Almost every commodity worth money has a futures market.
Diamonds, one of the most valuable things by weight on earth, have never sustained one. The reason is not that a diamond is hard to trade. It is that a diamond never had a price in the sense a market means the word.
Why the obvious market never formed
A futures market rests on two foundations a diamond cannot provide. One is fungibility, so that one unit settles like any other, and a diamond is the opposite of fungible, with cut, colour, clarity and carat making almost every stone its own small monopoly. The other is a price discovered by buyers and sellers meeting, which for most of the last century the diamond simply did not have. One company, De Beers, was the market. It held more than 80% of world supply as late as the 1990s and set the price by deciding how much of its stockpile to release, cutting supply when prices sagged and flooding it when a rival appeared. There is no room for a forward curve when a single seller can move the spot price by opening a vault.
The list that looks like a price
What the trade uses instead is the Rapaport Diamond Report, a price list first published by Martin Rapaport in 1978 and still the industry’s reference. It is worth being clear about what it is: a sheet of asking prices that dealers then discount from by negotiation, stone by stone. It is a quote, not a market. Nobody clears a trade on it, nobody can be held to it, and two dealers looking at the same list will settle the same diamond at different numbers on the same afternoon.
The one real attempt
The most serious try at building an actual exchange was the Singapore Diamond Investment Exchange, which from 2016 did the hard thing, standardising stones into fixed, sealed units it called Diamond Bullion, so that at last one unit really did equal another. It was the world’s first exchange for physically settled diamonds, and by the middle of that first year it had traded more than 35 million US dollars of them. It is now out of business. Standardising the stone turned out to be the easy part. The hard part was that the thing being standardised still had no independent price to settle against.
What happened when a real price finally arrived
Then the story that held the whole edifice up came apart. De Beers’ share of the market fell from more than 80% to about 35% by 2018 as new mines opened outside its control. And laboratory-grown diamonds, chemically identical and made to order, destroyed the one thing the natural stone was sold on, which was scarcity. Wholesale lab-grown prices fell somewhere between 70% and 90% between 2018 and 2024; a lab stone now sells for 73% to 83% less than its mined twin. Natural prices followed them down, falling roughly 50% over four years to the lowest level this century.
The point
For a hundred years the diamond had a number attached to it, defended by a cartel and the most successful slogan in the history of advertising. What it did not have was a price, in the sense of a figure that a market of independent buyers and sellers arrives at and a clearing house can stand behind. You cannot build a futures market on a number that was announced rather than discovered, and every attempt to build one has quietly confirmed it.
The absence of a diamond exchange was never a gap waiting to be filled by cleverer engineering. It was the market declining to ratify a price it had never actually set. When real supply and a real substitute finally forced the question, the answer arrived the way answers usually do in markets that were propped up instead of discovered: all at once, and downward.
Levanter Markets publishes for education. Nothing here is financial advice.