A Diamond ETF Could Revive Demand for Natural Diamonds Amid Lab-Grown Threat
The diamond industry is at a crossroads as lab-grown diamonds continue to rise in popularity, presenting a significant challenge to the value and prestige of natural diamonds. Consumers often mistakenly assume lab-grown diamonds are identical to natural diamonds, simply more affordable and ethical. But unlike natural diamonds, lab-grown diamonds are infinitely producible, diminishing their luxury status and undermining the market for genuine diamonds.
This confusion poses a serious threat to the natural diamond industry, jeopardizing millions of jobs and reducing the value of every natural diamond already owned. Many in the industry propose increased marketing efforts to differentiate natural diamonds from lab-grown stones, but without clear funding sources, such advertising campaigns risk backlash in the social media age.
Why a Diamond ETF Is the Answer
The solution could be a diamond exchange-traded fund (ETF), designed specifically to position natural diamonds as a valuable investment asset class. Rather than relying on marketing alone, the diamond ETF would build investor confidence by clearly demonstrating the inherent value of natural diamonds. Just as gold and silver ETFs successfully boosted investment demand and stabilized metal prices, a diamond ETF can achieve similar results for natural diamonds.
Diamond Standard has received approval to file for a diamond ETF, as reported by The Wall Street Journal. The primary requirement now is to secure initial assets to meet ETF listing criteria. To gather these assets, Diamond Standard plans to purchase excess diamond inventories from manufacturers, miners, and dealers, compensating them with ETF shares, which they can later sell at higher market prices.
Benefits for Retailers and the Industry
The introduction of a diamond ETF would offer retailers a compelling selling point: natural diamonds aren't just luxury jewelry—they're reliable investment assets with the potential to appreciate over time. Rising prices supported by ETF-driven investment demand would encourage consumers to buy, directly benefiting jewelers and the broader industry.
Taking Action
Retailers are essential in making the diamond ETF a reality. Jewelers should reach out to their largest diamond suppliers, urging them to support the ETF initiative by investing their excess inventory. Supplier participation would stabilize market inventory levels, enhancing the market for natural diamond jewelry and reinforcing their long-term investment appeal.
By uniting behind a diamond ETF, the industry can safeguard the future of natural diamonds, restore consumer confidence, and revitalize market demand.