INTRODUCTION â€œA gem should be a real possession, capable of affording pleasure to the wearer and the spectator, and, with fair usage, retaining an intrinsic and marketable value, undiminished by lapse of time...â€? E.W. Streeter 1877
Antony Stewart is a boutique brokerage sourcing rare natural coloured diamonds for individuals seeking to diversify their portfolio. Colourless diamonds are renowned for their beauty and rarity. However, lesser known and far more individual are coloured diamonds. These miracles of nature come in a full spectrum of colours. Diamond connoisseurs have always purchased coloured diamonds for their rarity and incredible beauty. Some have also recognised coloured diamonds as an outstanding purchase. Antony Stewart was conceived to bring this rare opportunity to you. Current economic conditions, combined with a huge growth in demand for coloured diamonds, a decrease in supply and incredible price performance, means they are now an exceptional addition to your portfolio. We will help you choose the most appropriate diamonds for your portfolio. This involves assisting in the colour selection, size and other characteristics of the diamond. Using our global network we will then source the best quality, conflict free diamonds.
WHY BUY A COLOURED DIAMOND? Current economic landscape The United Kingdom has enjoyed a long spell of prosperity due to easy access to credit. Personal debt is now at an all-time high and national debt is spiralling out of control as more money is being printed to prop up a failed banking system. For a long time we have put confidence in a monetary system and paper assets that can quickly lose their total value, rendering them completely worthless as they have no core value. â€˜Fiatâ€™ currency and paper share certificates are simply an I.O.U. This is why in times of economic and political uncertainty commodities are an excellent buy. Gold, for example, has been used as a hedge by investors because of its intrinsic value. Unlike paper assets, gold is a tangible product. It is also possible to take physical ownership of it. However, large quantities of gold are difficult to personally store and therefore very few investors actually take possession of it. Instead they hold certificates stating their ownership, with their gold stored in a vault, leaving it vulnerable to bank failures. Unknown to most, an option that offers a solution to all of these issues is natural coloured diamonds. They have experienced a consistent and impressive price performance throughout history, regardless of the economic or political environment. Coloured diamonds can be used as a hedge, as similar to gold they are a tangible product with intrinsic value. However, unlike gold it is extremely easy to take physical possession of coloured diamonds and, therefore, effortlessly carry vast sums of wealth.
WHY BUY A COLOURED DIAMOND?
INCREASE IN DEMAND
‘CONFLICT FREE’ DIAMONDS
Historically only royalty and aristocrats have owned coloured diamonds, but awareness of their beauty and existence is growing. This awareness is due to demand from new markets, increased celebrity attention and record breaking sales.
Antony Stewart only sources diamonds that are part of the Kimberley Process and therefore ‘conflict free’.
The media recently reported on the highest price ever paid for a jewel. It was a fancy intense pink diamond, weighing 24.78 carats and was sold for $46 million (£29m).1 Further demand has arisen as a result of the economic growth of China, Russia, India and the Middle East. These nations have produced a new breed of super-rich. The ethos of these cultures is different from that of the west, as they traditionally value commodities and hard assets that have intrinsic value. This growing demand in Asia was evident by the record $78.9 million auction for jewellery at Christie’s on 29 November 2010 in Hong Kong. Included in the auction was a 14.23 carat fancy intense pink diamond which sold for $23.2 million, making it the most expensive jewel ever sold at auction in Asia.2 The Argyle Mine Tender was shown in Mumbai for the first time in 2009 and in China for the first time in 2010, reflecting a growth in new markets.3 The demand from these nations and the rising profile around the world for coloured diamonds is increasing prices, making it an even more appealing asset class. 1 http://www.bbc.co.uk/news/world-europe-11764757 2 http://www.telegraph.co.uk/news/worldnews/asia/hongkong/8170240/Perfect-Pink-diamond-sells-for-23-million.html 3 http://www.idexonline.com/portal_FullMazalUbracha.asp?id=33912
INCREASE IN DEMAND
Conflict diamonds (also known as blood diamonds), are rough diamonds used by rebel movements to finance war against legitimate governments. The trade in illicit stones has fuelled devastating conflicts in countries such as Angola and Sierra Leone. The Kimberley Process Certification Scheme was designed to provide a means of certifying diamonds as ‘conflict free’. It imposes extensive requirements on its members to enable them to certify them as such. The Kimberley Process has not just stemmed the flow of conflict diamonds, it has also help stabilise fragile countries and increase the revenues of poor governments by bringing large volumes of diamonds onto the legal market. The scheme provides assurance to consumers purchasing diamonds that they are not financing war or the abuse of human rights.
RARITY “For every natural color diamond, there are 10,000 colorless ones that have made the trip from the Earth’s depths to its surface.” Gemological Institute of America
Coloured diamonds are extremely rare. For every 10,000 carats mined only 1 carat is a coloured diamond.4 Among the most desired and rarest stones is the pink diamond. More than 90 per cent of the world’s pink diamonds are produced in the Argyle mine in Western Australia. An average of only 50 stones from the mine are reserved for the annual Pink Diamonds Tender, known as the most exclusive diamond sale in the world. For every million carats of rough diamond produced at the mine, a mere one carat is suitable for sale at the tender. Each year, about 100 select clients, representing individual diamantaires, jewellery manufacturers and luxury retailers receive invitations to view the Tender diamonds in various global viewing locations.
Since 1984 only 750 stones have been auctioned, with an average size of 1 carat. Prices achieved range from $100,000/carat to over $1,000,000/ carat. Josephine Archer, Business Manager at Argyle Pink Diamonds says it’s this rarity which is driving the value of Argyle pink diamonds to new heights.5 The scarcity and price is expected to increase substantially when the Argyle mine closes in 2019. Even if a new source is found it takes on average 10 years for a mine to proceed from discovery to production. Even rarer than pink diamonds are red diamonds. These are the rarest of all coloured diamonds and only a handful have ever received the grade of ‘fancy red’ - a red diamond in its purest form.6 They are so rare it is highly unlikely that one would ever see a red diamond in their lifetime. The world record for the price of a red diamond is that bought by Laurence Graff in 2007. The diamond weighed 2.26 carats and sold for $2.6 million.7
4 http://gia4cs.gia.edu/cm/grading-reports/colored-diamonds.htm 5 http://www.idexonline.com/portal_FullMazalUbracha.asp?id=33912 6 Dundek, Marijian, Diamonds, Noble Gems Publication, 2010, p67 7 http://in.reuters.com/article/idINIndia-30536920071116
INCREASE IN DEMAND
TANGIBILITY Paper certificates only represent an asset and are not the asset themself, whereas coloured diamonds are a tangible asset. You can take physical possession of a coloured diamond, giving you full control and access to your asset. The value is in the diamond which you actually hold, rather than a certificate which has no intrinsic value in itself.
PORTABILITY Coloured diamonds are highly portable. It is often impractical to take possession of large quantities of commodities or hard assets such as bricks and mortar or gold. Coloured diamonds are the world’s most concentrated form of wealth, making it possible to wear or carry millions of pounds in your pocket. During times of political unrest diamonds have often provided a safe passage to many fleeing persecution and the means to start over.
DURABILITY Diamonds are the hardest substance known to man. Only a diamond can cut a diamond. They are not affected by temperature or humidity. This means diamonds can be easily and safely stored and transported.
INCREASE IN DEMAND
“With the monetary system we have now, the careful saving of a lifetime can be wiped out in an eye blink.” Larry Parks, Executive Director, FAME
WHO SHOULD BUY? Buying a coloured diamond should be considered a mid to long term hold.
Coloured diamonds come in a range of prices depending on their rarity, and a diamond or selection of diamonds can be selected to fit a portfolio of any size.
Unlike government issued bank notes which are generally only legal tender in their country of issue, coloured diamonds are recognised globally.
We can help and advise you in choosing the most appropriate coloured diamond for your portfolio.
Re-selling your diamond If you would like to sell your diamond we can assist you with the process. For example we can provide advice on whether your diamond should be auctioned and arrange this for you, or alternatively source interested private buyers.
Privacy The sale of a coloured diamond is private and does not need to be declared. Therefore, there is no public record in cases of civil action, divorces or lawsuits. They can also be easily gifted.
Hedge against inflation Coloured diamonds are not affected by de-valuing currencies as they have their own intrinsic value and they have consistently increased in price, even during times of harsh economic uncertainty.
Independently graded Diamonds are graded by an independent laboratory such as the Gemological Institute of America (GIA) or Antwerp Institute of Gemmology (HRD). These laboratories evaluate the diamonds based on colour, clarity, cut and carat (the 4 Câ€™s). This report provides an industry standard, making it possible to compare one diamond to another.
WHO SHOULD BUY?
SUMMARY Coloured diamonds are a unique opportunity, offering one of the best mid to long term assets available. Prices have increased each year between 14% and 87%. Antony Stewart expects future prices to increase dramatically as demand looks set to outstrip supply; especially with mines expected to close and with no new diamond finds. This increase in scarcity will only increase the price further. An example of prices notably increasing is the 25% increase in the price of yellow diamonds agreed by Tiffany & Co and their supplier (Gem Diamonds) in September 2010.8 Many of the negative factors which affect traditional assets are positives when it comes to buying a coloured diamond as their performance is independent of the economic climate. Coloured diamonds, have performed exceptionally well over the last few years during the economic downturn. Coloured diamonds are a tangible asset with intrinsic value making them one of the safest commodities possible, especially in comparison to investments which rely on the monetary system. Coloured diamonds are also the most concentrated form of portable wealth, providing the ultimate asset security. Aside from the growth potential, a coloured diamond is possibly the most magnificent of all gems and you can enjoy this asset by having it mounted. Due to the number of colours and various grades of coloured diamonds this opportunity can be tailored to fit a portfolio regardless of size.
COLOURED DIAMONDS Diamonds
How coloured diamonds are formed
Essential to Antony Stewart is our expertise and knowledge in the area of coloured diamonds. With vast experience within the diamond industry we can answer any questions you may have in relation to these unique and beautiful gems.
Coloured diamonds can occur when tiny amounts of other elements are present or if there are atomic-scale defects in the diamondâ€™s structure.
Diamonds are made from carbon that has been exposed to extreme pressure and temperatures over billions of years. The youngest diamond is thought to be at least 990 million years old, although some are estimated to be as much as 4.25 billion years old.9 Hidden deep within the Earth, diamonds reveal themselves only after volcanic eruptions push molten rock to the earthâ€™s surface. Only a small number of diamonds survive this remarkable journey.10
Yellow and orange diamonds are due to the presence of nitrogen in the structure, and blue diamonds owe their colour to levels of boron within the diamond. The presence of hydrogen produces unique violet hues. Tremendous pressure exerted on a diamond deep in the earth can abnormally compress its structure, thus creating a red, pink, purple or brown stone. Natural radiation impacting already formed diamonds over millions of years can give them a green hue.
High clarity graded diamonds are rare. It is estimated that only about 20% of all diamonds mined have a clarity rating high enough for the diamond to be considered appropriate for use as a gemstone.11 Even rarer and considered more beautiful than colourless diamonds are natural coloured diamonds. For every 10,000 carats of colourless diamonds there is only one carat of a coloured diamond.12 9 Rachminov, Eden; The Fancy Color Diamond Book, Diamond Odyssey 2009 10 Natural History Museum, http://www.nhm.ac.uk/about-us/news/2006/november/news_9996.html 11 http://en.wikipedia.org/wiki/Diamond_(gemstone) 12 http://gia4cs.gia.edu/cm/grading-reports/colored-diamonds.htm
Coloured diamonds come in a full spectrum of colours, including black, yellow, blue, green, pink, orange, purple and red.
The number, size, nature, and location of internal imperfections known as inclusions, and external imperfections, known as blemishes, determine a diamondâ€™s clarity. Clarity is one of the most important factors for valuing a colourless diamond. A coloured diamond with a better clarity will usually be more valuable than one with a lower clarity; however the inclusions can sometimes intensify the colour.
It is the intensity and saturation of colour in coloured diamonds that is the most important factor when assessing a coloured diamond. The value of a natural coloured diamond increases with the intensity of the most prominent colour within the diamond. Colour grading fancy-coloured diamonds is a complex process of assessing the colour of a diamond in three dimensions: hue (the aspect that gives the colour its name - like red, green or blue), tone (the lightness to darkness of the colour) and saturation (the strength or purity of the colour). The Gemological Institute of America (GIA) developed a grading scale that became the industry standard. The first three colour grades (Faint, Very Light and Light) apply to coloured diamonds other than yellow. Other colour grades including Fancy, Fancy Intense and Fancy Vivid are used when describing all colours (including yellow).13
Carat The weight of a diamond is measured in carats. One carat equals 0.2 grams. The term carat originated from the carob seed, an early Arabian trading measure. Colourless and coloured diamonds are measured the same. However since coloured diamonds are more rare, they demand a higher price per carat than a colourless diamond. The colour of a coloured diamond is more important than weight, as a small red which is exceptionally rare will be more valuable than a large yellow.
13 Rachminov, Eden; The Fancy Color Diamond Book, Diamond Odyssey 2009, p128
Cut Cut is one of the most important factors when considering a coloured diamond. A round brilliant is the most common shape for colourless diamonds, however coloured diamonds are often cut in ‘fancy’ shapes to increase the path the light has to travel around a stone, and therefore increase the intensity of the colour. 14
Disclaimer This legal notice should be read as an extension of any Terms and Conditions of Antony Stewart Limited. Antony Stewart Limited is not authorised or regulated by the FCA (Financial Conduct Authority). Diamonds are not investments of a specified kind within the scope of the Financial Services and Markets Act 2000 nor are they controlled investments subject to Section 21 of the Financial Services and Market Act 2000 and the Financial Promotion Order. Any and all information provided by Antony Stewart Limited relates to the sale of diamonds and their value. Antony Stewart Limited does not deal with “options”, “futures” or any “regulated investments of a specified kind” under the Financial Services and Markets Act 2000. None of the information provided should be deemed to constitute the provision of financial investment or other professional advice subject to regulation under the Financial Services and Market 2000. The information and services described in this brochure are not intended to be used by or to be available to persons accessing the brochure from outside the United Kingdom. The value of diamonds and the income derived from them may go down as well as up and you may not receive back all the money which you invest. The services described or recommended in this brochure may not be suitable for all people. You should seek your own professional advice as to the suitability of any such purchase or service before you enter into any transaction. Any information relating to past valuation of diamonds is not necessarily a guide to future performance. Fluctuations in the rate of exchange may have an adverse effect on the value, price or income of non-sterling denominated diamonds. The information contained in this brochure is not intended to be an offer to buy or sell securities, and this brochure should not be regarded as an offer of solicitation to conduct investment business of any investment or activity regulated by the FCA.
14 Rachminov, Eden; The Fancy Color Diamond Book, Diamond Odyssey 2009, p101
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