Editor’s Note
This article explores the unique role of diamonds as a stable, non-correlated asset for portfolio diversification, offering a potential hedge against market volatility and inflation.
Diamonds have always held a special fascination. Their aesthetic appeal is one thing, their economic significance another. They concentrate significant value in the smallest form and, unlike stocks or bonds, hardly react to market fluctuations. Their low correlation with other asset classes ensures crisis resistance and inflation protection. Precisely for this reason, they are gaining importance for investors looking to diversify their portfolios.
Particularly in demand are rare, natural diamonds of excellent quality. The relevant quality measurements are the color scale D to F and a clarity in the range of Internally Flawless (IF) to Very Slightly Included (VS). Such stones achieve stable market prices, provided their quality is verified by an internationally recognized certificate, such as from the Gemological Institute of America (GIA).
There is also demand for another segment: so-called Fancy Color Diamonds. These are stones in rare colors, primarily pink and blue. As collector’s items, they possess potential for long-term price appreciation.
Although diamonds do not generate ongoing yields and the resale market has been poorly standardized, initial trading structures are emerging: FinTech companies are developing investment offerings that allow the purchase of certified diamonds in bundles. Comparable to other alternative assets like wine, whisky, and art, diamonds are thus gradually becoming an attractive tangible asset investment.
Parallel to this development, another segment is currently coming into focus: Melee diamonds. These small, precisely cut stones under 0.2 carats were long used primarily in the jewelry industry. As a capital investment, they were considered uninteresting because their individual value was too low and their provenance was difficult to prove.
However, this assessment is changing. Melee diamonds can be classified according to uniform quality standards and traded in large quantities. In contrast to individual stones, whose value always fluctuates individually, they offer inflation protection, crisis stability, and independence from capital markets as an aggregated tangible asset.
Crucial for their tradability, however, is an impeccable ESG profile for Melee diamonds, meaning compliance with environmental, social, and governance criteria during their production and processing. For institutional investors, it has long been mandatory that the origin of the stones from ethically and ecologically responsible production can be proven beyond doubt.
For this reason, large quantities of Melee diamonds are now uniquely identified using nano-trackers. The leading digital platform for the traceability of natural diamonds, Tracr™, equips each stone with a unique ID, allowing its origin to be digitally verified at any time. The service provider Provenance Proof stores the complete supply chain on a blockchain. Investors receive a “Statement of Provenance” certificate and can securely store the “digital twin” of their diamonds, protected from manipulation.
Thus, the journey from the mine to the traded stone is traceable across the entire value chain. Melee diamonds, therefore, possess tamper-proof provenance certificates despite large volumes and the prerequisites to serve as a tangible asset investment.
One company significantly shaping this development is KGK Suisse SA, based in Biel. The company itself does not offer investment products but supplies the watch and jewelry industry, bijouteries, and goldsmiths with natural, certified diamonds.
In doing so, KGK Suisse ensures ESG compliance and meets the strictest compliance requirements using Tracr™ and Provenance Proof. Especially large brands that value sustainable, traceable supply chains benefit from this service.
For Rohrbach, the impeccable origin of natural stones is not just a sales argument but an ethical concern:
According to Rohrbach’s conviction, the proof of their origin and responsible production conditions will lead to Melee diamonds gaining importance as a luxury tangible asset for the diversification of investment portfolios.
