It may be time to reconsider diamonds and gemstones as alternative investments. These rare treasures are back in focus - this time, having to do with extraterrestrial ones. In fact, there's a known asteroid worth an estimated $700 quintillion floating in our space leaving investors excited about the new prospect of mining in space.
We now know that unlike conventional diamonds, formed hundreds of miles below the earth's surface, some don't come from the planet we inhabit but rather from space making them increasingly a fascination. They can be so small and beautiful that they are sold in their original state without the need for cutting or polishing.
The prospects for investing in asteroid mining in the listed equity markets remain premature, as initiatives are largely led by private sector interests. As an example, the tiny nation of Luxemburg, home to several communication satellite companies, sees massive opportunities in space as it aims to become a cosmic mining hub. In 2016 it established the Space Resources Initiative, working alongside Deep Space Industries and Planetary Resources, known as the leading companies in the sector.
Thus, it's too soon to simply invest in diamond mining companies or in mining focused ETFs in the hope that some of these names may venture into space. A better option is to focus on some of the companies that are making serious strides to explore and mine in space.
The first step in asteroid mining is physically landing on the asteroid itself, which requires a powerful craft capable of switching between low-Earth orbit and orbit around the asteroid. And Tesla's (NASDAQ:TSLA) Falcon Heavy is the closest to doing so. The successful launch of the SpaceX rocket into orbit around the sun gets us closer to space missions that were technologically not feasible until now.
Other names worth focusing on include Amazon (NASDAQ:AMZN), whose space technology arm, Blue Origin LLC, has successfully launched and landed several sub-orbital flights. Furthermore, Virgin Group (VA) which owns The Spaceship Company, Virgin Galactic, and Virgin Orbit, is developing and operating a new generation of space vehicles with the goal of making space travel open for everyone.
Most recently Goldman Sachs claimed that the first trillionaire will make their fortune in mining asteroids. This announcement came soon after a published analysis by Nature Communications that takes a closer look into the fragments of an asteroid, the Almahata Sitta, that exploded into hundreds of diamond-rich pieces on October 2008 scattering across the dunes of the Sahara in Sudan.
This first meteorite to be identified and tracked before it hit our planet left fragments containing diamonds far larger than any seen in celestial bodies. The report suggested that the diamonds trapped inside the meteorite, or "ureilite," likely contain the remains of an ill-fated protoworld lost in an extreme collision of planets that formed our solar system.
The report served to intensify the interest in celestial diamonds that had long been evolving over time.
Just last August, a major collision, or kilonova, between two neutron stars in space caused thousands of astronomers worldwide to observe and study it. The cosmic forge sent a wave of fireworks across the universe, emitting a blitz of radiation and gamma rays. The event further deepened our understanding of the vast riches found on earth, coming from celestial bodies containing not only diamonds but also gold, platinum and uranium, formed billions of years ago.
The observation led to staggering insights proving what was previously theory - that the dense shrunken cores of collapsed "dead" stars contain heavy, dense materials. And when these stars slam together, they release a myriad of valuable matter. Even more awe-inspiring is that the collision of these particular stars, about 1.1 and 1.6 times the size of the sun, occurred 130 million light years ago.
And as people gain a better understanding of how these gems were formed, it tends to pique both their interest and their demand. While there's still more scientific work involving gemstones from outer space, buyers aren't waiting. Diamond demand is increasing, particularly in the emerging markets, due to their growing middle-classes. According to Bain & Company's Diamond Industry Report, global retail sales of diamond jewelry for 2015 were approximately $72 billion and are estimated to increase per year to 2018.
As visionaries and investors put their money into space, it raises our awareness of why these objects of beauty exist and how precious and extraordinary they really are.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Disclosure: I am/we are long AMZN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.