Diamonds are investments

[smitcompton]

Hi All,

Since I usually post in colored stones I thought I would bring you the news that Harry Winston is starting his second diamond investment fund soon. His first was in May and has been doing well. Another fund is also going to start investments in diamonds,. The price rises are going to continue and they own a diamond mine and will consign their diamonds to their stores, so the article stated.

What is new to me is that Rappaport will provide them with a daily price. Diamond liquidity is higher then it used to be.

I buy colored diamonds as do many of you, so I posted here. The news is on www.cnbc.com . It looks as if the experts believe the prices are going much higher. Interesting.


Thanks
Annette

 

[LD]

Despite what the article says, I firmly believe that diamonds are NOT investments because (a) you have to find a buyer and (b) only unique diamonds are likely to hold their value in the second hand market.

 

[smitcompton]

Hi LD,

Martin Rappaport produces "The Guide", which lists diamond prices monthly. You must subscribe in order to see the prices. Many diamond vendors do subscribe and use his guide for setting prices. He has been trying to have diamonds become a commodity, just like gold. He has been promoting the idea for a while. It appears that he is gaining ground on this idea. The significant part of the article, to me, was that he has agreed to post daily prices, just like gold and oil(or other commodies). These are traded on the NYS Exchange. Harry Winston is publically traded. Well, I am interested to see how this works.

I am not promoting diamonds as an investment. But others in the know are. I am suggesting that things may be changing.

Annette

 

[Barrett]

the cartel is losing it's control...moving the sight to botswana instead of london where it has been a staple for decades...ouch..something is getting shaken up

 

[ruffysdad]

Maybe significant diamonds but .5 to 1ct SRB's? I don't think so. Still it'll be interesting to see if they can pull it off. Leslie wears a 1ct champagne fancy that we bought years ago, in a ring flanked by a pair of .10 baguettes. We paid 1200 for it then and yes the price has probably gone up if I could find a buyer willing to pay what I'd ask (not that I'd sell it). I think that there are too many price levels to really make diamonds a liquid investment unlike gold where there's a lot of competition to buy scrap. With a little shopping I can get pretty close to spot price for scrap gold. In diamonds the immediate buyers are usually only willing to pay way below the price quoted in the many price guides out there. There's also the quality issue. What is Rappaport going to base his prices on? D flawless? H SI?
What about the cut? And what sizes? Is a .95 the same as a 1.0? If so, how about a .94? I just see too many variable to make commodity pricing viable.

Pete

 

[0-0-0]

For some background: http://www.reuters.com/article/2011/09/16/us-diamond-fund-idUSTRE78F53J20110916

I think the Rapaport effort is a separate undertaking.

More on the arrangement between Harry Winston and DAA: http://diamond-asset-advisors.com/110526_1.php

DAA is raising $250 million, mainly from institutional investors, to buy diamonds. These are 0.50+ carat goods, DEF or fancy color, in VS+ qualities and Very Good cut grades. They are set in jewelry and offered at Harry Winston stores around the world. Once a consumer buys the jewelry, the goods are purchased from DAA.

It sounds like the arrangement is more a way for Harry Winston to gain access to cheap funding to ramp up inventory and transfer the risk of price volatility to institutional investors.

As for Diamond Circle Capital, who focuses on US$1 million+ diamonds and managed to complete a public listing right at the top of the market in 2008, it now trades at less than half of IPO price.
Quote: http://www.bloomberg.com/apps/quote?ticker=DIAM:LN
Prospectus: http://www.finejeweler.com/prospectus_selection_diamond_circle_PLC.pdf