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World Financial Report – July 19th, 2018

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WORLD FINANCIAL REPORT ON RADIO JULY 19TH 2018
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CHARTS OF THE WEEK-QUOTES-QUICK HITS

-CHART OF THE WEEK: Dow 30,000? You Don’t Have to Be Crazy to Believe, Gartman Says. The Dow Jones Industrial Average has struggled for five months to hold onto gains past 25,000. Economist Dennis Gartman says 30,000 is the real milestone to watch. Getting there would require a 20 percent rally an ambitious leap for a gauge that is essentially flat for the year. But to Gartman, the 67-year-old longtime publisher of a namesake newsletter for investors, the Dow Jones’s anemic performance in 2018 has been “nothing more than a massive consolidation phase” in an ongoing bull market. “If these past 6.5 months are indeed going to prove to have been a consolidation phase, then huge gains, perhaps sufficient to carry the Dow to 30,000” are “technically possible,” Gartman said in the letter Wednesday. He added a note of caution: “as exaggerated and as stunning as that may sound.” Bloomberg

-CHART OF THE WEEK: Warnings of Market Complacency Are Growing Louder. A growing chorus of observers is saying that financial markets are too sanguine about the threat that a U.S.-instigated trade war poses to global output and asset values. The International Monetary Fund joined the fray Monday, echoing warnings from investors including Larry Fink that trade friction could upend the current market-friendly backdrop of low volatility in equities and rates, and crimp economic growth.

For Paul Tudor Jones, the list of worries should also include the specter of higher borrowing costs and America’s expanding deficits. Complacency is becoming a buzzword among some market veterans, with stocks gaining for three straight months and a measure of yield swings near an all-time low. But Fink, BlackRock Inc.’s chief executive officer, predicts that stocks could drop 10-to-15 percent if the Trump administration goes forward with tariffs on an additional $200 billion of Chinese imports. And HSBC Holdings Plc says protectionism adds to the headwinds for risky assets.

“We have been making a similar call to the IMF on risky assets for a while, calling it a slow-motion credit crunch,” said Steven Major, global head of fixed-income research at HSBC. He says growth is under threat from forces including Federal Reserve rate hikes, trade-war escalation and higher energy prices, “and the way it likely plays out is through a gradual deflation of over-valued assets, those that have been distorted most by quantitative easing.” Bloomberg

-CHART OF THE WEEK: Sovereign Wealth Fund Warning Light Is Flashing. Pension funds and insurers are being increasingly tempted to shift money out of publicly traded securities in pursuit of more lucrative private investments. But they should pay more heed to what the some of the largest pools of money are doing. The International Forum of Sovereign Wealth Funds, which represents more than 30 of the state-owned investment groups, just published its annual review of the industry. The report suggests that the pickings from private assets are getting slimmer, especially in property and infrastructure, two of the most popular investment classes of recent years.

The IFSWF, which looked at more than 60 sovereign funds, found they were scaling back the amount of capital allocated to private investments. This matters. If any class of investors deserves to be dubbed “the smart money,” this one does. What explains this newfound lack of enthusiasm? Too much money has been chasing too few deals, driving up prices. For example, the total amount allocated globally to private equity but not yet spent rose to more than $1 trillion last year, according to figures compiled by research firm Preqin Ltd. Bloomberg

-CHART OF THE WEEK: Bernanke, Geithner, Paulson Voice Some Concern About Next Crisis. Federal Reserve policy makers appear confident that they have the weapons they’ll need to fight the next financial crisis. Some of their predecessors on the front lines are not so sure. Ben Bernanke, Timothy Geithner and Henry Paulson all voiced varying degrees of concern about America’s ability to combat another financial meltdown 10 years after they played prominent roles battling the last one. While agreeing that the banking system is a lot stronger than it was back then, they saw some weak spots in the country’s crisis-fighting arsenal that didn’t exist a decade ago. The trio also decried the nation’s ballooning budget deficits in a joint briefing with reporters. Bloomberg

-CHART OF THE WEEK: Trump Trash Talk Can’t Touch NFL, Packers Financials Reveal. The National Football League distributed a record $8.1 billion to its teams last season, up almost 5 percent from 2016, according to a financial disclosure by the Green Bay Packers. Packers President Mark Murphy said he saw no negative financial consequences related to the off-field tumult of the 2017 season, which included public criticism from President Donald Trump, declining TV ratings and player protests during the national anthem that polarized fans across the country. The boost in national revenue came from incremental raises built into the NFL’s media deals, Murphy said. The league also enlarged the pot with its Amazon streaming deal, which was worth about $50 million. The NFL has since extended that agreement for two years and $130 million. Bloomberg

-CHART OF THE WEEK: Warren Buffett Donates $3.4 Billion to Charities in Latest Gift. Warren Buffett contributed $3.4 billion to five charities as the investor continues making good on a pledge to give away all of his Berkshire Hathaway Inc. shares. Buffett, 87, has donated a total of about $31 billion to the foundations, according to a statement Monday from Berkshire, where he is chief executive officer and chairman. The latest gift, comprised of about 17.7 million Class B shares, went to charities including the Bill and Melinda Gates Foundation, one named after his first wife who died in 2004, and each of his children’s foundations. The billionaire investor pledged in 2006 to give his wealth to philanthropy and has pushed other entrepreneurs to pursue charitable giving. Donations to the five foundations have been boosted by gains in Berkshire’s stock price, which climbed 13 percent over the past year. Bloomberg

-Netflix is reminding us that there isn’t much room to maneuver when your price to earnings ratio is 176. The streamer’s stock is down more than 10 per cent in pre-market trading as investors look right past a nearly six-fold year-over-year surge in net income, and instead hone in on second-quarter subscriber growth that came in shy of expectations. Question is whether Netflix can bounce back in its third quarter, or whether this is the start of a new trend amid intensifying competition. The stakes for the broader market are significant, considering Netflix has more than doubled this year, good enough to be the second-best performer on the S&P 500. BNNBloomberg

-“Over the 36-hour Prime Day 2018 event, Prime members bought a whopping 300,000 Instant Pots. Businessinsider

-The prolonged correction in metal prices appears to be concluding. It is hard to see how speculative liquidation can go much further. We believe that there is little for speculators left to sell without becoming net short. The reasons for the dollar’s relative strength appear to be well discounted and priced into the market. We expect the many positive macro forces that are supportive for gold to prove increasingly difficult for investors to ignore. Trade worries, in our opinion, are not going to fade.

Fiscal deficits will, we believe, continue to grow. Financial assets remain expensive, with considerable downside vulnerability. Emerging-market economic weakness should begin to undermine earnings expectations. Inflation, we expect, will continue to plague policy-makers and undermine the notion that bonds are the safe haven they are purported to be. Unloved, ignored, and even laughable, we expect the notion of gold exposure to return to favor. John Hathaway Senior Portfolio Manager Tocqueville Asset Management L.P.

-Lloyd Blankfein could get as much as $84.7 million in compensation when he departs Goldman Sachs Group Inc. in October after 36 years at the investment bank. Blankfein will be succeeded as CEO on Oct. 1 by David Solomon, 56, the firm said Tuesday in a statement. He will relinquish his role as chairman at year-end. Bloomberg

-CFA Institute, whose grueling three-level program has helped train more than 150,000 financial professionals, is adding topics on cryptocurrencies and blockchain to its Level I and II curriculums for the first time next year. Material for the 2019 exams will be released in August, giving candidates their first opportunity to start logging a recommended 300 hours of study time. CFA added the topics, part of a new reading called Fintech in Investment Management, after industry participants showed surging interest in surveys and focus groups.

The worlds of finance and crypto have become increasingly intertwined after last year’s Bitcoin boom, with regulated futures now trading in Chicago, blue-chip firms like Goldman Sachs Group Inc. dabbling in digital assets, and scores of Wall Streeters joining crypto-related startups. While digital coins have tumbled in 2018 and the real-world impact of blockchain ventures has thus far been limited, some observers say the technology could ultimately transform swathes of the global financial system. Bloomberg

-Don’t look to BlackRock Inc. to revive demand for cryptocurrencies. The world’s largest asset manager isn’t buying, because its clients have zero interest. “I don’t believe any client has sought out crypto exposure,” Chief Executive Officer Larry Fink said in an interview on Bloomberg Television Monday. “I’ve not heard from one client who says, ‘I need to be in this.'” That means not even a fraction of BlackRock’s $6.3 trillion has been invested in Bitcoin, Ether or any of the other so-called coins, and it signals that institutions remain skeptical of cryptocurrencies as an asset class. For now, Fink said, BlackRock is studying coins to see how they perform and to determine whether they become “legitimized” as alternatives to cash. Bloomberg

-Florida’s economy hit a new milestone. The state’s Gross Domestic Product (GDP) topped $1 trillion, the Florida Chamber Foundation’s chief economist announced Friday. To put it into perspective, if Florida was an independent country, Florida’s $1 trillion economy would rank it as the 17th largest economy in the world ahead of Saudi Arabia, the Netherlands, Switzerland and Argentina, the Florida Chamber of Commerce said. Wftv.com

-Canadian housing starts surged in June to one of the highest levels over the past decade, driven by new condominium developments in Toronto that reached a 30-year high for the month. Housing starts jumped 30 percent to an annualized 248,138 units, Canada Mortgage & Housing Corp. said Tuesday. Multiple-unit urban starts were up 46 percent, with a 231 percent increase in Toronto for that segment of the market. The June numbers reveal a resiliency that continues to surprise policy makers and analysts, particularly since sales in some of the country’s priciest real estate markets have been cooling. Economists forecast annualized housing starts of 210,000 units in June, from 193,902 in May. Demand for condos seems to be high given low levels of inventory, the Ottawa-based housing agency said. Bloomberg

-1 in 6 Canadians struggling with finances, Angus Reid survey finds. More than a quarter of Canadians are already facing serious financial hardship, according to the findings of a new study released Tuesday as part of an examination of poverty. According to the report from the Angus Reid Institute, 21 per cent of respondents said they can’t afford to go for dental care, while one quarter reported they have recently had to borrow money to buy groceries.

Angus Reid says it sought to go beyond the usual income-based measures of poverty with this study. Instead, the organization said it asked respondents about their personal experiences in order to paint a picture of the ability of Canadians to make ends meet. Respondents were asked about 12 money-related situations, including whether they’ve used a pay day loan-type service, if they’ve used a food bank, if they’ve not been able to pay a utility bill and if they can afford to go for dental care. CBC

-Trump: Russian election meddling took place, but it ‘could be other people’ as well. President Donald Trump on Tuesday responded to scathing criticism from across the political spectrum of his performance at a summit with Russian President Vladimir Putin on Monday in Helsinki. The president said he accepted the assessment of U.S. intelligence agencies that Russia meddled in the 2016 election, but added that “other people” could have done so, as well. Trump also said he misspoke when he said that he could see no reason why Russia would have interfered in the presidential election.

President Donald Trump on Tuesday responded to scathing criticism from across the political spectrum of his performance at a summit with Russian President Vladimir Putin on Monday in Helsinki. “I accept our intelligence community’s conclusion that Russia’s meddling in the 2016 election took place,” Trump said, before adding: “Could be other people also. A lot of people out there. But there was no collusion.”

The president also claimed Russia’s actions didn’t have an impact on election results. Nonetheless, he said, his administration is committed to securing the nation’s election systems, and “will stop it and repel it [if there are] any efforts to interfere in our election.” Trump’s press conference Monday with Putin stunned the world, not least because the president appeared to endorse Putin’s denial of Russian election meddling over the conclusions reached by Trump’s own intelligence agencies that Russia did, in fact, interfere in the 2016 presidential election. CNBC

-A growing number of Republican lawmakers harshly criticized President Donald Trump‘s performance at a Monday news conference with Russian President Vladimir Putin, with House Speaker Paul Ryan saying that Russia must be held accountable for meddling in the 2016 election. Trump’s strongest GOP critics were those who have faulted the president in the past. A handful of Republicans defended the president’s remarks, made after the two leaders met in Helsinki.

Senator John McCain, an Arizona Republican, said Trump’s comments represented “one of the most disgraceful performances by an American president in memory” and that “no prior president has ever abased himself more abjectly before a tyrant.” “The damage inflicted by President Trump’s naivete, egotism, false equivalence, and sympathy for autocrats is difficult to calculate,” McCain said in a statement. “But it is clear that the summit in Helsinki was a tragic mistake.” Bloomberg

-Google received a record 4.3 billion-euro ($5 billion) antitrust fine from the European Union and was ordered to change the way it puts search and web-browser apps onto Android mobile devices. The penalty the same amount the Netherlands contributes to the EU budget every year is far higher than any other dished out by the U.S., Chinese or other antitrust authorities. More significantly, Google was given until mid-October to stop what the EU called “illegal practices” on contracts with handset manufacturers that push its services in front of users.

It faces daily fines of 5 percent of revenue if it doesn’t obey. Google owner Alphabet Inc. generated about the same amount of money as the penalty every 16 days in 2017, based on the company’s reported annual revenue of $110.9 billion. “The fines are still relatively minuscule” for a company the size of Google, said Maurice Stucke, a law professor at the University of Tennessee and a former U.S. Justice Department attorney. “They also have to, within 90 days, stop the practice so that can have more teeth.” Bloomberg

MGM Resorts International sued the victims of a Las Vegas music festival mass shooting in an effort to block any potential compensation claims against it. The owner of the Mandalay Bay hotel claims a 2002 federal statute wipes out liability for any company that adopts “anti-terrorism technology,” which it says it did. It’s asking federal judges in Nevada and Los Angeles for a declaration that the company isn’t liable. After Stephen Paddock opened fire at festival goers from the Mandalay Bay hotel, killing 58 and wounding about 500, more than 2,500 people brought, or threatened to bring, lawsuits against MGM, the company said in a pair of complaints filed July 13. A lawyer for the victims called the filings “reprehensible,” saying MGM is “trying to deflect attention from their own failures and a complete joke of security procedures they had at Mandalay Bay.” The Las Vegas-based attorney, Robert Eglet, said that while the federal law shields security companies from some responsibility for terrorist acts, it’s “not designed to give immunity to hotels for their negligence.” Bloomberg

-The NFL distributed more than $8 billion in national revenue, mostly from its television deals, in 2017. Each team pulled in $255 million, according to financials revealed on Monday by the Green Bay Packers, a team that is a public company because it sells shares from time to time to raise money, even though its shares are technically worthless. ESPN

-The Green Bay Packers season ticket waiting list, the longest in the NFL, now stands at 135,000 people. ESPN

-Tens of thousands of simulations proved no use for banks trying to predict the outcome of the World Cup with one exception. Nomura Holdings Inc. was the only one of six financial institutions that correctly guessed France would lift the trophy at the Luzhniki Stadium Sunday in Moscow. And none of the banks got more than one right when predicting the top four teams in a tournament marked by underdog wins and early exits for top-seeded nations. Bloomberg

-Director Rob Reiner’s new movie Shock and Awe, about journalists during the Iraq War, debuted this weekend to disappointing numbers. According to Box Office Mojo, for the weekend of July 13-15th, Shock and Awe grossed a measly $41,000. Mediaite.com

-This is the ‘biggest bubble in the history of mankind and it’s going to burst,’ Ron Paul says. Look to the stock market and you’d assume Wall Street was doing just fine. The S&P 500 has come back to March highs, the Dow is back to positive for 2018, and the Nasdaq is at fresh records. It’s all built on shaky foundations, said longtime market bear and former Republican Congressman Ron Paul. This market is in the “biggest bubble in the history of mankind,” and when it bursts, it could cut the stock market in half, he told CNBC’s “Futures Now” Thursday.

“I see trouble ahead, and it originates with too much debt, too much spending,” Paul said. This isn’t the first time Paul has made such dire warnings. During a “Futures Now” appearance in August 2017, he predicted a 50 percent drop in the market, a call he has doubled down on a number of times since. Since that appearance, the S&P 500 has rallied 15 percent. Paul belongs to the Libertarian Party, a faction that emphasizes constrained government spending. He sees federal spending and monetary policy as dual forces inflating a market bubble. “The Congress spending and the Federal Reserve manipulation of monetary policy and interest rates debt is too big, the current account is in bad shape, foreign debt is bad and it’s not going to change,” he said.

Paul isn’t alone in his critique. A number of politicians have voiced concern over ballooning deficits, including current House Speaker Paul Ryan, who raised a warning on the nation’s debt in 2012. The Congressional Budget Office estimates that federal deficits will average $1.2 trillion a year from 2019 to 2028, according to its April economic outlook. Its 2018 deficit estimates rose by $242 billion over previous forecasts made in June 2017. The federal agency said the revision was mainly owing to lower projected revenues tied to tax reform. CNBC

-Fed’s Powell Says Gradual Rate Hikes Are the Best Path ‘For Now’. Federal Reserve Chairman Jerome Powell said the central bank will continue to gradually raise interest rates “for now” to keep inflation near target amid a strong U.S. labor market. The Federal Open Market Committee, the Fed panel that sets interest rates, “believes that for now the best way forward is to keep gradually raising the federal funds rate,” Powell said in prepared testimony before the Senate Banking Committee.

“We are aware that, on the one hand, raising interest rates too slowly may lead to high inflation or financial market excesses,” Powell said in the text of his remarks Tuesday. “On the other hand, if we raise rates too rapidly, the economy could weaken and inflation could run persistently below our objective.” Powell addresses Congress with the underpinnings of the U.S. expansion looking solid. Unemployment stands close to an 18-year low and inflation is around the Fed’s 2 percent target, though some sentiment indicators are starting to flash warning signs over escalating trade disputes.

He will appear before the House Financial Services Committee Wednesday. Officials in June signaled they plan to continue to raise rates at a gradual pace, penciling in two more quarter-point hikes for 2018. Powell’s emphasis that gradual increases are the right path “for now” may suggest the committee’s debate about pausing those hikes once the rate gets closer to a level they consider neutral neither adding stimulus nor hurting growth is likely to intensify. Bloomberg

-China’s Cooling Economy Spells Trouble Ahead for Global Growth. Confirmation that China’s economy is slowing amid an escalating trade war is a worrying omen for global growth. Data released since Friday has affirmed what’s been expected for some time: That an ongoing campaign to curtail credit is putting the brakes on the world’s second-largest economy. Given that China generates as much as a third of global growth, that’s adding to signs that the best world expansion in years is plateauing.

The International Monetary Fund, which has repeatedly warned that the trade spat between the U.S. and China will reverberate globally, is scheduled to release fresh growth forecasts later Monday. The Chinese economy grew at an expected 6.7 percent in the second quarter, its slowest pace since 2016, while key readings on investment growth and industrial output slowed in June. Retail sales held up. While the numbers point to a modest slowdown in China, the U.S.-led trade war has only just begun. U.S. President Donald Trump this month implemented tariffs on an initial $34 billion of imports from China, which retaliated in kind.

Trump is expected to deliver levies on another $16 billion worth of goods and has threatened to expand the hit-list by $200 billion. China has threatened to retaliate again. That means headwinds not just for China’s economy, but for the world’s too. “If the U.S. and China do not resume talks in the next two months or so, the conflict will escalate further, with major economic implications for themselves and the global economy,” Louis Kuijs, head of Asia Economics at Oxford Economics in Hong Kong, wrote in a note after the data’s release. Bloomberg

-Home sales inch higher in June, but average prices still down 1.3% in past year. Last month was slowest June for home sales across Canada in five years. Home sales increased last month for the first time this year, but average selling prices are still slightly lower than they were a year ago. The Canadian Real Estate Association said Monday that there were 4.1 per cent more homes sold in June than there were in May. That’s the first time in 2018 that sales have increased from month to month, as the market continues to digest new mortgage “stress test” rules implemented at the start of the year. While the pace of home selling picked up on a monthly basis, it was the slowest June for home selling in five years. There were 11 per cent fewer sales in June 2018 than there were in the same month a year earlier, and June is typically a busy month for home sales.

On the price side, there was no rebound to speak of. Nationally, the average price of a home sold in June was $496,000. That’s down 1.3 per cent from where it was a year ago, and it’s also the fifth straight month that the national market has posted yearly declines. CREA says the average isn’t an accurate picture of the market, however, because it’s skewed by activity in some cities, and by certain types of housing. So they calculate another number the Housing Price Indicator which they say is a better gauge of the overall market, because it strips out all the volatility.

By that metric, house prices have increased by 0.9 per cent in the past year. The HPI has now decelerated for 14 months in a row, and is now at its lowest level since September 2009. Prices were down in many large cities, including Toronto, Edmonton, Regina, Saskatoon and Calgary, but the pace of decline is starting to slow. And in other cities, such as Vancouver, Ottawa and Montreal, prices are increasing. Read more here-http://bit.ly/2NW67nb

-Goldcore: Ponzi Economy Will Lead To Next Global Financial Crisis. Read more here-http://bit.ly/2Nu38S7 and http://bit.ly/2LxtYbr

-Millennials want to retire by 61, but most have nothing saved. Millennials may have only a little saved for retirement, but they still want to retire early. A recent Bankrate.com survey asked millennials, classified as Americans ages 18 to 37, what the perfect time to retire would be. Their answer: 61 years old. “Early retirement is something that seems very appealing,” Bankrate.com analyst Amanda Dixon tells CNBC Make It. If only wishing made it so. Of those millennials already saving, the median retirement account balance is about $19,100. But overall, roughly two-thirds of millennials have nothing saved so far, according to a February report by the National Institute on Retirement Security. Read more here-https://cnb.cx/2mqwuoL

Jeff Bezos is the richest person in modern history. The Amazon.com Inc. founder’s net worth cracked $150 billion in New York on Monday, according to the Bloomberg Billionaires Index. That’s about $55 billion more than Microsoft Corp. co-founder Bill Gates, the world’s second-richest person. Bezos, 54, also has topped Gates in inflation-adjusted terms. The $100 billion mark that Gates hit briefly in 1999 at the height of the dot-com boom would be worth about $149 billion in today’s dollars.

That makes the Amazon chief executive officer richer than anyone else on earth since at least 1982, when Forbes published its inaugural wealth ranking. His net worth has soared by $52 billion this year, which is more than the entire fortune of Alibaba Group Holding Ltd. Chairman Jack Ma, Asia’s wealthiest person. It also puts Bezos’s personal fortune within spitting distance of the $151.5 billion controlled by the Walton family, the world’s richest dynasty. Bloomberg

-Rare ’52 Mickey Mantle card, insured for $12 million, goes on display. The “Holy Grail” of baseball cards, a pristine 1952 Topps Mickey Mantle valued at several million dollars, was delivered to the History Colorado Center on Monday via armored truck for a 72-hour public display. “I want the community to enjoy looking at the card,” said its owner, retired lawyer Marshall Fogel of Denver. “It’s the finest card ever made, and it just happens to be my favorite player, Mickey Mantle.” The cardboard treasure was transported from a bank’s safe deposit vault and placed in a secure case that once housed Thomas Jefferson’s Bible with UV-lens protection and temperature/humidity control.

The card, which Fogel said was insured for $12 million “and is probably worth more than that,” is being displayed in the lobby of the museum where current exhibition “Play Ball!” features Fogel’s collection of classic baseball artifacts. Mike Fruitman, a sports card expert in Aurora, Colorado, said Fogel’s ’52 Mantle card is at least on par with the 1909 Honus Wagner T206 card whose rarity is attributed to Wagner’s supposed disapproval of the card being sold along with tobacco. One reason Mantle’s 1952 card is so rare is that so many of them were returned along with other unsold cards by retailers making room for the 1953 cards. The returned ’52 cards were subsequently sunk from a barge in the Hudson River. ESPN

-From 1988: Wayne Gretzky marries Janet Jones in Edmonton. Celeb guests included Alan Thicke, Gordie Howe and Paul Coffey. It’s probably the closest thing Edmonton has ever had to a royal wedding. And the people of Edmonton certainly had their part in making it so, turning out in massive crowds to see Wayne Gretzky, the star of hockey’s Edmonton Oilers, on his wedding day, on July 16, 1988. Among the guests were hockey stars Gordie Howe and Paul Coffey, along with actor Alan Thicke, a longtime friend of Gretzky’s. Less than a month later, the news broke that Gretzky had been traded to the Los Angeles Kings. Gretzky and his wife, Janet, have five children: Paulina, Ty, Trevor, Tristan and Emma. CBC

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-“People know that maybe we will have another two or three of those tenders before the mine closes.” Rio Tinto CEO Jean-Sebastien Jacques commenting on the 2018 Argyle Pink tender

-“What we’ve seen is the pink diamonds have been appreciating in the order of 10 to 15 per cent per annum.” David Fardon Perth-based Linneys

-“It’s an incredible rarity that’s becoming appreciated the world over and we do see bidding from all corners of the globe for these rare gems.” Josephine Johnson Argyle Pink Diamonds manager

-“The remaining reserves underpin the operation until 2020, with opportunities to increase reserve estimates and extend the operational life subject to technical and financial performance.” Rio Tinto 2017 annual report

-Pretty in pink: Rio Tinto kicks off one of its last rare diamond sales. Rio Tinto is launching one of its last ever pink diamond tenders as it prepares to shut the only pink diamond mine in the world. The miner has put 63 of its rare pink diamonds from its West Australian-based Argyle mine up for tender, with prices expected to run to nearly $100 million for the entire lot. Every year, Rio Tinto selects its best pink diamonds to sell to the world’s wealthiest people, and this year’s auction features the largest ever vivid pink diamond since its sales began in 1984, Rio Tinto’s chief executive Jean-Sébastien Jacques told Fairfax Media.

The largest diamond in the 2018 tender is the Argyle Alpha diamond, weighing 3.14 carats, which was actually uncovered in 2015. Before it was cut, the Alpha pink diamond weighed 5.88 carats. While the process of creating regular diamonds is well understood with diamonds able to be synthetically created it is not yet known why pink diamonds are pink. The largest ever pink diamond recovered from the Argyle mine, the Pink Jubilee, weighed 12.76 carats. Although Rio Tinto has not set a price on Alpha, the record price achieved for a pink diamond was $US2.2 million per carat, potentially valuing Alpha at around $US7.9 million ($10.7 million).

The most expensive gem ever sold at auction was the 59.6 carat Pink Star diamond, sold for $US71.2 million last year. The buyers are typically the super-wealthy, or luxury jewellery businesses from around the world. They are allowed to bid by invite only. “It’s a niche market, there are very few people who are invited to bid. All the bids will be received before the 10th of October, and at that point, we will disclose who are the winners,” Mr. Jacques said. “Last year’s auction was very good and we expect 2018 to be even better.” The tender starts in Sydney before moving to Hong Kong and finishing up in New York. However, this could be one of the last auctions with pink diamonds.

Mr. Jacques said the world is about to lose its main supply of pink diamonds as its Argyle mine is approaching the end of its supply. Argyle accounts for about 90 per cent of the world’s pink diamonds, with the remaining 10 per cent being random finds in other diamond mines. “This is the only mine which has consistently produced these types of diamond,” Mr. Jacques said. “It took only a few billion years to produce them all. The mine has only a few years left, about three years.” While Rio Tinto is shutting down the Argyle mine, it still operates the Diavik diamond mine in Canada’s frozen far north. “We like diamonds, which is why we have comprehensive exploration for diamonds. It takes a lot of time and a lot of dedication, and we hope to find a new mine like Argyle, but we have to be patient,” Mr. Jacques said. Read more here-http://bit.ly/2NXj2Ft

-Largest pink diamond in Argyle Diamond Tender’s 34-year history unveiled by Rio Tinto. The company’s Argyle mine in the East Kimberley produces more than 90 per cent of Australia’s diamonds, and is the only known source of pink diamonds in the world. This year’s record-breaking 3.14-carat diamond, named the Argyle Alpha, is one 63 diamonds in the 2018 Tender a collection so rare it will never reach the open market. The collection is being previewed in Sydney. Argyle Pink Diamonds manager Josephine Johnson said the 51-carat collection would also go on to tour Hong Kong and New York, where a handful of collectors from around the globe would have the opportunity to bid on some of the rarest diamonds in the world.

The Argyle Alpha shares the limelight with another diamond called the Argyle Muse that is over 2 carats, which is also in fact the largest fancy purplish-red we’ve ever offered at tender,” she said. “These stones are less than one-tenth of 1 per cent of the mine’s production; they are extraordinarily rare. “It’s really remarkable that this mine, virtually the sole world source of pink diamonds, keeps giving us these super-special gems.” A record-setting diamond weighing 12.76 carats the Argyle Pink Jubilee was found at the mine in 2012. Ms. Johnson said the tender’s bidding process was becoming fiercely competitive as the Argyle diamond mine’s closure loomed. “There’s growing awareness now that they’re just not rare but they’re very finite I can feel already this is going to be a very competitive year.

“With the mine closing by 2021 we’ve only got two or three tenders to go, so there’s an element of sadness that this is coming to an end. “It’s a bittersweet feeling amongst all the excitement of the launching of the collection.” Perth-based Linneys Jewellery owner David Fardon said there had been an increasing awareness among collectors that the global supply of pink diamonds was running out, which had reflected in their steadily increasing value. “With pinks we’re normally talking about a factor of being 25 to 30 times the price compared to white diamonds. “But once you get into the larger vivid stones, you might be talking about a factor of 30 to 50 times above the price of an equivalent-sized white diamond.”

In the past there had only been 12 pink diamonds weighing more than three carats in the tender, with three vivid red diamonds fetching more than $2 million each in previous collections. Although the total figure reached by each year’s tender was kept secret, in 2017 Rio Tinto revealed the collection reached double-digit price growth including the sale of the most valuable diamond in the tender’s history. In an update released alongside Rio Tinto’s 2017 annual report, it was revealed that Argyle’s likely closure date had been brought forward to sometime in 2020. The report also said at the end of 2017 the estimated ore reserve was down to 16 million tonnes, a drop of 45 per cent from the previous year.

A spokesperson said Rio Tinto was undertaking a mine closure pre-feasibility study for closing and rehabilitating the site. Last month, one of Australia’s biggest civil and mining contractors NRW Holdings revealed it had won a $7 million contract for a trial mine rehabilitation project at Argyle. The mine’s closure will come just five years after Kimberley Diamond Company shut its Ellendale mine in the West Kimberley. That mine once produced more than 50 per cent of the world’s fancy yellow diamonds. The mothballed mine went into administration when the company relinquished its mining lease and environmental liabilities reportedly as much as $40 million back to the State Government in October 2015. Read more here-https://ab.co/2utKMcI

-Rio Tinto unveils its largest Vivid Pink diamond. Lot 1, The Argyle Muse™, a 2.28 carat polished oval diamond, the dazzling centre piece of the collection, is the largest purplish red diamond ever offered at Tender, and with an unrivalled potency of colour will be keenly sought after by collectors and connoisseurs from around the world. To add to its prestige The Argyle Muse™ originated from a 7.39 carat rough diamond that yielded a second purplish red diamond for inclusion in the 2018 Tender (Lot number 9). The 2018 Argyle Pink Diamonds Tender collection comprises six ‘hero’ diamonds selected for their unique beauty and named to ensure there is a permanent record of their contribution to the history of the world’s most important diamonds. Read more here-http://bit.ly/2LuorSD

-Russia’s most expensive diamond to go on sale. A unique pink diamond weighing 27.85 carats which was mined by Russian diamond producer Alrosa last year is expected to be auctioned at $500,000 per carat. The most expensive gem ever discovered in Russia will be cut before it goes under the hammer, according to the head of the company Sergey Ivanov. The rough diamond is about the size of a large almond. “We believe that its value can reach approximately half a million dollars per carat. This is a unique pink diamond, it is the most expensive diamond ever mined in the Russian history,” Ivanov told NTV news channel.

He added that the precious stone will be cut in Russia, at the company’s own enterprise with the help of international experts, “but this will be a Russian cut.” The pink stone is almost free of inclusions. Colored diamonds weighing over ten carats are very rare and are recovered about once a year. As for the pink shades, by far the largest 3.86-carat pink diamond was found by Alrosa in 2012. Apart from this stone, in the last eight years, it has only recovered three pink diamonds weighing over two carats. One of the world’s largest producers of diamonds, Alrosa accounts for about 25 percent of global production and 95 percent of all diamonds mined in Russia. In 2014, Alrosa sold a diamond weighing 47.5 carats for $1.8 million at Sotheby’s in New York. Read more here-http://bit.ly/2La6Gw8

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GOLD-SILVER

Gold to silver ratio at 80 to 1 with gold at $2,000 the silver price would be $25.00

Gold to silver ratio at 70 to 1 with gold at $2,000 the silver price would be $28.57

Gold to silver ratio at 60 to 1 with gold at $2,000 the silver price would be $33.33

Gold to silver ratio at 50 to 1 with gold at $2,000 the silver price would be $40.00

Gold to silver ratio at 40 to 1 with gold at $2,000 the silver price would be $50.00

Gold to silver ratio at 30 to 1 with gold at $2,000 the silver price would be $66.67

Gold to silver ratio at 20 to 1 with gold at $2,000 the silver price would be $100.00

Gold to silver ratio at 15 to 1 with gold at $2,000 the silver price would be $133.33

-Gold at one-year low and a record number of investors in survey say it’s a buy. Gold falls to lowest level in a year, but this may be a time for contrarians to buy. A record 17 percent of fund managers in Bank of America Merrill Lynch’s monthly survey said they see gold as undervalued. Bank of America says this could make gold a buy for contrarian bears, who could also sell out of the overcrowded tech sector. Read more here-https://cnb.cx/2L6cO8s

-Another Billionaire Warns “We’re Running Out Of Gold.” Read more here-http://bit.ly/2zRUmv1

-This Will Trigger The Next Major Surge In The Gold Price. Read more here-http://bit.ly/2mrwpBa

-Gold pain is far from over, says veteran chart watcher Louise Yamada. A month ago, veteran market technician Louise Yamada called for gold prices to drop to as low as $1,250 an ounce. That call turned out to be golden and now, Yamada sees even more pain from here. “The next target is $1,200 or thereabouts,” Yamada, managing director of Louise Yamada Technical Research Advisors, told CNBC’s “Futures Now” on Thursday. A decline to $1,200 marks another 4.5 percent drop from gold’s closing price on Friday.

It has tumbled more than 7 percent since a 52-week high set in late January. “We’ve just had a monthly momentum sell signal which puts the daily, weekly and monthly momentum all negative at this point. So, the path of least resistance appears down from here still,” Yamada said. Other technical levels have been broken, too, Yamada explained. Gold broke below its 50-day moving average in late April, and then its 200-day moving average in May. Yamada said its next critical level will be its 200-week moving average, which sits around $1,234.

The analyst expects gold to reach the $1,200 in around four weeks, but said it could see a short-lived rally before then. “You could get a minor bounce. It’s been going down steadily for four weeks so if you’ve got a bounce toward $1,270, it wouldn’t surprise me,” she said. Gold has not touched $1,270 since June 25. That level is just a 1 percent rally away from Friday’s close. Any big rally that puts gold well above $1,300 would renew Yamada’s confidence in its long-term strength.

“The resistance over the past three years is around $1,366 to $1,375, so I’d say were the price to lift above that you’d have a nice three-year consolidation, possibly even four-year consolidation,” said Yamada. “I would give it $1,400 as even more secure. Go through $1,400 then you’ve cleared five years of resistance.” Gold hasn’t traded above $1,400 since September 2013. It ended Friday’s session at $1,255.40 an ounce, putting its year-to-date losses at nearly 4 percent. CNBC

-Traders Exit Gold ETFs as Dollar Leaves Metal `by the Wayside.’ Gold buyers are moving to greener pastures. Investors dumped exchange-traded funds backed by the metal for the eighth straight week, the longest stretch of outflows since January 2014. The exodus comes as appetite for the metal wanes amid a strengthening dollar and solid demand for equities. Gold is on track for a fourth straight monthly loss as solid U.S. economic data and expectations of higher interest rates from the Federal Reserve drive investors into higher-yielding assets.

Traders picked the dollar over the non-interest bearing metal as the haven of choice as geopolitical turmoil and a trade dispute between the U.S. and China roiled markets. “Expect gold to remain out of favor until the Fed shifts,” John Caruso, a senior market strategist at RJO Futures in Chicago, said by telephone. “As long as the Fed remains hawkish in its monetary policy stance, the dollar is the place to be. Gold has fallen by the wayside.”

While the momentum is against gold, some see a glimmer of hope. Citigroup Inc. analysts including Ed Morse and Aakash Doshi expect that the metal may turn around soon. “While the USD strength is likely to remain a headwind for gold in the short-term, investors may favor gold again, especially if the trade friction rises further and becomes a more sizable threat to economic growth and to the decade-long equity market bull run,” the analysts said in a commodities outlook report emailed Sunday. Total known ETF holdings dropped to 69.44 million ounces Friday, the lowest since March, according to data compiled by Bloomberg. Bloomberg

-Lawrie Williams: China’s gold reserves fact or fiction? One of the biggest unanswered questions facing the gold analyst and investor is ‘are China’s officially reported gold reserves to the IMF fact or fiction? According to the country’s central bank, which reports these figures to the IMF, which does not check any of the nationally reported gold reserve figures, these have remained static at 59.24 million troy ounces (1,842.6 tonnes) for the past 20 months keeping the country in sixth place in terms of national gold holdings.

Well the answer to the question, in our opinion (pure speculation), is yes they are fact and fiction at the same time and one has to understand Chinese bureaucratic logic to make sense of this. In terms of the bullion accounts China feels the need to report to the IMF the figure is probably correct, but that doesn’t mean the country is not holding physical gold in other accounts under state control and only reports this when it moves the gold into its official forex holdings account which can be at multi-year intervals. Read more here-http://bit.ly/2uMRYQr

-Minerals Council says 75% of SA’s gold mines unprofitable. Three-quarters of SA’s gold mines are unprofitable or barely making money, says the Minerals Council SA as the sector enters wage talks that some participants hope will reflect the realities bedevilling the sector. SA’s 140-year-old gold industry, for decades the world’s leading source of the precious metal, is a shadow of itself barely clinging onto eighth place ahead of Mexico. Its mines are old, deep, with falling grades and productivity, and rising costs. From more than 392,000 people employed in 1994, the sector now has 111,800 and that decline is showing no signs of slowing, with the weak rand price of gold forcing the closure of Pan African Resources’s Evander gold mine and the shutdown of the Cooke mines owned by Sibanye-Stillwater. Read more here-http://bit.ly/2mqXkgz

-South African Gold Output Falls Most Since February 2017 in May. Gold output in South Africa, once the world’s biggest producer of the metal, declined the most since February 2017 in May. Production dropped 16.2 percent from a year earlier, compared with a revised 5.8 percent contraction in April, Pretoria-based Statistics South Africa said Thursday in a statement on its website. That’s an eighth straight month of decreases. Total mining output shrank for a third month, dropping 2.6 percent from a year earlier compared with a revised 4.4 percent retreat in April, it said.

Production of platinum-group metals, of which South Africa has the largest known reserves, increased for the first time in six months, expanding 9.6 percent from a revised 6.3 percent contraction a month earlier. Aging infrastructure, reserve depletion and accidents have raised costs and curbed mines’ output in South Africa. Mining companies came under added pressure late last year and in the start of 2018 from the stronger rand and have responded by closing shafts and cutting thousands of jobs in a labor-intensive industry. Bloomberg

-Wreck of Russian warship found, believed to hold gold worth $130 billion. A South Korean salvage team has reportedly discovered the wreck of a Russian warship. It’s believed to still contain 200 tons of gold bullion worth 150 trillion won ($130 billion). The Russian Imperial Navy cruiser Dmitrii Donskoi was sunk 113 years ago. Read more here-https://cnb.cx/2uJmqeb

-Over the past month or so, COMEX silver warehouse inventories have grown by more than 8.5 million oz. In addition, there has been a net increase in the holdings of the big silver ETF, SLV, of more than 5 million oz, mostly of the highly counterintuitive type (as silver prices have been lower). On the other hand, there have been big reductions in other silver holdings (most notably in the ETF, SIVR), so the net increase of all visible world holdings of silver in the form of 1,000 oz bars has only increased by a little over 4 million oz, to 1.018 billion oz, barely a rounding error. My conclusion is that while there has been fairly large turnover in many visible forms of silver, total inventories haven’t changed that much.

This is the same point I’ve tried to make about COMEX silver inventories over the past seven years, namely, that the real story is in the turnover, not the absolute level of inventories. And while COMEX silver inventories have doubled over this time, the entire increase can be traced to JPMorgan’s epic accumulation of silver. The turnover, or physical movement of silver, towers over any net increase in total inventories. And I continue to maintain that the biggest takeaway from this impossible-to-deny frantic turnover, is a tightness in physical supplies because no one moves around metal for the fun of it. Silver analyst Ted Butler July 7 018 via Ed Steer edsteergoldandsilver.com subscribe here-http://bit.ly/1fdAByN

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Investing In Fancy Colored Diamonds

Investing in rare colored diamonds is a long-term investment. The economic cycles of the past 15 years have seen colored diamonds reach new heights in value as price records were broken.

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The Investor Learning Center was created to provide investors with the tools to make the right decision when it comes to investing in Rare Colored Diamonds.
Access our archives of exciting documentary video, informational content, historical pricing, and much more.
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The GIA report for this diamond is not posted on the website at this time however it is available. Please fill out a form to inquire or call us directly at 800-456-3934 for more information.

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 1980
  • Total Price: $50,000
  • Price per Carat: $50,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 1990
  • Total Price: $150,000
  • Price per Carat: $150,000
  • Source: Auction

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2000
  • Total Price: $500,000
  • Price per Carat: $500,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2008
  • Total Price: $1,000,000
  • Price per Carat: $1,000,000
  • Source: Auction

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2009
  • Total Price: $1,090,500
  • Price per Carat: $1,090,500
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2020
  • Total Price: $2,828,187*
  • Price per Carat: $2,828,187*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Vivid Pink

  • Year: 2025
  • Total Price: $4,361,506*
  • Price per Carat: $4,361,506*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 1980
  • Total Price: $1,000
  • Price per Carat: $1,000
  • Source: Auction

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 1990
  • Total Price: $3,000
  • Price per Carat: $3,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2000
  • Total Price: $9,000
  • Price per Carat: $9,000
  • Source: Auction

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2008
  • Total Price: $23,500
  • Price per Carat: $23,500
  • Source: Private Sale

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2009
  • Total Price: $26,300
  • Price per Carat: $26,300
  • Source: Auction

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2012
  • Total Price: $32,000
  • Price per Carat: $32,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2020
  • Total Price: $53,993*
  • Price per Carat: $53,993*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Intense Yellow

  • Year: 2025
  • Total Price: $74,873*
  • Price per Carat: $74,873*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 1980
  • Total Price: $60,000
  • Price per Carat: $60,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 1990
  • Total Price: $200,000
  • Price per Carat: $200,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2000
  • Total Price: $600,000
  • Price per Carat: $600,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2008
  • Total Price: $1,350,000
  • Price per Carat: $1,350,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2009
  • Total Price: $1,494,000
  • Price per Carat: $1,494,000
  • Source: Auction

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2020
  • Total Price: $4,555,497*
  • Price per Carat: $4,555,497*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Vivid Blue

  • Year: 2025
  • Total Price: $7,561,708*
  • Price per Carat: $7,561,708*

*Estimated value based on current market trend

1 Carat Radiant Cut Fancy Red

  • Year: 1950
  • Total Price: $13,800
  • Price per Carat: $13,800
  • Source: Private Sale

1 Carat Radiant Cut Fancy Red

  • Year: 1987
  • Total Price: $927,000
  • Price per Carat: $927,000
  • Source: Auction

1 Carat Radiant Cut Fancy Red

  • Year: 2008
  • Total Price: $2,000,000
  • Price per Carat: $2,000,000
  • Source: Private Sale

1 Carat Radiant Cut Fancy Red

  • Year: 2009
  • Total Price: $2,074,600
  • Price per Carat: $2,074,600
  • Source: Private Sale

1 Carat Radiant Cut Fancy Red

  • Year: 2020
  • Total Price: $3,103,720*
  • Price per Carat: $3,103,720*

*Estimated value based on current market trend