New Diamond & Gemstone ETF Explained

April 01, 2013


COO of PureFunds explains why his company's three precious metals and mining ETFs provide investors with unique diversification in those markets.

Mike Norman, Hard Assets Investor (Norman): Hello everyone, and welcome to I'm Mike Norman, your host. My guest today is Andrew Chanin, who is the co-founder and COO of PureFunds. Andrew, thanks a lot for coming on the show.

Andrew Chanin, co-founder, COO, Pure Funds (Chanin): Mike, thanks for having me.

Norman: What intrigued me about your company, and we're going to get into it, is you just recently launched an ETF that is a gem ETF. It follows gems, diamond and gemstones. That's fascinating. And I don't think there's anything out there like it. Can you tell us a little bit about that?

Chanin: Certainly. On Nov. 29, 2012, we launched with the assistance of the International Securities Exchange a new fund, the PureFunds ISE Diamond/Gemstone ETF. And like you said, it's the first one to hit the U.S. It's comprised of companies that are in the mining and exploration of diamonds and gemstones, companies that hold large inventories, and the companies that sell rough or polished stones. So this is giving U.S. investors new exposure to the space.

Norman: How does it trade? Would it track gem prices? Diamond prices? Is that the idea behind it?

Chanin: The producers would most likely track the diamond prices, while the retail side of it—the people selling the rough and polished stones—would actually give exposure to the frequency of transactions. And in this sector, this industry, we've seen a large growth coming from the new investors in China and India. And as in the U.S., it's very customary to give as gifts diamond and gemstones to show affection. This is a trend that hadn't yet caught on with the Asian investors.

Norman: Puts some of these shares right into the stocking around Christmas time, right?

Chanin: Not a bad idea.

Norman: I don't know if the ladies will go for that, though. I think they like the bling on the finger. But anyway, it is a very unique idea. Tell us about some of your other funds. I think you have two more funds.

Chanin: Certainly. So we also have another first. It's the mining service ETF. The ticker is MSXX, and that as well is with the International Securities Exchange. This fund wanted to do what had already happened in the oil space. In the oil space, you saw bifurcation between the oil producers and explorers. And on other sides you had the service side.

Now we're going to do the same thing for the mining industry. You already have several producing ETFs, but you had not had a mining service ETF. These companies, we like to consider them as the people selling the picks and the shovels. So as companies in the production side are interested in actually going out and finding new discoveries, what they'll do is they'll need to link up with the different service companies. So these companies will sell or lease equipment. They'll come in and they'll do consulting for these companies. They'll come in and they'll do the new mine build.



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