Turning Diamonds into Gold
Introducing investors to the world’s first regulator approved diamond commodity.
During past recessions, gem-quality diamonds have outperformed stocks and bonds, yet most investors—even trillion-dollar asset managers—don’t leverage this hard asset. The estimated value of the above ground diamond supply is $1.2 trillion, but 99% of that is used solely for jewelry. Just the remaining 1% is held by investors, mostly trading through art auction houses. Compare that to investor holdings of precious metals: approximately 30% of the world’s gold, 19% of silver, 17% of platinum and 15% of both palladium and rhodium. If 15% of pent-up demand is unlocked by a market-traded diamond commodity, investor allocations could amount to $180 billion at current values.
Precious metals are proven investments in periods of recession, uncertainty and economic crisis. In 2020, gold actually outperformed the S&P 500 stock index, reaching an all-time high price of $2,067 per ounce. The ability to use diamonds as a liquid investment offers investors an opportunity to diversify portfolios and protect against inflation, and possibly generate a substantial return.
Diamonds and the One Percent
Diamonds are uniquely positioned to rise in value in the coming years. Prices are near an all-time low and the global supply is diminishing. DeBeers estimates a 1%–2% supply decline annually until 2030, with some analysts projecting a drop of up to 5%. Unprecedented investment demand will significantly impact diamond prices in the coming years.
Investor Holdings of Hard Natural Resources
Investors Need What Diamonds Have Lacked:
Investors have been unable to leverage diamonds as an asset because the variations in diamond weight, color and clarity grades result in vast disparities in private valuations, which are highly subjective and secretive. Diamonds could not be “marked to market” reliably or traded efficiently.
To establish diamonds as a regulator approved asset, key concerns around consistency, valuation and transparency had to be resolved. The blueprint to establishing the Diamond Standard: fungibility.
The Diamond Standard Coin—containing diamonds from around the world sourced via an electronic exchange with a market maker to force price discovery—finally makes diamonds fungible because every coin has the same value. The diamonds are not valued by price estimates but by bids and transactions. Like gold, the standardized coins are priced by the market every day.
Using automated market making to transparently bid on 16 million varieties, diamonds are purchased globally through the Diamond Standard Exchange. The Gemological Institute of America (GIA)—with 3,000 gemologists in nine labs worldwide—grades each diamond. The diamonds are reinspected and assembled into the Diamond Standard Coin inside five IGI gemo-logical labs worldwide.
Each Diamond Standard Coin contains 10–12 diamonds selected by an optimization system from a public, statistically valid sample of all diamonds. Each coin has equal value by containing the same aggregate geological content. The contents of every market maker sample and every coin are always public for anyone to verify.
Every Diamond Standard Coin has the same value and can be traded on an exchange like other commodities, with low transaction friction. Investor holdings can be priced to market daily and the commodity enables securities like futures, options and ETFs to be developed.
The Diamond Standard
The Diamond Standard process revolutionizes the diamond supply chain by consolidating liquidity, enforcing price discovery, establishing transparency and fairness standards and reducing friction.
Each coin contains a military-grade wireless computer chip that enables instant authentication, audit and trading. The chip stores a regulator licensed blockchain token. Ownership, transactions and liens are all recorded on a public blockchain.
Investors can take delivery of the physical coin or choose to store it with a custodian in a smart cabinet that enables remote auditing. The owner controls the key to the coin’s token.
In hand, the coin can be transacted and authenticated seamlessly using a smartphone.
The World’s First Regulator Approved Diamond Commodity
Diamond Standard has filed to launch an exchange-traded fund to be listed on the NYSE under the ticker DIAM, subject to SEC approval.
Diamond Standard offerings are regulated by the Bermuda Monetary Authority and internally audited by Deloitte.
Commodity futures are in development to list and trade on MGEX via CME Globex and the MIAX Options Exchange, both subject to CFTC approval.
CME | MGEX | MIAX
With $1.2 trillion in above-ground value—more than all the world’s silver and platinum combined—in the eyes of investors, diamonds are beautiful for a different reason. They are a dense, easy to store, portable hard asset. And diamonds are a highly constrained natural resource—no substantial new mine has been discovered in 20 years.
Historically, diamond prices have been uncorrelated to stocks, bonds and other commodities, and have outperformed these assets in times of uncertainty.
Diamonds are an incredible asset, being made accessible to investors for the first time. As the Diamond Standard commodity becomes available through new vehicles, a secular phase of position-building may generate substantial returns for early buyers.
The timing is perfect. Gold (and equities) are at an all-time high, while diamonds are near an all-time low. Diamonds are finally an attractive asset.
An Investor’s Best Friend
Hear From Our Founder & CEO
Software pioneer and Diamond Standard founder Cormac Kinney
Diamond Price History
Predicted Demand Inflection Points
Diamonds added to
Brokers approve for clients
Institutions increase allocations
By solving the fungibility challenge, Diamond Standard brings to diamonds the same securities as are available for precious metals. A regulator approved diamond commodity will inspire a period of position-building by investors, which we estimate will reach 15% of the diamond supply, totaling $180 billion and raising prices three to eight times.
The world’s first regulator approved diamond commodity
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Brokers approve for clients