The Diamond Rush is Now

World’s only regulator approved diamond commodity

Unprecedented

Unprecedented

Creating value: transforming diamonds from an inaccessible trillion dollar natural resource, into the first truly physical and digital asset

Underallocated

Underallocated

While investors usually hold 15% to 28% of precious metals, with Diamonds, that share is only 1%

Uncorrelated

Uncorrelated

Diamonds have exceptionally low/negative historical correlation to other assets. Over the last 20 years, diamond prices have had a near-zero correlation to gold, silver, equities, and bonds

Unprecedented
An Unprecedented Moment for a New Commodity

Diamonds’ most well-known physical aspects are the 4Cs: carat, color, clarity, and cut. Carat measures the weight of the diamond. One carat is equivalent to 0.2 grams of diamond. Color indicates whether the diamond is naturally clear or a different color. Generally the rarer the color, the higher the value. Clarity refers to any imperfections detracting from the diamond’s visual aspects. Blemishes and inclusions reduce a diamond’s clarity score. Finally, cut refers to the style or design used when a diamond is shaped. It relates to the symmetry, proportioning, and polish of a diamond. Every diamond is one-of-a-kind, which makes them a unique investment asset.

Diamonds are incredibly value-dense, allowing them to be transported easily and for a fraction of the cost of precious metals. One carat, just 0.2 grams, can easily hold a few thousand dollars in value. The diamonds inside a Diamond Standard Bar and Coin are worth around $1 million per ounce. However, there is variation in the value density from diamond to diamond. For example, a 1 carat red diamond may be more value- dense than a 1 carat white diamond since red diamonds are rarer than white ones. Thanks to Diamond Standard’s efforts to standardize diamond commodities, investors can eliminate the disparity between diamond value by purchasing fungible Coins and Bars.

Portability of Diamonds vs. Gold

Much Easier to Store

Diamonds are 600x more value-dense than gold.
Storage and transportation costs are less when compared to precious metals.
Source: Diamond Standard Research
Underallocated
An Underallocated Investment with Pent-Up Demand

Investors hold a significant ratio of all precious metal markets. This includes 30% of the gold market, 19% of the silver market, 17% of the platinum market, and 15% of the palladium market. In contrast, the diamond market is only perhaps 1% allocated to investors. Without knowledge of issues with standardization, it is almost mind-boggling that one of the most well-known and highly valued precious resources is barely touched by investors (see page 20, Precious Properties - Physical Attributes). In the absence of standardization, the path to liquidity becomes incredibly vague as each gem has its own characteristics and price tag.

Diamond liquidity was an issue because no organized exchanges or market makers existed.

Industry-wide there existed no market price, price discovery mechanism, regulatory oversight, or price transparency. Diamonds lacked standardization, making it frustrating for investors to hold and transact. All of these factors combined made diamonds impossible to mark to market. Without the ability to mark to market, the value of a diamond holder's assets remains unclear, hindering the ability to invest.

Diamond price discovery and transparency were nonexistent because most diamonds were transacted privately, with subjective valuations. Former cartel control founded the supply chain on retail markup and price secrecy. Even today, most vendor prices are based on full retail prices then discounted for wholesale trade. Subjectivity in diamond prices subsequently results in discounts of 15-45%.

Most investors do not want to go through the hassle of buying and selling opaque and illiquid physical assets. The only other options these investors have is to invest in diamond producers, which are a layer removed from the asset itself. In a way, this generates a negative feedback loop as the less investors invest in diamonds, the less of a market there is for it, the less liquidity there is, and the less appealing the market is to prospective investors. Thus, despite being one of the most sought after and highly valued luxury resources, investors hold only around $12 billion of the $1.2 trillion market.

Allocation Comparison of Diamonds and Other Precious Metals to Investors

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Gold

30%

of

$9T

Diamonds

allCoins
1%

of

$1.2T

allCoins

Underallocated Opportunity

Silver

19%

of

$1.1T

Platinum

17%

of

$0.03T

Palladium

15%

of

$0.02T

Investors Holdings

Total Supply

allCoins

Underallocated Opportunity

Investors Holdings

Total Supply

While investors usually hold 15% to 28% of precious metals, with Diamonds that share is only 1%
Source: Diamond Standard Research
Uncorrelated
An Uncorrelated Asset for Portfolio Diversification

Diversification is essential to mitigate risk in any investor’s portfolio. An investor can reduce the portfolio risk by holding assets that are not highly correlated. The lower the correlation between two assets, the lower the resulting portfolio volatility with respect to asset price movements. For this reason, most savvy investors hold a diverse mix of assets, preferably with low or negative correlations to maximize returns for a given level of non- diversifiable or systematic risk.

The low correlations diamonds have relative to multiple asset classes suggest that diamond prices have a number of independent drivers different from other frequently traded assets. However, diamond correlations may increase with the anticipated increase in investor holdings.

Industry-wide there existed no market price, price discovery mechanism, regulatory oversight, or price transparency. Diamonds lacked standardization, making it frustrating for investors to hold and transact. All of these factors combined made diamonds impossible to mark to market. Without the ability to mark to market, the value of a diamond holder's assets remains unclear, hindering the ability to invest.

The inception of standardized and regulated diamond investments along with the increase in acceptance of the diamond asset class by investors will likely cause the correlation of diamonds to rise. Diamond-tied commodities, futures, options, private funds, exchange- traded funds, commodity indices, and other products will link a portion of the market price performance to the overall demand for assets and securities. Consequently, periods of heightened volatility will tend to increase the correlation between assets.

Correlation Between Diamonds and Related Investments

January 2020 - October 2022, Weekly Returns

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Diamond commodities are distinguished from other portfolio securities by having a low, often negative, correlation to many traditional investments.
Source: Bloomberg, 2022

Diamond Truths:
Busting Five Common Myths

Diamond Standard has encountered some common myths that have proven persistent – and which, without a more informed perspective, sometimes hold investors back from realizing the full benefits of these popular stones as investable assets.

Invest in Diamond Standard Offerings

Smart commodity you can hold in your hand

Diamond Standard Coins

Diamond Standard Coins

Fungible Commodity

$ 5,600
  • Contains 0.18 to 0.75 carat stones in a 35mm diameter transparent Coin
  • Buy and sell on the Spot Market
  • All diamonds independently graded by GIA
Invest
Diamond Standard Bars

Diamond Standard Bars

Fungible Commodity

$ 56,000
  • Contains 0.76 to 2.05 carats stones in a 70mm by 35mm transparent Bar
  • Valued at 10 times the market price of a Coin
  • Lowest commodity custody fees
Invest
Diamond Standard Fund

Diamond Standard Fund

For Accredited Investors

$25,000 Minimum
  • Shares offered in a private placement pursuant to Rule 506(c) under Regulation D
  • Co-sponsored by Diamond Standard and Horizon Kinetics
  • Third party administration by NAV
Invest
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