National Jeweler Network

Pricing

Stock market index for diamonds to launch

By Michelle Graff

September 13, 2013

Chicago--An index that tracks the price of diamonds like the NASDAQ 100 follows the largest non-financial companies is slated to launch in the near future, with a diamonds-as-investment vehicle potentially not far behind.

On Monday, Chicago-based GemShares LLC, a “pioneer” in creating physically backed diamond investment products, issued a news release announcing an agreement with The NASDAQ OMX Group Inc. to develop the GemShares Global Investment Grade Standard (GIGS) Diamond Basket Index.

The rules-based diamond basket index will operate like other NASDAQ Indexes, tracing prices on diamonds that have met the GIGS standards.

According to the patent GemShares received for the GIGS pricing mechanism, these standards include diamonds graded by the Gemological Institute of America as  D to J color; IF to SII clarity; 0.50 to 2.20 carats (preferred range); round brilliants with 57 to 58 facets; and “excellent” or “very good” cut grade.

Though the price on the index will be representative of a number of diamonds, not just one single stone, the index will be transparent so price movements of individual diamonds can be tracked, said GemShares member Andrew Feldman.

He said there is no set date for the launch of the index and, because they are still piecing together the structure for pulling in the prices on the diamonds, he was unable to provide information on what sources the index would use for pricing.

Once the index is operational, the release states that it “could be used to build financial products,” and GemShares partner Dan Gramza hinted at the same.

In the release, he called his company’s partnership with NASDAQ, “the first step toward creating a bridge between the financial and diamond industries that brings the benefits of investing in diamonds to investors around the globe.”

Back in April, GemShares filed an S-1 with the Securities and Exchange Commission for the GemShares Physical Diamond Trust.  According to the filing, the trust will hold physical diamonds and will issue shares designed for “inventors who seek a cost-effective, transparent and convenient way of making an investment similar to an outright investment in physical diamonds.”