The diamond industry, for all its sparkle and shine, has historically been cloaked in mystery and intrigue. For investors, the lack of standardization and transparency made diamonds a challenging asset class to penetrate.
Enter Diamond Standard (diamondstandard.co), which has disrupted the industry by introducing the world’s only regulator-approved diamond commodities.
But what does this mean for potential investors?
Table Of Contents
Understanding The Diamond Market
For context, diamonds as a natural resource currently hold a staggering value of $1.2 trillion. This is more than the combined worth of the world’s silver and platinum.
Despite this, diamonds were largely inaccessible as an investment due to a lack of transparency, standardization, and liquidity.
Historically, the value of diamonds was somewhat shrouded, determined mostly by private transactions and full retail prices that were then discounted for wholesale trade. Such practices resulted in diamond price discounts ranging from 15-45%.
Without a clear market value or price discovery mechanism, diamonds couldn’t be accurately marked to market, making investment decisions ambiguous at best.
How Diamond Standard Changes The Game
Diamond Standard’s unique approach bridges this gap. They’ve changed the way diamonds are viewed, purchased, and traded. Here’s how:
- Standardization: Diamonds have long been characterized by their 4Cs – carat, color, clarity, and cut. Diamond Standard adheres to a strict index, ensuring that every Diamond Standard Coin and Bar matches a specific set of diamond characteristics.
- Transparency: For the first time, the diamond industry has an objective, transparent price point. The price for Diamond Standard Coins, for example, is established using historical wholesale diamond prices.
- Liquidity: Diamond Standard’s Spot Market provides a platform for instant liquidity of Diamond Standard Coins and Bars, enabling live peer-to-peer transactions.
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Diamond Standard Offerings Summary
- Diamond Standard Commodity Token
- Minimum investment of $100.
- Instantly redeemable for physical diamond commodities.
- No conversion costs between Carats and commodities.
- Diamond Standard Coins
- Priced at $4,600.
- Contains diamonds ranging from 0.18 to 0.75 carats.
- Can be traded on the Spot Market.
- Diamonds are independently graded.
- Diamond Standard Bars
- Priced at $46,000.
- Houses diamonds between 0.76 to 2.05 carats.
- Offers the lowest commodity custody fees.
- Diamond Standard Fund
- Exclusive for Accredited Investors.
- Shares are offered in a private placement.
- Co-sponsored arrangements provide added trust.
Why Diamonds As An Investment?
Diamonds, aside from their aesthetic allure, possess unique characteristics that position them favorably as an investment:
- Value Density: One of the striking advantages of diamonds is their value density. A small, portable diamond can house substantial monetary worth, often more than metals like gold or silver for the same weight.
- Rarity Factor: Certain diamonds, especially those with rare colors, can fetch higher values. Their scarcity boosts their investment appeal.
- Tangible Luxury: Unlike digital assets or stocks, diamonds are tangible. You can touch, see, and even wear them, enjoying their luxury while they appreciate.
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Challenges Diamond Standard Overcomes
While the diamond market has its attractions, several historical challenges have dissuaded investors. Diamond Standard addresses these:
- Lack of Organized Exchanges: In the past, there wasn’t a unified platform for buying or selling diamonds, leaving investors to navigate a scattered landscape.
- Pricing Control: Former diamond industry dynamics were influenced by a handful of major players, often leading to non-transparent pricing and supply chain tactics.
- Standardization Difficulties: Every diamond is unique, which, while adding to its charm, made it challenging to determine a consistent value.
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Diamond Standard’s Technological Edge
Diamond Standard doesn’t just leverage traditional investment strategies; it taps into modern tech:
- Blockchain Integration: The use of blockchain ensures transparent, immutable records of every transaction, adding another layer of trust.
- Statistical Indexing via Computer Science: Advanced algorithms and computational techniques ensure the diamond characteristics within each Coin or Bar adhere to the company’s strict standards.
- Digital and Physical: By allowing diamonds to be transacted as blockchain tokens, Diamond Standard combines the tangible appeal of diamonds with the efficiency of digital transactions.
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The Path Ahead for Diamond Investments
The journey of diamond commoditization is just beginning:
- Growing Acceptance: As more investors and institutions recognize the potential of diamonds as an asset class, its market share is bound to expand.
- Innovations on the Horizon: With tech integration, expect innovations like smart contracts, automated trading, and even AI-driven analysis to play a role in diamond trading.
- Diamonds in Portfolio Strategy: Financial advisors and investment strategists might soon be discussing the role of diamonds alongside traditional assets for diversified portfolios.
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Pros & Cons
Pros
- Diversification: Diamonds offer a unique asset class, providing potential protection against inflation and diversifying investor portfolios.
- Transparency: Diamond Standard brings clarity to the diamond supply chain.
- Liquidity: With the Spot Market, diamonds can be bought or sold instantly, resolving traditional liquidity issues.
Cons
- Variability: While Diamond Standard has standardized investment diamonds, the broader market still sees a lot of variation in value.
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Bottom Line
Diamond Standard’s innovative approach is transforming the diamond industry, turning what was once an opaque and challenging market into a more accessible and transparent one.
For potential investors, this offers a golden opportunity (or should we say a ‘diamond’ opportunity?) to tap into a trillion-dollar resource.
The pros are evident – diversification, transparency, and liquidity. However, like any investment, it’s crucial to understand the nuances and potential risks.
If diamonds are truly forever, maybe it’s time to consider if they belong in your investment portfolio.
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