
Why then are especially red diamonds attractive for investment purposes? While the rise in demand for fancy colored diamonds in general is expected to keep pace with the growing superrich in the BRICKS-countries, the supply of red diamonds is particularly limited. Pure red diamonds devoid of secondary hues are the rarest and highest priced in the world. A closer look at the production at Australia’s Argyle Diamond Mine, famous for yielding 90% of the world’s pink and red diamonds, provides us with an idea of their rareness. The Argyle Diamond Mine produced an estimated total of 10.2 million carats in 2013, 80% of which were industrial graded brown diamonds, followed by 16% yellow, 2% white, 2% grey and less than 1% pink and green. Despite this low production value for gem quality diamonds, the mine remains the world’s only reliable production site for pink and reds. As for the rareness of red diamonds amongst pink diamonds, the 2011 Argyle Pink Diamond Tender offered only one red diamond, an .80ct fancy red oval-cut. In contrast, the 2013 Tender became known as “the red edition”, with the inclusion of 3 red diamonds among 64 stones. The Argyle Phoenix, a 1.56 carat fancy red diamond, became the tenders most precious stone. Breaking the mines record, of highest price per carat, the stone sold for $2 000 000. That said, the Argyle Diamond Mine is set to run out of mineable material and cease production in 2018. Being responsible for mining 90% of the worlds pink and red diamonds, the Australian mine is close to irreplaceable. Unless new mining sites, comparable in size and yield are discovered (which at this point is highly unlikely), market prices for pink - and even more for red diamonds are expected to skyrocket.
Expected profits
Given the extreme rarity of red diamonds, it is almost impossible to make clear predictions of such diamond prices. According to the Thomas Geld, manager of the grading laboratory of Harry Winston and former grader at Gemological Institute of America, the only truly accurate available pricing information for fancy colored diamonds is through auction house records. In an effort to analyze the potential return on investments, Gelb has collected data on more than 1,300 sales at auction over the past 14 years. Invariably the prices have increased in every color grade, and in some cases this rise has been dramatic.

For instance, pink diamonds has risen dramatically – from less than $50,000 per carat to more than $300,000 per carat – over the past 14 years. Such diamonds can be considered a more than solid investments.
Due to the extreme rarity of red diamonds similar charts are unavailable; therefore we are reliant on examples of known prices at auctions.

The Hancock Red Diamond, 0.95 carat, was reportedly acquired by Warren Hancock in 1959 for $13 500 and sold for $880,000 in 1987.

In 2001 the Moussaieff Red, the biggest red diamond ever found, measuring 5.11 carat, was acquired by the Moussaieff jewellery firm for approximately $7000 000, $1.36 million per carat.

At the 2013 Argyle Pink Diamond Tender, the Argyle Phoenix measuring 1.56 carat, reached a price of $2 000 000, which comes down to a $1.28 million per carat. Keeping in mind the predicted closure of the Australian Argyle Diamond Mine, pink and especially red diamonds are likely to become virtually extinct on primary markets by 2020. Numbers certainly do not favor de discovery of any fancy red after the closure of Argyle. It takes an estimated one million carat of rough to yield one carat of pink diamond to be sold at the Argyle Pink Diamond Tender. Taking into account that the 2013 edition was labeled the red edition due to the inclusion of 3 fancy red stones out of 64, just imagine how much rough is mined to produce one fancy red. With Argyle producing 90% of the world’s supply of pink and fancy red, it is not unlikely to predict that no fancy reds will be mined within a decade after its closure. Given the fact that a gemstones value on international markets directly correlate with its rareness, prices for red diamonds are likely to go through the roof.

For those planning to jump aboard the red diamond rocket, Vicore Diamonds currently has an exclusive selection of fancy reds on offer; an opportunity not to be missed by any smart investor.