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USPTO Grants Patent for Identifying Investment-Grade Gems

Aug 8, 2012 11:26 AM   By Jeff Miller
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RAPAPORT... The U.S. Patent & Trademark Office (USPTO) issued patent number 08239211 to Gemshares LLC of Chicago, Illinois for a process in which investment-grade natural and synthetic gemstones can be identified for use in financial investments and commercial trading. The invention relates to a method of standardization for natural or synthetic diamonds, rubies, sapphires and emeralds in order to enable the delivery of a standardized, fungible and certified global investment-grade gemstone, or basket of gemstones, which then can be used in futures contracts, options, exchange-traded funds or any other regulated or unregulated financial vehicle. Inventors  Victor Feldman, Andrew J. Feldman, Sharon Karsten, Daniel Gramza and David W. So filed for the patent on March 27, 2009.

The patented  process involves grouping diamonds in an investment standard based upon their gemological, proportional, optical and light behavior characteristics. Diamonds that conform to the investment-grade standard are interchangeable within a specific size range, according to an equivalent monetary bundling process, the filing stated. Diamonds subjected to the standard conform to a ''holistic set of gemological, proportional, optical and light characteristic requirements that enables diamonds to be classified into a extraordinarily homogeneous, visually indistinguishable and highly fungible group, which can be used to create baskets of diamonds to form an index or benchmark for diamond pricing, financial instruments, and a standard that can be used for certifying diamonds as investment grade to insure quality.''

Diamond characteristics will be classified using the Gemological Institute of America's (GIA) Diamond Grading Reports; however, other ''recognized gemological grading standards'' may be used as long as the characteristics are substantially similar to the standards used by the GIA or can be correlated, according to the inventors. The patent listed preferred sizes of 0.50 carats to 2.20 carats, with the flexibility to include  0.25-carat stones and those greater than 3 carats in order to ensure consistency with a grouping (basket) of gemstones.

Grading standards were defined as requiring stones to reflect  colors of D through J with clarities of IF to SII and absolutely ''no milky or cloudy material;'' to be generic, round brilliant cuts with 57 to 58 facets, cut grades of "Excellent" and  "Very Good,"  general proportions of "Excellent," a finished polish of "Excellent" to "Very Good," a symmetry of "Excellent" to "Very Good," and graded as showing no or faint fluorescence, with some stones possibly including medium blue, no natural unfinished surfaces, no excessive graining and no extra facets.

The patent also describes a system for generating an index, or benchmark, of investment-grade diamonds intended to reflect ''the general market'' for the stones that fall into a collection of diamonds, wherein the the collection has similar predetermined gemological characteristics, predetermined distinct weight classifications and stones that are optically substantially similar, wherein each of the diamonds within a distinct weight class has an equivalent monetary value.

The purpose of the patented process is to create an ''exchange for purchasing and selling financial instruments'' based upon a collection of diamonds and a computer with  data storage and processing capabilities for recording the prices, and calculating the value of the collection of diamonds based on the recorded prices as a single figure, wherein the single figure is calculated by the computer using the following algorithm: Index=NAV=Xo(Yo)+Y1(Y1)+FI−FE.

For the full patent and related images, view this link.

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Tags: diamonds, financial, gemshares, gemstones, Jeff Miller, patent
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