BitCarats vs. BitGems – Who is Cheating More Investors?

Bitcoins, the digital currency that is backed by real federal money, has now been in existence since 2008. It is not controlled and can be produced by anyone, making it extremely controversial and a topic of hot debate. It has by no means been universally adopted by the world, but its notoriety has certainly stretched far. In October of 2015, the first currency backed by gems was introduced. The company that claims it invented this concept is called Precious Investments, Inc. and they dubbed it BitGems. BitGems became the first asset based Ether coin on the cyber currency market and was intended to be valued and supported by the color diamond portfolio of Precious Investments. I previously wrote about Precious Investments and all of the gaping holes in their business plan and this investment scheme. It was a great idea but totally unrealistic – how were they paying for the diamonds in the portfolio? Who was determining what is considered an investment diamond? Where are the diamonds located and insured? What are the diamonds in the portfolio? It is an innovative idea but it has been carried out in such a shady way that we urge everyone to stay far away.

Now a new, potential, diamond investment scam has entered the market. It also claims to be a gem-backed digital currency and the misleading premise is the same. Diamond investment firm Carats Diamond Investments is offering its stock of fancy color diamonds as diamond investments – BitCarat. Much of the problems that existed with the BitGems scheme are present here too. What qualifies their diamonds to be investment diamonds? Who determines which diamonds are for investments? By what standards do they choose investment diamonds? Is this a diamond jewelry company or an investment company? Just from their homepage it looks like a company with a lot of jewelry stock that is looking to pass it off as investment diamonds. It is also clear that they have not done their homework properly, as in the press release, Digatrade claims to be the first ever cryptocurrency backed by gems….have they not known about BitGems? have they not read my previous article and tried to learn from it?

Here are 3 specific giveaways that this company may be misrepresenting its wares. First of all, the very top of the website lists what they have in their vault-

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A snapshot of the Carats Diamond Investment website homepage

 

Considering that they market themselves as an investment firm, even going so far as to calling themselves Brokers, it stands to reason that they are pitching  all of the stock in their vaults as investment diamonds. Why present all of the inventory as their own? When offering diamonds as an investment, you have to eliminate the potential conflict of interest. By owning diamonds, it is natural that the company will want to push their own products, wether it is the best for the client needs or not. By not owning diamonds, but presenting diamonds owned by true dealers, it allows the investment advisor to give independent advice, and by doing so, eliminating the conflict of interest. White diamonds are almost entirely never qualified as actual investments. Very few white diamonds can earn this qualification because their value does not actually appreciate unless they are of significant characteristics (unless colored diamonds which are not subject to the same principles but rather to completely different market conditions). To me this is a dead giveaway that they may not be trustworthy – pitching a huge stock of white diamonds as investments in order to sell them!

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A snapshot of the Carat Diamonds Investment homepage in the contact section

 

Our final problem with this website is with the investment asset itself. Lets say that a website visitor is a savvy investor, knows that only fancy color diamonds are diamond investments and ignores the fact that this website and therefore company seems rather untrustworthy. This visitor will want to see the stock of fancy color diamonds/diamonds for investment for themselves. However, its not possible! The link to the color diamonds stock is actually just a link to contact the company. This means that the company is not transparent about what qualifies a diamond of theirs as investment grade and clients cannot aid their own decisions by doing online and offline research about their purchase. They would have to wholly trust Carats’ discretion in order to make their decision and add a diamond to their investment portfolio. What investor on earth is dumb enough to do that?

The owner of this operation is Collin Ferguson. Collin has been in the diamond business for over 30 years and has always been talking about Champagne (brown) diamonds being an investment grade diamond. I encourage you to do your own research on brown diamonds and conclude for yourself if they are of any investment potential, both in the past and in the future…

This company may sell real diamonds, but if they are trying to get people to invest in BitCarats, then i doubt they will succeed, and hope they do not loose confidence of their clients. As I concluded in my last articles on this subject, it is easy to get wrapped up in an excellent idea with amazing potential. It is especially easy if you are not a seasoned investor and would be making a blind guess about who to trust. That is why, as a diamond investment financial advisor, I so strongly encourage potential investors to seek out a real, honest potential advisors. In the world of Fancy Color Diamond investments, some of the smallest details can take a diamond from investment worthy to merely a pretty bauble. Only people who have seriously studied and considered diamonds from a financial standpoint are qualified to inform you what kind of diamond is best, and will correctly guide you to the right decision. The kind of scheme that I have broken down for you above absolutely takes advantage of the fact that you are probably looking to diversify your portfolio.

Another day, another diamond investment scam. Only trust a real, investment expert for something as delicate and complicated as diamond investments.

What is the biggest scam here? Bitgems? BitCarats? Bitcoins? Tell me what you think in the comments!

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