They say that diamonds are a girl’s best friend.
One way for private investors to invest into diamonds as an asset class is via the Singapore Diamond Exchange (SDX).
Note that the SDX is not an regulated exchange like the Singapore Stock Exchange, but exists as a private limited company that facilities the buying of diamond portfolios for investors. A minimum of $250,000 is required for private investors so this rules out the retail investor.
The diamonds will be stored at Singapore Freeport, a storage facility for valuables.
One challenge of investing into diamonds is that the pricing is very opaque. Take a diamond with a specific carat, cutting and finishing to five different dealers and you will probably be quoted five very different prices. This is unlike gold where 1kg of gold bar would be priced very similarly no matter where you went.
Personally, I would find it hard to convince myself to use a platform like the Singapore Diamond Exchange to invest into valuables unless they are backed by a government body.
While the SDX do provide some kind of insurance (I have yet to find out the details), I would prefer to have my valuables stored in a bank’s safe deposit box or in a safe hidden at home! For the time being, I guess it doesn’t really make any difference as I do not own any diamonds at all. 🙂
Updated on 12 June 2016 : The SDX is no more but there is a new Singapore Diamond Investment Exchange (SDiX). Both the SDX and SDix are founded by the same person, Alain Vandenborre. I suspect it could be due to some issues that SDX was having with the Diamond Exchange of Singapore.