Diamonds: Navigating An Opaque Market

A diamonds transparency and brilliance are what make it so alluring, yet much of the global diamond industry is hidden behind a veil of mystery.

As an alternative investment fund Amma Group specialises in fancy-coloured diamonds. Working within collectible investments, Amma Groups funds are open to qualified investors.

From mine to retailer, a diamonds journey may take it across numerous continents and through many hands. Mines use the tendering process to sell coloured diamonds, with organisations first being invited, before being requested to make a sealed bid, with the results achieved kept confidential.

Diamond Tenders

Recently announced was Petra Diamonds rough diamond tender of a 39.34 carat, blue type IIb, to be held on 12th July and estimated to be worth $64 million once cut and polished. However, one of the most renowned tender processes was the annual Argyle pink diamond tender. Now depleted the Argyle mine in Australia contributed to over 90% of the world’s pink diamonds.

Closed in 2020, Argyle Pink Diamonds will hold its final tender in September 2021. In their own words, an event widely regarded as the most exclusive diamond sale in the world. Offering between 50 and 70 stones these are Argyle’s largest and most vivid pink, red and violet diamonds, representing less than 0.01 percent of diamonds ever unearthed from the mine. Headlining will be the 3.47ct Eclipse Fancy Intense Pink diamond and notably the largest ever offered at tender.

With the closure of the mine, has come a new venture from an Australian company selling pink diamonds pertaining to be of Argyle origin. Described as the world’s first public tender of secondary market Argyle Pink Diamonds it will be held in July 2021. Open to anyone, the tender will follow the same format of sealed bids, however the catalogue appears to have numerous inconsistencies, namely a lack of Argyle Certificates or in many cases recent GIA certificates. Ordinarily in addition, a tender would be highly regulated with an independent organisation brought into verify the process.

Mahyar Makhzani, Joint Managing Director and Co-Founder of Amma Group commented, “We offer full transparency on the diamond market to our investors; even providing all purchase and sales information. We also never buy a diamond with a GIA certificate older than 6 months. Alas GIA does not provide provenance of a stone, however Argyle Pink Diamonds are always sold with an Argyle Certificate – we would certainly question the validity of any stone claiming to be from Australia without an accompanying certificate of authenticity.”

Diamond Auctions

Buying and selling diamonds at auction offers greater transparency. As a trusted facilitator of the sale, the consumer can feel assured of the diamonds legitimacy and be guided by a price dictated by historical performance. And whilst demand during the sale often results in a price higher than estimated, the bidding process is entirely visible.

Most notable recent sales of coloured diamonds at auction have included the 204 carat Fancy Intense Yellow, named the Dancing Sun diamond which sold for $4.95 million at Christie’s New York in June 2021.

In May 2021, the 15.81ct Sakura diamond, sold for $29.3 million at Christie’s Magnificent Jewels, Hong Kong, setting a world record auction price for a purple-pink diamond.

Cryptocurrency and NFTs

To add a further twist to the story, the key auction houses have recently announced that they will accept cryptocurrency as payment for diamonds. Whilst still transparent, this brings them a step closer to NFTs (non-fungible tokens) which have recently hit the auction artworld by storm. An NFT is created using blockchain technology to facilitate tracking information; tracing the supply chain from diamond mine to manufacturer and retailer, is becoming more commonplace and helps to eliminate conflict diamonds from the market, safeguard livelihoods and minimise the environmental impact of mining operations. But is the world of luxury ready for NFTs to be used as a form of currency? With artwork, over and above the collectability, there is a certain amount of objectivity, whereas with expert knowledge, the accurate valuation of a diamond is possible.

It’s clear that understanding the coloured diamond market is complex and with much of the industry hidden from public view, whether you are a family office, private wealth manager or institutional investor, using a fund manager with diamond industry knowledge is paramount.

“As the fund is so highly regulated, the real opportunity for our investors comes from our ability optimise market value by creating pairs and sets or by re-polishing stones to improve clarity and colour. A great example of this was a 5ct fancy deep pink with a section of deeper colour. After re-polishing, the stone was re-certified as a Fancy Red, the most valuable of coloured diamonds and achieved a gross multiple of 6.6x,” added Philip Baldwin, Joint Managing Director and Co-Founder of Amma Group.

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