February 15, 21by John Jeffay
IDEX Online) - A fintech startup will tomorrow launch standardized diamond "coins" for investors in a move which could "reinvent the supply chain".
Diamond Standard, based in Bermuda, will offer the first 5,000 diamond standard coins, each containing "a set of certified natural diamonds with identical geological scarcity" weighing 4.5 carats and to the exact value of $5,000. Each coin (pictured) also stores a wireless blockchain token that allows it to be traded on leading digital exchanges.
The initial public offering takes place tomorrow (16 February). The coins will be traded digitally as a token on the INX cryptocurrency trading platform.
By standardizing diamond values Diamond Standard, created by fintech entrepreneur Cormac Kinney, aims to effectively turn them into a mainstream investable asset. Diamond Standard says: "As the first diamond market maker, we buy statistical samples of all qualities of diamonds, via transparent bids on a regulated exchange.
"The exchange consolidates liquidity, establishes transparency, reduces friction, and provides reliable and efficient settlement. In short, we are reinventing the diamond supply chain."
This is a real head scratcher for me. Cyber currency is money that only exists in the ether and all the block chain, digital encryption etc. is enticing to those who have loads of disposable income and like to play investment games. They understand that what goes up also may come crashing down.
Diamond investment schemes are not new. Putting diamonds in a plastic containers and selling to gullible investors is something that seems to appear every decade when there is an abundance of diamonds. Have you ever tried to sell a diamond?
In 1982 the Atlantic did a great article on diamonds and the false sense of value and rarity that DeBeers foisted on the gullible population so their cartel could maintain highly inflated prices. "Have You Ever Tried to Sell a Diamond? - The Atlantic " Just recently as reported in a Jewelers Circle Keystone article by Rob Bates, September 17,2020 "Federal prosecutors charged Jose Angel Aman with wire fraud for operating a diamond investment fund that they call a Ponzi scheme. Aman and his partners in Natural Diamonds Investment Co. and Eagle Financial Diamond Group, both based in Palm Beach, Fla., collected more than $30 million from hundreds of investors by telling them they would purchase rough colored diamonds, which would then be cut and sold at a profit.
“The solicitations were primarily through a radio show hosted by one of the partners, telephone calls, and word of mouth,” according to the charging document. The funds were billed as “no risk, high return,” as all investments were secured by $25 million in diamond inventory, it said. However, not only did Aman not have that much inventory, but he never cut or sold any diamonds, according to prosecutors.
“To conceal the fraud from investors and create the appearance of legitimacy, the defendant made purported interest payments to the investors by using new investors’ money to pay earlier investors,” said a U.S. Department of Justice press release.
Aman then set up a new business, Argyle Coin, which was supposedly in the business of developing a cryptocurrency token backed by diamonds, the government said."
If you were are around during the 1970's and early 1980's, these schemes were everywhere. Did we learn any lessons from the last couple of diamond investment crashes? A diamond is a commodity that has been contaminated with an emotional component. The brainwashing (advertising) hasn't stopped and the future of the commodity is as precarious as a bitcoin. Bit coin & other cyber currency isn't tangible, yet it exists because it attempts to solve cyber wealth security transfer issues. Their values have had wild market swings and many will fail.
Diamonds are real, but now there are laboratory grown diamonds, which can be made in mass quantities, what effect will that have on the future perceived value of diamonds in the market? Like any commodity it will have a value, but at what risk as an investment? If you like bright shiny stones, buy diamonds. If you have $5,000 to blow on a coin, personally I would bid on a rare one on a reputable auction site such as Heritage Auction. The odds are much greater that the numismatic rated coin will increase, or at least hold on to the value it had when you purchased it.