Hintergrund1

Buying process: What is the process to buy an ID-Knox?

Selling process: What is the process to sell an ID-Knox?

Price of an ID-Knox: How is the price of an ID-Knox determined?

Diamond Certificates: Which labs are assessing the (physical) quality of cut diamonds?

Commodity: Can diamonds be characterized as such?

Customers: Who does ID-Diamonds address?

DDI: What is DDI and what does it do?

Assembly (Audit) Certificates: Which labs are auditing the diamonds in the ID-Knox and sealing it?

GIA: What is GIA and what does it do?

GIA laser inscription: What does the lasered identification number mean?

HRD: What is HRD and what does it do?

ID-Diamonds: What is special about the range of services?

ID-Knox: Product description.

IGI: What is IGI and what does it do?

Investment in diamonds: Which options for investing in diamonds are currently available?

Investment in diamonds: What are the advantages/disadvantages in comparison to other material asset investments?

Kimberley process: What does this mean?

Performance: Which historical developments do the qualities used by ID-Diamonds display?

Diamond price: How are diamonds priced?

Quality: What diamond qualities does ID-Diamonds use?

Rapaport: What is the Rapaport Price List?

Removal of stones from an ID-Knox: What happens to an ID-Knox when stones should be removed?

Safekeeping: Where and how should diamonds be kept?

Reselling: How can one resell ID-Knoxes / individual diamonds taken from ID-Knoxes?

Viewing: Where can ID-Diamonds products be viewed?

Our Unique Selling Proposition (USP): What do we offer you as an investor


 

Buying process: What is the process to buy an ID-Knox?

The buyer receives on request a purchase agreement and an actual pricelist which can be downloaded from the website as well. He completes the agreement and sends it together with a copy of his passport to ID-Diamonds bvba. After transferring the total purchase price via bank transfer, the buyer receives the purchased ID-Knoxes by insured safety transport. ID-Diamonds bvba bears the costs for insurance and transport.

 

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Selling process: What is the process to sell an ID-Knox?

The owner informs ID-Diamonds bvba about his sales intentions and asks for an offer. ID-Diamonds bvba will submit an offer to current market conditions within 5 working days. In addition, ID-Diamonds bvba also assists the seller in the sale to third parties or in the collection or sale of individual diamonds.

 

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Price of an ID-Knox: How is the price of an ID-Knox determined?

ID-Diamonds provides all buyers of highly concentrated material assets who are interested in asset preservation and long-term thinking, a multi-patented secured and tamper proof unit (ID-Knox) for an attractive wholesale price.

The sales price for each ID-Knox consists of the following:·

a) The respective wholesale purchase price for the polished and GIA certified natural diamonds (GIA certificates are standard, IGI or HRD - certificates can be delivered instead on explicit demand of the buyer), which are acquired from reputable wholesalers and are conflict free·(see Kimberley process). ID-Diamonds bvba, due to their knowledge of the diamond industry and their relations with the most prominent diamond companies, has access to wholesale prices which are not accessible for end consumers (e.g. via the Internet) and certainly taking into account all add-ons and features offered by the ID-Knoxes. The sale prices are based on the Rapaport Price List (Rapaport minus x% discount) and weekly updated and consultable via the website. see Rapaport

b) Statutory value-added tax - VAT (in Belgium currently 21%). Exports outside EU are exempt from VAT (Art 42, §4, VAT law).

Moreover, following items/services are free of charge and as such included in the sales price:

c) The cost (fee) of the assembly certificate of the unit by IGI/·DDI. see assembly (audit) certificate

d) The cost (material/production/features) of the·multi-patented ID-Knox.

e) The expenses for transport and insurance.

f) A special integrated chip with tamper-resistant depositing of all document (GIA/HRD/IGI- certificate for each diamond, IGI or DDI assembly certificate for each ID-Knox) and a secure data interface to log in to the ID-Diamonds website and-safely- access the data about the diamonds in the ID-Knox.

 

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Diamond Certificates: Which labs are assessing the (physical) quality of polished diamonds?

Diamond certificates are assessments by recognized gemologists or relevant experts regarding the physical quality of (polished) diamonds. Diamonds are examined according to·various, globally defined and recognized criteria. Apart from the trained eye of the respective expert, this requires the use of special magnifying glasses, microscopes, UV light as well as instruments such as an absorption spectrometer or analysis devices based on the cathodoluminiscence (CL) method in order to identify counterfeits or man-made diamonds.

Apart from examining the concrete size specifications of the diamond, the carat weight, the color grade, the clarity grade and the cut grade are determined and evaluated. Furthermore, clarity characteristics, fluorescence as well as other more detailed about the diamond is documented. For larger diamonds the location of the inclusions is frequently also graphically displayed.

Various internationally and nationally operating institutions specialize in creating such certificates. In comparison the certificates issued by the various institutions differ mainly in terms of accuracy and stringency in the interpretation of their evaluation criteria; this in turn has an impact on the acknowledgment of the assessment and the prices of the respective diamonds.

Established in 1931, the Gemological Institute of America (GIA) is the world’s foremost authority on diamonds, colored stones and pearls. A public benefit, nonprofit institute, GIA is the leading source of knowledge, standards, and education in gems and jewelry. The·GIA·is the authority amongst the gemological research institutes, its assessments are reliable and precise and the interpretation of the evaluation criteria are considered to be very stringent so that diamonds with a GIA certificate are provided with the greatest stable value on the one hand, and on the other, GIA-certified diamonds also achieve the highest prices. GIA certificates are globally equally well-known and recognized. (www.gia.edu)

The·HRD Antwerp diamond lab is the largest diamond lab in the world that issues reliable diamond grading and jewellery reports fully compliant with the rules for grading polished diamonds set by the International Diamond Council (IDC). We are the only international lab that strictly adheres to these rules, which have been approved by the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA), the industry's two leading representative bodies. HRD Antwerp's primary shareholder is the Antwerp World Diamond Centre (AWDC). The AWDC is a private foundation established in 1973 as the Hoge Raad voor Diamant (HRD) or Diamond High Council and represents the Belgian diamond industry. (www.hrdantwerp.com)

The International Gemological Institute (IGI) was established in Antwerp in 1975 as a laboratory for the certification of diamonds, gemstones and jewellery. Around the world, IGI certificates bring confidence when buying or selling diaonds, gemstones and jewellery. Total commitment to understanding consumer concerns has motivated IGI to develop comprehensive analysis and clear documentation for consumers. This empowers jewellery buyers to focus on finding precisely what they want, with full assurance in the integrity and quality of the IGI certification.

IGI is the largest organization of its kind, with operating laboratories & offices in Antwerp, New York, Hong Kong, Mumbai, Bangkok, Tokyo, Dubai, Tel Aviv, Toronto, Los Angeles, Kolkata, New Delhi, Thrissur, Jaipur, Surat, Chennai, Ahmedabad and Hyderabad. The IGI School of Gemology has locations in Antwerp, Mumbai, Delhi, Hyderabad, Surat, Ahmedabad, Chennai, Dubai, Shanghai, Rome, Ascoli Piceno, Trecastagni, Cavalese, Marcianise and offers a variety of courses designed for professionals and consumer enthusiast alike.

A certificate from IGI represents the all-important 5th C that no one should be without: Confidence. As the world’s largest independent gem certification and appraisal institute for diamonds, colored gemstones and jewelllery, IGI is a standard for industry professionals and consumers around the globe. (www.igiworldwide.com)

See also assembly certificate

 

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„Commodity: Can the ID-Knoxes become a commodity in the future?·

The value of a diamond depends on its physical quality which is certifiable and can be described according to international standards·(see Diamond Certificates and Quality). This generally results in a material assessment situation that is significantly less complicated than for the vast majority of other material assets!·

If one understands commodities to be exchangeable goods, the quality of which can be qualified by means of unambiguous criteria so that, in the absence of additional possibilities of differentiation, quantity and price are the only relevant issues on the market – and not, for instance, their origin or manufacturer – then a polished diamond as such definitely has the potential to become a commodity! At the same time every polished natural diamond remains – when you look closely enough – a unicum and you have to do quite a bit of searching before finding a 100% duplicate. The conceivable combinations consisting of all Furthermore diamonds, in combination with a piece of jewelry as a carrier, are provided with a special type of individuality which, in a manner of speaking, de-commodisizes them in terms of perception and origin – and consequently also makes them more expensive!

ID-Diamonds want to make diamonds accessible as an investment opportunity; this is why the diamonds have to have as much commodity character and as little jewelry character as possible. The most extreme form of this logic, in which the main focus is on the diamond as a loose stone and the wearer slides entirely into the background, is basically portrayed by a customary small leather bag, which on pictures often contains a heap of diamonds. By means of the ID-Knox, ID-Diamonds has developed a concept for safekeeping that does not dominate the stones but uses a sophisticated technique to present them, make them emotionally accessible and refine them as individual valuables - thereby rendering their own material value negligible because the valency of the product as a whole should be focused on the diamond as such in its material valency – but also on its beauty, a special feature which distinguishes it from all other commodities.

 

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Customers: Who does ID-Diamonds address?

ID-Diamonds addresses wealthy private individuals pursuing long-term, physical wealth preservation strategies in addition to classic investments and who are interested in products whose estimation is not driven primarily by fungibility (such as gold or other precious metals), but partly also by individual assessment, which has to do with taste or emotion. It is more about tangible substances than rapid turbo returns. Examples of such investments are, apart from precious metals/coins, real estate and forests also art/antiques, vintage cars, wine or the like. ID-Diamonds offers four standard diamond units - ID-Knox 1 to ID-Knox 4 – that suit different investor profiles (pls. see product portfolio at www.id-diamonds.de).

 

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DDI: What is DDI and what does it do?

The Stiftung Deutsches Diamant Institut (DDI) with headquarters in Pforzheim is one of the only institutes that is globally accepted by the CIBJO (Confédération Internationale de la Bijouterie, Joaillerie, Orfévrerie, des Diamants, Perles et Pierres Precieuces = International Association of jewelry, silverware, diamonds, pearl and gemstones). The work performed by the DDI (and all CIBJO institutes) primarily consists of assessing diamonds according to international regulations determined and accepted for the first time in 1979 by member states of the CIBJO from all around the world. These regulations continue to be revised and expanded; the current edition is based on the edition of 2010. The assessment of a diamond exclusively comprises a statement about its quality with regard to color, clarity, cut and weight. A value statement is not provided, since the foundation does not trade with diamonds.

The DDI Foundation is located in Pforzheim. It is an establishment of the industry for the industry. The institute was founded in 1976. By choosing to become a foundation in its proper legal form, the DDI made a conscious decision to place itself under the supervision of the responsible regional authority. The DDI is currently supported by 38 trustors with a proportion of shares each. The trustors represent the entire German sector of gemstone dealers, jewelry manufacturers, jewelry wholesalers and jewelers. The foundation is a non-profit organization.

The DDI is represented by Jeanette Fiedler, Managing Director and Dr. Alfred Schneider of the Foundation’s Board of Directors (status summer 2017).

See also Assembly (audit) Certificates

 

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Assembly (audit) Certificates: Which labs are auditing the diamonds in the ID-Knox and sealing it?

As well IGI as DDI provide assembly certificates for our ID-Knoxes

They assess every single diamond on behalf of ID-Diamonds as well as monitoring and, most importantly, confirming the composition of the diamonds for every individual·ID-Knox. To do this they compile a report, which allocates each individual ID-Knox identification number with individual diamonds via·GIA, HRD or IGI laser inscription.·As a result, stocking of the entire unit is professionally, clearly and independently documented.

Therefor all ID-Diamonds products are certified twice in total i.e. the individual diamonds by the most renown international diamond labs·GIA/HRD/IGI·and the unit by the·DDI or IGI.

The statement of IGI: “International Gemological Institute (IGI) is acting as an independent gem auditor and provides this service at a nominal fee. IGI has identified the submitted laboratory report and gemstone using the necessary identification methods and equipment, mainly by ways of weight and measurements. In our opinion, the objective measurements and weight of the submitted laboratory report fairly state the respective diamond and are consistent with our results herein. IGI may not be held responsible for grading results stated on the submitted report. Neither IGI, nor its employees, shall be liable or responsible for any error in or omission from IGI´s Gem Audit. This report may not be referred to as a guarantee, valuation or an appraisal.”

The statement of DDI: The foundation Stiftung Deutsches Diamanten Institut, Pforzheim confirms, that the GIA/HRD/IGI certified diamonds listed on the left side of this certificate, have been sealed under its supervision to a ID-Knox with the ID-Knox ID: xyz.

 

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GIA: What is GIA and what does it do?

GIA stands for Gemological Institute of America. The GIA is the world’s most prestigious certification institute for cut diamonds;

See also diamond·certificates.

 

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GIA, HRD or IGI laser inscription: What does the lasered diamond identification number mean?

In order for diamonds used by ID-Diamonds to be unmistakably identified, they are provided with an individual diamond identification number (GIA, HRD or IGI laser inscription registry). This diamond identification number is inscribed onto the round list (belt) of the diamond with a laser and can be verified with a strong magnifying glass; for the naked eye, however, it remains invisible. The beauty of the diamond is not affected through this process. Whereas, for the owner, the security of the diamond is significantly increased.

 

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HRD : What is HRD and what does it do?

HRD stands for Hoge Raad voor Diamant. The HRD is a leading diamond certification lab under the umbrella of the Antwerp World Diamond Center (AWDC). (www.awdc.be)

 

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ID-Diamonds·bvba: The core-business

ID-Diamonds bvba was founded in Antwerp mid 2017. It is particularly committed to dealing with the issue of how polished diamonds can be safely, transparently and representatively made available as investment opportunities at attractive prices. ID-Diamonds is a registered trade mark; the core product of the company – the ID-Knox – a multi-patented security system, that enjoys legal protection for registered designs to embed polished diamonds.

ID-Diamonds bvba

  • purchases top quality certified polished natural diamonds from prestigious Antwerp diamond companies at attractive wholesale rates,
  • creates a clear connection between diamonds and associated, internationally accepted quality reports/certificates,
  • joins several diamonds in order to combine four standardized unit sizes, which are tailored for various investment amounts and purchasing motives,
  • Provides these units with storage security, representativeness and value traceability by means of the representative ID-Knox,
  • Provides transparency regarding performance
  • Facilitates and supports resales activities and
  • Provides additional services related to diamonds as an investment (consulting, insurance, safekeeping, reclosure, …).

By means of their product portfolio ID-Diamonds addresses the question of whether diamonds are a commodity. Because every ID-Knox reduces complexity, creates transparency and comparability. Yet it does not negate the emotional value of a diamond. Because despite its technical-methodical qualities the ID-Knox is also representatively designed and could quite possibly be used as an innovative presentation item or jewelry.

 

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ID-Knox: Where does it stand for?

Today the classic use of polished diamonds regularly includes the upgrading of objects for the wearer. This ranges from a diamond stud on an otherwise worthless mobile phone case right up to watches and jewelry which are provided with one or more diamonds in a more balanced value relationship. Despite this the wearer is still the focus of attention in all these examples: the diamond case, the diamond ring, the diamond necklace.

For the purpose of investment an inverse logical approach is required: the diamonds, as loose stones, are the focus of attention; the wearer himself has to remain in the background but meet the presentation and security safekeeping requirements that are expected for high-quality diamond collections.

In view of the above, ID-Diamonds has developed the ID-Knox (Identity Diamonds and Knox of Fort Knox) as an innovative and thus far unique form of such a carrier, that does not dominate the stones but presents them, refines them and makes them accessible in a sophisticated manner as loose valuables – by receding into the background itself in terms of value. The material value of the entire product is also reduced to the diamond as such with all its value components (material value, beauty, emotional value).

Every ID-Knox is created in the following manner:

  • Three-layered construction (cover, carrier and base plate) made of special highly transparent, scratch-proof cast acrylic glass with special surface hardening and resistance to light.
  • Cover and carrier plate are highly transparently glued together with a circumferential security contact thread (silver); printing with mark of authenticity made of IR lacquer, only recognizable under a UV light with an appropriately adjusted spectrum.
  • Base plate with integrated magnet element; optionally and on request available in different colors, with engravings or also with additional functions.
  • Additional connection of cover and carrier plate by means of two safety rivets: edition in stainless steel, hollow interior for inclusion of carrying straps, circumferential security labeling with individual ident. number of ID-Knox on rim.
  • Embedded security chip (ReadOnly, Interface via Micro-clip) on the lower end of each ID-Knox, that is able to save all documents (GIA certificates for each individual diamond; DDI report for stocking) and prevent manipulation and is able to (offline as a reading device) stop security and integrity routines as well as being able to retrieve value performance data (online if requested) after being connected with a computer.

By means of these features each ID-Knox is able to guarantee …

  • Security and protection: every ID-Knox safekeeps diamonds so that they are safely stored. Removal is only possible through destruction of the ID-Knox and separation of the integrated security thread, which then makes it impossible to retrieve the certificates and further quality characteristics of the stones. Each ID-Knox also protects the stones from dirt and from falling out.
  • Verifiability: The culets of the inserted stones are freely accessible in each ID-Knox. After removing the magnetically held back cover, verification of the natural diamonds can be conducted by means of a customary conductibility tester. Moreover, this type of safekeeping allows for a tactile experience and rotation of the stones, so that the ident. no. which is lasered into the belt can be read (magnifying glass with very high magnification) and verified.
  • Representativeness: Each ID-Knox is highly transparent from three sides, providing a high degree of visibility and allowing one to experience their brilliance by means of the polished drill holes for insertion of the stones. The ID-Knox fulfills the highest design requirements and can also be presented as extraordinary exhibit or worn as jewelry due to the safety cables which are open on the inside. The optional colored or transparent back covers provide the ID-Knox with variability for safekeeping as well as for representative purposes in terms of light conditions, individual preferences and environments.
  • Transportability. Each ID-Knox – regardless of how it is stocked – is manufactured in one standardized size to allow for collection, inconspicuous transportation and the right size to fit into any business card pocket.

The ID-Knox is multi-patented; registered design and design protection are provided.

 

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IGI : What is IGI and what does it do?

IGI stands for International Gemological Institute. The IGI was established in 1975 as a leading laboratory in Antwerp, now operating worldwide.

 

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Investment in diamonds : Which options for investing in diamonds are currently available?

Purchase of diamond-studded jewelry. The most common use of natural diamonds today is in jewelry. This naturally means that high retail business margins are charged. Therefor jewelry is less suitable for investment purposes; it is primarily purchased because it is beautiful and decorative and not mainly because of its value.·

Purchase of loose, certified polished natural diamonds as individual items from dealers – online if required. As a general rule the prices payable are significantly lower than the prices that jewelry retailers calculate in pieces of jewelry. Online diamond sellers who specialize in sales, often fall back on stock lists used on the same B2B platform (and then offer diamonds to customers that are not actually their own) and provide hardly any services except subsequent resales support. International platforms are operated by enterprises such as IDEX (www.idexonline.com) or the US Rapaport Group (RapNet). However, these platforms are mere B2B platforms and only accessible to intermediaries i.e. jewelers with an established market position. Stones offered to end customers by online dealers often display extensive value ranges with regard to existing qualities (the 4C’s), that can only be explained after more detailed specification. Strictly speaking it can be noted that the mean values of the Rapaport list lie slightly above these, particularly if one fades out offers which appear to be especially cheap but are partially not available if planning to make a concrete purchase and can observe that the prices are relatively high with regard to jewelry-oriented quality.

Interest in diamond funds. The performance of such investment products depends on the cut diamonds that are physically stored (with the issuer) or tied to an underlying asset which is highly correlated with the price of the diamond. This strategy was pursued by, for instance, the unsuccessful Thomson McKinnon Diamond Investment Trust of 1981, the Diamond Circle Capital Fund (volume of US$ 50 mill., purchase of stones at US$ 1 mill. at least respectively, listed in London since 2008), the Pretagus Diamond Fund, which provides investments starting at € 3,000 and claims to purchase its stones at 10% less than the Rapaport price list and deposit them physically. Similar product announcements have been made by Harry Winston (NYSE: HWD) with targeted funds of over US$ 250 for institutional investors or IndexIO with the intended IQ Physical Diamond Trust (which apparently is the first diamond-backed exchange traded fund). Even Polished Prices (see www.polishedprices.com), Martin Rapaport (see www.diamonds.net) or the enterprise Diamond Asset Advisors, that are reported to specialize in diamond investment consulting, are, according to own announcements, pursuing corresponding product planning.

Interest in publicly listed diamond groups or their investors. The number of corresponding investment options is small. Known groups include Alrosa, Russia (MICEX: ALRS); Petra Diamonds, UK (LSE: PLD); Gem Diamonds, UK (LSE: GEMD); Firestone Diamonds, UK (AIM: FDI); Stornoway Diamonds, Canada (TSX: SWY); Dominion Diamonds Corp., Canada/USA (NYSE: DDC); Mountain Province Corp., Canada (TSX: MPV) and Lucara Diamonds Corp., Canada (TSX: LUC).

Purchase of large mining company shares. However, the market trend of companies such as Anglo American, BHP or RioTinto only partially depends on the demand for diamonds since these companies operate significantly larger iron ore and/or coal mines.

 

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Investment in diamonds : What are the advantages/disadvantages in comparison to other material asset investments?

The purchase of certified polished natural diamonds for investment purposes constitutes a long-term investment in material assets. It should be determined within a context that includes other material asset investments such as gold/precious metals, real estate or land, luxury goods (watches/jewelry etc.), antiques (e.g. vintage cars) or even wine.

Advantages·

Highest specific value. A bar of 1,000 g of fine gold cost approximately € 35,000/kg in the summer of 2017. At this time one would have been able to acquire two excellent, cut one-carat diamonds for the same price. These would however have added up to a total weight of 0.4 g!

Uncomplicated transportation, easy storage, durability. The transportation of cut diamonds is entirely uncomplicated (in contrast to, for instance, houses and land, that are naturally immobile) and they can be securely deposited in safes (in contrast to, for instance, wine or antiques with partly sophisticated storage requirements and considerable storage costs). This advantage is particularly noteworthy in contrast to gold, which private citizens in Germany own over US$ 400 billion of and half of which is stored at their homes with a corresponding need for space and respective security costs!

Fundamental performance factors are in favor of diamonds. Generally speaking the availability of diamonds is marginal because a whole range of diamond mines have been almost entirely depleted and the development of new larger profitable mines is, according to experts, not in sight. Particularly due to the extensive costs for the development of new mines and lengthy development periods the production of rough diamonds will decrease significantly, see “Perspectives on the diamonds industry” by McKinsey & Company, September 2014, page 4. At the same time the demand for diamonds is expected to increase between 2% and 5% per annum, see Bain & Company, “The global diamond industry”, Bain & Company, 2016, page 37. As a result Bain & Company is expecting a strong supply-demand-gab in the coming years, see “The global diamond industry”, Bain & Company, 2016, page 37 ff.

Sturdy future trends, limited volatility, marginal correlations with other material assets. Existing price information systems·(price) show that the prices of cut diamonds are able to display stable trends; see·Performance. Performance of these standard size prices includes significantly less volatility than the indices of major securities traded on the stock exchange. Furthermore, the price development of cut diamonds is not or scarcely correlated with the development of other material assets.·

Limited risk of loss. Given the limited yet existing volatility, there is, nevertheless a risk loss when investing in cut diamonds. However, it is in the nature of a physical diamond that the risk of value loss (excepting the physical risk of losing it) is limited and is not subject to risk of decay or degeneration. Even the risk of changing tastes is especially low when looking at colorless round cut diamonds.·

International standardized quality regulations as a basis for pricing. Even though the pricing of diamonds does not (yet) possess the quality of pricing for material assets such as gold which is carried out through official ongoing listings, it is most definitely more advanced than for other material assets. This is why there are no quantifiable or standardized criteria for real estate, antiques, art or wine, which provide a basis for evaluation. Unlike diamonds, that quite definitely possess·“commodity”·attributes due to their easy to classify nature, the characteristics of these material assets are too varied or taste-related.·

Disadvantages

Limited fungibility in contrast to capital market-oriented investment products. Even though the resales of diamonds through diverse trade platforms or as a commodity-like product is by all means given; considering their usage in jewelry (jewelers as customers) there are no implementation periods as we know them from capital market-oriented securities through highly liquid spot markets. Such markets and an official price regulation do not (yet) exist for cut diamonds. But transparency about price fixing (→price) is increasing and the existing trade platforms are opening up to private buyers as well as providing resales support (see IDEX magazine, 08/2012, p. 98 with a report about the Singapore Diamond Exchange (SDX) as a private exchange for private investors).

Obligation to pay VAT for private persons. In most countries the purchase of physical diamonds and the vast majority of other material assets is subject to sales tax (tax rate for cut diamonds e.g. Germany is currently 19%; Austria 20%; Belgium 21%, Luxembourg 15%; Switzerland 8%; Dubai 0%). Therefore diamonds and most other material assets, in comparison to investment gold which is exempted from sales tax, present a disadvantage for private buyers.

Buy/sell spread. Similar to all physical investments there is also a relatively large spread between buying and selling prices for diamonds. For gold it currently amounts to approximately 6 - 10% and is not precisely predictable for art, antiques as well as diamonds. However, it can be significantly lowered by means of favourable entry prices (on the level of established resales prices) in connection with recognized, common and therefore “liquid” qualities.

 

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Kimberley process KP: What does this mean?

The Kimberley process is a system that is aimed at preventing trade with so-called blood or conflict diamonds by means of state certificates of origin. These blood or conflict diamonds are rough diamonds which have been or are being used to finance various African wars. The Kimberley process has by now 54 participants representing 81 countries (among these the states of the European Union), including various African diamond mining companies. An international committee has been set up to verify whether the participating states issue the certificates in the correct way.·

ID-Diamonds requires its suppliers to explicitly confirm that the diamonds they deliver are conflict free and stem from legitimate sources; see also·quality.

 

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Performance : What is the performance of ID-Diamonds products?

The sales prices of ID-Knoxes increased during the last years:

Product

Sales price ex. VAT on 31.12.2013

Sales price ex. VAT on 31.12.2016

Performance 2013 - 2016

ID-Knox 1

EUR 153,400

EUR 179,700

+ 17%

ID-Knox 2

EUR 26,700

EUR 37,400

+ 40%

ID-Knox 3

EUR 64,200

EUR 83,600

+ 30%

ID-Knox 4

EUR 7,000

EUR 9,350

+ 33%

 

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Diamond Price : How much should diamonds cost?

Whereas the quality-related assessment of polished diamonds is relatively easy because it is carried out according to globally applied criteria (see also Quality) and is confirmed by prestigious diamond certification labs (see also Diamond Certificates), the monetary evaluation of diamonds is a closed book for a large number of people.

At the same time the question on how much a certified diamond is allowed to cost is relatively easy to answer. Because there are a range of institutions that regularly publish price lists in US$, the global currency for diamonds. These price lists, which are a fundamental illustration of the wholesale market, serve as indicators among experts for diamond valuation and value tracking on this level of the value chain.

The world’s most recognized and common classification of (certified) diamond qualities compared values for cut diamonds is provided by the Rapaport Diamond Report (see www.diamonds.net : The Rapaport Diamond Report is the industry's primary source for diamond prices and market information. The Rapaport Diamond Report is published every Thursday on a weekly basis by the deemed to be independent US Rapaport Group that has been the standard reference for the evaluation of diamonds since 1978. The Rapaport Diamond Report globally defines the starting point for price negotiations amongst wholesalers and distributors and is only accessible to professional players and not private individuals.

In addition to Rapaport there are further, less important institutions that also publish price lists e.g.

  • The US corporation IDEX (International Diamond Exchange with its IDEX Diamond Price Report, which according to its own statements is “ … an objective, transparent wholesale price list, based on market data”.
  • The likewise US company Polished Prices which was founded in 2001 by Ch. Windham, a former DeBeers employee. They claim to provide the first independent price information list for diamonds via weekly market reports based on actual transactions.

With respect to the practical application of cut diamonds, buyers e.g. jewelry dealers or jewelers, regularly speak about the percentage at which they purchased them under Rapaport and the percentage at which they resold them above Rapaport to end customers, for instance in the form of jewelry.

Offers of individual stones by Internet dealers regularly show that there may well, from time to time, be individual stones available to end customers that are under Rapaport (before VAT). Yet it remains to be determined whether these stones are flawless and actually available within each rating category.

 

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Quality : What diamond qualities does ID-Diamonds use?

Every polished natural diamond is a refined natural product and therefore a unique piece. Nonetheless there is an international standard for determining the physical quality of diamonds: by means of the 4 C specifications (carat, cut, color, clarity) as well as differentiated criteria for the cut (particularly the symmetry, the polish, the polish grade – but also with details of dimensions such as relative table size, depth, etc) and fluorescence a diamond these days can be very accurately classified and officially certified by internationally recognized entities (see also Diamond Certificates). All in all this results in an evaluation scenario which is more standardized and clearly less complicated than for many other material assets!

In order to create a sensible selection from the theoretically infinite number of options to determine the physical quality of diamonds that are to be used in an ID-Knox ID-Diamonds combines the units according to the following criteria:

Simplicity, comparability, transparency – without loss of emotion

When considered purely as gemstones, diamonds are not an exotic product because almost everyone has some idea of what they are, usually characterized by attributes such as “valuable”, “rare” and “desirable”. At the same time many people regard the large variety of possible qualities, the lack of transparent evaluation (see also Diamond prices) for experts, a partially negative context (e.g. child labor in mines, blood diamonds, counterfeiting/man-made diamonds etc.) and the suggested intransparent structures on the diamond market as obstacles in their decision for the purchase of individual stones for investment purposes.

Against this background, ID-Diamonds bvba create their product range in such a way that the diamond as a product becomes easier to comprehend for non-experts. As a result ID-Diamonds bvba currently offers four ID-Knoxes which are all stocked with diamonds from merely two clearly defined weight categories. The physical quality of the diamonds is respectively documented in a comprehensive clearly assignable manner by means of individual GIA laser inscriptions for each. All quality characteristics can be accessed on request at any given time via a secure data interface. The entirely transparent, tangible and visually appealing embedding of the stones in an ID-Knox ensures that the stones are not only safely stored but that their beauty and the conveyed emotions are likewise maintained.

Maximization of the relative (value) security

Many people are unsure about the monetary evaluation of diamonds. So even though there may be an increasing amount of transparency about existing physical qualities through a number of price indicators (see also Diamond prices), these are based on representative estimations or averaging through sales prices or also (thus far infrequent) transaction prices. Therefore the sales prices offered by online dealers, according to existing quality criteria, are always so far apart that a lay person is often not able to comprehend them fully. Irrespective of these facts, the following observations can be made:

  • The relative price range (highest price in % of lowest price) often decreases according to how much more physically valuable the stones are. Therefore the prices of, for instance, one carat with minimal inclusions and a good cut are generally further apart than those of flawless one carats with an excellent cut and otherwise identical characteristics.
  • The observable volatility of price developments but also their performance potential over time generally increases with the weight of the diamond (carat).

Within the context of secure value, both observations lead to a diamond selection in the carat categories 0.5+ und 1,0+, with very high to maximum quality requirements regarding cut, clarity and color, that can be clearly allocated to a respectively lasered individual identification numberon the belt of the additionally provided GIA report. The + in the carat specification is used to show that ID-Diamonds bvba prefers to use diamonds that lie marginally above the specific threshold values of 0.50 or 1,00 (polish reserve). On the one hand this is due to the fact that the diamonds with any precisely predetermined weight whatsoever are statistically seen rare and on the other hand diamonds with slightly more weight can also be recut without dropping out of the relevant price/carat category.

If stones stem from legitimate sources this likewise secures their value because the risk of perception is also reduced. ID-Diamonds only uses stones that are verifiably conflict free. This regularly occurs through the commitment of suppliers to the so-called Kimberley process. ID-Diamonds bvba specifically requires its suppliers to certify the following: “The diamonds …. have been purchased from legitimate sources not involved in funding conflict and in compliance with United Nations resolutions. The seller hereby guarantees that these diamonds are conflict free, based on personal knowledge and/or written guarantees provided by the supplier of these diamonds.”

Maximization of relative fungibility

There is no official, continuously listed spot price for diamonds (such as for gold). This is why ID-Diamonds bvba mainly addresses long-term investors, who are primarily interested in preservation and security of their assets instead of quick profits and reselling. At the same time ID-Diamonds also wants to offer diamonds that possess a relatively high potential for reselling within an appropriate time period because they open up a relatively high degree of fungibility in terms of subsequent use. The following can be observed in this regard:

  • Up to now polished natural diamonds have been used most frequently in jewelry. Stones of up to 1.0+ carats are, by all means, common and “liquid“ sizes, especially when they appear on the market as a pair of very similar stones (e.g. earrings).
  • Whereas round polished (brilliant cut) is the most frequent and commonly used or applicable shape. Furthermore, it is the shape that is most easy to describe and therefore to use in terms of cutting dimensions.
  • Fungibility is provided if a sales requirement meets a purchase requirement in a relatively short space of time. The biggest customers of cut diamonds are jewelers. Major player such as Wempe or Tiffany define minimum quality criteria for the diamonds they use. Diamonds purchased by ID-Diamonds bvba consistently and clearly exceed these criteria.
  • Diamonds with a natural hue (fancy stones) may be rare and expensive but their character is more subject to contemporary taste than colorless (white) diamonds.

In terms of the criterion of fungibility within the above-mentioned carat categories, these observations lead to the following specifications, initially be referred to as a “very high quality”:

  • Clarity: ID-Diamonds bvba uses stones that range between “flawless” to “very small inclusions”, these are the clarities FL (flawless), IF (internally flawless), VVS1, VVS2 (very very small inclusions 1 or 2) and VS1 (very small inclusions 1) in the international nomenclature.
  • Cut: ID-Diamonds bvba uses round diamonds (brilliants) with a strictly “excellent“ cut. ID-Diamonds bvba pays particular attention to criteria that are decisive for determining the brilliance of the stone, namely depth and table size.
  • Color: Depending on the value concentration required by the customer, ID-Diamonds bvba uses colorless diamonds ranging between "near colorless" (G) and "colorless" (D).
  • Furthermore, ID-Diamonds bvba only uses diamonds with a polish between excellent and very good as well as strictly no fluorescence (none).

Diamonds that meet these requirements and are used in an ID-Knox are of a very high to maximum quality with regard to every evaluation category and do not provide cause for a discussion on quality and taste. They exceed the minimum quality criteria of prestigious jewelers such as Tiffany or Wempe, in some cases to a considerable extent and are therefore – in terms of their potential reselling – attractive.

 

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Our Unique Selling Proposition (USP): What do we offer you as an investor?

We sell certified polished natural diamonds

With the supplier’s written guarantee of non-conflict

Our suppliers are the most prominent (Antwerp) diamond companies

The certification of each individual diamond by worldwide renown diamond labs as

  • GIA: Gemological Institute of America, Carlsbad
  • HRD: Hoge Raad voor Diamant, Antwerp
  • IGI: International Gemological Institute, Antwerp

Every single diamond has a laser inscription in the gurdle with the number of the underlying corresponding certificate

For each ID-Knox, we provide you with an assembly (audit) certificate by

  • IGI: International Gemological Institute, Antwerp, or
  • DDI: Foundation of the German Diamond Institute, Pforzheim

Our product, the ID-Knox, is a unique – multi patented – storage, security and documentation system

  • A prestigious tamper-proof carrier for the diamonds, including a travel case made of full-grained calfskin
  • Integrated security chip (Readonly, interface via microclip)
  • Able to save all documentation (certificates for each individual diamond; assembly certificate to guarantee that all diamonds in the ID-Knox match with the underlying certificates
  • If connected to a computer able to fulfill offline security and integrity routines as well as show details of the enclosed diamonds
  • Online access to the data of the enclosed diamonds and related performance report in a protected customer area

We offer a transparent pricing as the pricing is based on the international Rapaport Price List (which is the reference base for 99% of all polished diamond trades globally and is online available any time)

We provide you on our website a weekly updated price list (as mentioned before Rapaport based)

You can check the €/US$ exchange rate applied for the final invoice (if applicable) via www.bloomberg.com/quote/EURUSD:CUR

 

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Removal of stones from an ID-Knox: What happens to an ID-Knox if stones should be removed?

The security concept of the ID-Knox lies in the fact that it is only possible to remove diamonds from an ID-Knox if the integrated security thread is destroyed or severed. After this it is impossible to retrieve the certificates and further quality characteristics of the stones via the integrated chip. Provided individual stones should be removed (e.g. for sales purposes or for further use in jewelry), ID-Diamonds bvba will, upon request, open the ID-Knox and secure the remaining diamonds in a new ID-Knox in exchange for a favourable fee.

 

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Safekeeping : Where and how should the diamonds be stored?

ID-Knox provides an innovative safekeeping concept for individual diamonds as such, which is able to transparently stock and protect 10 diamonds and securely save their characteristics/certificates. Due to a dimension of only 2.9 cm x 1.1 cm x 10.5 cm an ID-Knox fits into any safe or can be stored in any other secure location.

 

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Reselling: How can one resell ID-Knoxes / individual diamonds taken from ID-Knoxes?

ID-Diamonds addresses long-term thinking and asset value-oriented investors. Therefore the sale of entire ID-Knoxes and individual diamonds taken from them is not a problem! Because we are in contact with a large variety of jewellers and have access to the most important professional diamond trade platforms through which we are, on request, able to resell the diamonds at market prices.

As a result ID-Knoxes are not only safe, transparent and representative but also provide our customers with an unusually high degree of flexibility for the diamond market!

Please contact us if you are interested in reselling and then send us your invoice with the ID-Knox number as well as, if so required, the individual gemstones which you want to resell. We will then provide you with a binding offer, in consideration of the respective market situation and the currently valid dollar exchange rate.

Should you not want sell the entire ID-Knox, we will gladly recombine the remaining stones into a new ID-Knox at cost price.

 

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Our Value Proposition (VP):

Given the current low interest rate environment and the persistent global market volatility, as well institutional investors - like pension funds, hedge funds and insurance companies – as individuals are more than ever looking to reduce volatility through diversification.

As such, many investors are looking to alternative asset classes not only to reduce volatility but also to diversify their portfolios and increase returns.

Diamonds are considered as a secure and crisis resistant investment.

Moreover, the macro-economic law of supply and demand indicates a structural increase of the diamond prices on the market worldwide.

Physical diamonds (certified natural polished diamonds) are an attractive investment segment because of:

  • potential value increase primarily through future demand exceeding world supply; ¹
  • real asset characteristics i.e. inflation hedge; ²
  • portfolio diversification because of low correlation to stocks, bonds and commodities; ³
  • low volatility compared to other commodities ⁴

 

1 Bain & Company, The Global Diamond Report 2015, page iii, 28 ff

2 Bain & Company, The Global Diamond Report 2014, page 23

3 Correlation Goldspot: 0.14; Silverspot: 0.11; MSCI World: 0.18; DB World Luxury: 0.12; source: Berenberg Private Capital GmbH, lnternal Research “Diamanten im Direkterwerb”, page 12; positive impact on portfolio, page 15

4 Last 15 years ˃10% p.a (color D-F, Clarity IF-VS2); Berenberg Bank/HWWI Studie Sachwerte 2030 (no. 15), page 47

 

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Viewing: Where can ID-Diamonds products be viewed?

After mutual agreement, ID-Diamonds bvba can arrange appointments for viewing in Antwerp and other big cities in Europe.

 

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RAPAPORT: What is the Rapaport Price List?

Established in 1976 by Martin Rapaport in New York City, the Rapaport Group is an international network of companies providing added-value services that support the development of fair, transparent, efficient, and competitive diamond and jewelry markets. Rapaport is best known for its Rapaport Price List. Established in 1978, the Rapaport Price List is the industry's primary source for diamond price and market information. The Pricing of approximately 90% of all diamond transactions are linked to the Rapaport Price List.

 

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Frequently Asked Questions

 

Here you will find answers to the product and to the diamonds.

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ID-Diamonds bvba, Rijfstraat 2- 4, B – 2018 Antwerp, Belgium, info@id-diamonds.com

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