Are Physically Backed Diamond Investment Vehicles Feasible?

- October 23rd, 2013

In an interview with Kitco News, Paul Zimnisky, CEO of PureFunds, said that he doesn’t see physically backed diamond investment vehicles becoming a reality any time in the near future. The main reason behind his thinking is that “diamonds lack fungibility.”

In an interview with Kitco News, Paul Zimnisky, CEO of PureFunds, said that he doesn’t see physically backed diamond investment vehicles becoming a reality any time in the near future. The main reason behind his thinking is that “diamonds lack fungibility.”

As quoted in the market news:

‘I applaud the attempt(s), but I don’t see the vehicle working,’ Zimnisky told Kitco News. ‘I don’t see what they can do to make it work because the underlying fundamental issue is that physical diamonds are not fungible, they’re not price transparent.

‘There’s a reason we don’t have one right now and it’s because diamonds lack fungibility, they all have different characteristics, different values, they’re individually graded,’ Zimnisky said. ‘You’re trying to create a fungible asset out of something that’s not (fungible), you’re forcing the issue, and, when people buy an ETF, they buy it because there’s pricing transparency, there’s liquidity and you’re just not going to have that.’

Click here to read the full Kitco News interview.

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