Diamonds And Disruptors

Antonio Cecere

Antonio Cecere Adds Clarity To A Luxury Asset Soaring In Value

The Magnificent Jewels at Christie’s New York auction this April proved once again that fancy color diamonds are a top performing physical asset and an investment vehicle able to withstand financial turmoil. The total lot went for $30,315,875, with a rare blue diamond ring selling for $6.7 million and five other diamond rings each going for over $1 million.

The Knight Frank Luxury Investment Index, part of the 2019 Global Wealth Report, featured the 19-carat Winston Pink Legacy as the most expensive per carat pink diamond ever to be sold at auction at $50 million.

Antonio Cecere, Founder of Monaco Diamond Exchange in 2016 and President of Geneva Diamond Exchange, has spent the past few months discussing the merits of colorless and fancy color diamonds as an alternative investment. The primary focus to fully commoditize these assets needs to be, in his view, on the mechanics of liquidation. The diamond sector, through product parameters, must make a clear distinction between what is destined to the consumers’ market and what should be elevated to a commodity status.

Colorless diamonds are more sensitive to the challenges of liquidation due to their correlation to retail performance. A recent study carried out by the Geneva Diamond Exchange resulted in the necessity to create a standardized alternative to liquidation and the Swiss regulator is now supporting the incorporation of a fiduciary, Geneva Diamond Exchange Privée. This international trust company is regulated by Sveriges Riksbank, Sweden’s Central Bank and the oldest active central bank in the world; it’s backed by a number of reputable European custodian banks and is set up to facilitate the financing of diamonds.

“These underutilized assets are currently stored in vaults, generate no income and are not being leveraged creating financial liability,” notes Cecere. “This solution creates liquidity on-demand without the need of liquidation and it’s offered on a variety of physical assets including jewelry, watches, fine art, classic cars and gold.”

He indicates that the creation of a standardized approach to diamond financing—a 112% appreciation for fancy colored over the last ten years and an historical CAGR of 3-4% for the colorless—“will disrupt the market and support equally investors and cutters.”

From jewelry to art, Monaco is a globally renowned hub of investors in physical assets, and this solution grants its affluent residents access to credit against their passion investments while keeping possession of their assets. “This new-found liquidity enables them to further expand their portfolios and positively impact local economy,” says Cecere.

Monaco Diamond Exchange and Geneva Diamond Exchange are registered under United Nations Department of Economic and Social Affairs; together these non-profit associations monitor compliance with the Kimberley Process Certification Scheme (KPCS) to ensure that the revenue generated by the diamond trade does not finance conflicts and terrorism.

Today, a proprietary blockchainbased platform that aims to track stones from the mining stage through the supply chain to retail stores also
support traceability.

Cecere’s opinion is that the implementation of blockchain in the sector “not only creates the transparency essential to ensure ethical sourcing, but through its digital currency application renders diamonds the ideal collateral for stable coins, a milestone in the evolution of the highly volatile cryptocurrency market.”

Geneva Diamond Exchange is taking this a step further and it is exploring the possibility of being involved in the creation of GDX, a stable coin emblematic of ethical sourcing that benefits from the stability of a fully collateralized currency. A diamond-backed digital currency with the seal of approval from either association can generate a high level of reassurance amongst investors and constitutes a step forward towards the commoditization of this asset class.

“Verifying the compliance of diamonds that are used as collateral in any digital currency invariably reinstates confidence amongst investors,” Cecere says.