(1) which sapphire for investment, and (2) how to source?

[realtanu]

(1) I am interested in purchasing a sapphire for $10,000-20,000 as an investment. Basically put in a safety deposit box, let Bernanke touch it with his magic wand, and in 10-20 years have it be worth 2-3x! I have read on this forum, and elsewhere, that Kashmire and Burmese sapphires are the best for seasoned collectors etc. I know they aren't making any more of them! is there any quantifiable way to understand Kashmirs/Burmese as an investment, either historically or versus other origins?

(2) As a novice (who will get an AGL premiere report), how do I source a stone? How many jewelers are qualified to price a good sapphire stone, and what % of them will give me the cheap price vs. rip my face off? I imagine sapphire market is MUCH more inefficient than say diamonds/rappaport model.. and when you go into Kashmi/Burmese I imagine much more so!

Thank you

 

[soberguy]

Re: (1) which sapphire for investment, and (2) how to source

I am not sure your budget would be enough for an investment grade AGL certified Kashmir, or Burma sapphire... There are much safer investments for that amount of money. Talk to your local banker.

 

[Haywood74]

Re: (1) which sapphire for investment, and (2) how to source

I would look into precious metals like silver or gold if you want something to toss into a safety deposit box with the expectations of the value going way up. Not to say that sapphire values won't go up equally, but I think when you decide to liquidate, precious metals would be a whole lot easier to sell quickly. My humble 2 cents worth

 

[Richard M.]

Re: (1) which sapphire for investment, and (2) how to source

Gems are NOT investment commodities. Yes, insiders who buy the right stones at source prices and have the connections to liquidate holdings when the best time can do well at gem "investments." But average consumers tend to buy at retail and sell at wholesale.

Gems are not fungible; stocks and some other commodities are. Every share of Apple or every ounce of 24K gold is worth the same every day on world markets. They can be traded by mashing of a computer key.

Gems have individual (and subjective, debatable) values. Each one must be evaluated by a qualified laboratory for quality and an individual buyer must be found for each one. There are no international "gem exchanges" or brokerages. When the average consumer tries to sell back into the retail market -- say on 47th St. in NYC -- the result is something like bringing a knife to a gunfight. Seasoned gem traders with generations of experience love those encounters!

As one who learned "hard asset" economics from the ground up, I strongly urge you to follow Soberguy's advice. There are many investment vehicles that will keep pace with dollar devaluation in the current inflationary cycle. Some gems will too, but that's no game for outsiders. Just a word to the wise.
Richard M. (Rick Martin)

 

[realtanu]

Re: (1) which sapphire for investment, and (2) how to source

Thank you for the honest replies. I actually do appreciate it. I already have gold, silver and platinum in my safety box! And I own gold, silver, platinum and palladium ETFs. Tossing some gemstones seems fare as well, and I think you folks are right that I underestimate the resale ability of the gemstone. Reality is the gemstone will not be a "liquid" investment. I figure in 10 or 20 years, I will present the stone to my wife.. and have it made into jewelry at that time.. and thus I figure it will really stay in the family for a long time... the resale points everyone makes is valid.. but before getting gauged on the sapphire.. I would have liquidated my bank accounts, gold, silver, etc. I'm not approaching this from PURELY an investment point of view. Indeed for that I'm in Gundlach's funds and am looking to buy investment property (although I am 1-2 years late to that trade). But whatever I buy should appreciate more than other like commodities. E.G., buying a sapphire doesn't appreciate in value would defeat the purpose of buying it today vs. in 20 years.

 

[LD]

Re: (1) which sapphire for investment, and (2) how to source

Do not buy if you're looking for an investment.

Unfortunately your budget doesn't allow you to buy a gem that will definitely increase in price - believe it or not, your budget is not atypical for people looking for engagement rings with coloured stones. It would buy you a very lovely sapphire but not one that will definitely appreciate (even in 10-20 years). To give you a real life example, I've been collecting for over 20 years and I don't think one of my sapphires have appreciated in price. Some haven't lost money but that's the most I could hope for. Also, bear in mind, your stone in 20 years is only worth what somebody will pay and gemstones/jewellery on the second hand market normally is far less than buying a new piece. An AGL report for an expensive gemstone is of course a must just to assure yourself that you have bought the stone as described (there are lots of variables that would mean you had paid too much) and if you ever re-sell it's good to reassure your buyer BUT it won't increase the price of the stone and it's definitely NOT an assurance of quality.

 

[chrono]

Re: (1) which sapphire for investment, and (2) how to source

I agree with all the posters involved. Buying is the easier part compared to trying to sell it - it may be difficult to find a buyer who is willing to pay the price you have in mind. For your budget of $20K, that will probably get you a lovely stone but not guarantee it will appreciate in price (and who knows by how much) in 10 years into the future. True collectors are looking at unheated Kashmir stones from $100K and upwards. In such a market, there are no cheap stones. In any case, for stones above $5K, I would recommend the AGL prestige report.

 

[bobsiv]

Re: (1) which sapphire for investment, and (2) how to source

Also, sapphire prices are pretty inflated right now in my opinion. You'd almost certainly be buying high and selling low. A better question for the experts here might be: 'what colored stone do you think is undervalued in the current market?' If, that is, you have your heart set on acquiring a gem as an investment.

 

[Lady_Disdain]

Re: (1) which sapphire for investment, and (2) how to source

I think I made money only once with gemstone and that was my Mahenge spinel (and, well, I didn't really make money as I never sold the stone). Why? Because I got it very early, before the "Mahenge boom" and paid a reasonably low price for it. Even so, it wouldn't be that easy to sell it. I would only "invest" in a gemstone if I was able to catch one of the "wow" discoveries (Mahenges, Namibian Spess, Paraiba Tourmaline) very soon after the find and it was obviously something special. Even so, it is still tricky (wello opals, for example, haven't had any huge price increase). The other criteria is if I would be happy to have the stone on my own finger if it never appreciated in value (a big yes for my spinel).

As previous posters have mentioned, sapphires are on a very high peak right now, in part because gemstones in general are high and in part because of the Diana/Kate ring hype. Generally speaking, if people are talking about how good an investment is, then the time to buy has long passed.

It is also important to consider your exit strategy. No dealer is going to pay you retail prices, so you will probably get 50% of retail. There goes a lot of your money.

Also, you can get many better investments. If you are aiming at 3x times in 20 years (which, if you consider the hit you will get when selling, would mean a 5x price increase), you are really only asking for 5.5% a year. That is too low to tie your money for so long.

 

[realtanu]

Re: (1) which sapphire for investment, and (2) how to source

A lot of great responses. I am humbled by the quality of response.

I will post a new thread, "which gemstones are arguably most undervalued today"

Thank you

 

[ChristineRose]

Re: (1) which sapphire for investment, and (2) how to source

Once upon a time, before checks and insurance policies, gems were used as a form of currency. You could buy a gem from a broker and resell it to the same broker the next day, less a moderate fee. Those days are gone.

Nowadays gems are purchased from luxury retailers and are resold to professional buyers who clean them up, batch them, and re-insert them in the wholesale market at wholesale prices. When you resell your gem, you will typically be offered from 10% to 30% of what you paid for it. Very rare and nice stones retain more of their value, but also are usually sold by the higher-markup retailers, so it's not clear how much you will actually get and for what. Therefore you need your investment gem to appreciate around 333% at least before you can expect to break even.

Private sales (e-bay) will net you as much as 70% of what you paid, but you have to have a buyer who is looking for the exact stone you are selling, and e-bay buyers are not looking for $20,000 stones, and it's questionable whether you should even be trying to sell something like that on e-bay at all. If you go that route, you need about 40% appreciation before you can break even.

Very, very rare stones, in the one million dollar plus range, are sold on commission at auction houses and major jewelers. Those are the only stones that make decent investments, and even then they are risky. Only multi-million dollar investors with professional advice should be buying those as investments, and the gems should be part of a balanced portfolio.

I really have no idea which gems are going to appreciate the most as it depends on a huge number of factors--who knew Kate Middleton would wear Diana's ring? But if I had to guess, I'd vote for antique diamonds with provenance.

 

[PrecisionGem]

Re: (1) which sapphire for investment, and (2) how to source

I would NEVER consider gemstones to be a good investment. Most people would be buying at retail, and selling at wholesale or below.

Let see.... 10 years ago you bought $15,000 worth of Apple stock, it was trading for $7.71 per share. So that would equal 1945 shares. Today it's trading for $700.09 per share. That means you would have $1,362,042 if you sold today. And the good news is you could sell today. I doubt any gemstone in 10 years would have out performed that!