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(MoneyNewsWire.Net, December 21, 2017 ) PREMIER DIAMOND GROUP (NORTH AMERICA) LTD.
Volume 2, No. 11
May 2017
SHARES SEEN AS MORE OVERVALUED
THAN AT ANY POINT SINCE 2001, SURVEY SHOWS
Source: Financial Times, Eric Platt and Mamta Badkar
Date: March 21, 2017
More investors say stocks are overvalued than undervalued than at any point since at least 2001, pointing to an anxiety that was amplified as US stocks continue a trend of volatility in 2017!
The finding came in Bank of America Merrill Lynch’s latest survey of investors, which also showed money managers rotating out of US equities, energy stocks, UK assets and into emerging markets, utilities and staples.
Despite earnings expectations dimming in recent weeks, multiples on US stocks remain higher than before the November presidential election, leading some investors to believe the market is overvalued. The valuation on a forward price-to-earnings measure for the S&P 500 is now at its highest level since 2004, FactSet data shows.
According to the survey, which questioned about 200 investors who manage almost $600bn of assets, just 10 per cent expect tax cuts to be passed before Congress breaks for a summer recess.
Analysts at Bank of America Merrill Lynch added that the cash positions portfolio managers currently have could sustain a market rally for the rest of the first half of the year, but that there was an argument for a “risk rally pause” happening sooner rather than later.
The survey also found that investors are putting more of their funds into European equities, where allocations are now at the loftiest in almost a year.
And according to a recent article that appeared in “Knowledge” Financial Newsletter published by President Trump’s alma mater, The Wharton School of Business, “The value of the Stock Market is nearly 150% higher than the nation’s GDP, a level last seen around the dot-com bust of 2000 and previous to that, just before the 1929 crash according to the World Bank. And in a Bank of America Merrill Lynch survey of their own fund managers, 81% think that U.S. Stocks are currently overvalued.
GREEN FIRE: EMERALD TO BE AUCTIONED
Source: New York Times, Rachel Garrahan
Date: March 24, 2017
In the auction world, there are few things more fascinating than the journey of a gem through the hands of the rich and famous. The Stotesbury Emerald, which was included in the Sotheby’s Magnificent Jewels sale in New York on April 25, is one such stone.
Sotheby researchers have found a century-long tale of intrigue behind the unusual hexagonal-cut 34.4-carat Colombian emerald’s journey through America (its whereabouts before then are unknown), linking it to some of society’s most notable jewelry lovers. The stone, which had a sales estimate of $800,000 to $1.2 million (ed: and sold for $996,500), began its American tale in 1908 when Cartier created a necklace for the eccentric mining heiress Evalyn Walsh McLean featuring her 94.8-carat Star of the East diamond and the emerald. Three years later, the Parisian house and the socialite agreed to a complex exchange involving the emerald and the famous Hope Diamond that led to a bitter court battle, settled in 1912 with the emerald back in Cartier’s possession.
Eva Stotesbury, the wife of a wealthy Philadelphia banker and a society hostess, became the emerald’s next owner and the person for whom it is now named. In 1946 she sold the stone to the New York-based jeweler Harry Winston, which reset it as a ring and sold it to May Bonfils Stanton, another jewelry-collecting socialite from Colorado.
The emerald, in the Harry Winston ring setting, has been in a private collection since the 1971 sale of Mrs. Stanton’s estate by Parke-Bernet Galleries of New York.
Frank Everett, sales director of the Sotheby’s New York jewelry department, said the gem’s colorful provenance is unlikely to be repeated, given changes in people’s lifestyles. “No one lives like this today, no one collects jewlery like this today,” he said on the phone from Dubai where the emerald was beginning an international preview tour. “ To think about this one jewel going through the hands of these three fabulous women and two legendary jewelry houses, you just couldn’t make it up.” Mr. Everett said.
ALSO AT SOTHEBY’S, THINK PINK
Source: New York Times, Reuters
Date: March 24, 2017
A 59.6-carat diamond known as the Pink Star returned to auction April 4 in Hong Kong and brought $71.2 million, three years after it was sold for even more in a deal that ultimately failed. In November 2013, the mixed-cut diamond apparently sold for $83 million at a Geneva auction, but Sotheby’s said the buyer, the New York-based diamond cutter Isaac Wolf, defaulted on payment.
Sotheby’s says now was a good time to try again. “The last few years we’ve had colored diamonds perform extremely well,” said David Bennett, worldwide chairman of Sotheby’s jewelry division. He said there have been many records for colored diamonds, particularly pinks and blues. In 2015 the Blue Moon of Josephine sold for $48.5 million in Geneva. At 12.03 carats, it set a price-per-carat record.
Sotheby’s said the Pink Star was mined by De Beers in 1999 in Botswana as a 132.5-carat rough diamond before being cut and polished. Its’ refined form is considered to be the most valuable polished diamond ever offered at auction.
Mr. Bennett said the current record for a pink diamond was held by the 24.78-carat Graff Pink, sold for $46.2 million in 2010 in Geneva. The $71.2 million brought by the Pink Star makes it the most expensive diamond of any color ever sold at auction!
BLUE DIAMONDS – PUSHING UP THE PRICE
Source: Rapaport, Joyce Kauf
In 2007, a 6.04-carat emerald-cut fancy vivid, internally flawless diamond sold at Sotheby’s Hong Kong for $7,981,835. Purchased by Moussaieff Jewelers, the ring’s per-carat-price of $1,321,590 established a new record at that time. Seven years later in November 2015, a 12.03-carat cushion-shaped fancy vivid, internally flawless Blue Moon, renamed the Blue Moon of Josephine, sold for $48,468,158 or $4,028,941 per carat at Sotheby’s Geneva. Six months later, in May 2016, at Christie’s Geneva, the 14.62-carat rectangular-cut fancy vivid Oppenheimer Blue broke the world record for any jewel sold at auction, achieving a staggering price-per-carat of $3,935,826, for a total price of $57,541,779.
“The stones that are available for sale and the state of the market determine the price,” says Raul Kadakia of Christie’s Auction House, who identifies the market today as “dominated by an acute shortage of blue diamonds, especially stones over 10 carats, vivid blues, clean stones with extreme saturation. Whether it is a new stone like the Blue Moon or an old blue diamond, such as the Oppenheimer, when they do come up for sale, in this current market of seasoned and new collectors, they make the prices they do,” Kadakia elaborates.
“Rarity is the number-one calling card that pushed the value of blue diamonds to greater heights, even in a down economy. On the wholesale level, it is small enough to be considered a coveted collection.” Blue diamonds are not a leveraged commodity, nor are they cash-flow sensitive as is often the case with white diamonds.
“There is no great mystery behind the increase in value, as there are many more clients out there who are capable of spending in this kind of price range.” For the very wealthy, blue diamonds remain a very lucrative asset that appreciates in value. According to one dealer, “the increase in per-carat price far exceeds gains in the NASDAQ or Dow Jones Industrial Average (DJI) over a comparable period”.
“There is so much uncertainty in this world,” say another dealer. “The affluent always look for super, super rare assets – whether in diamonds or art.”
Industry experts see no softening of demand for blue diamonds and expect it to continue given the dwindling supply and escalating costs. “I would tell collectors to really buy the best. Pay the price you have to pay to buy a great gem. They are only going to increase in value,” advises Kadakia. “There is no reason to believe that there will a glut of blue diamonds in the market.” There is a “tremendous amount of money” out there looking for that rare item that will drive prices up “exponentially”.
“A blue diamond is one in millions of millions of diamonds,” says Herri Barguirdjian of Arcot Finance, based in New York, adding, “something so very rare keeps its value over time and appreciates.” But even in that rarified world of blue diamonds, those stones that make headlines are “the right stone. It has to have the size and the purity and the saturation of color has to be just right so that people fall in love with it. And if it is going to set records, more than one person has to be in love with it.”
“When we look at a vivid blue at auction we often say, “Wow the size…wow the color,” says Bruno Scarselli of Scarselli Diamonds Inc.. The size of the stone and intensity of color are other factors that take a blue diamond from being rare to extremely rare. “We have rarely seen blue stones of this caliber that are in the market today,” says Kadakia. “There have been great blue diamonds sold in the past, but not at the level we have seen. What is selling today is market-driven for a very small supply. A 10-carat blue diamond is a really special gem.”
“Size is an important part of the equation,” Scarselli points out. “Petra produces perhaps ten rough stones in a year that are 4, 5, 6 or 7 carats. These in turn will become polished stones of between 1.5 carats to 3 carats.” Furthermore, Scarselli notes, “There isn’t a pocket of ten or 20 individuals with ten blue diamonds in their safes. I am sure that if anyone asked, maybe only two or more of these people would have five diamonds and not necessarily vivid blue.”
“Most of the blue diamonds that come up for sale are not new.” And because some of these diamonds are older, they have stories to tell. For the general public, the Hope Diamond is the blue diamond that conjures up tales of intrigue. To some potential buyers, a stone’s provenance enhances its value. The status of owning a blue diamond that can boast verified ownership by a Hollywood legend or a grande dame who graced the society pages or a royal pedigree all add to its cachet – and its price.
“Everyone loves a story, especially when it comes to very rare gemstones,” says Gary Schuler, of Sotheby’s. While he believes provenance does not “dramatically” increase the value, it does pique interest. Schuler recalls the “very special moment” in his career when he first saw the 9.75-carat pear-shaped fancy vivid blue diamomd that belonged to Mrs. Paul (Bunny) Mellon. “We had seen a listing that basically said there was a blue diamond of approximately 10 carats. But no one in the family knew much about it. I can’t tell you how many people, particularly in the trade, speculated about its origins. It raised a host of questions: In what part of the world was it mined? Did it originally belong to the Oppenheimers? Did they sell it to the Mellons because both families were into horse racing? It was one of the finest stones that came to market at that time. So the story helps.” The Mellon Diamond sold at Sotheby’s New York in November 2014 for $32,645,000 or $3,348,205 per carat. Renamed the Zoe Diamond, it set a world auction record for price per carat for any diamond and any blue diamond, a record that held for just a year.
“The quality has to be there, but a special provenance adds that much more to the stone. If you look at the historical blues that have sold at auction – the Wittelsbach, which Christie’s sold twice, the Oppenheimer, the Tereschenko – they all garnered a premium because of their provenance,” says Kadakia. While a story can add a hint of mystery or romance, the allure of its provenance may well depend on the buyer. Henri Barguirdjian, managing partner of Arcot Finance based in New York City, agrees that a story “does not hurt.” However, Barguirdjian, who was most recently the CEO of Graff Diamonds North America, points out that provenance does not have a significant impact on value for select jewelers with a preferred client base.
Editor: Interest in Natural Colored Diamonds is perhaps at an all time high. While the valuations for the very best continue to establish new world records, colored diamonds of .50 to 1 carat become even more valuable as well, but continue, at least for the moment, to still be affordable.
Premier Diamond Group (North America) Lt
David Metcalfe
416-679-9306
info@premierdiamondltd.com
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