ADAMAS COMMODITIES www.adamascommodities.com
020 815 083 58 email@example.com Adamas Commodities, 80 -86 Old Street, London, EC1V 9AZ Registered in England and Wales: 07557334V
ABOUT US Adamas Commodities is an independent brokerage based in Londonâ€™s financial district, specialising in the trading of tangible and precious commodities such as precious metals and gemstones. CONTENTS 2 GOLD 3 DIAMONDS 4 WHY DIAMONDS? 5 GRADING 6 CLIENT PROTECTION 7 BENEFITS & FAQS 8 RISK WARNING
The formation of Adamas Commodities arose from a collective of city professionals noticing opportunities in the physical commodity market. Our objective is to source and present opportunities to private clients and institutions alike, who are seeking to store wealth in tangible assets. Our team is comprised of highly skilled financial services professionals, who have a combined experience of over 50 years in the commodities market. We provide clients with the tools and insight into a market that has been predominantly unavailable to the retail investor.
GOLD Gold has long since been thought of as the physical hedge of choice in times of turmoil, be it economic downturn or geopolitical tension. This is as true today as it has ever been, perhaps even more so as we see higher then ever numbers of private investors buying physical gold. Despite historically poor performance versus other asset classes gold has maintained a steady upward trend for the past 10 years and show no signs of abating.
Combinations of factors made 2010 a positive year for the international gold markets. With the national governments in India, China and Russia all publicly stating their intentions to significantly increase the size of their gold reserves, and continued economic and geopolitical uncertainty itâ€™s not difficult to see why 2011 is likely to be another positive year. As with any asset class gold offers several ways in which to invest. Gold bullion (larger bars) has historically been the dominion of national governments and can be difficult to sell. By far the more popular option is to invest in smaller bars, although they do carry a small increase in premium. They do however offer a far larger resale market. Another option is gold coins, which have a smaller premium than gold bars and have an excellent secondary market. Please feel free to contact one of our brokers to discuss which option would best suit your needs.
DIAMONDS Adamas Commodities looks for niche opportunities in the precious gemstones market. We specialise in offering coloured diamond investments. Unlike colourless diamonds, whose intrinsic value increases the nearer to colourless the diamond is just the opposite is true for coloured diamonds. With coloured diamonds, intensity of colour is the main criteria in determining the value.
“Stones are THE FORMATION OF DIAMONDS portable The process to create one of these spectacular gems can take wealth, and as long as 4.5 billion years. The diamonds are created when carthey are part of a bon is placed under immense pressure and temperature, 100-250 global market... miles deep within the Earth. It’s something that Wall Street is Rocks that potentially possess diamonds are brought towards the really looking at surface during volcanic activity. It is during this stage „pipes‟ are now. When the formed as the molten rock travels at supersonic speeds towards stock market and the surface through the path of least resistance. As the volcanic real estate are emissions rise so quickly, the diamonds within the molten rock do unpredictable, what’s predictable? not have time to alter their chemical makeup to form graphite. Diamonds”
Lisa Hubbard, Sotheby’s
TYPE OF DIAMOND DEPOSITS Diamonds come from two types of deposits: Primary Deposits... diamondiferous ‘pipes’ of a volcanic rock called ‘kimberlite’. Deep in the Earth these deposits were carried towards the surface in molten rock and are now extracted through surface and sub-surface mining operations. Secondary Deposits... are formed as a result of erosion of material from primary deposits and contain diamonds that have travelled some distance away from primary deposit sites. These require alluvial mining, which uncovers diamonds in riverbed, coastal and marine/undersea locations. Regardless of the way diamonds are mined, enormous investment and technical skills are necessary to construct, maintain and operate a mine. On average from discovery of diamonds to being fully operational takes 7 years. The Udachny mine in Russia took 13 years to become operational.
WHY INVEST IN COLOURED DIAMONDS? Even though world diamond production has tripled since 1980, diamonds remain a scarce resource. More than 12,000 kimberlite deposits have been found worldwide in the last 25 years, yet less than 1% have contained enough diamonds to make them economically viable (according to Petra Diamonds).
The demand for diamonds is set to continue its rise as the emerging economies continue to grow. Led by the BRIC nations the demand for diamonds has grown exponentially over the last two decades, resulting in a 40% deficit between supply and demand (according to Cris Heaton Money Week). Unlike colourless diamonds, which still exist in nature in large quantities, fancy coloured diamonds compose less than 1% of the amount of rough diamonds cut and polished globally every year, and this quantity is drastically declining. As a mid-to-long term investment, fancy coloured diamonds not only preserve their value, but appreciate to a far greater degree than their colourless counterparts. Regardless of where diamonds come from the situation we now face is one of diminishing supply, further adding to their rarity and subsequent value. Below are some quotes from leading industry professionals regarding the supply of diamonds.
1. "Despite a boom in exploration in the last decade, there have
“In order to meet the shortfall, you would have to find at least another Botswana, or better yet, two. It can’t be done”
James Picton, W.H. Ireland Group
been no new discoveries of any significance since the early 1990s and it is estimated that there is only 15 years worth of diamond production available in the world." (Julie Crust and Eric Onstad, Reuters)
2. “....if we continue to diamond mine at this rate we shall run out within 20 years.” (Gareth Penny, former Managing Director of De Beers)
3. “Of the 100+ listed companies, fewer than 20 have meaningful production.” (Des Kilalea, diamond analyst at RBC Capital Markets) The outlook for diamond prices in the mid-to-long term is extremely positive.
GRADING OF DIAMONDS CARAT The weight of a diamond is measured in carats - one carat is equal to 0.2 grams. This is the easiest factor to determine. Diamond prices go up exponentially with carat weight, as larger naturally formed diamonds can be incredibly rare. Approximately 250 tons of ore must be mined and processed in order to produce a single, one-carat, polished, gem-quality diamond.
COLOUR Fancy coloured diamonds are valued for the intensity of their colour. Using controlled viewing conditions and master stones, the grader determines the stone’s colour from a number of factors. Coloured diamonds come in a number of ‘hues’ such as Purplish Red. The fancy grade describes the stone’s tone and saturation such as Fancy Light, Fancy, Fancy Intense, and Fancy Vivid.
CLARITY A diamond's clarity is determined by the number and size of: i) natural internal characteristics, called "inclusions" and ii) surface features, called "blemishes". These irregularities occurred in the liquid magna (volcanic rock) within which the diamond was created. During crystallization other minerals become trapped within the cooling mass. These show themselves as the various characteristics which make up the clarity of a diamond (included crystals, feathers, clouds etc). Clarity is measured on a scale ranging from flawless to heavily included (I-3). The clarity of a diamond is graded by using 10X magnification under good lighting by an experienced grader. The final clarity grade is usually determined by how easy the inclusions and blemishes are for the grader to see.
CUT Cut ensures that a given stone has maximum brilliance and sparkle, which would not be the case were the stone cut for weight alone. Regarding coloured diamonds, cutters will at times sacrifice carat weight for more of an intense colour.
Cut Too Deep
Cut Too Shallow
CLIENT PROTECTION Adamas Commodities’ first priority is the protection of our client’s investment. To ensure the safety of our client’s funds we take a number of precautions. These include using only internationally certified diamonds and abiding by the KPCS (Kimberly Process Certification Scheme – a measure used to prevent sale of conflict diamonds). WHAT ARE CERTIFIED DIAMONDS? Adamas Commodities only offers certified diamonds. These are diamonds that have been inspected and graded by a gem laboratory; an independent organisation which grades diamonds or gemstones. They provide for the unbiased grading and evaluation of a loose diamond, on a certificate or a ‘Grading Report’. There are several diamond grading laboratories. More prominent among them are: International Gemological Institute
Gemological Institute of America
Hoge Raad voor Diamant (Diamond High Council)
The main purpose of a certificate is the security of authenticity for your purchase and the subsequent ease of any future disposal of your asset. A certificate comes with a plot or a map of the diamond, which points out the inclusions relative to what you would see under magnification. It provides a way of checking the authenticity of the diamond, through contacting the gem laboratory with the report number issued on the document.
THE KIMBERLEY PROCESS
All diamonds supplied by Adamas Commodities have gone through the Kimberly Process and are certificated by one of the leading gem laboratories.
The purpose of this process is to thwart the trade of conflict diamonds or ‘blood diamonds’ from entering the rough diamond market. By developing a method to stop the illegal trade of diamonds, the participating countries can assure consumers that by purchasing diamonds they are not financing violence or human rights abuses in their countries of origin. In December 2000, the United Nations General Assembly adopted a resolution supporting the creation of the Kimberley Process Certification Scheme (KPCS) to regulate the trade of rough diamonds. The KPCS was finally agreed upon by the countries involved in the trade of diamonds as well as those participating in diamond mining activities. The KPCS outlines the provisions by which the trade in rough diamonds is to be regulated by countries, regional economic integration organizations and rough diamond-trading entities. In order to be compliant with KPCS standards, the participating country must abide by stringent requirements that guard against conflict diamonds entering the black market. As of December 2009, the Kimberly Process has 49 members, representing 75 countries and now more than 99% of the world's diamonds are from conflict free sources. To learn more about the Kimberley Process visit the official web page at: www.kimberleyprocess.com
BENEFITS OF THE DIAMOND INDUSTRY Diamond revenues enable every child in Botswana to receive free education up to the age of 13. Even after the age of 13, secondary education is 95% funded by the government, enabling children to stay in school longer. When diamonds were discovered in Botswana in 1966, there were only three secondary schools. Today, due to revenues from diamonds, there are more than 300. An estimated 10 million people globally are directly or indirectly supported by the diamond industry. From the countries where they are sourced to the countries where they are polished and sold, diamonds are supporting millions of people globally.
FREQUENTLY ASKED QUESTIONS
Diamonds have the best fundamentals; the gap between supply and demand is much bigger relative to other commodities Evy hambro, Merrill Lynch
An estimated 5 million people have access to appropriate healthcare globally thanks to revenues from diamonds. Revenues from diamonds have enabled governments and health organizations to greatly improve existing public health services and provide new health services to those who have never had them before. Diamond revenues have funded more hospitals and medical centres. Ensuring healthcare is extended to millions of people. Diamond revenues play a significant role in helping to tackle the HIV/AIDS pandemic in southern Africa. Revenues from diamonds help to provide necessary counselling, testing, education, treatment programs, and clinics, along with homes and care for children orphaned through this disease.
How important is the clarity of coloured diamonds? The most important criteria in assessing the quality and value of coloured diamonds is their colour. Clarity is not as crucial, as long as the imperfections do not interfere with the play of colour or with the sparkle of the stone, and are not visible to the naked eye. How is my commodity delivered? After purchasing a commodity through Adamas Commodities, the products will be sent by recorded delivery on a prearranged date, fully insured to your chosen location. Please note once in receipt of your commodity it is your responsibility to have it adequately insured. Why invest in diamonds and not mining companies? As the physical diamond market isn’t correlated to the equity market it is more resilient and less affected by market sentiment. Compared to the share price of mining companies, which are affected by a number of market factors, diamonds are a far less volatile investment. Furthermore, the increasing frequency of human error and natural disasters, such as Gulf of Mexico oil leak and mining collapses in China, Chile and New Zealand caused havoc to market capitalisation of those companies involved while the price of the inlaying asset increased.
RISK WARNING Adamas Commodities does not operate any form of collective investment scheme, nor can Adamas Commodities offer any form of financial advice whatsoever. Adamas Commodities is not regulated by the Financial Services Authority. The purchasing of commodities is an unregulated activity and should only be considered by those Buyers who are comfortable making their own investment decisions. Buyers should seek to rely solely upon their own research and due diligence when purchasing commodities. Past performance is not a guide to the future. The value of commodities may go up as well as down and a purchaser may not subsequently get back the original purchase expenditure. Any opinions regarding future returns and opinions expressed are based upon the Adamas Commodities own forecast and should not be relied upon as indicating any guarantee of return. Except where otherwise stated, the source of all information is Adamas Commodities.
020 815 083 58 firstname.lastname@example.org Adamas Commodities, 80 -86 Old Street, London, EC1V 9AZ Registered in England and Wales: 07557334V