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PBs in Asia to get new asset class

PBs in Asia to get new asset class

The Singapore Diamond Investment Exchange (SDiX) has listed a product designed to bolster investment in diamonds and it is in talks with private banks in Asia to facilitate distribution.

Known as the Diamond Bullion, it is a credit card-sized package, encasing investment grade diamonds, with four layers of security, manufactured by the Singapore Diamond Mint Company.

SDiX executive chairman and founder Alain Vandenborre said, ‘Every single currency has depreciated over time while the price of gold has been steady. You need more and more currency to buy gold.

‘Gold has always been a hedge against deflation of currencies and assets. The price of diamonds behaves exactly like gold. It’s better than gold because it has zero correlation to any asset class.

‘Creating a bullion will be a significant step in making diamond a new safe haven creating fungibility and liquidity for something that has traditionally never been seen as an asset class,’ he told Citywire Asia.

While SDiX is targeting large global private banks and broker members as distribution partners in Singapore, Hong Kong, India, Dubai, and London, it also wants to limit the number of private banking partnerships to 10.

‘We want to give them first mover advantage as the price will only appreciate after this,’ Vandenborre said.

The agreement is based on a profit-sharing model where SDiX gets 51% and the remaining 49% goes to the distributer.

‘They [private banks] are going to underwrite it in big numbers and sell it to clients.’

Buyers can buy gold and silver cases, with approximate values of $200,000 and $100,000 respectively. The silver bullion was soft-launched on 2 October and as of market close on 11 October, closed at $106,440.00 on the SDiX.

The Singapore exchange also has other bullion in the pipeline, including one worth $500,000; but it all depends on the success of the initial launch.

‘The appetite of some of the global banks is significant,’ Vandenborre said, adding that especially with interest from Middle Eastern, Chinese, Indian, and Russian clients, who bought the initial prototypes in the testing phase.

Typical diamond exchanges globally are wholesale markets where people go and trade physical diamonds manually. SDiX will trade electronic receipts instead of the physical commodity.

After the order is placed, the bullion is sent directly to the buyer or stored in vaults at Singapore Freeport and other vaults around the world.

The bullion is a tamper-resistant sintered zirconia case, with a unique optical signature recognition system and serial number, and the latter two features enable the instant authentication of the product using a mobile app called Diamond Bullion.

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