Rapaport to launch Diamond Futures Market 9/17

[JohnQuixote]

Currently restricted to the trade and financial institutions (1ct+ D-K VS+). I was reminded of this thread and other past 'investment' discussions.


From Rapaport News:

i]

The auction will offer select round one carat and larger, D-K, IF-VS2, Excellent to Very Good cut GIA graded diamonds. The diamonds will be available for inspection in New York. Bidding will be over the internet and restricted to the trade and financial institutions. Terms: Spot Cash FOB New York, three percent fee to seller.

“We are implementing stringent Rapaport quality standards and guarantees in addition to GIA’s first class grading reports to make sure that buyers get the best diamonds. All the diamonds will be highly desirable and liquid ensuring suitability for all buyers including investors who may wish to resell the diamonds. We encourage the diamond and jewelry trade to participate in these auctions and we will do everything we can to create new market opportunities for everyone in our industry,” said Martin Rapaport, chairman of the Rapaport Group... >>

Full story.

 

[echelon6]

I highly doubt that such a futures market would be liquid enough to be of functional benefit to members of the trade who actually have a use for them... e.g. merchants, mines, cutters, and large jewelers who wish to hedge. I doubt it would attract much attention from speculators, considering all the problems with diamonds as an investment vehicle (e.g. low fungibility)

Innovative nonetheless.

 

[Garry H (Cut Nut)]

I imagine the plan is to create a transperent real life price assessment mechanism that makes it possible down the track for there to be a market that provides the volume of trade to enable physical delivery should a futures buyer actually wish to take real delivery (although most such ''instrument'' trade is in reality a hedging activity).

He will need to do that for the Fed''s to consider making such a futures market legal and valid.

Much of the goods currently listed on Rapnet are simply shipping transactions to and from GIA via India and Israel under Rap''s bonded delivery service for GIA. He possibly does not have enough hard cold cash evidence of real trades as many brokers would simply buy and sell between themselves - and use Rapnet as a convenient place to see what is on offer from each vendor. The prices there are not always a real indication - they often represent memo prices for retailers etc

 

[JohnQuixote]

 

[strmrdr]

Until there is a thriving secondary market for diamonds they will never be investment grade in my opinion.
Does the industry really want that? DeBeers has fought it for many decades and Jewelers still do today with pennies on the dollar offers on secondary market diamonds.