Gemstone Prices: Do They Make Sense?

-- End Ad Box --->Association (ICGA), the "traditional gemstones" --
Gemstones are beautiful, but they have noruby, emerald and blue sapphire -- command a
intrinsic value (except perhaps for diamonds usedpremium price in the market due to "their lasting
for industrial applications). Why then does aappeal and distinguished history." Even though
reasonably nice 1 carat heated VS ruby sell fortoday most of these stones are treated or
$500 while a fine untreated 6 carat VVSenhanced in some way, the price remains
tourmaline goes for $200? Why is a cleanprecious, though ruby and emerald tend to be
untreated 10 carat amethyst only $30? Domore expensive than sapphire.
gemstones prices make sense?The ICGA identifies another category of gems
The simple answer, one would think, is that it'sthat they call the "new classics" -- tanzanite,
just a matter of supply and demand -- if a lot oftourmaline, aquamarine, imperial topaz and
people want to buy a particular kind of gemstonetsavorite garnet. These stones are considered
and the supply is limited, the price for that"the rising stars of gemstone jewelry" and they
gemstone will be high. However, that answerare also rising in price as their popularity increases.
doesn't really tell the whole story of how thingsTanazanite, in particular, has been very heavily
work in the gemstone business.promoted.
Consider the case of one of the most rare andLess well-known stones which are not heavily
expensive gemstones, diamond. In the 19thmarketed often have very reasonable prices in
century, world production of diamond was only athe market. These stones, which the ICGA calls
few pounds a year. After the discovery of the"collector's gems", include spinel, zircon, moonstone
huge South African diamond mines in 1870,and morganite and other beryls.
diamonds were being dug out of the groundThen there is a list of gems the ICGA calls
literally by the ton. There was such a glut of"affordable gemstones" -- nicely colored stones
supply and so little demand that the Britishwhich have good availability and attractive prices.
financiers of the South African mines were inThese include amethyst, citrine, ametrine, peridot,
danger of losing their investment. Their solutionrhodolite garnet, blue topaz, iolite, kunzite, diopside
was to create the powerful De Beers cartel thatand andalusite.
to this day controls worldwide diamond productionWhat all this makes clear, we think, is that there
and supply. Quality diamonds are actually notare several factors at work in determining
scarce at all. But De Beers controls how muchgemstone prices. Supply is of course important,
supply comes on the market and that keepsbut the marketing power of the jewelry industry
prices high.is also a major factor in determining the demand
The De Beers consortium also mounted alevel. If a gemstone is not widely available or not
concerted decades-long advertising campaign toconsidered mainstream or "fashionable," it is
associate diamonds with love, courtship andunlikely to be marketed heavily and the price is
marriage, under the now familiar slogan "Diamondslikely to be lower. If a gemstone has a very good
are Forever." The diamond engagement ring, oncesupply, as in the last category, there is not much
unknown in most parts of the world (includingthe jewelry industry can do to influence prices
Europe), is now considered an essential part ofunless they can control the supply like the De
the ritual of marriage. This was probably one ofBeers cartel did with diamonds. But thus far there
the most successful feats of social engineering inare no signs yet of a citrine cartel.
the 20th century. (In Thailand a bride still prefersSo what does this all mean for you? In our view,
gold, however).there are still many good values in the gemstone
In the colored gemstone world, there ismarket. In the "precious" stone category, it is still
fortunately no cartel, though many forces try topossible to buy nice blue sapphires from
influence market demand and perceived value.Madagascar, Africa and Sri Lanka starting from
Consider for example the terms "precious" andunder $200 a carat. The market for fancy
"semi-precious." As most everyone knows, thecolored sapphire has changed with the introduction
precious stones are diamond, ruby, sapphire andof beryllium treatment -- the prices have dropped
emerald. But did you know that the list ofand the colors are more dramatic. Tourmaline
precious stones once included amethyst? Whatmay be a "new classic" now, but prices are still
happened? The discovery of major amethystattractive and the range of available colors and
deposits in Brazil made amethyst widely availablecuts seem to have increased as tourmaline gets
and it was dropped from the list of "precious"wider distribution. Burmese spinel, with its excellent
stones. It would be hard to maintain prices for thehardness and clarity, continues to be a great buy.
other "precious" stones if one of the group soldThe brilliance of zircon is hard to equal unless you
for only $5 a carat! So amethyst was demoted.buy diamond. Then there all the affordable stones
These days some rare semi-precious stones suchstill available for less than $10 a carat -- wonderful
as alexandrite and demantoid garnet can be morestuff like garnet, topaz, amethyst, citrine and fire
expensive than ruby and sapphire. In fact the USopal.
Federal Trade Commission now discourages theIn the end, the most important thing is that you
use of the misleading distinction between preciousbuy the stones that you will love and enjoy. But if
and semi-precious gemstones. But ruby, sapphireyou're looking for the best values, have a look at
and emerald continue to command a premiumsome of the lesser known gems that haven't yet
price in the market.been marketed heavily.
According to the International Colored Gemstone