Diamond Standard Market Outlook
Comment of the Day

April 14 2022

Commentary by Eoin Treacy

Diamond Standard Market Outlook

I had the pleasure of speaking with the CEO of Diamond Standard, Cormac Kinney, last week and they kindly forwarded over their most recent market update. Here is a section: 

The announcement of diamonds as a regulator-approved investment product has resonated across the industry. The anticipated 1% to 2% growth in rough diamond production over the next five years will not keep up with accelerated demand, especially now that a much broader pool of investors are indirectly competing with the consumer jewelry market for diamonds.

Precious metals saw similar evolutions as their use expanded beyond the functional and decorative and into storing value. Investors now hold at least 15% of each above-ground precious metal. Early evidence of the impact of diamond investment assets indicates a shift toward the hands of investors similar to that of precious metals. Presently fewer than 1% of above-ground diamonds are allocated to investors.

Eoin Treacy's view

There is more institutional investment in bitcoin than diamonds. The primary obstacle to investing in diamonds has always been fungibility. No two stones are the same and the relative merits of colour, shape, size, cut, clarity and fluorescence mean pricing has always been inefficient and subject to interpretation. The inefficiency of the market has kept the market for stones opaque and deterred institutions from attempting to take positions.

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