The Emergence of the Missing Tier

Throughout its history, the precious gems industry, diamonds and coloured stones alike, has run on a single engine of demand: jewellery. This one narrative and channel, through which value is realised has created a structural vulnerability, and while gold is an intrinsic element of the same end business, it benefits from a secondary market, being available as bars, ETFs, central bank reserves, and futures, thereby attracting a deep institutional ownership base. The same is broadly true of silver, platinum, and palladium. Even oil, copper, and lithium have liquid investment markets layered on top of their industrial demand; however, no such model exists for diamonds and gemstones - yet.

The consequence is felt by both the industry and investor alike. The industry, lacking a secondary market, absorbs every cyclical shock through the only one it has. The investor, meanwhile, simply cannot get direct exposure to the asset in any meaningful sense. An investor who wants exposure today has three unattractive options: buy branded jewellery and absorb a 100%+ retail markup, buy a polished stone and discover there is no functioning secondary market, or buy equity in a mine and inherit operational risk that has little to do with the underlying asset. While wealthy collectors can bid for trophy assets at auction, these remain one-off purchases rather than real investment products. This gap is the industry’s greatest challenge, but it is also its most significant opportunity.

Rarity is Structurally Locked In

The case for a precious gems investment tier does not rest on speculation, but on a supply curve reality the industry has been quietly mapping for over a decade. Exploration spending across the diamond sector has fallen sharply since 2015, with many capital projects deferred or cancelled. New discoveries tend to be in remote, capital-intensive locations, while existing mines are running into the limits of their open-pit lives. Jwaneng and Venetia are at-scale examples, both converting to underground operations to reach deeper ore. As an outcome, conversion rates from discovery to commercial viability remain at long-odds, single-digit percentages over multi-decade timeframes. Scalable, tier-one assets are rarer still, a key reason why major diversified miners have exited the space. With flagship operations like Argyle, the world's largest source of pink diamonds, already closed, the supply curve is bending downward at precisely the moment global wealth and demand for hard, finite stores of value are bending upward.

For coloured gemstones, the rarity is more acute. The finest rubies, sapphires, emeralds, tourmalines, Alexandrites and tanzanites are orders of magnitude rarer than top-colour white diamonds, yet the supply base is fragmented across artisanal operations with few recognised juniors and almost no majors. This has resulted in no consolidated capital, no scaled exploration, and limited production discipline. Furthermore, many of these gems are geographically concentrated: tanzanite comes from a single deposit in Tanzania, and the finest paraiba tourmalines from just a few locations in Brazil, Mozambique, and Nigeria. A single border closure or local conflict can take a meaningful share of global supply offline overnight. Rarity therefore, not a cyclical story but a structural one, geologically baked in.

Innovation Challenges

Anyone serious about closing this investor-access gap must confront four underlying challenges. First is mark-to-market benchmarking. Unlike gold, each diamond and gemstone is unique, making the creation of a spot price elusive. Because pricing has been historically opaque and dealer-driven, a credible, transparent valuation methodology, trusted by buyers, sellers, custodians, and auditors alike, reflecting bid and not just asking prices, must be created from the ground up.

Secondly, investors will not allocate to an asset class that cannot articulate why it should appreciate. The supply story must be translated into a return profile that can demonstrably compete with alternatives on a risk-adjusted basis.

Thirdly, any store of value with no exit is a sunk cost. Investable structures need redemption pathways, secondary markets, and credible market makers. Liquidity will likely be thin for years before it is deep; that is a reality of every new asset class.

Finally, regulation is paramount. The line between an unregulated digital novelty and a regulated security is where projects live or die. Jurisdictional choice is the entire game.

Catching the Next Wave

While variants of this idea have been floated before, we must look at the signals, patterns, and trends to understand the investment market's likely evolution. Precious gems investment has been a signal story for years, a smattering of startup activity with a tokenisation pilot here, a provenance platform there. Today, these are clustering into a pattern: a locked-in supply curve, growing investor demand for alternative investments, a surging Real World Assets (RWA) movement, the emergence of dedicated virtual asset regulators, and AI dissolving the non-fungibility problem. A full blown trend developing from this pattern is the next stage, and the cost of being early is now considerably lower than the cost of being late.

The good news is that the technology to close this gap exists and functions at scale. Blockchains, digital product passports, smart-contracts, tokens, and stablecoins collectively solve problems the industry has wrestled with for a century with the diamond industry being an early mover through platforms such as Tracr. A field of credible players has since emerged, from those focused on provenance like iTraceiT and Sarine, to those leaning into investment like Dubai-based Icecap, Tokinvest and Ctrl Alt. All these developments are important building blocks demonstrating progress, and the next step is greater collaboration on interoperability or a shared layer that lets these building blocks speak to one another.

AI is the final piece of the puzzle. Machine-learning-driven scoring and indexing make it possible to normalise differences across unique assets and construct standardised tradable units. The fine wine and art markets have shown this pattern works; assets once considered untradeable now sustain benchmarks because technology does the heavy lifting of standardisation. Diamond Standard was an early mover in solving this for Diamonds with Coin and Bar offerings. With further AI driven innovation, the addressable scope expands from investment-grade jewellery and polished stones to curated parcels, rough diamonds and possibly even mine-level reserves.

Dubai as the Accelerant

Of all the jurisdictions positioning themselves for this moment, Dubai is the most credibly placed. We already sit at the centre of global diamond and gemstone flows, home to the world’s largest diamond exchange. We have a regulator, VARA, purpose-built for virtual assets, and the DMCC ecosystem, which combines physical commodity infrastructure with a tokenisation lab and deep relationships across the value chain. Finally, Dubai possesses the political will and speed of decision-making that is less evident elsewhere.

The institutional angle is the prize. Wealthy individuals and family offices first, then private banks, and finally the long-only allocators hunting for uncorrelated, inflation-resistant assets. Trophy stones will be the proof-of-concept, while parcels and rough provide the volume. The first credible, regulated, mark-to-market product that can demonstrably deliver compelling returns and with enough liquidity will not just succeed on its own terms, but reset the terms of the entire industry. The question is no longer whether this tier of demand will be built, but who builds it, and where.