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com

Colored Diamonds and Precious Gems


"the rarest, most concentrated form of wealth in the world
is becoming even rarer"

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Investment Summary
TABLE OF CONTENTS

1 Investment Summary1
1.1 Introduction to Investment Opportunity1
1.2 Rare & Precious Gems™1
1.3 Magic from the Mines Since 19892
1.4 How the Investment Works2
1.5 Time of the Investment2
1.6 Gem Stone are Wearable Investments3
1.7 Where to Keep Your Investment3
1.8 Education on Precious Gems3
1.9 15 Reasons to Invest in Rare & Precious Gems™3
1.10 Rare & Precious Gems™ Pricing Benefits4
1.11 Why you should invest in gems with our company4
1.12 How Easily Can You Sell Your Investment?5
1.13 From Mine to Market5
Champagne Diamonds in the Rough and Polished6
1.14 Business Model6
1.14.1 Precious Gems7
1.14.2 Jewelry7
1.14.3 White Diamonds – Mine to Market7
1.15 Our Company7
1.15.1 Bryan Kerrison, President8
1.15.2 Kim Helman, VP Sales & Marketing9
1.15.3 Helen Xiang, VP Asian Development9
1.16 Strategic Relationships10
1.16.1 Argyle Pink Diamonds10
1.16.2 Strategic Relationships with Sight Offices10
1.17 Associations of the Company11
1.18 Colored Diamond Market Overview11
1.19 Number of High Net Worth Investment Growing11
1.20 Colored Diamond Market Research12
1.20.1 The Pink Story12
1.20.2 Yellow or Canary Diamonds13
1.20.3 Blue Diamonds14
1.20.4 Orange Diamonds14
1.20.5 Red Diamonds14
1.20.6 Green Diamonds14
1.20.7 The Champagne Campaign15
1.21 Precious Gems - Emeralds, Rubies and Sapphires and Tanzanite16
1.21.1 Emeralds16

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1.21.2 Rubies17
1.21.3 Sapphires18
Sapphire Bracelet in a rainbow of colors18
1.21.4 Tanzanite19
1.22 Sourcing Strategy19
1.22.1 Mandarin Website20
1.23 The Opportunity20

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Colored Diamonds

Colored diamonds are one of the biggest investment


opportunities today and one of the least known
making it an exclusive commodity.

Diamond supply is declining for the first time in 30 years and


it is primarily happening in the area of
rare colored diamonds
The Vivid Pink
A cushion-shaped fancy vivid pink, potentially flawless, Type IIa diamond ring of 5.00cts
Price realized: $10,776,660 or $2,165,778 per carat
December 2009, Hong Kong
World auction record price per carat for any diamond at auction
World auction record for any pink diamond at auction at this date

An opportunity to own the very best…

8.02ct Fancy Lilac Pink diamond valued at $1.32 million

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For generations, Europeans have recognized


the worth of portable concentrated wealth
and always held colored diamonds in their portfolio.

The leading mine in Australia, which produces 90 percent of the world's pink diamonds, saw a drop in supply
of 30 percent last year. An additional decline of 20 to 30 percent is expected for this year. This will lead to a
shortage of pink diamonds and further increases in prices.

The very rarest…

A 5.16-carat fancy-vivid, internally flawless blue diamond fetched $6,415,613 at Sotheby's Hong Kong
auction in April 2010, approximately $1.24 million per carat. The diamond was bought by London's
Moussaieff Jewelers Ltd.
Moussaieff says the fancy-vivid, internally flawless gem has a market value of about $1.5 million per carat
and that she would have raised her bid had her rival persisted. A blue diamond of that size and caliber is so
rare that it is worth about $2 million a carat and high-street stores like Moussaieff could ask for $3 million.
The auction record for a blue diamond was set by Hong Kong property tycoon and gem collector Joseph Lau
Luen-Hung in May 2009 with his purchase of a 7.03- carat gem in Geneva for $9.8 million or $1.3 million per
carat.
The exceptional blue diamond set two auction records at Sotheby's Geneva on 12 May 2009 - the world
record price per carat for any gemstone at auction and world record price for a fancy vivid blue diamond at
auction.
The exceptional blue diamond set two auction records at Sotheby's Geneva on 12 May 2009 - the world
record price per carat for any gemstone at auction and world record price for a fancy vivid blue diamond at
auction.

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The blue diamond ranks among the most important diamonds


ever to be offered for sale by Sotheby's. It was cut from a 26.58
carat rough discovered in 2008 at Petra Diamonds historic
Cullinan diamond mine in South Africa, the world's most
consistently reliable source of blue diamonds.
Becoming rarer still...

The Wittelsbach Diamond

An historic 17th century cushion-shaped fancy deep grayish blue, VS2 diamond of 35.56cts

Price realized: $24,311,191

December 2008, London, King Street

World auction record for any diamond or jewel at auction at this date

A chance to develop a heritage,


a legacy for future generations….

Faceted Natural Fancy Vivid Canary Yellow Diamond

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As global financial markets show volatility and instability, affluent investors and collectors are taking a closer
look at rare, hard assets to diversify their portfolio and protect their wealth. Colored diamonds fulfill these
criteria and, as supply dwindle; international collectors and investors continue to acquire these rare pieces
for their personal holdings.

and be a connoisseur collector of the world's most high


value portable assets, the ultimate investment hedge,
colored diamonds.

Fancy-colored diamonds are among the most valuable and sought-after diamonds in the world.

Rarity: For every 10,000 carats of colorless diamonds mined, only 1 carat will be fancy colored.

Value and Growth: Since the early 1970's, natural fancy blue diamonds have doubled in value every 5 years.

Portability: The most concentrated form of wealth in the world.

The Rare & Precious Gems™ choice...


only the best in investment quality exceedingly rare
natural fancy colored diamonds

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white diamonds
and precious gems

Assets that hold their value, regardless of the performance of the dollar.

Rare & Precious Gems™ is managed by individuals with over 20


years experience with DeBeers, the world's foremost diamond
company. Rare & Precious Gems™ is also the nation's first and
only company to every have a direct distributorship agreement
with the fabled Argyle Pink diamond mine.

1 INVESTMENT SUMMARY
1.1 Introduction to Investment Opportunity
Rare & Precious Gems™ introduces a rock solid
investment opportunity into hard assets that have
increased in price about 15% each year since
1949 and have never gone down in value on a
wholesale level in 35 years.
In a time when traditional asset classes are weak
due to the current state of the economy,
investment grade gems are one of the few hard
As global financial markets show volatility and instability,

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affluent investors and collectors are taking a closer look at rare, assets that have, not only maintained their value,
hard assets to diversify their portfolio and protect their wealth. but have increased in value.
Colored diamonds fulfill these criteria and, as supply dwindle;
Do you own any valuable hard asset
international collectors and investors continue to acquire these
investments? Colored diamonds are some of the
rare pieces for their personal holdings.
safest, secure investments available today. They
are a hedge against negative economic
fluctuations in the stock market, currency and
real estate.
Rare colored diamonds sell for several times
above colorless diamonds.
A rare colored diamond bought today could
increase in value five to ten times in the next 10
years.
Diamonds and precious gems are a highly private
asset with no reporting requirements and are
easily concealed and transported. They can be
quietly and legally sold in most major cities
globally.
Colored diamonds offer investors stability, long-
term appreciation, portability and privacy! With
fancy colored diamonds, one can choose to
invest in small or large stones the return potential
is huge due to their scarcity and the high
demand.
Colored diamonds and precious gems not only
serve the purpose of showcasing beauty but it
also serves as a good protection of wealth for
those who wish to secure the value of their
wealth, especially in volatile market conditions.
Consider enhancing your portfolio with the
alternative hard asset investment, a rare fancy
diamond or gem stone with its unprecedented
potential to appreciate in value. Rare & Precious
Gems™ presents investors with an opportunity to
make a significant return and secure their wealth.
1.2 Rare & Precious Gems™ Limited Partnership
Rare & Precious Gems™ has been established to
assist you in making investment decisions into
one of the best hard assets available today, Super
Rocks! These are colored diamonds and precious
gems of great value and their addition to your
portfolio enhances your financial position and
security.

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A well balanced investment portfolio should be


comprised of securities,

bonds and commodities proportionally balanced to suit


your personal requirements and preferences. Our
professional consultants draw on years of experience in
the diamond industry to help you select the most
appropriate diamond investment for you. The outcome is
a successful and reliable investment in a hard asset that
holds value, colored diamonds and gems.
1.3 Magic from the Mines Since 1989
Rare & Precious Gems™ is a company with roots as a
diamond wholesaler since 1989. The principals of the
company ranked as the second largest buyer of pink and
colored diamonds in the world in 2008. Our 30 year
history in the diamond industry and 20 year history with
DeBeers offers a depth and breadth of experience that has
resulted in one of the most solid reputations in the
industry. From our waterfront offices in the World Trade
Center in beautiful downtown Vancouver, we gather
Since formal records were first kept at the colored diamonds, white diamonds and sapphires, rubies,
beginning of the 1970s, prices for the highest emeralds and tanzanites direct from the mines and bring
grades of colored diamonds have increased in them to you at incomparable prices. The lack of middle
value by an average of between 10%-15% per men and our direct links to some of the most prestigious
year, with rarer colors and higher grades enjoying mines in the world gives us access to the rarest gems at
the greatest appreciation. the best prices which we pass on to our customers.

1.4 How the Investment Works


When you invest in Rare & Precious Gems™, you are
investing into hard assets and we have a plan that we
anticipate will bring returns of up to 10% annually with
security and possible returns of higher than 15% as
international mines close and certain stones become rarer.
You can choose from the colored diamonds and gems we

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have on hand or request a purchase of a particular color,


quality and size for investment. Our advisors can assist
you in making this choice by offering the latest in market
research and prices on various gems.
1.5 Time of the Investment
Rare & Precious Gems™ advises its clients to hold on to
their gem purchase for a minimum of five to ten years in
order to realize maximum profit potential. Certain stones
may experience a radical rise in value due to prevailing
market conditions and the closing of source mines. In
these cases, clients may be able to sell sooner to take
advantage of the prices.

1.6 Gem Stone are Wearable Investments


A gem stone purchase may serve two purposes. It may
be solely an investment and kept in a vault or it may
be set in a piece of jewelry and worn. Rare & Precious
Gems™ offers its clients both services and while
many are kept in vaults, many of our clients choose
unique settings that capture life moments such as
marriages, births, anniversaries, birthdays, and special
holidays such as Christmas or Valentine's. When gem
stones are set and worn, it does not detract from their
investment value. Many of the world's most valuable
stones are set in jewelry for royal families or heads of
state and commemorate special occasions.
1.7 Where to Keep Your Investment
Once you have made a purchase of a stone, you must
decide where to keep it. Many of our clients keep their
gems and the GIA1 certificate in our vault as it is a
highly secure and insured place for safekeeping. When
Purchasers of gems and jewelry may wish to view the client wishes to view their stone, or wear their
their piece before finalizing a sale. Our exclusive jewelry, they request it to be taken from our vault. It
diamond services offer viewing, cleaning, and can be brought back at a later date for security.
polishing services.
Some clients keep their precious gems at their own
locations and bring them to us when they wish to resell
and realize their investment profits.
1.8 Education on Precious Gems
Rare & Precious Gem has an immense wealth of
experience in the colored diamond, diamond and gem
stone sector and likes to share this knowledge with
you, our esteemed client. You can come in, ask
questions, see certain stones, and learn about market
conditions for your investments. You will also learn

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about the history of the gem industry and the


comparable value of certain stones.
1.9 15 Reasons to Invest in Rare & Precious Gems™
Investing in rare and precious gems such as diamonds,
colored diamonds, rubies, emeralds, sapphires and
tanzanite from our company represents the best
investment opportunity for investors for the following
reasons:
 Diamonds have never gone down in value on a
wholesale level in 35 years
 Diamond prices increases about 15% each year
since 1949
 Pinks and blue diamonds have doubled in price
every five years during a strong world
economy and increased by 500% in 1980
during high inflationary times similar to now
 A 5-carat vivid pink diamond sold for $10.8
million in December 1, 2009. This is over $2
million a carat and 40 times more than its value
in 1980 when that diamond was valued at
$50,000 a carat

 In a time when traditional asset classes are


weak due to the current state of the economy,
investment grade gems provide a hard asset
that has maintained and increased value
 Investment into precious gems maximizes
capital gains
 It is a method of wealth preservation
 Hedge against extreme leverage in the
financial markets
 Hedge against stock market losses
 Hedge against negative currency fluctuations
 Provides a 'Store of Value' in a financial
Rare and Precious Gems can show you how to profit
from this historical climb in one of the world's rarest
emergency
commodities.  A highly private asset with no reporting
requirements
 Easy to conceal and transport - A colored

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diamond portfolio worth millions of dollars


fits inside an envelope and can easily be
transported in a coat pocket. They can be
transported quietly and legally, and sold
globally in most major cities
 Colored diamonds are 10,000 times as rare as
white diamonds and more valuable
 Superb Durability: Natural diamond is one of
the hardest substances known. Colored
diamonds are not affected by temperature,
humidity, or shocks, and thus provide an asset
that will withstand storage or transport in
normally hostile conditions without adversely
affecting the value of the gem
1.10 Rare & Precious Gems™ Pricing Benefits
 Mine direct prices for high quality precious
gems
 Rare & Precious Gems™ sources diamonds
direct from the mine or directly from DeBeer
Sight Holders, without the middle men that
increase prices
 Rare & Precious Gems™ is a Company with
a 30 year history of quality, trust and relations
in the diamond industry and offers the best
deals in diamonds anywhere
1.11 Why you should invest in gems with our company
 Well-established quality and valuation
methods
 Company with a 30 year history of quality,
trust and relations in the diamond industry
 Rare & Precious Gems™ is one of the world's
largest purchasers of natural fancy colored
diamonds direct from the mine
 The diamonds in our collection have been
independently certified by a recognized
gemological authority
 Listen carefully to your investment
requirements
 Answer your questions and provide expert
advice

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 Search through hundreds of thousands of


diamonds
 Only recommend certified diamonds with
great cut and value
 You choose your favorite from our
recommendations

 Help you review certifications and


specifications
 Carefully inspect the diamond and report
our findings to you
 Ship you the diamond to inspect before
you buy
 Only make payment after you examine a
gem
1.12 How Easily Can You Sell Your Investment?
 For over 30 years, Rare & Precious
Gems™ has built up a trade with
thousands of high value diamond
investors from all over the world. This
busy trade ensures a rapid turnover of
investment grade gems.
 Many of our clients keep their diamonds
in our vault and we resell them in a few
months or in several years as the client
wishes, but always at a profit.
In the colored diamond world, whatever is rare is becoming
1.13 From Mine to Market
rarer. Colored diamonds are one of the biggest
investment opportunities today and one of the
least well known, making it an exclusive and rare
commodity.
The large mines of the world are running out of
diamonds, especially colored stones. These
shades include yellow, green, blue, orange,
brown ("champagne"), purple, gray, black (called
carbonado, recently shown to be meteoric), milky
white, pink and red2.
Diamonds are extremely rare and it is estimated
that it takes 1.3 tons of rock to reveal just one
carat or .20 grams of diamond. Colored diamonds

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are even rarer and there is only one colored


diamond for every 10,000 white diamonds in
existence, according to Rio Tinto, the operator of
the world's largest diamond mine.
This rarity offers some challenges to the market
as supplies become increasingly scarce. Argyle,
the world's largest diamond mine and producer of
over 90% of the pink diamonds is planning to
completely shut down operations by 2018. This
will deal a blow to diamond dealers but warrant
enormous increases to holders of these assets as
what is already rare becomes impossibly rare.

Nothing is smaller, rarer and more valuable than


Natural Fancy Colored Diamonds

Collectors of these valuable assets stand to gain


as the market price moves inexorably upward.
Recent purchases have produced prices where the
sky is the limit and shows no sign of abating
especially with growing scarcity.
Diamond prices increases about 15% each year
since 19493.

Rare & Precious Gems™ offers the opportunity to


invest in a commodity with the upward momentum in
value of a Rembrandt or Picasso at prices direct from
the mine. Add this classic hedge in a monetary crisis
to your portfolio. There is a short window of
opportunity as prices are rising meteorically and
sources becoming scarce. Rare & Precious
Gems™sources direct from the mines and can show
you how to profit from this historical climb in one of
the world's rarest commodities.
Diamonds are the most concentrated store of value
that exists, an important source of liquidity. The value
of diamonds is not determined by 'fiat currency". The
A rare pair of vivid pink stones.
value of extremely precious commodities is
independent of government laws and that is why they
have retained their values even during recession.
A person can wear diamonds in jewelry and carry it
on their body all over the world; it has rareness,
minimal weight, and is not detectable by screening
metal objects in airports.

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1.14.1 Precious Gems

Colored diamonds and gems are a depleting hard asset and are one of
the best investments available in the world.

Rare & Precious Gems™ leverages its contacts and know


how of an experienced management team to continue to
develop sources of colored diamonds and precious gems
and increase its inventory of these hard assets. The
company also acts as an advisory to its clients about
strategic investments in these rare commodities.
1.14.2 Jewelry

The top end of the Pink Luxury jewelry line features limited edition
items of high value with a signature pink gemstone embedded in the
setting and a laser inscription on the stone.

Rare & Precious Gems™ offers a jewelry line in both


colored gemstones and white diamonds. The name of this
line is Pink Luxury. The Company continues to develop
A Ring from the Pink Luxury Jewelry Collection. this line to feature attractive heirloom pieces that generate
Note the pink gem inserted in the finishing with a feeling of exclusivity.
the inscription of the logo, a hallmark of the line. 1.14.3 White Diamonds – Mine to Market

The White Diamonds section of the website offers a large inventory that
can be shipped anywhere in North America within 24 hours.

Further to the primary initiative of trade in colored


gems, Rare & Precious Gems™ offers white diamonds on
its website with a strong differentiating factor. The white
diamonds are of excellent quality and at the lowest price
anywhere. The margins are so competitive that no other
sellers are able to match our price.
White diamond engagement rings continue to be 1.15 Our Company
a best seller. Rare and Precious will offer them at
low prices to drive sales and generate loyal Mission Statement
customers.
It is the mission of Rare & Precious Gems™ to offer the
highest quality of investment grade natural colored
diamonds, precious gems and luxury goods and engender
a level of trust and satisfaction that ultimately results in
bringing beauty and long lasting investment value into the
lives of its customers.

Management Team
Rare & Precious Gems™ would like to introduce you to
its stellar management team with collectively more than
50 years in the diamond business and over 20 years at De

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Beers. The credibility, history and depth of industry


knowledge that Rare & Precious Gems™ brings to this
sector, will ensure the position of the Company as it leads
its stakeholders towards a greater accumulation of
important assets.

1.15.1 Bryan Kerrison


President, Rare & Precious Gems™
With over 20 years of experience handling
precious diamonds with De Beers, Mr. Bryan
Kerrison is a driving force on the Rare & Precious
Gems™ management team, which provides
leading edge expertise that is unrivalled by any
other company in the diamond investment
industry.
Bryan Kerrison's career in the diamond industry
began in London, England over 20 years ago
when joined the Diamond Trading Company
(DTC), the rough diamond sales and distribution
arm of the world renowned De Beers Group.
By 1991, Bryan had completed the De Beers
training program, learning in great detail the way
the company operates, as well as the technical
skill of valuing rough and polished diamonds.
His early success and talent working with
diamonds was soon recognized by De Beers's
management and within 5 years of joining the
firm, he began representing De Beers in Southern
Africa (South Africa, Namibia and Botswana).
Bryan held key positions there, performing mine
valuations, carrying out local staff training, and
assisting government diamond valuators.
After 18 months, Bryan returned to London and
then moved on to Antwerp, Belgium where he
learned the intricate technical skill of Rough to
Polished valuations on +10.8ct diamonds and
Natural Fancy Colored Diamonds, before once
again being posted back in Southern Africa for a
further 3 years.
Upon returning to London, Bryan was again
promoted, this time to a position in the De Beers
Sales and Purchasing team. Dealing directly with
Alrosa, Russia's largest diamond company, his
role was to represent De Beers in Moscow for one

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month every quarter, negotiating diamond


shipments valued up to $30 million.
Having moved his young family to Vancouver,
Canada, Bryan accepted the position as President
at Rare & Precious Gems™, where he sees the
massive opportunities the company presents. With
his credibility, history and

depth of industry knowledge, Mr. Kerrison is an


invaluable addition to the company.

"My training and experience allow me to see


beyond the sparkle, fire and passion of a diamond,
and deep into the stone, assessing its natural
beauty, value, and ultimately its true investment
potential." --Bryan Kerrison.

1.15.2 Kim Helman, VP Sales & Marketing


Kim Helman brings an impressive, nearly 14
years, history in the sales and marketing of rare
and valuable diamonds and jewelry to Rare &
Precious Gems™. As president of Carats
Investments Inc., a sister company, Ms. Helman
has administered a multi million dollar buying
power that includes colored diamond purchases
for a discerning list of global clients.
Kim Helman
Kim also led the development of an internet
presence for carats.com as it became positioned
in the competitive world of online jewelry and
gem stones. Her work in this area resulted in
positioning Carats Investments at the top of
wholesale Canadian diamond merchants.
Kim has the ability to work in all aspects of the
company, including sales, customer support,
diamond buying & valuation, and ring design.
Ms. Helman was the top salesperson on the
Carats Investments team and has extensive GIA
(Gemological Institute of America)
certification.
Helen Xiang
1.15.3 Helen Xiang, VP Asian Development
Helen Xiang is instrumental in developing
relations in the Asian markets. With her roots of
Chinese origin, a deep understanding of

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Chinese culture and a precise grasp of the


patterns of consumption of Asian communities,
Helen Xiang plays a pivotal role in reaching the
Asian market for the Company.
Prior to working at Rare & Precious Gems™,
Ms. Xiang worked in Singapore at Gem Impex
Asia Pte. Ltd., a diamond whole-sale company.
At Gem Impex, Helen's responsibilities were in
accounting and sales where she developed a
solid client base and achieved strong revenues
for the company.
Helen made a pivotal move to North America,
first entering the US and then coming to
Canada. In the US, she augmented her
accounting skills pertinent to tax and business
ethics.
After relocating to Vancouver, Canada, she
joined Rare & Precious Gems™ where her
responsibilities include developing an Asian
clientele, and networking in the community.
Vancouver has the largest Asian community in
Canada and they are demonstrating a growing
appreciation for investments in the precious
gem category. China is now the second largest
purchaser of diamonds in the world. Helen
Xiang's relationships with a growing Asian
clientele are a valuable asset to the Company.

1.16 Strategic Relationships1.16.1 Argyle Pink Diamonds


Rare & Precious Gems™ is the nation's only company to ever be granted
the distinction of being an Argyle Pink Diamond Authorized Partner and
one of only a handful of companies worldwide ever to have been selected.
This is a strong statement of credibility that is recognized by every mine,
wholesaler, retailer, etc. in the diamond industry.
Each year, only selected clients receive invitations to view the prestigious
Argyle Pink Tender in various global viewing locations. Included on the
Purchasers of gems and jewelry
list of invitees are top-end jewelers, dedicated Argyle clients or Rio Tinto
may wish to view their piece
Diamond's Select Diamantaires. Rare & Precious Gems™ is proud to have
before finalizing a sale. Our
been on the invitation list to this exclusive world event for over 20 years.
exclusive diamond services offer
viewing, cleaning, and polishing This year's diamond Tender will have our president, Bryan Kerrigson, at a
services. secret location somewhere in the world on Saturday, October 16th from
10am to 12pm EST to view and bid on this year's selection of the best of
the best from this fabled pink diamond mine. Anyone interested to learn
more and perhapsperhaps have the opportunity to bid are welcome to

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contact Rare & Precious Gems™ directly to receive information on the


gems available in this year's tender and can also contact us to consult on
appropriate bids.

The Crème de la Crème of the diamond world attends the exclusive


Argyle Pink Diamond annual auction once a year to purchase some of
the rarest gems in the world
1.16.2 Strategic Relationships with Sight Offices
Rare & Precious Gems™ enjoys long term strategic relationships with
significant and long term Sight Offices world wide that enhance the ability
of the Company to source high quality diamonds, rare colored diamonds
and other gemstones at prices that continue to defy comparison.
A Sight Office is a company on the Diamond Trading Company's (DTC)
list of authorized bulk purchasers of rough diamonds. DTC is controlled
by the De Beers Group, the single largest producer and purveyor of rough
diamonds in the world. The DTC Sight Office lists only 79 companies
listed worldwide for the period of 2008 to 2011.

1.17 Associations of the Company


Management is in charge of brokering diamonds worth millions of dollars to the public annually
and maintains the highest standards of certification. They are members of the following trade
associations:
 Jewelers Vigilance Canada
 Natural Color Diamond Association (NCDIA) - the only Canadian member of the

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Natural Colored Diamond Association (NCDIA).


 Jeweler's Board of Trade
 Better Business Bureau
1.18 Colored Diamond Market Overview
A price comparison of 50 Years historical wholesale diamond price trend date up to June 2010
shows US $ 26,950 for a 1.00 carat diamond of premium quality, ideal cut, D color, exceptional
white +, clarity: loupe clean, no fluorescence. This price has grown at approximately 15% per
year since 1949.

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1.19 Number of High Net Worth Investment Growing


 De Beers' April sight estimated at $470 million with a reported 5-7 percent
price increase.
 Indian polished diamond exports in April reach $1.94 billion, an increase of
109 percent on April 2009.
 US polished diamond imports during March reaches $1.55 billion, an
increase of 85 percent on March 2009.
 Namibia's rough diamond production rose 102 percent year on year in the
January through May 2010 period to 580,000 carats, the country's Ministry
of Mines and Energy reported.
 Jewelry, gems and watches became the second-largest passion investment
category for HNWIs, replacing art. Overall, HNWIs allocated 23 percent of
their passion investment funds to the jewelry, gem and watch category in
2009, up from 22 percent in 2008 and 18 percent in 2006
1.20 Colored Diamond Market Research1.20.1 The Pink Story
The rarity of colored diamonds cannot be overstated and soon, even the current
market availability will dry up. As a result, prices are rising fast.
Since formal records were first kept at the beginning of the 1970s, prices for the
highest grades of colored diamonds have increased in value by an average of
between 10%-15% per year, with rarer colors and higher grades enjoying the
greatest appreciation. In addition, this appreciation has statistically been non-
correlated to the stock and bond markets, an important consideration for investors
seeking a diversified portfolio.
Currently, price appreciation is increasing. The market for natural colored
diamonds is very strong at the moment and prices have risen by 25% within the last
year," says Andrew Coxon, vice president of De Beers in London. If that pace
continues, an investment in natural colored diamonds today could double in value
in the next 36 months.
With demand for colored diamonds continuing to grow and pink diamonds
becoming very scarce, experts predict pink diamond prices will significantly
Gem Quality
outperform the historical averages over the next five years. According to colored
Pink Diamonds
diamond expert Stephen Hofer, author of Collecting & Classifying Colored
in various cuts
Diamonds, the supply is down and will decrease further, demand is up significantly
and colors from and as a result, prices are going to continue to go up.
Very Light,
Last year a 5-carat vivid pink diamond was sold for $10.8 million in the Christie's
Fancy Light,
Hong Kong auction on December 1, 2009, becoming the world's most expensive
Fancy, Fancy
diamond and this occurred during the recent economic downturn!
Intense, and
Fancy Deep, to
Fancy Vivid.

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These records confirm that, even in an unsettled economic


environment, top quality jewels and gemstones will
maintain their value and realize great prices.
According to Josephine Archer, business manager, Argyle
Pink Diamonds, there is an increase in demand for pink
diamonds from investors across all geographical markets.
As global financial markets show volatility and
instability, affluent investors and collectors are taking a
closer look at rare, hard assets to diversify their portfolio
and protect their wealth. Argyle pink diamonds fulfill
these criteria and, as supply dwindle; international
collectors and investors continue to acquire these rare
pieces for their personal holdings.
And they are doing so at increasingly higher prices. Since
the first Argyle Pink Diamonds Tender was held in
Geneva in 1985, prices have increased exponentially. The
price growth is a reflection of the fundamental economics
of pink diamonds – increasing demand for a truly scarce
Fancy Vivid Pink Last year a 5-carat vivid pink product. Never before, and never since, has there been a
diamond was sold for $10.8 million in the diamond mine that consistently produced rare pink
Christie's Hong Kong auction on December 1, diamonds like the Argyle Diamond Mine.
2009, becoming the world's most expensive
This rarity, she says, plays the dominant role in driving
diamond and this occurred during the recent
the value of Argyle pink diamonds to new heights. The
economic downturn!
chances of any future mine discovery replicating the
unique properties of the Argyle mine, is extremely low.
Currently there are no other pink diamond mines or
deposits of this type in the world.
Currently, all of the pink diamonds from the mine that are
suitable for sale are offered up for auction, with none
Fancy Radiant Yellow Diamond
being held back in reserve for when Argyle yields up its
last pink treasure.
While there are no estimates for the price of diamonds
once mining ends at the Argyle mine, there are only
around 500 more Tender-quality diamonds available
between now and 2018, and, like in any market, once they
are gone, they are gone.
1.20.2 Yellow or Canary Diamonds
Natural fancy intense yellow is highly sought after by
collectors. Nature creates so few fancy colored diamonds
that they account for less than 1% of all diamonds offered
on the market at any given time. It has been estimated that
only 1 out of 1000 diamonds fit into the yellow grading

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classifications.
Natural fancy yellow diamonds - sometimes referred to as
canary diamonds - are completely natural and caused by
the presence of nitrogen. South Africa today is the main
producer of these gems. Green and orange are the
secondary hues found in natural fancy yellow diamonds.
Unlike with other fancy colored diamonds, pure dark
tones do not exist with yellow or canary diamonds.
Though canary diamonds are relatively dark, pure dark
tones with yellow diamonds become brownish.
Natural fancy canary yellow diamonds come in all cuts,
including princess, emerald, asscher, oval marquise, pear,
radiant, heart and cushion.

1.20.3 Blue Diamonds


Natural fancy blue diamonds are completely natural and
are usually classified as either gray-blue or green-blue.
The color in gray-blue, grayish blue, blackish blue or
black-blue colored diamonds is caused by the presence of
minor amounts of boron in their structure. Green-blue or
greenish blue (teal) colored diamonds usually contain
nitrogen impurities in aggregate form. New production of
Fancy Blue Marquise-cut diamond blues comes from South Africa or Australia.
The most famous of all natural colored blue diamonds is
the 45.52 carat 'Hope Diamond'. The Hope Diamond was
originally 112.25 carats when it was purchased in India
and sold to the French King Louis XIV. $569,000 is the
most paid per carat for a blue diamond (for a 4.37 carat
diamond sold in 1995 at Christie's for $2,486,000).
Vivid Orange Color
1.20.4 Orange Diamonds
In 1997, a 5.52 carat natural fancy vivid orange diamond
sold at Sotheby's for $1.32 million or $238,718 per carat.
Natural fancy Orange diamonds are completely natural
and caused by the presence of nitrogen and carbon lattice.
Moussaieff Red "…pure orange diamonds are … exceptionally rare
naturally, which is why they are desirable collector's
specimens." (Source: S.C. Hofer, 1988).
Because pure orange is a mixture of the primary colors
red and yellow, the natural fancy orange diamonds range
from orange red diamond to yellow orange diamonds.

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Red, orange, pink, purple and yellow are the secondary


hues found in natural fancy orange diamonds.
1.20.5 Red Diamonds
Red diamonds are the rarest of all the colors and are so
rare that most jewelers, never mind the buying public,
will never see one. Red diamonds, including the 5.11-
carat Moussaieff Red on display in London, are worth $1
million or more per carat and considered almost priceless.
If Rare & Precious Gems™ is able to procure one of these
exceedingly desirable stones, it will make it available to
private collectors globally.
1.20.6 Green Diamonds
Natural fancy Green diamonds are completely natural and
caused by exposure to atomic radiation. After natural
fancy red diamonds, natural loose green diamonds are the
second rarest.
"In the diamond industry, green diamonds are highly
valued and greatly admired, especially pure green colored
diamonds that show no trace of secondary color
modifiers," (source: S.C. Hofer. 1988).
The stakes are high in this arena. In 1988, a 3.02
yellowish/green sold for $1.7 million. It would be
considerably higher today, if you could get one.

1.20.7 The Champagne Campaign ™


The management at Rare & Precious
Gems™ believes that now is a good time to invest
into Champagne diamonds or diamonds in the brown,
orange to yellow specter. Several years ago, pink,
blue, green, red and yellow diamonds were
undervalued but, as they became rarer, their prices
soared to unimaginable heights. The colored
diamonds that remain affordable are called
Champagne diamonds. They will soon become rarer
with the accompanying rise in price. Investments into
Champagne diamonds today will become as good as
investments into pink diamonds were a few years
ago. With this in mind, Rare & Precious Gems™ has
begun its Champagne Campaign with a special focus
on Champagne colored diamonds. Please request
more information on this upward moving color sector
from the company.

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Of all the diamonds, Champagne diamonds are


currently the most collectible. Champagne diamonds,
also known as chocolate diamonds, belong to the
Brown Diamond collection, and are a great bargain
for the collector. Natural fancy Champagne colored
diamonds, sometimes referred to as a brown
diamonds, are completely natural and caused by the
absorption of light by structural defects in the
diamond lattice. Many of the fancy natural
Champagne diamonds come from the Argyle mine in
northwestern Australia. It is the Argyle Mine that
coined the terms "champagne diamond" and "cognac
diamond" to better understand the color of these
diamonds.
Imagine diamonds the color of champagne bubbles,
sparkling as they rise up in a crystal glass; or the
shade of warm cognac, catching the light at every
angle. Or even the sheen of honey and caramel,
butterscotch and chocolate, silkily diaphanous as they
glow.
The shades and hues of brown diamonds, usually
grouped under the category of champagne diamonds,
can be light and pinkish-bubbly as the elite,
effervescent wine; or dark, rich and spicy as
cinnamon, nutmeg and cloves; but whether espresso-
deep or café au lait-soft, their sparkle, fire and flash is
as captivatingly warm.

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Champagne diamonds are more available


than some of the other colors and they offer
a bargain for today's collectors.
1.21 Precious Gems - Emeralds, Rubies and
Sapphires and Tanzanite
Emeralds, Rubies, Sapphires and Tanzanite
are the only stones, other than diamonds,
that are considered precious stones or
precious gems.Rare & Precious
Gems™ will carry high quality stones in
each of the categories that will be rare in
their type, and of investment grade.
1.21.1 Emeralds
Most collectors seek strictly Colombian
emeralds. They spend decades buying the
finest green and cleanest stones available.
Occasionally, African and Brazilian
emeralds are discovered that look exactly
like Colombian emeralds. These gems make
sense to collect to an emerald connoisseur.
Collectors that are more modest can
purchase African emerald. As a general
rule, these gems are cleaner than Colombian
emeralds but have a touch of black and gray
colors. They trade at a 50% discount to
Colombian stones.
Emerald is the green member of the beryl
mineral family (which also includes
Aquamarines). Its fine intense green
coloring is due to a trace of chromium or
vanadium replacing the aluminum in the
beryl structure. Because of the nature of this
replacement, almost no Emeralds with
intense color are free from inclusions. These
inclusions are acceptable as long as they do
not take away from the durability or beauty
of the stone.
Since natural Emerald can contain liquid
and gas inclusions, this gemstone needs to
be kept away from any high heat --
Emeralds should not be cleaned in an
ultrasonic machine or steam cleaned.
Principal sources of quality emeralds are

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Colombia, Zambia, Brazil, and Afghanistan.


While emeralds are readily found in these
geographical locations around the globe,
none comes to close to the colors and
quality produced from the mines in
Colombia.
There are three major mines in Colombia.
One in Muzo, another in Cosquez and close
by to La Pita are several mines, which have
only been in production during the past
seven years. Collectively, the Muzo and
Cosquez mines have been in production for
over 500 years.
The cost of an emerald can be attributed to
many factors. No doubt, color, cut and
quality are at the top of the list. However,
price is also determined by those who set
the world market prices. A major partner in
the La Pita mines is known as Yesid Nieto.
This man may be the next "sight holder" for
all emerald production realized from the La
Pita mines. On any given day he can buy up
to 12,000+ carats of fine

emeralds (which accounts for about 6 to 8 weeks of


emerald production).
Prices for Colombian Emeralds are now increasing on a
daily basis (as opposed to weekly and monthly). A
mediocre emerald is now commanding upwards to
$1000.00 a carat! These are emeralds which are so light in
color that one would just have to pass on such a "buy".
These are not emeralds the experienced emerald buyer
wishes to see (and pick through) on a daily basis.
Occasionally, an all around gorgeous emerald is found
however, one has to spend hours picking through
hundreds of emeralds to find just one "single" treasure.
On April 20, 2010, a ruby ring sold at Sotheby's This would explain why fine Colombian emeralds are
for $2,098,500. The cushion-shaped ruby now commanding high prices and 2 carat plus gems may
weighed 8.66 carats. triple the price.
Rare & Precious Gems™ will carry only natural untreated
emeralds of exceptional color and beauty and feature
them on the website and in its stores.

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1.21.2 Rubies
Ruby is probably the most well-known colored stone and
the most traded gemstone by collectors. The Hindus call
ruby "The Lord of Gems". Chromium creates the
beautiful red in ruby.
There is presently a shortage of ruby worldwide. The
supply of these gems is severely restricted due to the
political instability of the source countries in Southeast
Asia. Most high quality rubies come from remote areas of
Burma and are controlled by tribes and the local
governments. Further, mining methods are so primitive
that pouring water on a hillside or sifting gravel in a
stream represent state-of-the-art extraction. The two main
sources of ruby are Burma and Thailand. The rarest rubies
are mined in Mogok, Burma. In 1992, a new mine was
discovered at Mong Hsu (pronounced Mine Shu). The
problem with Mong Hsu ruby is 99% of the material is
heated/fracture filled.

Most Burma rubies sold in jewelry stores are treated


Mong Hsu stones. Besides the Burma production, NGC
also trades in Thailand rubies. They tend to sell at
approximately 1/2 the price of Burma goods. Most
collectors specialize in unheated Mogok Burma ruby. Due
to their beauty and color, there is a premium for Burma
rubies over Thai rubies or stones from other areas.
The premiums that sellers are paying for natural (un-
enhanced) rubies and sapphires have greatly increased.

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For several years an increase has been reported in the


premium paid for untreated natural corundum in the Fine
and Extra Fine grades. In top quality Burma rubies of 3
carats or larger that are natural, un-enhanced gem
material, demand is very strong. Rare & Precious
Gems™ will carry only the best natural stones for its
clients and investment collectors.

1.21.3 Sapphires
Both ruby and sapphire belong to the same gemological
family, corundum. However, titanium creates the blue in
sapphire. It is the hardest gemstone type known except
diamond. All corundum is a common natural mineral,
aluminum oxide. What is rare are the small trace elements of
titanium, iron, chromium and vanadium which create the
various colors in fancy sapphires.
The leading sources of blue sapphire are Australia,
Madagascar, Thailand, Sri Lanka (Ceylon), Burma and the
Kashmir mines in India. Kashmir sapphires are considered the
ultimate sapphire. They are rich, velvety, and serenely soft.
Originally discovered in 1882, the stones were so plentiful the
locals would use them as flint stones. By 1925, the mines
were nearly depleted.
Although most people tend to think of sapphire as being blue,
On April 20, 2010, a ruby ring sold at it actually comes in a kaleidoscope of colors. Besides blue,
Sotheby's for $2,098,500. The cushion- their hues can be orange-pink (padparadscha), pink, orange,
shaped ruby weighed 8.66 carats. yellow, golden, purple, green, white and color change. Of
course, corundum that is red is ruby, when it is discovered
any other color it is sapphire.
Geologists say that we are the first and last generation of
humanity to have the opportunity to be first-time owners of a
piece of tanzanite.

Sapphire Bracelet in a rainbow of colors


The rarest and most valuable collector fancy sapphire is the
padparadscha, which is Sinhalese for "lotus flower". A true
padparadscha must display a combination of both orange and
pink colors. These colors should blend so that it is difficult to

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see where the pink stops and the orange begins. Dealers
disagree on the exact ideal color of a padparadscha. Tone and
origin are crucial factors in determining what truly constitutes
this gem.
Sri Lankan padparadscha sapphires sell at a premium, nearing
the price of a Kashmir sapphire. Padparadschas are hot
collector items and are bought up as quickly as they are
found.
Gem quality fancy colored sapphires are rare, especially
unheated Burmas and Sri Lankan padparadschas. Fancy
colored sapphires offer uniqueness, beauty and durability that
collectors can use in a well diversified collection.

1.21.4 Tanzanite
Three Sight Offices control the world's supply
of Tanzanite. The rest is kept in rough storage
for the future. Prices of Tanzanite have soared
out of control during the past few years.
Tanzanite an only be found in a Tanzanian
village called Merelani. Known reserves are
finite and supplies will eventually run out.
Seventy percent of all tanzanite has been
mined, most in the past 18 years.
In the shadow of Kilimanjaro, the highest
mountain in Africa, in a thin strip of land only
five kilometers long, is the only known source
on Earth of this deeply blue, sparkling violet
and flashing red tri-color gem phenomena. The
cradle of humanity, the East African country of
Tanzania, is also the cradle of creation for this
highly-coveted gemstone, a gem 1,000 times
Geologists say that we are the first and last generation of humanity
rarer than diamonds. In the shimmering blue
to have the opportunity to be first-time owners of a piece of
depths of tanzanite lie millions of years of
tanzanite.
human and geological history. Approximately
500 million years ago, the deep indigo crystal
was formed over millions of years by volcanic
and geological processes such as the pulling
apart and grinding together of the continents,
with intense heat and the presence of certain
minerals and elements coming together in a
unique geological circumstance that created
tanzanite.
In a rift valley 25 miles from the base of

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Kilimanjaro, the gemstones are mined on


traditional Masai tribal lands. Masai herdsmen
first noticed the glittering blue stone but kept it
to themselves until one Masai showed the
stone to Indian immigrant and part-time
prospector Manuel D'Souza. D'Souza realized
there was something special about the stone,
so, in 1967, he took a sample to Germany
where he met with Henry Platz, grandson of
Louis Tiffany, founder of Tiffany & Co. of
New York. The highly-influential jewelry
manufacturer made an exclusive deal for the
stone Platz called "the most beautiful
discovery in 2,000 years."
Top-grade gem-quality stones, with their rich,
scintillating blue, halo of violet glow and
flashes of red, sell for $1,500 to $2,000 per
carat; often much more. Top-grade stone
represents only 0.13 per cent of
TanzaniteOne's annual production.
Geologists estimate that the mines will be
depleted in 15 years. Due to its geological
uniqueness, geologists are certain that no more
deposits will be found. No top-grade stone has
been produced by any of the mines in the past
two years. The few vendors selling tanzanite
this February at the Tucson International Gem
Show, one of the industry's top shows, had
stones that were lightly-colored and highly-
included. The deep blue-violet color with
flashes of red seen only in top-grade stones is
currently available only on the secondary
market as it has already been mined out.1.22
Sourcing Strategy
Rare & Precious Gems™ has an advantage in
the market with its long status with De Beers,
the Argyle mine and Sight Offices in
Amsterdam as well as a database of significant
sources of diamonds gained from over 20 years
in the

business. The company offers consistent quality and standards of service that
reinforce a global vision of excellence.
1.22.1 Mandarin Website

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Rare & Precious Gems™ has made inroads into the Chinese market and
opened an Asia Sales division headed up by Helen Xiang, VP Asia Sales.
The Company has already made a website in the Mandarin language and has
done search engine optimization marketing in this language to capture the
Asian audience. As the numbers of investments into high quality diamonds
by the Asian market continues to grow, Rare & Precious Gems™ plans to be
there and take a leadership position.
The Company has added a Chinese character which means "happiness" and
"good fortune." The new logo is:

1.23 The Opportunity


The highest end of the jewelry market is the investment grade colored
diamond and precious gemstone sector. The interest is growing at a time
when supply is diminishing and there is a rapid increase of value for holders
of these hard assets. Markets are opening up in Asia and growth is being felt
at all levels of the industry. Investors and buyers of Rare & Precious
Gems™ have an opportunity to achieve a high rate of return in the exclusive
and rarified precious gem and jewelry market through strategic investments
in hard assets in this sector.

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Champagne Diamond Necklace

To learn more about the lucrative, hard asset investments, please


consult our experts by e-mail or phone.

telephone 1-877-689-7273

e-mail experts@rareandpreciousgems.com

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