Who knew you could auction real diamonds much like you could sell your stamp collection on eBay?
Well, not really, but pretty close. DODAQ has launched a demo version of what appears to be the first ever online diamond exchange, enabling professional traders to buy, sell and hold certified polished diamonds like stocks. The company offers a two-way auction for traders and facilitates electronic transactions with real-time tradable pricing.
Now, it’s been a while since I’ve traded any diamonds, but according to company management the mechanism is bound to make waves in the industry. The way it works now, is that there’s no real fixed price for polished diamonds. The few inventory lists that give an idea of which stones are out there, are often inaccurate or incomplete. Buyers and sellers pretty much agree on pricing based on a scheme that’s distributed on a weekly basis, but without any real, dynamic transaction data that can be used for benchmarking.
DODAQ aims to provide a centralized, global meeting place that enables basically anyone to trade or invest in diamonds, with transparency on rates. The platform also allows outsiders to start investing in diamonds and set up a virtual holding. Obviously, the biggest challenge for the company is building a market place so secure that it’s able to convince industry professionals diamonds can effectively be traded online ‘like any other commodity nowadays’ (not my words). In order to brush off skepticism, the authenticity and actual existence of every stone is graded and guaranteed (including insurance), and the polished diamonds are locked in a vault facility together with their certification documents.
DODAQ acts as a custodian, so it charges a fee for the vault service and takes a commission of maximum 1,5% on any transaction. You can sign up for a demo account and play around with $500,000 on a dummy balance. I embedded a video below that outlines what DODAQ does in a nutshell.
this is interesting… really cool idea, but in order to work the power houses have to buy in….
I wonder if I can by a CDO on this badboy — collateralized deadpool obligation
jk, actually right now diamonds are priced per the rappaport report or some bs like that.
the only problem is that a lot of jewelers base the pricing that they can acquire a diamond for a customer off that report and the cost is known when the customer is there. If there is an auction, the price is up in the air for two days.
collateralized deadpool obligation
+1 for coining a new term.
Diamonds can be synthesized, Gold cannot. http://www.post...6/754167-28.stm
Is this what Mark Cuban used to put 8% of his networth in DIAmond Puts? Anyone know what actually means?
Can they be easily traded like stocks? Also who would verify the quality?
Yup, traded just like stocks, or more like gold actually (try the demo).
“All diamonds published on the DODAQ platform have first been graded by a recognised gemological grading laboratory and are received with their original certificates into the DODAQ vault.”
Riiiight.
Either the people behind this idea don’t really understand how diamonds are graded and traded in the real world, or they are hoping you don’t really understand how diamonds are graded and traded in the real world.
I’m betting the latter.
Diamonds are worthless. Gold is not.
Haven’t you seen the blood diamonds movie dude? …diamonds suck
en.wikipedia.org/wiki/Blood_diamonds
its unlikely anyone’s going to overthrow debeers, but they can try
rankmaniac
What a nice video
As developers of the promo, I can tell you this is an incredible application. I’ve seen it in clear cut action, so to speak and it’s going to cut a swathe through the diamond trade.
Congrats to Simon & team at Dodaq.
Next: put/call options on diamonds
I hope the guys at DODAQ have bullet-proof cars and 24/7 secuirty escorts for their families. The cartel does not like upstarts like this.
At first I was apprehensive that such a thing could even be done but on closer inspection, having used the site, this looks like it could really change things – ultimately for the better. Fascinating stuff. I look forward to reading more.
This will certainly be interesting. The diamond world isn’t used to startups of any kind. Not in the least, something like this.
As a financial instrument, why not trade diamonds like any other commodity? But, if you are choosing just ONE diamond for your fiancee, I highly recommend seeing a stone in person. Any gemologist will tell you that no two stones are ever the same, and that each has its own “fingerprint” and will handle light refraction differently. There are 57 angles to a diamond, and each stone is cut slightly differently, according to the natural growth of its crystals.
Two stones of the same 4 C’s can produce very different effects of light and sparkle. This is a subtlety that is often times lost when people compare diamonds, site unseen, and assume the 4 C’s tell the whole story. But when you put the two stones next to each other, you might be surprised at how obvious of a difference there could be.
It’s very helpful to categorize diamonds with the 4 C’s, but as you can imagine, a 10 minute crash course in the 4 C’s can’t replace a lifetime of experience in diamonds. It’s the same in any industry, where reading a wikipedia article on something doesn’t make you a real expert. You’ll have solid footing, though, and that’s a good start.
Diamonds are the biggest SCAM ever perpetrated on the American public. There’s nothing scarce about them and one big company controls the supply of them. Not to mention that ALL diamonds are blood diamonds! This startup won’t change that.
http://www.thea.../198202/diamond
You couldn’t be more wrong. I know for a fact that Israel for instance was the first country to sign a treaty banning the import/export of blood diamonds and they are known as the #1 or #2 diamond-cutting country in the world.
Dave is right – diamonds are worthless. Try reading this: http://www.edwa...amond/chap1.htm or watch the “Diamond Empire” on Google Video.
In the book listed above, Harry Oppenheimer (owner of De Beers) admits that they pay off international governments each year, so as to keep a virtual monopoly on the Diamond market.
Israel has the worst reputation when it comes to grading diamonds with “favorable” certificates. EGL-Israel is universally known in the industry to up sell inferior quality diamonds with faulty certifications.
This is for wholesalers. They don’t care about sparkle. Only retailers and customers care about that. If you try to sell 2000 diamonds, you will get very tired trying to rank the sparkle.
diamonds are a scam. It’s an incredibly corrupt industry controlled by a small number of producers and distributors. Accordingly, they are substantially overpriced – the current supply and demand does not come close to justifying the fees. If the industry was allowed to operate efficiently, the price of diamonds per pound would be close to the price of common metals (like copper). But the industry and all of its players – from producers to the retail outlets – rely on this lack of transparency to cheat people out of their money. Whatever you paid for it, you overpaid. Moreover: *THERE IS NO SUCH THING AS AN INVESTMENT GRADE DIAMOND*
Well, good luck in getting the people’s trust (even for wholesale). It will take a while….diamonds are not iPods, like on eBay.
Maybe they can get DeBeers involved?
This is a great idea, but the UI is pretty basic right now. I think traders are going to need something a little more powerful to really get into this.
Why is it based in Belgium? Does this have something to do with de Beers?
Also, it doesn’t look like they distinguish between different sources of diamonds – there are a lot of people who want to avoid conflict diamonds.
a lot of people want to avoid conflict diamonds – most industry professionals are not included in this group. having worked in the industry for a diamond wholesaler I know first-hand that the source of the diamond has very little influence. it all comes down to price for most dealers.
They’re based in Antwerp, which is pretty much the diamond centre of the world (about 70% of all the world’s diamonds are traded there)
The Diamond trade is no longer controlled by De Beers. The Cartels back was broken by Lev Leviev. Russian-Israeli business man who owns a vertically integrated Diamond Business from shovels in the Ground to Retail. He got sick of having to blindly accept what the de Beers cartel was telling. Forcing him to buy diamonds without knowing their origin. Diamonds are worth something. They may exist in Large numbers but they are in High demand and the pricing reflects that they are expensive to produce. If they weren;t we would all be in the diamond business.
Robin, a diamond dealer knew that you could sell real diamonds much like anything else on eBay for about 10 years already. And they still do.
Attempts to make some kind of centralized website to trade gem materials, and not just diamonds, but also colour gemstones which is actually a much bigger business failed many times. (First was Gemkey.com, about 10 years ago and 75 million dollars down the drain.)
These days, there are a lot of private and semi-private B2B sites where you can trade diamonds (i.e Polygon, Canada Diamonds, etc).
And “no real fixed price for polished diamonds” is a false statement. There is and it’s called “The Rapport report”. Everyone uses it as a reference point. Basically, diamonds is the only gemstone commodity which has more or less fixed and transparent pricing, thanks to
De Beers Consolidated Mines and industry “4c” grading standards.
The biggest diamond consumers are jewellers and they don’t buy diamonds, they get in on memo, which is not possible at DODAQ, according to their “cash market” statement. Which makes me think, that the biggest challenge for the DODAQ, would be convincing large jewellery manufactures that they can have a good deal on diamond contracts in credit terms and price. I would also think, that if the “polished diamonds are locked in a vault facility together with their certification documents” which would mean that diamonds must be in Belgium, which makes someone wonder how it will work for sellers from India, Russia and Israel.