Diamond Mining Equities: Proxy or Distressed Bet in 2026?

Diamonds are among the most universally recognised stores of value on earth. Yet there is no diamond futures contract, no diamond commodity exchange, and no diamond exchange-traded fund that hands an investor direct exposure to the price of the stones themselves.

That gap is not an oversight. It is a structural consequence of how diamonds behave as physical objects, and it forces anyone who wants diamond market exposure into indirect routes. Historically, that has meant mining equities. But that default is now under fresh pressure from a 34% collapse in rough diamond prices since 2022 and the rise of blockchain-based alternatives that promise to build what the market never had.

Here is what the evidence actually tells you about diamond mining equities and every competing route: why each pathway exists, what its real-world performance record looks like, and what an investor should conclude before committing capital to any of them.

Why diamonds have never had a commodity market

Start with the physical object, because everything else follows from it.

A gold bar is a gold bar. An ounce delivered in London is identical to an ounce delivered in Zurich, which is precisely why gold trades on tight-spread exchanges around the clock. Diamonds do not work this way. Each stone is graded across the four Cs (cut, clarity, colour, and carat weight), and no two stones are interchangeable. You cannot write a futures contract that delivers a generic diamond, because a generic diamond does not exist.

That single fact of non-fungibility is the root cause. But it does not sit alone. Four structural barriers compound to keep diamonds out of the standardised commodity system:

• Non-fungibility: each stone is unique, so no uniform underlying unit can be defined
• Grading complexity: the four Cs preclude standardised derivative contracts, a dynamic ETF Trends has corroborated
• Oligopolistic supply: a handful of producers have historically dominated supply, disincentivising transparent markets that could weaken pricing control
• Bid-ask spread width: severe illiquidity produces spreads that make exchange trading impractical

The supply concentration point deserves emphasis. De Beers managed supply as a near-monopoly for much of the twentieth century, controlling prices through the volume it released. A transparent exchange market with visible base prices would have undermined that control directly. Opacity was not a bug in the system; it was the point.

The clearest evidence of that opacity is the spread. On physical diamonds, bid-ask spreads run from 10% to 40%, against the fraction-of-a-percent spreads on exchange-traded metals.

Former JPMorgan commodity trading director Jon Deane highlighted the wide diamond spread as a key sign of market inefficiency.

That spread is more than a liquidity footnote. It tells you that every physical diamond transaction carries a large embedded cost, and any investment structure built on top of diamonds must somehow absorb or disguise that cost. Keep that number in mind, because it reappears beneath every proxy route that follows.

What the diamond price collapse since 2022 means for any investment thesis

If the structural barriers explain why no direct market exists, the price environment explains why the timing of this question matters now.

Rough, mined diamond prices fell roughly 34% from their 2022 peak through late 2024, and the deterioration did not stop there. By 1 December 2024, Rapaport index data showed steep, uneven declines across stone categories.

The slide carried into the following year. The Uni Diamonds Diamond Index fell 5.23% in Q3 2025, bringing its year-to-date decline to 9.24%.

The lab-grown market economics behind that 80-90% discount reveal a cost structure that has permanently reset the competitive floor for natural stones, making the conventional ‘scarcity premium’ narrative increasingly difficult to sustain across any stone category.

The primary driver is not cyclical. It is structural. Lab-grown diamonds, chemically identical to mined stones, typically sell at an 80% to 90% discount to natural equivalents. That is not a temporary discount waiting to normalise; it is a permanent competitive floor that pulls the entire natural pricing narrative down with it.

The share data shows how fast this happened.

According to Gordon Brothers, manufactured stones grew from 11% of the diamond market in 2020 to 53% by February 2024. This figure is unverified and should be treated as indicative rather than confirmed.

By 2024 and early 2025, lab-grown stones captured roughly 20% of the market by value. The gap between the value share and the volume share tells you where the pressure concentrates: at the accessible end of the market, where most buyers actually transact.

The BriteCo Jewelry and Diamond Price Index tracks lab-grown diamond market share reaching 47% of new appraisals in 2026, with lab-grown engagement rings rising from 6% in 2019 to 51% over the same period, a trajectory that removes any remaining doubt about the permanence of the competitive pressure on natural pricing.

What this means for any investment thesis is direct. Natural diamond pricing has lost its monopoly on the desirability story. Any vehicle tied to natural diamond prices now needs a credible answer to that structural headwind before it deserves capital. And the same collapse that hit prices hit producers twice over, because energy, labour, and capital costs kept rising while rough prices fell, compressing margins from both sides.

Diamond mining equities as proxies: the case and its limits

That margin compression sets up the central question. If there is no direct market, are the miners a workable substitute?

The conventional case for miners

The conventional answer is yes, and it has real logic behind it. Equity stakes in diamond producers are the most accessible, most regulated, and most liquid route to diamond market participation available to ordinary investors. De Beers, reachable through parent company Anglo American, is one anchor. Lucara Diamond Corp, listed across multiple exchanges, is another. Both are buyable in a standard brokerage account, which no physical diamond or futures contract can claim.

Where the proxy relationship breaks down

The problem is that the proxy relationship is weaker than it looks.

Empirical research points consistently in one direction. A 2019 study by Jotanović et al. and a portfolio-risk analysis from Birkbeck both concluded that diamond miner returns track local equity market indices and company-specific operational risks, not physical diamond prices. You are buying an equity, and it behaves like one.

Historical performance reinforces the point. Commentary in The Northern Miner noted that a basket of diamond producers fell 17.3% in 2017 and 28.9% in 2018 despite expectations for supportive diamond prices, though this figure is unverified.

The current sector picture makes the disconnect concrete, and it is not encouraging.

Rapaport coverage from 11 May 2025 reported that Lucara management expressed “significant doubt” about the company’s ability to continue as a going concern over the following 12 months. Burgundy Diamond disclosed a USD 86.8 million loss for 2025 and issued its own going-concern warning on 9 March 2026. In May 2025, S&P Global Ratings warned of mounting liquidity challenges and default risks on 2026 debt maturities for Petra Diamonds, which shuttered its Finsch mine amid the price collapse.

Several risks compound the picture:

Kimberlite exploration economics sit beneath every single-mine concentration risk flagged in the sector: the near-impossibility of replacing depleted ore bodies with new discoveries compounds the going-concern pressures already straining producers who rely on one asset.

• Single-mine concentration: smaller producers often depend entirely on one asset
• Liquidity stress: balance-sheet strain and near-term debt maturities across the sector
• ESG scrutiny: lab-grown sustainability marketing intensifies pressure on traditional miners
• Geopolitical exposure: heavy reliance on producing regions such as Russia and the DRC

Here is what that pattern tells you. When multiple producers issue going-concern warnings at the same time, diamond mining equities are not carrying “commodity proxy” risk. They are carrying distressed-debt-adjacent risk, and that distinction should drive how large a position you are willing to hold. The one bright spot on the horizon is structural: a 17 September 2026 report from Russian financial news agency AK&M indicated Anglo American entered preliminary IPO negotiations for De Beers, with Botswana authorities engaging constructively, though this remains unverified.

Blockchain tokenisation: does it solve what equities cannot?

If equities give you the wrong risk and no direct market exists, tokenisation is the newest attempt to build one from scratch.

The thesis is genuine, not gimmick. Platforms on the XRP Ledger, Hedera, Avalanche, and Polygon are trying to create standardised, tradable units backed by physical diamonds, targeting exactly the accessibility and liquidity problems that blocked conventional markets. Fractional ownership, on-chain provenance, and enterprise custody are real features that address real historical weaknesses.

The activity is scaling. Tokenised assets on the XRP Ledger grew from roughly USD 24.7 million in January 2025 to USD 567.9 million by December 2025. Yet as of late 2026, no dominant exchange-traded product comparable to gold-backed tokens has emerged. The growth is real; the standardisation is not there yet.

The structural critique is where the optimism meets its limit. Wrapping a non-fungible object in a token does not make the object fungible. The following problems persist beneath the blockchain layer:

The gold tokenisation precedent is instructive here: gold-backed tokens succeeded precisely because the underlying commodity is fungible and already had transparent reference prices, which is exactly the set of conditions that diamonds lack and that no blockchain wrapper can manufacture.

• Non-fungibility: the underlying stones remain unique regardless of the token wrapper
• Valuation opacity: the same grading complexity that blocked exchanges still applies
• Wide bid-ask spreads: the 10% to 40% physical spread does not vanish on-chain
• Regulatory uncertainty: documented enforcement actions, not hypothetical risk

That last point is not a future worry. The Gem & Jewellery Export Promotion Council (GJEPC) warned that early diamond tokens lacked adequate regulation, enabling arbitrage, mis-selling, and inadequate cost disclosure. The SEC has already frozen assets tied to unregistered coloured-diamond token offerings. What that tells you is simple: regulatory risk in diamond tokenisation is a documented present reality, and any investor entering this space must price it explicitly rather than assume it away.

What the evidence actually tells investors about diamond market exposure

Three threads now converge, and they point to one honest conclusion.

No direct commodity market exists, and it never will, because non-fungibility makes standardisation impossible. Mining equities offer theoretical exposure but behave like local equities carrying company-specific risk, and right now that risk is acute across the sector. Tokenisation genuinely improves access and provenance, but it does not resolve non-fungibility, valuation opacity, or regulatory clarity.

So the choice becomes clear-eyed. Diamond mining equities remain the most liquid and regulated route, but you should enter knowing you are buying operational and financial risk inside a structurally declining commodity environment, not a clean diamond price proxy. That is a materially different proposition from what the “diamond exposure” framing suggests.

Three variables will determine whether the answer changes:

1. The De Beers IPO outcome: a completed listing would create a larger, more liquid equity vehicle and would be the first significant structural change to diamond equity investing in decades
2. Lab-grown market share trajectory: further gains would deepen the pressure on natural diamond pricing
3. Tokenisation regulatory developments: whether any platform earns approval sufficient to list a standardised exchange-traded product

A reader positioned ahead of the Anglo American restructuring is better placed than one who has not tracked it against the backdrop of the 34% price decline since 2022.

The Anglo American De Beers divestment process has moved through multiple structural phases in 2026, and the gap between early sale expectations and the emerging IPO pathway reflects how significantly the diamond market deterioration complicated what initially appeared to be a straightforward corporate separation.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions. Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors.