From Tulips to Diamonds – Transparency

(ehudlaniado.com) - If I had to guess, I would say that those who bought into the Tulip Mania of the 1630s in the Netherlands had some information on the tulip bulbs they bought. However, in the era of Big Data, there is a lot more available information, and that makes buying an asset a very different kind of affair. In the past two articles, I argued that to create a market of diamonds as a wealth preservation asset, we need a number of things to happen. First and foremost, we need to reach a critical mass of believers. A group of people interested in diamonds, and confident that whichever diamond they buy, they will find a buyer who will purchase the asset from them, paying them a premium, just as we do already with other assets. This group needs to be large enough to create resell value, which will in turn create demand and form a market. For all this to happen, we will need a critical mass of believers who will keep the value of traded diamonds sustainable. Another essential component is education. Education may include museum programs that display diamonds, and discuss how they are formed, polished, traded and used. Another venue is schools, where science classes at elementary schools discuss volcanic eruptions, which is a pre-requisite for diamonds appearing on the surface of the planet. Kids should know that diamonds are rare natural creations, formed at the depth of the planet over millions and even billions of years, and pushed to the surface by volcanic activity. I also pointed out that auction houses provide information on fancy color diamonds on sale to educate potential buyers, and called on the industry to expand this educational effort. Without widespread education, there would be no widespread appreciation for art, and without that, a critical mass would not have been formed to create an art market – the same goes for diamonds.