Investors Lose Their Sweet Tooth for Cocoa in 2016, But Iron Ore Is Back In Play

Not long ago, I re-posted an old article that I wrote last year about Cocoa being a strong commodity for investors in 2015. Along with Cocoa, investors were rewarded with excellent ROI for 3 more commodities: Sugar, Rice and Cotton. Since Sugar is related to Cocoa being that both are the essential ingredients for chocolate (whose demand increased in 2015), Cocoa led the commodity craze in 2015. Fifteen commodities out of 18 (except for fancy color diamonds) dropped in 2015. Interestingly, in 2016, the overall picture is the exact opposite!

Iron Ore Reverses Trend

Iron Ore was the second worst performer on our list in 2015, but made a complete 180-degree spin and became the best performer in 2016. In 2015 it lost 32.35% (Heating Oil was the worst performer by losing 41.15% in 2015), while in 2016, Iron Ore gained a whopping 90.11% over the year. It made a significant gain during the first 75 days of the year up to early march, just to lose steam in both May and June when it peaked at 64. The last two months of year it gained steam, and finished the year with a BANG!

 

iron ore being produced by rio tinto

Iron Ore being produced by Rio Tinto, largely considered the world’s biggest Iron Ore producer as well as the world’s biggest producers of pink diamonds

What a Sweet Deal

If we look at performance of both 2015 and 2016, we see only 2 commodities that gained positive returns year after year (excluding fancy color diamonds). Cotton is the first, which gained a 6.22% increase in 2015 and 12.94% in 2016. The other is Sugar, which gained 6.88% in 2015 and a 30.33% price appreciation in 2016.

 

sugar

Blue Diamonds Continue to Rise

Continuing their strong price appreciation, blue diamonds are more desired than ever, and the high quality, high clarity diamonds are rarer than ever, which translates into higher prices for them. As Fancy Vivid Blue diamonds gained 8.4% price appreciation in 2015, a 1 carat Fancy Vivid Blue Diamond gained a further 16.67% price appreciation in 2016, reflecting strong demand and lack in supply.

 

7.32 carat Fancy Vivid Blue pear shaped diamond

A vivid blue pear shaped diamond

We have also seen strong prices in auction during 2016 for blue diamonds as well as pink diamonds, as some have broken new records.

We are currently working on a more detailed analysis of commodities covering at least 5 years, which we intend to publish in the coming weeks.

Conclusion

We are looking forward to the start of the auction season beginning in April in both New York and Hong Kong, which will be followed by Geneva auctions in May. Our prediction is that we will see a lack of perfect, high grade pink and blue diamonds. We have heard that will see the largest Fancy Vivid Blue diamond ever to be offered in auction in Geneva by Sotheby’s in May, but nothing official has been confirmed by the famous auction house. Our intelligence report says that it will be larger than The Oppenheimer Blue diamond, and that it will be a pear shaped diamond with the highest clarity possible. The diamond has not been seen in public for over 20 years. It will be accompanied by a pink diamond of similar shape and size. It is not yet confirmed if they will be sold as a pair or separately. If offered as a pair, our estimate is that it will be the most expensive pair of diamonds ever to be offered at auction, and may have a 9-digit sale price. Only a handful of potential buyers may even be able to acquire such a rare and unique pair. We will keep you updated!

Got any questions? Ask us in the comments!

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