Pink Diamond Prices to Rise Dramatically. A-Letter.

September 1, 2004

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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Wednesday, September 1, 2004 – Vol. 6 No. 166
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In This Issue:
* COMMENT: Pink Diamond Prices to Rise Dramatically

* OFFSHORE: Guernsey Trust Rivals. U.K. Tax Haven Crack Down. St. Kitts-Nevis Treaty Ratification.

* WEALTH: Dirty Cash World Hit List. Lithuania Taxes, Smuggling. Swiss-U.S. Trade Down. Another IRS Computer Glitch.

* PRIVACY & RIGHTS: Freedom. Liberties. Debates. Passports. Unions.
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Stephen Hershoff of Antwerp, Belgium, is with Pastor-Geneve, a firm that deals exclusively in rare colored diamonds.
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COMMENT: Pink Diamond Prices Expected to Rise Dramatically

Dear A-Letter Reader:
The Argyle tender is a silent bid auction of the most important pink diamonds to come out of the Argyle mine in Australia this past year. Forty-eight pink diamonds, ranging in size from .49 to 2.07 carats were available for sale. The pinks toured seven cities throughout Europe, Asia and North America before being offered at a private location in New York. The colors covered all of the important fancy colors, including fancy intense, fancy deep and fancy vivid. More than 40 dealers placed bids for these one of a kind pieces. The dealers represented some of the most important collectors and investors from around the globe. While most of the stones received multiple bids, only 18 bidders walked away with prizes. One estimate for these stones was prices in the hundreds of thousands of dollars per carat.

From David Beckham to Jennifer Lopez, these beautiful rose and lilac colored stones have become the hottest items at the major jewelers and auction houses around the globe. A recent Jewelry Survey reported pink diamond recognition is up 30.4 % in the United States. Last year a three-carat vivid pink sold for over a million dollars, a new record price for a pink diamond of this size. Astute investors have been acquiring these stones because of their portability, privacy, beauty and most importantly, their rarity.

The Argyle mine produces over 90% of the worlds pink diamonds but only a small number of pinks come from the mine each year. According to CNN Money: “Argyle mines 30 million carats a year, and of that, less than 5% is jewelry grade. Less than 1/10th of one percent of that are pink diamonds. Out of those, it’s a minute percent that are usable for jewelry.” Most people don’t realize that new diamond discoveries in Canada and Russia, which account for over 25% of world supply, have not led to a new supply stream of colored diamonds.

With the extreme rarity and increased demand for pink diamonds, it is no wonder that pink diamond prices have doubled on average every 6 years since the 1970′s. However, a recent announcement from the Argyle mine has changed the future dynamics of the market. The Argyle mine announced this summer that the supply in the first half of 2004 fell to 6.28 million carats, a drop of 51%. As a result, buyers trying to acquire pink diamonds in the future will have increasing difficulty and will have to pay much higher prices. Experts in the trade are predicting prices should rise by at least 10-15% per year for top quality Argyle stones. And buyers who are looking for specific sizes, shapes and colors have been waiting for 6-9 months and paying 20% premiums because of a lack of availability. With the mine expected to close in 2007 and no other available source of supply for pink diamonds, one Beverly Hills based jeweler expects top quality Argyle stones to double or triple in value over the long-term.

Investment grade Argyle stones can still be acquired if you’re working closely with a coloured diamond specialist with strong connections to the source. Discriminating buyers should look for stones graded fancy intense or better and should concentrate on bubble gum, rose and lilac colors. Furthermore, if the light stone becomes available, you should acquire it because you may not see another one like it in the near future. Considering the supply situation and the dramatic increase in demand, owners of Argyle pink diamonds are expected to enjoy significant long-term price appreciation.

Stephen Hershoff, Antwerp, Belgium
E-mail: info@pastor-geneve.com
Web site: http://www.pastor-geneve.com

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COMMENT LINKS:
* Fancy This, by Cathy Chestnut, LINK:
http://www.naplesillustrated.com/index.cfm?fuseaction=display_article&whicharticle=22
* Toys of the super rich, CNN
LINK: http://money.cnn.com/2004/01/23/pf/q_ultraluxury/
* The Argyle Mine and Its Diamonds.
LINK: http://www.gem.org.au/gallery/diamond.htm
* Woman turns husband’s remains into a diamond.
LINK: http://www.local6.com/news/3693644/detail.html
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* OFFSHORE *

GUERNSEY TRUST PROVIDERS WARNED OF RIVALS
ST. PETER PORT: Kepp an eye on other trust haven nations, LINK:
http://www.thisisguernsey.com/code/showbusinessarticle.pl?ArticleID=111851
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BRITISH TAX HAVENS UNDER SCRUTINY
LONDON: UK crackdown on cross border tax fraud. LINK:
http://iccoventry.icnetwork.co.uk/0150business/0100news/tm_objectid=14588587&method=full&siteid=50003&headline=tax-havens-under-scrutiny-name_page.html
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ST. KITTS & NEVIS RATIFIES ANTI-CORRUPTION TREATY
Caribbean nation joins in global anti-corruption pact.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17136
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* WEALTH *

ANTI-MONEY LAUNDERING SOFTWARE WORLD HIT LIST
Claims to have suspect names from 230 countries, 140,000 sources.
LINK: http://www.tmcnet.com/usubmit/2004/Aug/1069277.htm
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LITHUANIA TAXES UPPED BY EU MEMBERSHIP
VILNIUS: High EU taxes causes increase in cross border smuggling.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17144
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SWISS – U.S. TRADE DOWN
Security restrictions is one reason for trade drop. LINK:
http://www.swissinfo.org/sen/Swissinfo.html?siteSect=105&sid=5181627
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ANOTHER I.R.S. COMPUTER GLITCH
IRS flubs part of security modernization.
LINK: http://www.fcw.com/fcw/articles/2004/0830/web-irs-08-30-04.asp
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* PRIVACY & RIGHTS *

IS FREEDOM THE SAME AS DEMOCRACY?
Everybody loves freedom, but how do you define it?
LINK: http://www.strike-the-root.com/4/macgregor/macgregor1.html
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BUSH FORMS CIVIL LIBERTIES BOARD
High level officials tasked to protect privacy & civil rights.
LINK: http://www.wired.com/news/privacy/0,1848,64784,00.html
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ANOTHER CITY DEBATES PATRIOT ACT
Helena, Montana joins over 300 cities opposing Act. LINK:
http://www.helenair.com/articles/2004/08/31/helena/a01083104_05.txt
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TESTS REVEAL E-PASSPORT SECURITY FLAW
Readers could not detect information on e-passport chips. LINK:
http://www.eetuk.com/tech/news/showArticle.jhtml?articleID=45400010
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U.K. INDUSTRIAL TRADE UNION DECLINE
LONDON: Decline of unions threatens Labour Party. LINK:
http://news.ft.com/cms/s/24a3c4e6-fac1-11d8-9a71-00000e2511c8.html
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER.
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