“Since diamonds and gold share many basic characteristics, it is tempting to lump them together into a ‘precious metals/materials’ bucket along with silver,” Colas added.
Basic price fundamentals and its “hard” asset status both contribute to the argument. However, diamonds experience a wider bid/ask spread due to its categorization into the “four Cs” – color, carat, cut and clarity.
Due to their wide variations, the ETF industry has also struggled to provide a uniform physically backed diamond ETF. Although, there are some providers, like GemShares and IndexIQ, that have shown interest in a physical diamond ETF offering. [Diamond ETFs in the Works — Will Investors Bite?]
For more information on diamond funds, visit our diamond category.
Max Chen contributed to this article.