Making Diamonds A Credible Alternative Investment

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Making Diamonds A Credible Alternative Investment
ColiN00B / Pixabay

Consider the diamond. Not as an object of natural beauty but as an asset class. Diamonds represent a natural commodity worth about $1.5 trillion whose value is universally recognized, yet they have never been useful as an institutional investment. The reason for this is also one of the things that makes diamonds a symbol of love and commitment—each diamond is unique.

It’s this fundamental lack of similarity and fungibility that has bedeviled institutional investors and ETFs. Add to that the diamond industry’s inefficient supply chain, high transaction costs, and general opacity. The majority of diamonds sold at retail change hands five to eight times en route, with the price going up with each trade. The much smaller investment diamond market operates through auction houses with 12-18% commissions, which wh