Cormac Kinney slices away at problems until he gets a practical result...

His work includes an algorithm that quantifies the language of financial reporting... In other words, it can use the wording of earnings reports to calculate stock market sentiment.

He created the first heat maps for visualizing data used in the commercial finance industry. More than 5,000 patents have cited Cormac's work. And with all these "firsts" to his name, it's safe to say he knows innovation.

We had dinner at this year's Stansberry Conference. There, he caught me up on his biggest innovation yet...

Cormac's new company lets investors buy and trade diamonds. At first glance, that might not sound so special. The amazing part is what he has done to an asset that's known, most of all, for its uniqueness...

Cormac has standardized the diamond market for the first time in history.

That means an asset that was once difficult to own – and trade – is truly investable for the first time.

Let me explain...

Diamonds defy standardization.

Four properties determine their value: cut, color, clarity, and carat. But these metrics contain an infinite array of combinations. So no two diamonds are exactly the same.

The retail diamond market adds to the complexity.

Dealers set prices with little transparency. A crooked dealer could inflate a price with big commission fees... or simply overstate their value.

This problem fascinated Cormac. How do you turn such a valuable natural resource into an investable asset?

He started a company called Diamond Standard... and found the answer.

The company developed an automated program that bids on global diamond inventories. As a result, it was able to collect a mountain of price data from a statistically valid sample.

He then put this sample on a curve that charts the value of any given diamond. Check it out...

This curve shows the scarcity of any given diamond on earth. So diamond prices are no longer a guessing game.

That means the company can split off groups of diamonds into equally valued samples. Then it "mints" these groups of diamonds by setting them into epoxy "coins." Take a look...

Every coin contains a different array of diamonds. But in total, they net out to the same scarcity – meaning the value of each Diamond Standard coin is equal.

The whole process is audited by accounting firm Deloitte. And the International Gemological Institute grades the gems. What's more, a public blockchain records every transaction on the marketplace.

That leaves very little opportunity for price tampering. Put simply, Cormac solved the standardization problem. Diamonds are now investable.

This is a historic change. And when an asset becomes investable for the first time, big gains are possible...

For example, from 1933 to 1974, it was illegal for U.S. investors to own gold. Then, the Ford administration finally reversed the Depression-era policy. On the last day of 1974, gold became investable again.

The metal's price fell at first. But in 1976, it entered a four-year bull run. Prices soared more than 700%. Many factors fueled that bull run... But new investor demand was a major part of it.

Now that diamonds have the green light, it may not be long before history repeats itself.

With Cormac's new company, you can finally invest in diamonds easily. He has managed to create a new asset class. And although it's still in the early stages, that's an exciting and rare thing to see in the world of finance.

Good investing,

Sean Michael Cummings