Icecap: The Diamond Marketplace For Hard Asset Investors
What is Icecap? (Overview)
Icecap is an open trading marketplace in which investment-quality diamonds are bought and sold for hard-asset portfolios. Icecap’s market, technology, and processes greatly reduce the primary sources of friction that have traditionally made the diamond market difficult for hard asset investors. With Icecap, diamonds can be bought and sold in a manner somewhat similar to the markets in gold and silver bullion. However, there are differences as further explained below.
How “investment-quality diamonds” are defined:
Icecap is extremely selective in what types of diamonds are acceptable for trading. While full specifications are here, Icecap diamond trading is restricted to round diamonds, earning a “triple x” cut-quality rating from GIA, D-I color, and FL-VS2 clarity. Also, all negative factors such as graining, strong fluorescence, and other attributes that diminish diamond value, but which are not factored into the “Four C’s” are prohibited.
Note: The reason these types of diamonds are considered “investment-quality” is that, to the maximum extent possible, these diamonds are the ones that are the most liquid, and easiest to sell. Stones outside these parameters can be problematic for investors.
How quality-control is maintained:
In addition to the above gemological requirements, all diamonds on Icecap’s trading platform must have a GIA grading certificate, and those grades must be audited and confirmed by GCAL, the only diamond grading lab in the world that guarantees its color and clarity grading. Without this GCAL auditing, a diamond could easily be up to two color and/or clarity grades off from its GIA certificate—with a corresponding change in value. On Icecap, traders know precisely what they’re buying and selling.
Investors should note that obtaining diamonds from any source that does not include this dual grading, with guarantee, are incurring substantial risk.
How the marketplace works:
The core reason the diamond market is inefficient is that diamonds are not “fungible”. Unlike gold bullion, where every ounce is the same as every other ounce, diamonds are all different. How do you trade them? Answer: Before Icecap, not easily. The diamond market is similar to real estate in that you can’t sell a property, without finding someone who wants to buy that kind of property, and in that general location. That means most of the buyers aren’t interested in what most of the sellers are offering. That’s hugely inefficient.
Icecap solves this via its proprietary (patent pending) pricing algorithm which creates “virtual fungibility” between diamonds. While the process is complicated, the short version is simple. Icecap computes (via industry price lists) the likely wholesale cost of every diamond quality and weight combination in its marketplace. It calls this price “par.” Every diamond offered for sale is then ranked as a ratio to par. The diamonds that are closest in price to wholesale thus float to the top, while those furthest in price from wholesale sink to the bottom. This is called the Icecap “Value Index,” and it’s what powers the trading.