August 22, 2007 at 2:00 pm by Tom Lydon
If diamond expert/broker Martin Rapaport had his way, diamond exchange traded funds (ETFs) would be available now. However, his goal has a way to go before that happens. Rapaport’s first mission is to make diamonds investable, like gold or other precious metals.
When Rapaport noticed that diamond prices varied widely, he developed the Rapaport Diamond Price List in 1978 to track their prices, reports Joanne Von Alroth for Investor’s Business Daily. The price list was not warmly welcomed as many in the industry feared it would undercut prices. However, that didn’t stop him from creating an electronic and an online interactive diamond trading market. He is currently working on creating the Rapaport Diamond Index that will be used to develop a diamond futures market and, hopefully, ETFs.
If diamond futures ETFs are created, they likely will resemble gold futures, such as PowerShares DB Gold (DGL). In addition, as an ETF that invests in futures, diamond ETFs will run the possibility of contango and backwardation issues that United States Oil (USO) has incurred.
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