Cormac Kinney: Diamond Prices Rising, New Tech to Open Market for Investors
The diamond market has long presented challenges for investors. Prices are difficult to determine, sourcing can be tricky and it’s often difficult for buyers to resell the gems into the market.
Cormac Kinney, founder and CEO of Diamond Standard, believes his company has found a way to solve those problems and open up the diamond market to both large and small investors.
“I became fascinated that the diamond industry is US$1.5 trillion, which is more than silver, platinum, palladium and rhodium combined, but an investor could never invest in diamonds because there was no price discovery,” he told the Investing News Network in an interview. “Every diamond is a little different, there was no liquidity — I thought I could solve that using computer science, and that’s exactly what I did.”
Diamond Standard has developed regulator-approved physical bars and coins that contain equivalent sets of diamonds and are each backed by a blockchain token. The company’s aim is to decrease opacity in the diamond market and allow investors to gain a toehold in an industry where it’s historically been challenging to see success.
“The breakthrough is that using optimization and automated market making and radical transparency, we can prove that (any) two physical coins are equal,” Kinney explained.
Diamond Standard has more products planned for the near future, including a fund and an exchange-traded fund, plus futures and options, and Kinney believes both retail and institutional investor demand will be strong.
“Only 1 percent of the world’s diamonds are held by investors, and any large investor you can name … they don’t own one single diamond,” Kinney said. “Our commodity’s made it accessible for the first time, so we expect the investors of the world to buy about 15 percent of the supply — that’s US$250 billion almost, about eight years of production. That demand, if it comes true, will dramatically cause prices to rise.”
Watch the interview above for more of his thoughts on Diamond Standard and the diamond market.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.