A Singapore-based company is attempting to make diamonds the new safe-haven asset of choice. The exchange began trading a standardized diamond product on Tuesday with the intention of pushing gold out of its top position as a shelter from global risks.
The Diamond Bullion, which comes in a package the size of a credit card, also aims to remove the subjectivity of a diamond's value; an obstacle that has kept precious stones from becoming a viable trading option.
The product was launched by the Singapore Diamond Investment Exchange (SDiX) and is designed to display and store polished gems sourced at wholesale prices on the exchange. The bullion is issued in the standard denominations of $100,00 and $200,000. The $100,000 denomination will have a silver case, while the $200,000 denomination will have a gold case.
All of the diamonds are in the top five levels of clarity and color.
Each card has a chip to determine immediate valuation based on the current exchange rate. The chip also serves as an instant authentication of the diamonds.
A special marking further verifies the authenticity of the diamonds. The mark was developed by the International Institute of Diamond Grading and Research.
Prior to the Diamond Bullion, investors had no real way to invest in diamonds. They instead turned to physical gold, futures or used a 401k to gold IRA rollover to invest in this traditional safe-haven asset.
But Alain Vandenborre, founder and executive chairman of the exchange, says diamonds are a safer choice because they are not linked to other assets, unlike gold.
"A diamond has absolutely zero correlation with any other asset class, whether it's commodities, bonds, equities," he said. "It's a store of wealth, it's a hedge against volatility and you need that in your portfolio."
The exchange's Diamond Bullion offers a few advantages to investors. For starters, it is easy to make an investment, but traders can also get real-time pricing through the exchange's website and the mobile app.
"The Diamond Bullion is designed to be the 'Gold Bullion for diamonds': a standard, portable and highly liquid format that allows investors to access the unlocked and true value of diamonds for the first time," said Francis Yeoh, chairman of the Singapore Diamond Mint Co. "Investment diamonds are the most concentrated form of wealth on earth, and is an investment that can be passed on to future generations for years to come."
Units are now available to accredited and expert investors through SDiX brokers and SDM partners. The company plans to be aggressive in securing distribution partnerships with private banks and wealth managers in the near future.
The Silver Diamond Bullion was launched earlier in the month, closing on Friday at $106,450 on the SDiX.
News of the Diamond Bullion comes at a time when more investors are seriously considering gold as an investment vehicle. Geopolitical tensions have driven demand for safe-haven assets, and gold has benefited from the lack of risk appetite.
Gold prices rose once again earlier in the week, amid fresh tensions between the U.S. and North Korea.
Disclosure: The author does not have any financial interest in the listed equities.
