Bling it - Singapore launches world's first diamond bullion

Singapore

SEVENTEEN months since the inception of the world's first exchange that enables trading in diamonds as a commodity, the Singapore Diamond Investment Exchange (SDiX) is offering investors another way to bling up their portfolios.

Its sleek credit-card sized diamond bullion, worth US$100,000 apiece for the silver casing and US$200,000 for the gold one, is produced by the Singapore Diamond Mint Company; it is the third product to be listed on the SDiX.

The first two investment products that the exchange started with were single large stones and a basket of small diamonds.

These precious stones could well help mix things up for investors who want safe-haven bets. Its biggest proponents say the polished gems are a worthy hedge against inflation and volatility.

SDiX's founder and executive chairman Alain Vandenborre told The Business Times in an interview that they may just be the game changer and a "catalyser" for the boutique exchange.

Already, with the first two investment products - the single large stones and basket of small diamonds - the first-year target of US$100 million in cumulative trading volumes has already been surpassed.

As at a week ago, trading volume stood at some US$165 million with about 60,000 investment-grade polished diamonds having been traded; the investors were mostly Asian, and primarily from Hong Kong.

Mr Vandenborre, a Belgian-born Singaporean, said: "For Year Two, the target is US$200 million. So, we will get there. This bullion will be a catalyser for (trading) volume."

The optimism is premised on the diamond bullion's bar of investability. For one, the package of investment-grade polished diamonds is tradeable and fully fungible.

"It is also portable, which means, unlike the basket of diamonds or single stones, you can take it out of the exchange and it still remains tradeable," he said.

Identifiability is another plus point. Each diamond sealed in the bullion has a unique optical signature and serial number for instant authentication through the use of a mobile app.

Investors can also get real-time pricing data with the app or the SDiX website. In addition, De Beers Group, the world's largest diamond producer, will provide further verification services on the bullion.

For starters, the SDiX, which is backed by investors (including a Temasek Holdings' venture-capital unit and Mr Vandenborre), will launch the diamond bullion in those US$100,000 silver and US$200,000 gold tamper-resistant cases.

The silver diamond bullion has been trading on the exchange since Oct 2; four days after that, it closed at US$106,450.

The book building process or "pre-marketing stage" started on Tuesday; sometime in the first quarter of next year, investors will be able to take delivery of the bullion, said Mr Vandenborre.

The exchange plans to tie up with global private banks with the relevant market-making capabilities, trading desks and brokerage for distribution purposes.

"Our target is to have two to three private big banks by next year to distribute the product," he added.

Eventually, bullion will be available in denominations of US$50,000, US$25,000 and perhaps even US$10,000 and US$500,000. Each will be identified by the colour of its case.