Economics of Diamonds, Part 5

It has been a while since I last talked about investment diamonds. There have been some interesting new developments in the diamond industry, which I would like to discuss.

More diamond companies are choosing to comply with FCA regulations, according to Diamonds.Net. This means dealing with cash less (hence adhering to anti-money laundering laws) and making financial reports which are up to IFRS accounting standards.

However, these are only the first steps which would gradually lead to diamonds being more respected as investments. There’s still the problem of a lack of liquidity with coloured diamonds as investments but they have proven to have had higher price rises than colourless diamonds.

Unfortunately, there’s no real solution to this problem. Diamonds are not standardised enough to allow a long presence in the futures markets, and all the current attempts have ended in failure. However, there is a light in the end of the tunnel. Custom-made structured products which are tied to investment diamonds, are possible and with investment diamonds gradually gaining status as an investment, I believe diamond companies would start to offer this sort of investment in the nearest future.

It may not solve the liquidity problem but diamonds were never meant to be a part of futures markets.