Which resource is mainly produced by seven countries but is too expensive for most of its citizens to purchase? Diamonds. Diamonds have a long history. They were found on jewelry and accessories dating to centuries before our birth. Diamonds were an important part of the trade in the early centuries. They’ve always been a symbol of success and wealth. Recently, there’s been a lot of controversy surrounding diamond mines in poor countries. Today, Diamond Standard is trying to make diamonds a commodity. Its founder, Cormac Kenney, wants to make it easier for investors to trade diamonds ethically. And with a twist. Let’s look deeper into this company and the Diamond Standard Coin.
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What Is Diamond Standard?
Diamond Standard is a very recent company. It was founded in 2018 in New York City by Cormac Kenney. However, due to its new business model, it’s slowly beginning to make headlines.
Diamond Standard’s business plan revolves around making diamonds a regulated commodity. The company wants to create the equivalent of a standard gold bar.
But with diamonds and incorporating blockchain technology. Where does a Diamond Standard coin come into play?
Diamond Standard Coin
You might ask yourself, what do diamonds and blockchain have in common? Are we talking about another non-sense cryptocurrency?
Not exactly. The Diamond Standard coin sells a physical, high-tech coin with a QR code around the diamonds. So for once, it’s a real coin, not something found in a cloud.
The token is built-in and is used to authenticate the purchase. Many investors don’t want the diamond at home. The company offers to keep it in its vault until the investor requests it. It can be traded or sold at any time.
Every coin has diamonds with different factors such as carat, color, weight, and clarity. However, each coin sold has the same factors. They are all GIA (Gemological Institute of America) graded and certified. It almost sounds like you’re shopping for an engagement ring.
At the time of its release in Q1 of 2021, one coin was worth $5,000. Today, it is worth $6,540. Since we’re still pre-IPO, there are various offerings, and the price increases every time.
Hedging and Diversification
Kinney expects diamonds to perform similar to or better than gold and have similar functions such as hedging against inflation. Furthermore, he compares it to Bitcoin; but more environmentally friendly and much more predictable and tangible.
Lastly, it can be an additional source of diversification for portfolios. These all seem nice, but at the end of the day, how much of it is true and attainable?
Unfortunately, it’s still way too early to answer any of these questions. We have to wait for the SEC to fully approve diamonds as a commodity and for Kinney’s other investment ideas to hit the open market. If the value keeps appreciating and more investors get in early, we might see more regulations for the diamond industry.
Will it ever compete with gold? It’s doubtful since gold is held by many countries and has much more power than diamonds. Can it compete with Bitcoin?
Once again, it’s hard to see it happen with all the hype behind owning intangible assets. On the other hand, diamonds can definitely become a commodity and can be incorporated into portfolios. However, the Diamond Standard coin could be great for diversification.
There isn’t much information about the provenance of the diamonds. However, they’re staying away from lab-grown diamonds. Diamond Standard claims to follow ESG (Environmental, Social, Governance) procedures.
They’re trying to have a positive impact on their business. According to their brochure, they’re doing this in many ways. For example, instead of using only mined diamonds, they buy and recycle diamonds others no longer require.
Next, they have projects amounting to $150B to provide social dividends to families with new diamonds. Finally, they are creating over 1,000 jobs for producing and distributing diamonds as a commodity.
Over the last 20 years, no significant diamond mines have been discovered. However, small mines are still discovered periodically. It is estimated that 85% of diamonds have already been mined.
Diamond Standard relies on consumers to sell their diamonds at a competitive price and diamond mines for their business. Therefore, the company works with vendors and partners that meet and exceed ESG regulations.
The GIA and IGI (International Gemological Institute) highly regulate and certify diamonds. This all seems positive, but are diamonds a good commodity to own?
Diamond Standard Investment Opportunities
How can investors purchase Diamond Standard’s products, and what are future investment opportunities? Currently, their products aren’t SEC-approved. However, they’re working towards becoming public and market-priced security.
Currently, the Diamond Standard Coin can be purchased directly on their website. Diamond Standard is also working to bring four investment products to US exchanges. They’re all submitted and pending approval of the SEC and CFTC (Commodity Futures Trading Commission).
- Diamonds Standard Futures, on the CME Globex Exchange
- Options Diamond Standard, on the MIAX Options Exchange
- Diamond Standard Fund, Q2 2022 target date, co-sponsored by Horizon Kinetics
- Diamond Standard ETF, on NYSE ARCA
In the next year, Diamond Standard will have many interesting products potentially hitting the market. Their partnership with Horizon Kinetics, which have over $7B in Assets Under Management (AUM), can be an interesting fund to add to our watchlist.
This is still a very new company but an age-long industry. Once the products are launched and available to investors, it will be interesting to see how the market reacts.
It’s still too early to determine, but they seem to be gaining momentum, and people are beginning to discuss them. So put them on your radar for future investments. Or visit their page for more news.
Other Diamond Investments
We conclude this article with more traditional investments in the diamond industry. As we established earlier, diamonds are mainly found in 7 countries.
The top producers are Russia, Canada, Botswana, Angola, South Africa, Congo, and Namibia. In addition, Russia and Canada have their own companies to exploit this resource.
However, Africa is full of international companies that can profit massively from these operations, potentially making the Diamond Standard coin. Let’s take a look at a few companies in the industry.
Rio Tinto (NYSE: RIO)
Rio Tinto is one of the world’s largest natural resources exploitation companies. Its operations include iron, aluminum, copper, and many other resources.
As for diamonds, they have a few active operations. However, they had one of Australia’s most successful operations, ending in November 2020 after 37 years.
The Diavik mine in Northern Canada belongs to them and is home to some of the most sought-after diamonds in the world. The company faces a cyclical demand for its products, meaning it varies according to the state of the economy.
Since the beginning of the year, the stock has enjoyed a nice run due to a shortage of many natural resources. As a result, they aren’t pure diamond stocks, but they offer a lot of diversification for shareholders.
Anglo American plc (OTCMKTS: NGLOY)
Anglo-American is very similar to Rio Tinto. It is also a top mining stock with global operations. They own 85% of De Beers Group, the world leader in the diamond industry.
De Beers and their partners control one-third of the world’s diamonds by monetary value. Their operations include Botswana, Canada, Namibia, and South Africa.
Three of the top 7 are included in their operations. A stake in Anglo-American is also a good way to diversify any portfolio seeking natural resources.
Signet Jewelers Ltd (NYSE: SIG)
Signet Jewelers is the world’s largest retailer of diamonds. The company operates over 2,800 stores under various names in Canada, the US, the UK, Ireland, and the Channel Islands.
For anyone looking for a pure diamond play, Signet is the answer. Between 2015 and the pandemic’s beginning, their stock dropped from $140 to $8 since it bounced back and seemed to be gaining momentum.
Weddings and expensive gifts seem to be popular again despite most people having a hard time with money. So maybe we’ll see a Diamond Standard coin given as a gift.
As for ETFs, there aren’t any in the diamond industry. However, Diamond Standard might be the first in this market if they succeed.
Now You Know What Diamond Standard Coin is
To conclude, the Diamond Standard Coin is simply a physical blockchain token made of diamonds. Its creator, Cormac Kinney, wants to change how investors see diamonds.
His objective is to make diamonds a commodity like gold or Bitcoin. Then, if the SEC approves, various investment products will be released soon.
Once they hit the market, we can see the true potential of diamonds. In the meantime, the only way to invest with them is via their website, which also explains all their projects.
This can be a great diversification opportunity with an available resource. A few stocks also deal with natural resources and, more specifically, diamonds available to everyone. So keep an eye on this sector. It can grow quickly if Kinney’s plans get approved.