Thursday, April 26, 2012

Why a diamond is a Hong Kong widow's best friend

Hong Kong businessman Kennedy Tam always wanted to travel the world. When he died suddenly of a stroke in 2010, his wife Freda decided death would not stand in his way.Since that day, Freda has taken Kennedy on trips to New York, Canada, Shanghai and Turkey.

"We are always together. Even at work he is always near me," said Freda, 48.As she talks, Freda looks lovingly down at the necklace around her neck. "This is Kennedy," she says. "He is my diamond."She is not speaking metaphorically. When he died at the age of 52, Kennedy was cremated and his ashes made into a synthetic diamond.

It's an option more people in Hong Kong may have to consider in future as the city, with its rapidly ageing population of 7.1 million and annual death rate of 50,000, faces up to a shortage of places to bury its dead.Burial plots are scarce in the city - one of the world's most densely populated spaces - and often exorbitantly expensive, with permanent spots starting at 36,000 US dollars, or around 770 US dollars for a short-term stay of six years in a government plot, after which the body has to be exhumed and the remains cremated.

The other main option of keeping cremated ashes in urns at a columbarium - a storing place for urns - is less expensive, costing around 330 dollars at a government facility. However, the price rises to between 6,200 and 42,500 US dollars at a private columbarium.But with 90 per cent of people choosing cremations, even this option is unable to keep pace with demand and there are an estimated 12,000 deceased people now on waiting lists for columbarium places.The government says a new columbarium will be ready by summer which will provide some 43,000 niches - roughly equivalent to the number of cremations in one year.

It has also identified 24 potential new columbarium sites. However, many of these have already met with opposition in the community because of the belief that presence of the dead drags down property prices due to their bad feng shui.Recently, the government began promoting other options, such as remembrance gardens for scattering ashes and an internet memorial service in the absence of real grave.

In 2007, it lifted a 22-year ban on scattering ashes at sea, and began offering free boat trips for the purpose. Since then, sea burials have increased fourfold, from 160 in 2007 to 660 in 2011.But these numbers are a drop in ocean when you consider the death rate, says Professor Lily Kong of the Department of Geography at the University of Singapore.

"Space is at a premium and the growing death rates present a challenge to the city authorities in accommodating the dead amidst the challenges of housing the living," Kong said.Kong, who has studied the subject, said the biggest obstacle for alternatives like sea burials was cultural practices and beliefs."The notion of returning to the earth upon death is deeply entrenched in Chinese belief systems," Kong said.

"Without a proper burial, the traditional Chinese belief is that the soul will not rest, giving rise to a 'hungry ghost' rather than a venerated ancestor."Moving away from burials to cremations had involved a "significant cultural shift", but taking the further step of disposing of the ashes at sea presented even greater cultural obstacles, with many people believing it showed "disrespect and lack of care for one's ancestors", said Kong.

A funeral director, speaking on condition of anonymity because of the sensitivity of the subject, said sea burials were unpopular because people did not like the idea of a parent or spouse floating around in the sea."They prefer to have a place to visit, something real, and to keep their loved ones close," he said.Space burials, in which ashes are shot into space, have also proved unpopular in Hong Kong for similar reasons, he said, adding he knew of only one in the last 10 years.

Saturday, April 21, 2012

Artist Teresa Margolles makes diamond from London riots dirt

WHEN Mexican artist Teresa Margolles arrived in the UK in 2011 she witnessed London erupting into aggression.

In the aftermath, she travelled through Croydon in South London to document the demolition and vandalism caused by the unrest.

She collected residues generated by the rioting including carbonized remains of cooked out buildings and objects that were products of vandalism.

In a bid to create art symbolizing the riots she separated pieces of wood and carbon from a burned building in London Road in Croydon and sent it to a English company which specializes in elaborating diamonds with the remains of ashes from incinerated bodies.

The result is this stunning three-quarter carat, 58 facet cut diamond stud.

Margolles, one of the foremost artists working in Mexico today, this week presented her new body of work for the 2012 Glasgow International celebration of Visual Art.

The artist has earned a reputation internationally telling stories relating to aggression, crime and death.

Some of her art work includes broken glass from Mexican street clashes and shootings which she gathers mutually and turns into the sort of flamboyant jeweler worn by drug dealers.

But her work has raised some eyebrows in the history.

A New Zealand museum had to cancel an exhibition by Margolles after concerns it would upset people.

The Lower Hutt's Dowse Art Museum had planned to display Margolles installation - an empty room filled with floating bubbles using water in the past used to clean corpses.

Thursday, April 19, 2012

Are diamonds the new gold for individual investors?

"Diamonds are a girl`s best friend." From Carol Channing to Marilyn Monroe to "Moulin Rouge" the iconic song has endured as a symbol of wealth for more than half a century.

But should diamonds be an investor`s new BFF?

Of course, investors and couples alike can buy diamond earrings on the retail market, but there`s a movement to create a way for individual investors to buy diamonds like gold.The Securities and Exchange Commission is looking over a proposal for the first-ever diamond-backed exchange-traded fund.

Tom Lydon, president of Global Trends Investments and editor of ETF Trends, thinks there would be a demand for a diamond ETF, but the problem will be pricing. "When you look at these ETF providers trying to get into the space to a degree it`s the tail wagging the dog. They`re trying to force the industry to have standardized pricing" he said.

The diamond industry likes "the fact that pricing is not always clear. That`s basically how they make their money," Lydon told CNBC`s Street Signs."Gold is liquid. It trades on the futures market. But when you get to diamonds it`s a whole different story. Diamonds aren`t created equal. There are so many sizes, shapes, qualities," he said.

A report in The New York Times explains how the diamond ETF would work.It would buy one-carat diamond earrings and store them in a vault in Antwerp, Belgium, providing daily values with an as-yet-unnamed index. The fund is backed by a New York company, IndexIQ, that has brought 14 other exchange-traded funds to market in the last five years.

Wall Street waded into the diamond trade in the late 1970s and early 1980s, when inflation was exploding and investors were looking for hard assets. But when rates sank, so did the value of diamonds and the diamonds-as-an-investment proposition.

Citi analyst Oliver Chen, who covers the diamond industry, regards the proposed diamond ETF with caution. "Diamonds for end-use tend to be 98 percent consumer versus gold at 50%. So there could be a lot of volatility on those supply and demand characteristics.

"Within the context of the diamond market, De Beers and [Russia`s] Alrosa still have chunky market shares. On a combined basis that`s 60 percent. So it`s a relatively non-fragmented market, which is a unique characteristic in contrast to gold," Chen told CNBC.

And it may get even more non-fragmented.The Sunday Times in the UK reports that legendary investment group KKR wants to create the third-largest diamond company behind De Beers and Alrosa by combining the diamond operations of BHP Billiton and Rio Tinto.

Chen is, however, bullish on diamonds, projecting that prices will increase 6% annually for the next decade. He likes Toronto-based Harry Winston recommending it as a "buy" with a price target of USD 17 a share over the next 52 weeks.

Meanwhile, Harry Winston is looking to tap hedge funds, pensions, and other institutional investors by teaming up with a Swiss asset manager to create a USD 250 million fund to buy diamonds.According to Chen, the difference between this investment fund and the proposed IndexIQ diamond ETF is the Harry Winston vehicle will only be open to qualified investors, will be capped at USD 250 million and will be a closed-end fund.

Monday, April 16, 2012

Could diamonds be the new gold?

A small number of investment professionals around the world are competing behind the scenes to turn the gem into a commodity that would be available to investors in the way that gold has been traded through funds on exchanges.

Trading in diamonds is limited in the United States to the retail market for engagement rings and other jewellery and the back-room bargaining among merchants in places like Manhattan’s diamond district on West 47th Street.

But financial industry players in New York, London, Switzerland and Israel say there is an opening to provide reliable public access for the growing universe of investors who have been willing to sink money into funds backed by exotic assets like palladium and silver. Those players have turned a gold-backed fund, the SPDR Gold Shares, into one of the world’s largest exchange-traded funds, with a market capitalisation of about $70 billion.

The Securities and Exchange Commission is reviewing a proposal to create the first diamond-backed exchange-traded fund, which would be available to anyone with an online trading account. It would buy one-carat diamonds and store them in a vault in Antwerp, Belgium, providing daily values with an as-yet-unnamed index. The fund is backed by a New York company, IndexIQ, that has brought 14 other exchange-traded funds to market in the last five years.

In addition, Martin Rapaport, who founded a popular gauge of diamond pricing, said recently that he was preparing to release a “few” products this year that would be available to retail investors. He declined to describe them.

In perhaps the most developed plan, the largest publicly traded diamond company, Harry Winston, is working with a Swiss asset manager to create a $250 million fund that is set to begin buying half-carat to six-carat diamonds this year with money from institutional investors like hedge funds and pensions. The fund would own diamonds bought and sold in Harry Winston stores and sell shares to private investors.

“Diamond is the last uncommoditized commodity, and so it’s drawing in many organizations,” said Edahn Golan, the editor in chief of IDEX Online, a provider of diamond industry data. “I assume that by the end of this year there will be a bunch of them out.”

Investment professionals say that retail investors should be very careful, given the difficulty of establishing consistent prices for diamonds of widely different cuts and quality, and the traditional secrecy of the industry. The diamond market has also been tarnished by accounts of stones mined in war-torn parts of Africa, though both the IndexIQ fund and the Harry Winston fund have committed to avoiding such so-called blood diamonds.

“There would be a huge learning curve for me to be comfortable trading something like this,” said Matt Zeman, a commodity trader at Kingsview Financial.The diamond industry can only dream of replicating the success of gold companies. Gold investments, rather than jewelry, have become the primary driver of growth in the industry, according to the World Gold Council, pushing annual production to around $100 billion, Citigroup analysts say. By comparison, the annual production of polished diamonds is about $18 billion, Citi said.

The allure of diamonds is that, like gold, they are easily authenticated and long lasting. But unlike gold, and oil, diamonds have not had much price volatility, in part because they have not been touched by large flows of speculative money, though that could change if the new efforts succeed.“It makes sense that investors would have interest in diamond-backed funds,” said Joung Park, a commodities analyst at Morningstar.

This is not the first rush to bring diamonds to Wall Street. When inflation was soaring in the late 1970s, the search for stable stores of value led to a few legitimate, and many illegitimate, operations that lured retail investors into diamonds. One, started by the financial company Thomson McKinnon, sold shares privately and was wound down when interest rates plummeted, taking the value of diamonds with them.

The market long repelled many investment professionals because of the 80 per cent to 90 per cent market share of production held by De Beers, the global diamond giant. That began to ebb when De Beers relaxed its grip on the supply channels in 2000, and subsequently sold some of its mines and inventory, reducing its market share to 40 per cent today, according to Citi.

“Before De Beers gave up its monopoly, the investment case was pretty difficult,” said Peter Laib, chairman of the Swiss firm Diamond Asset Advisors, which is working with Harry Winston on a diamond fund. “Why would I start a fund where the price is controlled by one company?”

The end of the monopoly still left perhaps the biggest barrier to investment: the lack of uniform standards for diamond pricing. Unlike gold, which is sold for essentially the same price in financial markets around the world, diamonds have been sold mostly through bazaarlike areas like the Manhattan district and the Antwerp Diamond Bourse, which advertises that a “binding handclasp fixes price, delivery and conditions.”

“The diamond industry suffers from an image which sadly is rather well deserved, which is hiding behind smoke and mirrors,” said Charles Wyndham, the London-based founder of Polished Prices, a diamond pricing company.

Many market participants argue that diamonds are not a commodity but unique items that need to be evaluated individually. But Wyndham, Rapaport and IDEX are competing to prove that wrong by creating standardized pricing. IDEX has an hourly updated index of asking prices from its online database, weighted with the 15 most popular varieties.

Saturday, April 7, 2012

Diamonds Are a Great Way to Diversify: Expert

Diamonds are an attractive option for investors looking to diversify portfolios because they don't move in relation with other assets such as commodities and stocks, according to David Riedel, President of equity research firm Riedel Research Group.

“Over the past decade cross-asset correlations have nearly doubled, (but) diamonds have exhibited very low correlations to other assets making them an attractive source of diversification. They have almost no correlation to anything else – commodities, gold, equity markets,” Riedel told CNBC on Wednesday.

In 2011, the RapNet Diamond Index (RAPI) for one carat polished diamonds rose 19 percent outpacing gold,which rose 10 percent. And supply constraints are expected to take diamond prices even higher in the coming years, says Riedel.

He estimates demand for diamonds will grow 50 percent between now and 2015, driven by consumption in the United States, China and India, while production will rise by just 24 percent.“Diamond mines tend to be most productive near the surface, and like a funnel become less productive as you go deeper,” says Riedel, which restricts supply.

Demand out of the U.S., which currently accounts for 40 percent of global diamond purchases, is set to strengthen alongside the pick up in its economic recovery, he said.The rise in household income and the young population in India and China will support demand out of these two countries, which are already the world’s top two consumers of gold jewelry, says Riedel.

“We expect cultural trends throughout emerging markets to drive demand for diamonds further. A major trend increasing demand among the Chinese is a desire to display wealth,” he said.

Addressing the growing supply of synthetic diamonds, which are available at a fraction of the cost of natural diamonds, he says the former will not impact demand for the latter.“There is a growing supply of synthetic diamonds but there is a certain cache and investment value in natural diamonds and we think that will continue.”

Sotheby's annual spring sale of “Magnificent Jewels” in Hong Kong this week highlighted Asia’s booming interest in diamonds. The highlight of the auction was the sale of an 8.01-carat blue diamond ring for $12.7 million - the second highest price per carat for a blue diamond at an auction.

Wednesday, April 4, 2012

A $2.5 Million, 10-Carat Pink Diamond At Edmonton Jewelry Store

An Edmonton retail jeweler will showcase a 10-carat fancy light purplish pink diamond from April 13-17. The radiant cut diamond with SI1 clarity is owned by a private collector and is available for $2.5 million CAD ($2.52 million).

The diamond will be displayed at the Birks jewelry store at Manulife Place, 10180 – 101st St., part of the Birks Canadian fine jewelry retail chain.

The pink diamond originated from a rare rough stone of 21.35 carats found in a South African mine, making it one of the world’s largest pink diamonds ever mined, Birks said in a statement. Because of its large size, it took 3½ months to cut and polish the stone. The pink diamond, with its purple and pink hues, is set on a platinum ring.

Pink diamonds of this size, as regular readers of this blog know, are extremely rare. The auction house Christie’s – one of the most important resellers of diamonds in the world—has reportedly auctioned 18 polished pink diamonds over 10 carats in its 244-year history. The South African 10-carat stone, made from a 21.35-carat rough stone, is even larger than Australia’s biggest rough pink diamond weighing 12.76 carats, recently unearthed at its Argyle mine, the most famous mine in the world for pink diamonds.