Pink diamonds, investing and the value of authenticity

Pink diamonds, investing and the value of authenticity
PUBLISHED 23/05/2022

How are pink diamonds tied to world events? You might be surprised. Significant world events have a tendency to swing our focus away from our daily lives and onto changing situations beyond our own borders.

Events such as Russia’s invasion of Ukraine can lead to a more global mindset than we perhaps normally carry, and in the world of investing, this mindset can only be a good thing. As it happens, it’s particularly pertinent when we consider pink diamonds, because the global market in investment quality pink diamonds is evolving, and in changing times it pays to consider the situation within Australia and further afield, too. Investing wisely depends in part on understanding the bigger picture, after all.


The global rush for investment grade diamonds

The sheer rarity of pink diamonds compared to near-colourless diamonds has led to the phenomenal performance of the former as an investment in recent decades. And while rarity remains one factor driving their performance (only a few kilos are produced globally each year), quality and provenance are increasingly part of the conversation. As an investment, Argyle certified pink diamonds from Western Australia’s Kimberley region have long been recognised as the finest in the world. The interesting twist here is that the number of Argyle certified diamonds available is never likely to change, seeing as the mine that was their source is now closed.


Proof and provenance driving Argyle investment performance

While pink diamonds are produced on several continents, Argyle certified pink diamonds from Western Australia are unique, and made more so because they have since 2003 been produced in strict adherence with the Kimberley Process. This initiative was introduced to increase transparency in the diamond industry, with an overall goal of eliminating trade in ‘conflict diamonds’. Often sold by rebel groups to help raise funds for armed action against legitimate governments, conflict diamonds are by nature untraceable to any source. The Kimberley Process involves proof of provenance, certification and transparent trade between around fifty participants in the scheme across 82 countries. Trade with non-participants is prohibited. While there are many factors that set Argyle certified diamonds apart as an investment, in a global context the assurance of ethical sourcing is more important today than ever before.


The origin of ‘other’ pink diamonds, and why it matters.

We’ve already mentioned Russia as a source country of pink diamonds. Other countries producing these diamonds today include Brazil, India, Angola, Canada, The Congo and Venezuela. Despite the number of active mines in the world, global production of pink diamonds remains limited. Only a tiny quantity is produced each year and of the diamonds coming to market, very few are over 1 carat.

Until its closure in November 2020, Western Australia’s Argyle Mine produced 90 percent of the world’s pink diamonds. It set the standard for quality, and as a Kimberley Process member, adhered strictly to its traceability and certification protocols. The closure of the Argyle Mine, together with rising demand for these diamonds in developing markets, has seen opportunistic action from producers around the world – not all of which has resulted in certified diamonds.

It’s vital that investors are aware that unless any pink diamond carries full certification and therefore traceability, it represents a risk. The unequivocal provenance of a pink diamond is a significant factor in proving its worth today, and assures the growth of its value in the future.


At first glance all pink diamonds are beautiful, but it pays to know their provenance

At first glance all pink diamonds are beautiful, but it pays to know their provenance.

From light to vivid – what matters in grading

In any conversation about pink diamonds as an investment, grading of gems is an important point to touch on. Fancy pink diamonds are graded in part by a colour scale. Broadly, the more intense the colour, the higher the relative value. There can be quite wide variations in colour saturations within each grade. These variations are catered for by systems such as Canadian Gemlab and GRS Swisslab’s ‘Fancy Plus’ grading system that is measured from light to vivid on a scale of 1 to 10, and supplemented with 5 additional grades from ‘dark’ to ‘deep’.

Pink diamonds from Western Australia’s Argyle Mine are graded from the most intense 1P colour to the lightest at 9P. Globally, there are equivalencies across the various grading systems that help maintain consistency in assessment.


Pink diamond identification, Certified Argyle and the Chain of Custody

We’ve discussed provenance and grading of pink diamonds, both critical factors when considering one as an investment – so needless to say, clear identification of each stone is vital. As more pink diamonds trickle into the market each year, it is worth noting that a significant number of these are essentially unidentifiable. This is alarming, but should perhaps come as no surprise. Not all producers feel bound to comply with recognised protocols governing transparency and traceability. This is how conflict diamonds can slip into the system.

By contrast, genuine Argyle certified  pink diamonds each have a unique identification number – invisible to the naked eye – laser inscribed into the girdle of the stone. This number is recorded on a permanent database which identifies the gem. Furthermore, this database carries a record of the pink diamond’s history, all the way back to its point of origin at the Argyle Mine.


Investment certainty in a changing market

Argyle certified  pink diamonds remain a truly stellar investment performer, roundly beating all comers over past decades in terms of sustained growth. Yet as we’ve mentioned, not every pink diamond is Argyle. World producers are bringing more stones to the market each year via various channels, and by no means does each of them represent a high-performance investment. It is absolutely vital that investors partner with a qualified and experienced pink diamond investment specialist such as Pink Diamond Capital in order to source an authentic, ethically sourced Certified Argyle pink diamond. Certification and identification that matches the official database is the only way to be certain that the stone you are considering is truly investment quality – genuine Argyle.

Despite how flawless any other pink diamond might appear, today there are stones making their way onto the market that are completely untraceable, even as far as their country of origin is concerned. Any of these could prove to be inferior stones or even conflict diamonds. The very worst that could happen is a stone purchased as an investment proving to have little worth as well as possible connections to unethical behaviour such as human exploitation.

Pink Diamond Capital‘s credentials are impeccable. Director and Principal Diamond Specialist Eric Kariuki is a highly trained member of the Gemmological Association of Australia as well as the Fancy Colour Research Foundation. Mr Kariuki is also a member of Unashamedly Ethical, a global movement united by a founding vision to transform society through a focus on ethics, values and clean living. The goals of Unashamedly Ethical align perfectly with Pink Diamond Capital’s own determination to do what’s best for their customers, deliver service excellence and deal only in ethically sourced, certified pink diamonds of the finest quality and provenance.

While it is certain that certified pink diamonds today represent an investment opportunity with enormous potential, like all high value investment decisions, a considered approach is always recommended. In the context of a complex global market situation, investors are well advised to partner with an expert for guidance in selecting diamonds that can be relied on for not only strong value growth, but also clear provenance. The best investments, after all, are those that combine performance with peace of mind.