Yaniv Marcus, founder of the Diamond Investment & Intelligence Center, is particularly positive about fancy colored diamonds, but also believes investors shouldn’t be worried about today’s low colorless diamond prices.
Diamonds, like most commodities, have been having a tough time in 2015. Prices for the gems continue to fall, and many companies have been forced to cut their production targets.
Investment firm Moody’s has said the overall market malaise is “specifically tied to China’s economic rebalancing and lower luxury spending,” and believes that it may severely impact countries whose economies are closely tied to the diamond industry. For example, while Botswana is calling for a 2.6-percent budget deficit for the 2015/2016 financial year, Moody’s predicts that it may be “much wider.”
But though those circumstances may sound fairly dire, some market watchers believe that there are still ways for diamond-focused investors to profit. Yaniv Marcus is one such person. Formerly an investment strategist at Leibish & Co., he recently founded the Diamond Investment & Intelligence Center, which he bills as a global authority on diamond investment intelligence. It’s geared at providing investors with accurate, up-to-date information about diamonds and their future potential.
Speaking to the Investing News Network, Marcus explained that while he’s particularly optimistic about fancy colored diamonds, he also believes that long-term prospects for colorless diamonds are good. In terms of the former, he said, “on fancy colored diamonds my position [is] quite strong. Prices are holding up in comparison to colorless diamonds, where prices have been in turmoil this year.”
Explaining the appeal of fancy colored diamonds, he noted, “people are looking for safety, they don’t know where to put their money … and fancy colored diamonds have been a tool for people to hold their cash.”
For those interested in such diamonds, Marcus said that one event to watch is Rio Tinto’s (ASX:RIO,LSE:RIO,NYSE:RIO) Argyle Pink Diamonds Tender. Launched during the summer and set to close in October, it’s made up of 65 diamonds — including four fancy red diamonds — weighing 44.14 carats. “The Argyle diamonds are a hot commodity,” he said, noting that regular dealers, as well as private investors, investment funds and family offices, are potential buyers of the stones.
Looking at colorless diamonds, Marcus explained that decreased financing has been a big problem for the market. However, he believes that the cyclical nature of the industry will ultimately win out. “Just like every industry there’s ups and downs,” he commented, adding, “I’m really not concerned … for this industry.”
And indeed, major industry participants are certainly making a push to bring the colorless diamond space back up to speed. Marcus mentioned that earlier this year seven top diamond miners formed the Diamond Producers Association in a bid to support development in the diamond sector, while more recently De Beers announced a holiday ad campaign to stoke demand.
It will certainly be interesting to watch whether those efforts have an impact as the year draws to a close.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
Expect Higher Diamond Prices in 2015: Leibish & Co.
Leibish & Co.: Updated 2015 Diamond Market Outlook