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.
To find out how you can add coloured diamonds as an alternative investment to your wealth portfolio, please click the button below.
The Dancing Sun
The 204.36-carat “Dancing Sun” fancy intense yellow diamond, sold for $4.95 million.
Christies, New York
The Sakura Diamond
An 15.8-carat purple-pink diamond set on a platinum and gold ring, sold for $29.3 million.
Christie’s Hong Kong
Sapphires Shine in Geneva
Geneva was the location for this years May Magnificent Jewels auctions, with sapphires steeling the show and exceeding top estimates.
With a 55.19 carat, blue colour (medium-strong to strong saturation) Kashmir sapphire, the biggest ever to be auctioned, exceeding its top estimate of $2.8 million and achieving an astounding $3.529m at Sotheby's. Head of Magnificent Jewels Sales at Sotheby’s Geneva, Benoit Repellin, said “Kashmir sapphires are among the rarest coloured gemstones known to man. These gems have over the years acquired an almost legendary status.”
Whilst Kashmir sapphires are far rarer than those from Ceylon, both shone at Christie’s and Sotheby’s with all lots exceeding their top estimates.
What Makes Kashmir Sapphires So Rare?
True Kashmir sapphires are extremely rare due to the short period of time they were mined from the original deposit, known as the “Old Mine”. They have a blue colour that is deeply saturated and bright, with a velvety transparency, caused by tiny inclusions scattering light within the stone. Alas few sapphires originating from later mines compare to the quality of the "Old Mine" sapphires.
The best quality sapphires possess a vivid, fully saturated blue colour and the most coveted is known as “royal blue.”
Nowadays, very few truly high-quality Kashmir gemstones are available on the market. It is the uniqueness of their appearance combined with their rarity which make Kashmir sapphires so highly desirable.
The famous ‘Jewel of Kashmir’, a 27.68 carat sapphire was sold at auction in 2015 at Sotheby’s in Hong Kong for a record per carat price of US$242,145.
Sapphire and Diamond Brooch
Formerly in the Collection of Maureen Constance Guinness, Marchioness of Dufferin and Ava, a 55.19 carats and 25.97 carats Kashmir Sapphire and Diamond Brooch.
Sotheby’s
Non-Fungible Token Fancy Coloured Diamonds - Really?
After more than 12 months of relative inactivity, fancy coloured diamond prices are on the up according to data from the Fancy Colored Diamond Research Foundation (FCDRF), which shows changes in the wholesale price of all yellow, pink and blue fancy-coloured diamonds, irrespective of specific classifications, such as clarity, cut, tone and colour saturation.
This comes at the same time as the launch of the first public global tender of secondary market Australian Pink Diamonds by yourdiamonds.com, as well as the launch of Icecaps Investment Grade Diamond Non-Fungible Tokens, which are blockchain-based tokens that document ownership of assets.
Coloured diamonds are incredibly rare; approximately 1 in every 10,000 diamonds is considered fancy coloured, as stated by the Gemological Institute of America, the worlds most trusted name in diamond grading and gem identification. However, this poses a problem for the new diamond platform-based launches, as according to WWW International Diamond Consultants, at least 5,000 carats of similar attributes need to be traded to have a reliable gauge for a stones value, which given their scarcity, is impossible for fancy coloured diamonds.
Amma Group, fancy coloured diamond fund managers with over 60 years of experience in the diamond and luxury sector, set up its first fund 13 years ago. Open only to qualified purchasers and accredited investors, Amma Group believes that something of such high value and with general market opacity should not be traded by people or to people without the knowledge and expertise of fancy coloured diamonds, the necessary buying and selling procedures, transportation, safe keeping, insurance and naturally the financial regulations that must be followed when trading in this asset class.
Coloured diamonds range from brown, which is mostly used for industrial purposes, to yellow, through to orange, green, pink, blue, purple and the rarest of all, red. Of these colours, each is further classified by its intensity and depth of colour, the best of which is fancy intense to fancy vivid.
Unlike white, also known as colourless diamonds, whose increased value is attributed to the lack of colour, coloured diamonds attribute their value to the presence of colour, with fancy intense to fancy vivid being the most valuable.
“It takes in-depth knowledge and skill to know what you are dealing with.” said Mahyar Makhzani, Joint Founder and Managing Director of Amma Group. “For example, take a 1 carat Light Pink and a 1 carat Fancy Vivid Pink, assuming all other characteristics are the same, there could be a price differentiation of 100 times.”
Philip Baldwin, Joint Founder and Managing Director of Amma Group added “We only ever buy and sell stones with certification that is no more than 6 months old. Even as experts, seeing a certificate is just part of the story. We also ensure a realistic net asset value ‘NAV’ by gaining valuations from three independent coloured diamond experts on a quarterly basis.”
Fancy coloured diamonds are a natural and therefore exhaustible resource. With scarcity and rarity constantly increasing, prices at auction have shown a steady rise over the last decade and more. This combined with over 60 years of knowledge and skill along with some interesting buying and selling strategies have resulted in Amma Group receiving some notable recommendations with one client saying, “The Coloured Diamond Fund produced impressive returns with the additional attraction that they were not correlated to those of traditional mainstream asset classes.”
Makhzani went on to say “We bought one stone, with a per carat price of $500,000. We thought that if we re-cut and polished it, in other words, reduced its size, we might be able to achieve a better, more intense colour. We did just that; it was re-certified and sold for a per carat price of over $3.5m.”
With the depletion and subsequent closure of the Argyle mine in Australia, which was the source of 90% of the world’s pink diamonds, prices for one of the rarest of coloured diamonds are expected to increase, but as Baldwin ends, “With such opacity in the coloured diamond market, you really have to be knowledgeable about what you are buying and from whom.”
Pink Diamond Colour Scale by Scarcity & Value
The graph shows how scarcity and value are impacted across the colour scale spectrum.
The Argyle Prima© Fancy Red Pear Shaped Diamond
Previously under management by Amma Group
Rare Fancy Purplish-Red Diamond Sells Above Estimate
A 1.05 carat fancy purplish-red cut-cornered rectangular shaped diamond sold at Christies Geneva yesterday, the 10th November for $2.74 million, almost a million above its high estimate of $1.85 million. The stone with VS2 clarity, was mounted on a simple platinum and gold Graff ring and was flanked by 2 heart shaped white diamonds.
Also selling at the auction was a 3.96 carat fancy deep blue pear-shaped diamond ring which went within estimate, for $1.73 million; and a 16.45 carat Kashmir sapphire which sold for $789,570, almost one hundred thousand dollars above its top estimate.
The on-going results of auctions that have taken place during the pandemic, continue to prove that the rarest of rare are a commodity which holds its own, during economic downturn.
The Argyle Mine Ceases Operations Today
After 37 years and more than 865 million carats of rough diamonds, a very small proportion of which have been pink, the Argyle mine will finally close today.
The Argyle mine has been the source of 90 per cent of the world's pink diamonds over the last thirty years and in that time, pink diamonds have gone up in value by more than 500 per cent. Rio Tinto's managing director for operations, copper and diamonds, Sinead Kaufman said "Demand for Argyle pink diamonds has continued unabated. Rarity, uniqueness and a finite supply has driven the strong value appreciation we have seen, and continue to see."
Described by Vivienne Becker, award winning jewellery writer and historian, as having "a colour and quality that had never been seen before." Much like white diamonds, coloured diamonds are categorised according to their colour which range from very light through to vivid and intense - the more vibrant and intense the colour, the rarer and therefore, the more valuable. What has made Argyle Pink Diamonds so extraordinary is the sheer number of stones with the richness and vibrancy of colour, sitting in the far end of the colour spectrum. "It was completely unprecedented and there was massive excitement in the industry," said Becker.
Mahyar Makhzani, Managing Director and Co-founder of Amma Group commented that we expect prices to climb further after the mines closure. "Pink diamonds have out-performed virtually all traditional asset classes over the past 10 to 15 years," he said. "They've done better than the stock market, property, precious metals and really do present a very stable asset class.”
"The market has known for a long time now that the mine is closing so I don't think we're going to see any shock movement but certainly in a year or two the supply squeeze will start to be felt quite significantly and we’ll expect to see pink diamonds really increase in value. It would be true to say that if you have an Argyle Pink Diamond, then you should hold onto it, but if you are looking to invest, do it now rather than wait a couple of years," said Makhzani.
The land that these diamonds originate from is well known to be sacred land and as Vivienne Becker mentioned, "A huge part of the appeal of these diamonds is the provenance, the purity and integrity of the provenance."
"We've lived through the life of this mine, right from the start, and in these days, when people are really concerned with the origins of every product they buy, particularly luxuries, then this has been a very important element," she commented.
The term conflict diamonds is well known and for a long time now, mines have signed up to the Kimberley process, ensuring diamonds are conflict free. However less well known are the environmental, social and governance (ESG) concerns surrounding the industry. In a desire to ensure traceability of its diamonds, Amma Group has recently partnered with The Loudhailer to support and connect digital futureshapers whose innovations might address these concerns.
“With an intention to work with partners to improve social, economic and environmental factors within the diamond and precious stone industry, Amma Group through is partnership with The Loudhailer is developing a fund structure to further support winners of the African based Global Startup Awards, also providing the business tools needed to succeed. Inevitably these digital disruptors will pave the way in addressing climate change, sustainability metrics and energy”, said Philip Baldwin, Managing Director and Co-Founder of Amma Group.
Amma Group has been one of a handful of organisations around the world that are invited to the yearly Argyle Pink Diamonds Tender - the chance to bid on stones from the Argyle mine, 2020 being its penultimate Tender. The process follows the format of a blind auction; organisations have a limited time frame in which to present their best and final offer on a stone in the hope that they come out on top. Amma Group has been fortunate enough to have purchased a number of stones from the Tender, over the last decade.
The Argyle Mine will close today, Tuesday 3rd November and Rio Tinto will begin a five-year process to decommission it before returning the land to its Traditional Owners.
In celebration of the the Argyle Mine and its treasure trove of pink diamonds, below is a wonderful podcast from The Sydney Morning Herald, Good Weekend Talks.
Thank you Argyle Pink Diamonds; ours is the richer for having known you!
Amma Group Announces Its ESG Intention With Launch of New Partnership
The term conflict diamonds is well known and for a long time now, mines have signed up to the Kimberley process, ensuring diamonds are conflict free. However less well known are the Environmental, Social and Governance (ESG’s) concerns surrounding the industry.
In a desire to only work with organisations that are respectful of the environment, ensure positive social impact and gender equality, within a framework of governance, Amma Group has created a longterm ESG intention.
To team up with partners to create an ecosystem that aims to improve social, economic and environmental factors within the diamond and precious stone industry by 2030.
During the formation of its ESG goal, Amma Group was introduced to The Loudhailer, the African partner for the Global Start Up Awards. The African continent makes up around 40% of all diamond production. In a desire to ensure traceability of our diamonds, Amma Group has partnered with The Loudhailer to support and connect digital futureshapers whose innovations might address the ESG concerns surrounding the diamond mining industry.
“In looking for a partnership, it was important to Amma Group that we worked with an organisation that promoted innovation, self-sufficiency and growth, but also looked to ‘challenge the norms’ - all principles that have helped to shape our organisation”, said Mahyar Makhzani, Managing Director and Co-Founder of Amma Group
“With an ESG intention to work with partners to improve social, economic and environmental factors within the diamond and precious stone industry, Amma Group through is partnership with The Loudhailer is developing a fund structure to further support winners of the African based Global Startup Awards, also providing the business tools needed to succeed. Inevitably these digital disruptors will pave the way in addressing climate change, Environmental, Social and Governance metrics and energy”, said Philip Baldwin, Managing Director and Co-Founder of Amma Group.
Celebrating 13 Years
In 2007 the likes of Facebook, LinkedIn and Twitter had just begun their journey; the first iPhone was less than a year old and many organisations were still grappling with the transition from paper to email.
In that same year, in the midst of the ‘Global Financial Crisis’, Philip Baldwin and Mahyar Makhzani both with extensive experience in the world of luxury, decided to set up their first Fund specialising in fancy coloured diamonds, targeted at qualified investors.
“It was the strong demand in coloured diamonds combined with a general opacity and inefficiency in the pricing of these alluring stones which compelled us to set-up Amma”
13 years on and we find ourselves in the midst of another crisis, but unlike any we have seen in our lifetime. One of the founding beliefs when setting up the first fund was that due to the rarity and scarcity of coloured diamonds, they would remain strong during economic downturn. Whilst the last ten months have not only proven challenging, but have also been the downfall of many seemingly stable organisations, we are pleased to say that coloured diamonds have retained their value, as backed up by recent auction results.
Having recently celebrated our anniversary, we wanted to take the opportunity to announce the launch of our new website, social platforms and our Environmental, Social and Governance (ESG’s) intention which is ‘To partner with organisations to create an ecosystem that aims to improve social, economic and environmental factors within the diamond and precious stone industry by 2030.’
We also wanted to thank those who have helped us on our journey - to our friends at Atlas and Eclipse Consulting who didn’t shy away when we challenged the ‘norms’ of Fund Management; to Argyle Pink Diamonds, who invited our relatively unknown organisation to become part of their Tender process and to amongst others, Vivienne Becker and Robert Frank who have recognised the newsworthiness of our story - thank you!
Amma Group now also includes Amma Privé, which creates exquisite bespoke jewellery and Amma Advisory, which offers expert analytical, strategic and tactical advice for the luxury sector.
Thank you to you all,
Philip and Mahyar
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Decrease in global diamond production creates demand amongst India’s super rich
It is well-known that the primary source of the rarest pink diamonds in the world, Rio Tinto’s Argyle mine in Australia, will close its operations imminently. Less well-known is the pre-pandemic expected decline of around 8% of total rough diamonds mined, starting in 2021. In Bain’s 2019 Global Diamond Industry Report, it states annual production of rough diamonds is expected to decline in Canada, Botswana, Australia and South Africa.
The anticipated reduced production, combined with the estimated 20% Covid-related drop in rough output this year, may push up diamond prices further in the near future. And with coloured diamonds representing just 0.001% of the total rough diamonds mined, the value of these exceptionally rare stones is foreseen to skyrocket as supply falls.
Indian based diamond traders have commented that the demand for Argyle pink diamonds has shot up by three times amongst high net worth Indians compared to the same period last year.
Over the last decade up to 2017, the average price paid at auction for coloured diamonds increased by 122% with Argyle diamonds demanding a further 10 - 20% on top. Argyle diamonds can reach in excess of $5 million per carat depending upon the size and clarity. The mine holds an annual invitation-only Argyle Pink Diamond Tender in which it showcases its best pink, red, and blue stones from the preceding year. Over the last decade, Philip Baldwin and Mahyar Makhzani have been invited to the Tender and have previously purchased three Argyle red diamonds, the Argyle Isla, Aurora and Prima, one of which sold with a Gross Return of 1.6x, with a 38% IRR (internal rate of return).
Cullinan Mine Unearths Five Significant Blue Diamonds
The Cullinan mine is known as the world’s most important source of blue diamonds. It is therefore very exciting to hear that Petra Diamonds has announced the discovery of five blue diamonds of high quality at its Cullinan mine in South Africa.
These rough stones are significant in size, ranging from 9.61 carats up to 25.75 carats and are assessed as being individual stones opposed to being part of one larger stone.
The last most significant blue diamond weighing 20.08 carats, was unearthed from Cullinan a year ago. “It is therefore even more unusual to recover five high quality stones around the same time, all in the space of one week’s production”, commented the mine.
Given the current pandemic, Petra Diamonds is maintaining a flexible approach to the sale of these incredible stones. And with their last blue diamond (20.08ct) selling for $14.9m USD, speculation and anticipation will be high.
Cullinan, was the source of the world’s largest gem diamond ever recovered: the Cullinan diamond weighing an astonishing 3,106 carats in its rough form, was cut to create the Great Star of Africa and the Second Star of Africa, the two largest cut diamonds in the British Crown Jewels.
With the Argyle closure looming, Ellendale provides hope for Australian coloured diamonds
Western Australia is one step closer to a new source of coloured diamonds, following a significant discovery at the Ellendale diamond field.
India Bore Diamond Holdings revealed it had unearthed a large deposit of rare diamonds on a site which had once produced half the world's supply of fancy yellows.
Ellendale exploration had been mothballed until the recent discovery which targets a riverbed formed some 22 million years ago and is estimated to contain over a million carats of gem-quality diamonds.
Most interesting is that after analysis, the stones appear to display a purple florecence under ultraviolet light, something which only occurs in around 30 per cent of diamonds and a characteristic rarely seen in fancy yellows.
Whilst yellow diamonds are typically valued at up to four times that of a white diamond of a similar size and quality, a pink diamond can reach up 50 times the price.
Alas whilst renewed exploration is very encouraging, it is unlikely that there will ever be another mine that equals the success of the Argyle.
Courtesy Rio Tinto
Internally Flawless Fancy Intense Blue to Lead at Christie’s New York
Christie’s New York is to host their Magnificent Jewels auction on the 29th July at the Rockefeller Center.
Centre stage will be a 7.16 carat Fancy Intense Blue Internally Flawless, Pear-shaped Diamond Ring with an estimate of $3.5 - 5 million.
In addition to a number of yellow diamonds is an unheated and untreated 8.54 carat Kashmir Sapphire
The sale along with another in London are Christie’s first live jewellery auctions to take place since the start of the global pandemic. The inclusion of such a significant piece, with an estimate akin to the pre-pandemic prices, is extremely encouraging for investors of fancy coloured diamonds.
A blue diamond ring to lead Christie's sale of magnificent jewels in New York on July 29.
Courtesy of Christie's
