The diamond trade wants investors to take it seriously. And not just by shoppers who are out to buy the most exquisitely designed jewellery pieces to adorn the loveliest of necks, wrists or hands.
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The solution? Learn from the gold trade, and even those who are making digital currencies hot property. Sell diamonds in the coin form.
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This is exactly what Diamond Standard has done – bring out coins carrying a value of a fixed $5,000. The intention is to get the big funds and investors to pick up these coins as a tradeable asset. Much like they do with gold, other metals and, of course, crypto-coins.
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That’s right – these diamond coins can be bought and sold through online channels and don’t need to be sent physically from one point to the other. All details are entered into blockchain accounting, which is any trait that it shares with Bitcoin.
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Real value – because they are marked against real assets, says Shaunak Shastree, General Manager IGI (International Gemological Institute), the entity that is the certifying agency for the coins. “That’s unlike all the cryptocurrencies out there that have no real asset back up.”
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Only up to $25 million worth of these diamond studded coins will be issued. Keeping in mind that there aren’t too many ‘natural’ diamond mines being discovered and older ones seeing marked declines in output, these coins could build up a store of value.
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How are these coins made? Under the partnership with Diamond Standard, IGI will be responsible to receive, inspect and validate the authenticity of over 50,000 natural diamonds acquired through the Diamond Standard Exchange. Post which, IGI will assemble the diamonds, sealing them into a transparent coin with a sophisticated wireless computer chip.
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Specialized equipment will be used to analyze and enroll the Diamond Standard Coin onto a blockchain, creating a regulator-licensed digital token that is used to authenticate, audit and transact the coins.
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Of late, diamond values are picking up, though much gradual than anything seen with gold or silver. A key diamond value tracking index, the RapNet, is up 3.5 per cent in the last three months. Against that, gold has been zooming around in double-digit rates over the past. Above, a woman displays the Sakura Diamond, a 15.81 Carat fancy vivid purple pink Internally flawless type lla diamond ring, during a Christies pre-auction preview in Hong Kong on May 20, 2021
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But diamond can live with less volatility. So, for investors out there chasing solid returns – and not the dizzying highs and lows of Bitcoin and others – this coin may be just what they wanted. Above, An employee holds a rough diamond at the Diamonds of ALROSA factory in Moscow.
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A bit of stability when assets and markets move in volatile ways every which way. Following the initial sale, the market price of the diamond coin will be established by independent trading on various digital exchanges. Like gold, there will be a daily fix, used to settle the futures and options, report the net-asset-value for any securities, and mark-to-market institutional funds. Above, A staff holds a D colour, internally flawless rectangular step-cut diamond of 100.94 carats during a preview at Christie's before its auction sale in Geneva, Switzerland, May 7, 2021.
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Do we have a gamechanger in the making? “The concept of diamond being used as a trading commodity is relatively new, and hence our partner like IGI will add value in instilling confidence amongst the investors,” said Cormac Kinney, founder and CEO of Diamond Standard, which is launching the coins. “Diamond trading will be a gamechanger in the coming days in the world of trade.”
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So, the next time when deciding on the asset mix, keep an eye out for diamonds. It could well be the store of value… forever
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