Appraisal woes

[starryeyed]

Date: 1/19/2007 11:23:18 AM
Author: colorchange
About the premium, you are comparing two sources.
A number of online sellers target advanced consumers that look for non treated material and claim high premiums. I can tell you that for the very highest quality with Ceylon origin, the premium is approx 60%. If it's Burma, it can go up to 80%. If it's Madagascar, it's down to 30%.
What I state is what I pay. Sellers then do whatever margin they want on the rarer stones. And may misprice up or down sone stones.

About the disclosure : Almost all sellers will satisfy of a big lab stating 'No evidence etc' to say a gem is unheated. That's lying to the customers. AIGS for instance will state unheated if there is direct proof a gem was not heated, that is extremely rare. If they don;t state it there is no proof.

Colorchange, a few comments. Perhaps you are comparing two sources - I am not a dealer, I am a consumer. The comparison I gave you was retail-to-retail for similar quality & size gemstones. The NSC charges "legitimate" premiums, according to you on another post, so the pricing is probably accurate (they are a little high I think). Based on your statement, you are talking about premiums at the wholesale level and you never adressed the specific quality attributes or size of the stones. "Very highest quality" sounds like something you'd hear on QVC. I think you will find that most PS users are "advanced consumers", who are well-educated and looking for the best their money can buy.

I can't comment on the Asian Institute's lab, the types of tests they run, the types of equipment they have, etc. I know that AGTA, where my certs are from, is one of the most reputable labs and has some very sophisticated equipment. From my conversations with AGTA, they have at least 3 different types of tests to determine if there's any evidence of heat treatment. After these tests, they have at least 2 gemologists look at a stone - if both agree that there's no evidence, the stone gets that designation.

Their certs are pretty clear - they state that unheated stones are unusual. When they state "No indications of heating" this means that they are almost 100% sure no heat-treatment has been done (although there is a very slight chance). As I understand it, there are times when heat-treatment is done at low temperatures to improve color. I also understand that any heat treatment, even low temperature treatment, has an effect on crystals and inclusions in the stone. If the stone is very very very clear, and has not tested to be heat-treated using the usual heat-treament tests, it's difficult to say with 100% certainty that the stone is not heat-treated because there are no crystals/inclusions to assess. This is not the case with most stones - it is pretty rare. So, stones that are designated "no indication of heating" from AGTA are most likely not heated, with a high degree of certainty.

The AGTA has seen thousands of stones and, according to them, it's very very rare to find a stone that demonstrates no indications of heating when it's actually been heated. So to say vendors, who claim "no heat treatment" on AGTA-certified stones with "no indications of heating", are lying, is really unfair. I'm sure the same is true for stones coming out of other labs that use the LMHC standardized language such as Gublien, GIA, SSEF and others. I can understand there is a nuance because 99% sure is not the same as 100% sure, but your generalizations seem kinda harsh and really unfair.

 

[riogems]

CC - why do you get a lab report on your sapphires? Are you getting the report to confirm your seller didn''t cheat you? Or do you need the report to sell stones in France? The reason I ask is probably cause for a separate topic -- but looking at what percentage of cost are lab reports vs the gem original cost?

I just briefly looked up from the website some prices on the labs for 1-2ct sapphires:

If you buy 100 reports from AIGS, it is approximately $20 / report.
The GIT is also in Bangkok and and in the LMHC, and I believe their prices are also around $30 / report.
The AGTA seems to be around $115 / report ($230/report with origin) -- and there may be surcharges for Be-treatment testing?

The lab industry for testing color stones seems to be growing; and the demand from consumers seems to be growing too.

If a sapphire originally cost $200, even an AIGS report increases the cost 10%. If a sapphire originally cost $1000 (which I think is ample amount in this example for a 1-2ct sapphire) - an AGTA report increases cost over 10%.

Moreover, the content of the report seems less than what consumers really want to know. Here is just an example from an AGTA report: 1) Color: Blue; 2) Transparency: Transparent; 3) Weight: xx ct; 4) Dimensions(mm): A x B x C; 5) Shape: _____; 6) Cut: ______;

Okay - up until this point, this is all something anyone with basic tools (a scale and gauge) can observe on their own.

7) Enhancement: No indications of heating.
Okay - this is not something a lay-person without training and tools can observe.

Species: Natural corundum; 9) Variety: Natural Sapphire;
This is something an average jewelry store should be able to know with maybe a little larger toolset.

So with a lab report, you are mostly paying for #7 (and maybe a little bit 8 and 9 -- but I don''t really think so much on 8 and 9).

I think more interesting than enhancement, will be if the lab consortium can agree on some type of detailed color grading and possibly clarity grading for color gemstones. This will make it at least a little easier for people to shop and compare; which I think is one of the major benefits of diamond reports -- although, it is never a complete substitution for visual side by side comparison in any instance.

 

[strmrdr]

I''m not going to do a long quote but I see where colorchange is coming from.
There are many levels of heating and other treatments.
Some labs will just check for the obvious high temp treatments where other labs test for the much more subtle low heat treatments and at some level the treatment becomes pretty much impossible to detect.
No lab will guarantee no treatments on any stone.
The best they can do is say they dont see any signs of the kinds they look for.
With new treatments coming along all the time it wouldnt shock me to see 1/2 the stones certed as untreated to test as treated 5 years down the road as the treatments become known and the tools better.
That said some labs are better than others at finding them.

 

[movie zombie]

storm has summed up very nicely what i as a consumer think when i read the color stone cert.....especially when i''m looking at a stone that is supposed to be unheated and isn''t carrying a hefty price tag.

movie zombie

 

[RockDoc]

With many gemstones while what you''ve said, Rio ( Adam) is important, what sets the values in many gemstone is origin of where it was mined.

Over the years that has been filtered down to color origin, as geographic origin is just too difficult to ascertain with 100% of being positive.

Then there is "misuse" of trade terminology such as Kashmir, Paparascha, Pariaba, and Imperial of the various types of stones.

This practice is particularly abused by many of the dealers selling stones on ebay.

Another instance is the troublesome testing for BE, as in can happen naturally, as well as being induced in the heating. I am floored at how many potentially treated BE red sapphires are being offered for sale, under the term "songea".

AGTA and AIGS do have some pretty advanced equipment that is extremely costly. Some of the testing takes a significant amount of time to perform on "difficult" stones. Then there is the question ability of the person doing the testing to interpret the results correctly. Some of the units out there require a lot more knowledge/training than just gemological classes. For some of these instruments to run them almost requires a PhD is various areas.

I agree with what storm wrote as far as the future. What we "discover" five years from now can make what we depend and rely on now, almost useless.

GIA had a really good system with the Color Master. Unfortunately, because of the unit''s cost not many people have them. I have one and think its really a good system, at least the best that has come along. Perhaps the future will bring us a more exacting and reliably conclusive one.

The Gemset matching of a gemstone next to a plastic color one just doesn''t work at all in my opinion. But it was "cheap" so a lot of people bought into that ( not cheap for a bunch of plastic "doo-hickeys" but significantly less than the Color Master cost was ).

I wish GIA would start selling and producing it again. I think a really good grading system for fancy colored diamonds could be developed using it as well, that would be easier to understand for consumers.

welcome to PS

Rockdoc

 

[Richard Sherwood]

Date: 1/19/2007 11:23:18 AM
Author: colorchange
To give you datas :

A number of online sellers target advanced consumers that look for non treated material and claim high premiums. I can tell you that for the very highest quality with Ceylon origin, the premium is approx 60%. If it's Burma, it can go up to 80%. If it's Madagascar, it's down to 30%.

In my opinion, Color Change is basically correct on his analysis of what untreated premiums bring on corundum. Whatever premium appears on top of this is dealer markup, but not a reflection of wholesale market prices.

A 2 to 3 markup on untreated corundum is unrealistic, in my opinion. If you are talking a 100% markup (twice the value of unheated), that is one thing, in regards to Burma material in particular (although it would still be a stretch over the more common 60% to 80% percent premium). (Other country of origin stones command less of a premium.) If you are talking 200% to 300%, that is out of the realm of reality, no matter what the country of origin.

I don't really see that level of markup reflected in the prices of unheated corundum dealers, Natural Sapphire Company or otherwise. Usually I see an appropriate premium charged for the quality level of material and country of origin.

 

[starryeyed]

Date: 1/21/2007 12:57:39 AM
Author: Richard Sherwood
In my opinion, Color Change is basically correct on his analysis of what untreated premiums bring on corundum. Whatever premium appears on top of this is dealer markup, but not a reflection of wholesale market prices.

A 2 to 3 markup on untreated corundum is unrealistic, in my opinion. If you are talking a 100% markup (twice the value of unheated), that is one thing, in regards to Burma material in particular (although it would still be a stretch over the more common 60% to 80% percent premium). (Other country of origin stones command less of a premium.) If you are talking 200% to 300%, that is out of the realm of reality, no matter what the country of origin.

I don't really see that level of markup reflected in the prices of unheated corundum dealers, Natural Sapphire Company or otherwise. Usually I see an appropriate premium charged for the quality level of material and country of origin.

Well, based on what you guys are telling me, I got a great deal to start with!

I think the reason that there seems to be such a discussion here about retail "premiums" is that no one is considering carat weight. The larger the stone, the more rare. The larger a clear, vivid, "no indications for heating" stone, the even more rare. There are sizable price differences that occurs above 4 carats. And it's a non-linear relationship, so as you get bigger, the more and more rare, and the bigger the pricing differences for "desirable" attributes. Look at the 8-carat ruby example from RocDoc. What do you think this stone would have been worth if it was heat-treated instead? I can't say for sure, but I wouldn't be surprised if it was A LOT less.

I know what I paid for my pink sapphire when we thought it was heat-treated. Heated or not, I know the quality is superlative. Now that I have a AGTA cert with "no indications of heating", I know it is very difficult to find the same stone and if you do, it's very expensive. I see the prices on the NSC's site. I saw the prices at which the local jeweler could source similar stones for me. The multiplier I saw was 2-3 times (meaning a 100%-200% premium) for similar quality stuff with no enhancement.

In timmy's case, it's hard for me to comment, but to get a natural, unheated Burmese ruby that is super clear with incredible color over a carat is probably going to be harder than finding a heated one, particularly if his cert is from a well-reputed lab. Is the premium 2-3 times? Maybe, but probably less because of the size. If he were looking at a 4-5 carat ruby, would the premium be 2-3 times? Probably, because of the size (maybe even more). You can't compare premiums on 1-2 carats with those for 4-5 carats - it's just not a linear relationship.

I'm not an expert, just a well-informed consumer who has done a lot of homework and pavement pounding.

 

[colorchange]

Hi all,

First about myself :

- I get laboratory report because it helps selling most usually. Law in France is very though and fine jewelers especially don’t want to have any problem. Selling a treated gem without mentioning is almost as serious as selling a counterfeit…
- I also systematically get a good lab report on rubies to be sure I’ve not been cheated on minor clarity enhancement that I may not notice with very simple equipment. That does not happen often but it does happen sometimes (once in 2006, on an inexpensive Burma ruby) when I buy from sellers I don’t know well. It also helps selling a lot on those stones.
- I use 3 labs in Asia: AIGS, GIT and TGL.
o TGL is very cheap (approx $. I basically use it on stones that I have no doubt about and that are not expensive. I won’t mind using it on a stone I sell as low as $150 because that makes the jeweler more comfortable: He will add a setting worth $300 and he will sell it approx $700 + 20% VAT. On the final price, $8 or even $20 (AIGS) is not big. Usually he will give the paper to the client that will be happy to see it. Regularly I have a stone in France without a certificate and will be asked to have it certified in Bangkok by a client because for $20 he is more confident.
I will usually not use TGL on yellow/orange/orangy pink sapphire and rubies except when I don’t have the slightest doubt and the stone is cheap. I do not trust them on these stones.
o AIGS and GIT are very good. To me AIGS is just as good as AGTA for everything except the trust people put in it.
o I will accept reports from GRS though I prefer AIGS.
- I will use the French Laboratory (almost a state lab, it belongs to the Paris chamber of commerce) on more expensive gemstones: It allows the final client to bring the stone (set or not) to the lab with the report to check for free that they match. On a stone worth $5000 or $10000 the clients really appreciates it.
- I will sometimes use Gubelin on high end rubies because it’s well trusted, not expensive on stones below 3 Ct and that those small rubies may be too expensive to be sold with AIGS typically.



If a stone is sold to me as unheated, I will bring it to AIGS to check. Anyway there are several kind of “unheated” statement from the most trusted Burmese source to a simple Bangkok seller that would state a Berylium treated stone is unheated (sometime with a lab report from a non trustable laboratory).
I will try to reflect my degree of certainty to the client at my best.



About real probability that a stone be unheated:
- From Burma, you easily get some unheated stones for sure. Burmese rarely treat stones though that tends to change. If you source it well you may be 100% sure.
- In Ceylon, most stones go through heat treatment at LOW TEMPERATURES and not for long. Even in stones that have inclusions that might go through a lab as “no evidence etc”, as well as it might very well have had NO IMPACT ON THE STONE even in color or clarity! Don’t ask me why they treat everything for a not so clear results, I do personally find it a bit stupid. Of course you still can find some unheated for sure but you need a very good local knowledge.
To me you are not 99% sure of the heat treatment when it comes to Ceylon stone, more realistically 90% sure at most on high end stones.
I have several experience of Ceylon stones I bough that were heated for sure (bought from a cutter and burner) and when through the best labs with “no evidence etc”.
- My opinion about a Ceylon stone that has been through AGTA or GIA or Gubelin, SSEF, AIGS or so and get the “No evidence etc” label is that all you can be sure about is that if it goes through another lab you have 99% chance it gets the same label! Good enough for a seller.



About the prices: I think THERE IS NO REASON THE PREMIUM IN RETAIL BE MORE HEAVY THAN IN WHOLESALE. The premium stated are those I usually get stones for. It seems that Richard sees the same premium…

To me TNSC claims a premium due to their large stock and excellent service, that premium is justified. Richard is much more qualified than I anyway when it comes to US retail prices.

I have one last point: I feel it sad that labs do not mention “Evidence of a traditional heat treatment” on those stones that went through low temperature heat treatment. To me a stone gone through that kind of treatment isn’t worth the same at all as a stone gone through high temperature treatment.



The premiums I stated are for stone of the same kind of rarity as yours.

Of course on an 8 Ct perfect ruby things are different, but unfortunately, that is not my category!
On a 4-5 Ct excellent ruby from Mogok, Burma, the premium would be +110% or +130%. From Mong Shu it would be approx + 60% or +70%.
On a whole it’s not so different from the + 80% on an excellent 4 Ct pink sapphire from Burma (Mong Shu or Mogok or Namya).
If it were from Madagascar it would be a lot different!



starryeyed, please be tolerant with my english, I'm trying to be clear in what I say but I'm French and when I said "very highest quality" I simply meant very good color with perfect clarity and cut. BTW I don't even know QVC. Of course I was adressing stones similar as yours. If it were a blue or an orange sapphire or a pink of another size, premium would be different.

 

[starryeyed]

Colorchange, are the stones currently for sale on your site Padmaraga typical of the quality you stock and sell?

I am quite surprised at how quickly you are willing to throw reputable labs under the bus in their assessments of heat-treatment. Perhaps I am naive, but an AGTA gemologist explained the effects of low-temperature heat on crystals/inclusions to me personally and I have a hard time not believing such scientific, systematic people. Somehow, you seem to be positioning yourself that because you doubt just about any lab, you are better than other vendors, who are "lying" if they believe a lab. A lab's job is to assess gemstones, not sell them, so their professional opinions are instantly more credible on this topic than those of any vendor. There is definitely a pecking order for lab credibility and a responsible vendor acknowledges this, as I'm sure you agree.

I can certainly see the need for some kind of industry-wide standards. I think this is part of the goal of the Laboratory Manual Harmonization Committee (LMHC).

With respect to pricing, in addition to the non-linear relationship between sapphire attributes, size, and pricing, the other thing that hasn't been considered here is the FX.

If a wholesale premium is say 70% for a dealer in Europe, for a US wholesaler to buy that stone from Europe (no mark-up) would cost, in US dollars, 1.7 x 1.3 (Euro fx) = 2.21 times the original price to the European wholesaler. Throw the retail premium on top of that and you can see how quickly it adds up. (This is even true if you take Europe out of the equation because FX-rates are all interrelated and FX arbitrage opportunities are rare.)

 

[Richard Sherwood]

Date: 1/21/2007 1:36:56 PM
Author: starryeyed

You can't compare premiums on 1-2 carats with those for 4-5 carats - it's just not a linear relationship.

Your statement here would be more correct if you said "You can't compare "per carat prices" on 1-2 carats with those for 4-5 carats.

The main reason for this is the rarity factor for larger stones. This factor is well known and well documented.

You can, however, compare premiums for things such as country of origin and heated versus non-heated. The premiums for these factors tend to fall in a pattern well known to most experts.

So speaking as an appraiser (and former dealer, 19 years) this is the first phase of how it works (figuring value): You arrive at a base price for the stone based on it's carat weight and quality. In the case of ruby & sapphire, this base price is with the assumption of "moderate" heat treatment.

Then you assign a premium (or deduction) based on country of origin. Then you assign a premium (or deduction) based on the level of heat treatment or absence thereof. A ruby with "minor" heat treatment will bring a premium, one with "significant" heat treatment will bring a discount. A ruby with no heat treatment will bring much more of a premium, which will vary according to the country of origin.

An unheated Burma brings a larger percentage premium than an unheated Ceylon, which brings a larger percentage premium than an unheated Madagascar, which brings a larger percentage premium than an unheated Thai.

There is a documented, patterned order to it, an order that sometimes has a pattern going back centuries. It is not near as haphazard as many think. Those dealers or consumers who perceive it to be so haphazard are usually the dealers or consumers that are less knowledgeable. Knowledgeable dealers usually have a much more clear picture of the market and how these factors affect it. (I'm not speaking to anyone in particular here, just in general.)

Once you have arrived at a "working figure", then you begin the second phase of the process, checking comparables. On larger, finer goods in particular you research what similar stones go for on the market, as you have researched your stone. From this figure you then "tweak" your working figure, and come up with a final value.

No part of this process can be left out to obtain an accurate figure. For example Starryeyed, you are comparing your pink sapphire with others seen over a computer screen and arriving at the conclusion it is worth about 3 or 4 times what you paid (if I understand you correctly, from 6-7000 paid to 18-25000). That might be so, but it would be very unusual for a professional, knowledgeable dealer to let that kind of profit escape him. It happens, but not often. Congratulations if it happened in your case.

However I've had many, many clients come in thinking the same thing (because of their own research, augmented by assumptions and hearsay), who have been sorely disappointed when their gem appraised for far less than the value they had come to perceive. Usually the appraisal comes in at about what they paid for, or a reasonable amount above if they got a good deal.

 

[strmrdr]

Well said as always Richard!

starryeyed notice what the labs say none of them will say there is no treatment!
They say there is no evidence of treatment.
What treatments and how many they check for is the next big question and the point CC and myself is making.
Further in 5 years as more treatments are found out by the labs some of which are likely in use today some of the stones lab graded as "no evidence of treatment" will be found to have treatment with the new tools and knowledge.
Its happened in the past and will happen again.
The latest case in point was some BE stones being graded as "heat only" when the newer technique of desfussing it thru the whole stone was discovered by the burners.
Eventualy they might figure out how to do BE at low heat then watch the market run scared.
No small number of stones may pass the labs as "no evidence of treatment" before the labs catch on.
Its a game of cat and mouse with the labs getting a late start in the race.

 

[starryeyed]

Date: 1/22/2007 8:35:02 PM
Author: Richard Sherwood
Your statement here would be more correct if you said 'You can't compare 'per carat prices' on 1-2 carats with those for 4-5 carats.
No part of this process can be left out to obtain an accurate figure. For example Starryeyed, you are comparing your pink sapphire with others seen over a computer screen and arriving at the conclusion it is worth about 3 or 4 times what you paid (if I understand you correctly, from 6-7000 paid to 18-25000). That might be so, but it would be very unusual for a professional, knowledgeable dealer to let that kind of profit escape him. It happens, but not often. Congratulations if it happened in your case.

Thank you Richard for the very excellent explanation of pricing theory. I can only tell you my experience - I apologize if any of this is repetitive, but it seems some of what I wrote may have been unclear to some.

After considerable research, I bought a pink sapphire that was uncertified. It came from a Forbes recommended dealer in NYC with the usual descriptors for top quality stones, same as you see on CherryPicked or the NSC. The price was based on being heat-treated. I took the stone to a local GG who relied on price guides to put a lowball figure on it, but who then raised the value after "research".

I had consulted two local dealers about sourcing pink sapphires. They each asked if heat -treated would be ok, because a certified, non-heat-treated stone would cost me at least double, depending on the quality of the stone at the size I was looking. They also said that pricing on pinks has gone up considerable over the past 2-3 years or so. They brought in several stones to view, of various color and clarity grades. I wasn't impressed with anything I saw and the pricing for lesser quality material was even more than what I paid.

After appraisal, the stone went to the AGTA for certification. Much to my surprise, the stone received the "no indication of heating" designation. The stone went to another appraiser (through the dealer) who verbally gave me a value range of 2.5-3 times what I paid. This echos what both of the jewelers told me. (I asked that the appraisal be written for the least amount possible because of the insurance premium.)

I linked several stones on this thread that have the similar descriptors/images as my stone (i.e - with respect to color,clarity, brilliance, zoning, windows, enhancements, etc). I suppose I could take this one step further, have the stones sent under memo and do a comparison. Unfortunately, I can't afford the stones with the similar descriptors that aren't heat-treated. I quoted the prices for you. So how can I say these stones are similar? I am basing this comparison on the integrity of the vendors' detailed descriptions and video images. These tell an awful lot.

Just to clarify, I never concluded a value of "3-4 times". I said 2-3 times, based on:

1. Prices of stones from two local dealers: heat-treated vs. non-heat-treated.
2. The original invoice price vs. the appraiser's valuation once the cert with "no indications of heat" was done.
3. The original invoice price vs. the asking price for similar stones on the NSC's site.

And 2-3 times translates to 100-200%. So if a stone is $5K, $10-15K. So three comps, all similar conclusions. I certainly don't think pricing is haphazard. However, I do think it is a dynamic thing and depends on supply and demand, quality, rarity, size, vendor reputation, integrity of certification.

Thank you Storm for acknowledging that I understand the nuance of "no indications of heat". Of course no reputable lab is going to definitely say with 100% certainty that there is no heat-treatment - that would be professional suicide. Afterall, temperatures comprise a range and where exactly is the cut-off for "low" or "high". I had been concerned myself and spoke to the AGTA lab directly - they were quite clear about the characteristics of a low-temp-heat-treated sapphire and what they look for. There are physical discernible changes in crystals/inclusions. Will there be progress over the next 5 years? Of course - it doesn't mean they know nothing now.

 

[colorchange]

Date: 1/22/2007 2:30:47 PM
Author: starryeyed
Colorchange, are the stones currently for sale on your site Padmaraga typical of the quality you stock and sell?

I am quite surprised at how quickly you are willing to throw reputable labs under the bus in their assessments of heat-treatment. Perhaps I am naive, but an AGTA gemologist explained the effects of low-temperature heat on crystals/inclusions to me personally and I have a hard time not believing such scientific, systematic people. Somehow, you seem to be positioning yourself that because you doubt just about any lab, you are better than other vendors, who are 'lying' if they believe a lab. A lab's job is to assess gemstones, not sell them, so their professional opinions are instantly more credible on this topic than those of any vendor. There is definitely a pecking order for lab credibility and a responsible vendor acknowledges this, as I'm sure you agree.

I can certainly see the need for some kind of industry-wide standards. I think this is part of the goal of the Laboratory Manual Harmonization Committee (LMHC).

Padmaraga.com is a very very minor occupation to me indeed I created this site in a single day, and plan another release in one month much better (there should be approx 20 rubies and 80 fancy sapphires listed). A very tiny fraction of my inventory is on the website and it's not representative at all of what I deal.

I'm not throwing the labs under any critic, only the vendors that sell a stone as "unheated" because a lab stated "no evidence of heat enhancement".
I'm not pretending to be a better dealer because of that but I try to be as honnest as possible. And clearly pretending that a sapphire that I saw burnt under my eyes is unheated because any lab states they don't see evidence wouldn't be honnest.
Now when a seller don't have anymore information than a lab that states "No evidence of heat enhancement" how can he state that the stone is unheated for sure ?

My point is that I've bought a number of stones that were heated for sure and that went out of every good labs as "no evidence of heat enhancement". Now, I'm not a gemologist, I don't know more about inclusions than what it takes to deal but I can tell you a number of stones go through. That is my experience.
And with simple statistics, considering that there are originally 10% of unheated stones in your category (fine 4Ct pink sapphire from ceylon) and that 1% of heated stones don't get detected (I think it's much more), the probability that a stone with no heat detected be indeed heated is 8% . That not near to 0.

Since I think the proportion is nearer to 3% I estimate the probability that a stone with "no etc" label be heated is 20% .




stareyed, your calculation of the FX effect is plain wrong.
If the markup for unheated sapphire is 70% in EUR, put it into USD it will still be 70%, add a 50% margin and it will still be 70%.

 

[starryeyed]

Date: 1/23/2007 4:41:02 AM
Author: colorchange
And with simple statistics, considering that there are originally 10% of unheated stones in your category (fine 4Ct pink sapphire from ceylon) and that 1% of heated stones don't get detected (I think it's much more), the probability that a stone with no heat detected be indeed heated is 8% . That not near to 0.
Since I think the proportion is nearer to 3% I estimate the probability that a stone with 'no etc' label be heated is 20% .

stareyed, your calculation of the FX effect is plain wrong.
If the markup for unheated sapphire is 70% in EUR, put it into USD it will still be 70%, add a 50% margin and it will still be 70%.

Colorchange, I agree with you a 70% premium is a 70% premium, regardless of FX. (Although I don't quite believe that the premium is the same for a 1-carat stone as an 8-carat stone - I believe it's more non-linear). I am trying to work with you on this to say that there are other factors that affect how much I pay in absolute Dollars as an end-consumer, one of which could be the FX. There has to be some explanation for the 2-3 times multiplier that I have experienced. The Euro is much stronger than the Dollar right now, so in the world market, you can buy more than me. The absolute Dollars amount that I pay today to a European dealer is more that the absolute dollar amount I would have paid if the FX were 1:1.

Say my sapphire was sourced in 2002 (when there was greater parity), kept in inventory, and then sold to me today at a fixed premium over original dealer invoice. If I then compare the price of my stone to the price of stones from Europe today when the Dollar is weaker, those stones today are going to appear 30% more expensive in absolute Dollars. If you also include the heat-treatment premium in the equation, today's unheated stones will appear 1.7 x 1.3 = 2.21 times more expensive than the 2001 heated stone.

So currency fluctuations over time are happening all of the time, so the FX has a definite effect on the absolute Dollar amount I pay as an end-consumer. It doesn't change the other premiums, agreed.

Colorchange, I understand what you are saying that the probability of a "no indications of heat" stone having been heated, i.e. - a false positive, is 8% using your numbers, but by the same token, using your statistics, the chances of a false positive on a random stone are 90% x 1% = 0.9%, less than 1%.

If the lab looking at the stone is highly reputable and knows what to look for, 1% (1 in 100 heated stones are incorrectly assessed) may be high. For a less reputable lab, 1% may be low. This is exactly why lab choice is so important. If rather than 1%, the number of times they are wrong is 1 in 1000, the chances of a false positive are about 1%.

If you opt for cheap reports and use less-reputable labs (say they get it wrong 1 out of 10 times), the chances of a false positive approach 50%, so it is important to disclose this. You pay for greater certainty.

 

[colorchange]

stareyed, I think I agree on everything exept that AGTA, GIA or any gem lab able to bring less that 1% false positive.
I have never stated that the premium is linear. The premium I stated were for the kind of stones you are interrested in.

What I was stating is that if AGTA makes 1% mistake on heated stones and 0% on unheated and that 10% of stones are unheated, the result will be that 8% of stones certified as "no evidence ect" will have indeed be heated.

And my personnal experience on top occidental lab (you seem not to trust AIGS...) is that on Ceylon stones, around 3 or 4% of heated stones go as unheated.
With 3.5% probability of a stone beeing certified as "no evidence ect" and 10% of the stones beeing really unheated, you get to a probability of 24% that a stone certified as "No evidence etc" be indeed heated.

That's a lot !

And clearly fine sapphires rarely get sold by a jeweller or a dealer as heated when it's unheated. Very few people will make $1500 income on a sale when they coud do $5000.
And on such pricey stones, when you have a doubt, you just drop it to AIGS, it costs $20 and tells you if you should then ask a certificate at AGTA (a lot of dealers do that because they know what the tryue value of these "cheap" labs is. These labs are cheap just because the salaries are much lower but that do not mean they are less qualified).
The chances are that you are in the 3.5%, but anyway that does not really affect it's value in the market : one quarter of the "unheated" stones in the market are indeed heated !

 

[starryeyed]

Colorchange, I understand the math - no need to keep explaining. Thanks.

You obviously have very different experience than what AGTA told me. It''s semantics at this point, but as I was told by an AGTA lab gemologist, "very very rare" out of "thousands of stones" (topic being being pink sapphires) does not translate to 3.5%, i.e. - 7 stones out of 200. "Very very rare" out of "thousands of stones" means something on the order of magnitude of 1 in 1000 or less. My guess is they get it right more often.

And where is the threshold for "low-temperature heat treatment"? Maybe the stones undergo drying before weighing - is this heat-treatment? This is probably something the LMHC could work on - what defines "low-temperature heat treatment" - what temperature and for how long, derived from when atomic properties of corundum change. I think the whole idea is, has the sapphire undergone some process by which the natural properties have changed or am I getting a stone that came out of the mine with these properties.

I have nothing against AIGS - I just don''t know much about them.

I would agree that the gemstone market is probably pretty "perfect" if you have properly accounted for all of the factors - including the more intangible ones like vendor reputation and certificate quality. For this reason, the market itself is probably far more reliable than price guides or esoteric formulas.

 

[elmo]

Starryeyed, I think you are correct - the premium for unheated goes up with weight, to the point at certain sizes I''ve seen where the Guide leaves it fairly open-ended saying "xx% to yy% or more". I may be wrong, but it looks to me like the more rare and fine something is, the less predictable a premium or selling price can be.

 

[colorchange]

Date: 1/23/2007 2:31:39 PM
Author: starryeyed


You obviously have very different experience than what AGTA told me. It''s semantics at this point, but as I was told by an AGTA lab gemologist, ''very very rare'' out of ''thousands of stones'' (topic being being pink sapphires) does not translate to 3.5%, i.e. - 7 stones out of 200. ''Very very rare'' out of ''thousands of stones'' means something on the order of magnitude of 1 in 1000 or less. My guess is they get it right more often.

staryeyed, I think at this point the only problem is : Do you trust what AGTA guys tell you aor what I''m telling you.
I have no interrest in lying on that point. AGTA isn''t on the same side as I, I think that they tend to think that if their conclusions are never disprooved it means they are true.
On their side, they do their work perfectly, I''m sure that if you tale 10 000 "no evidence etc" pink Ceylon sapphire from AGTA and bring all to GIA, less than a dozen will be mentionned as heat treated.
On my side, I see what amount of heated stones go undetected.

And if the premium on Burma, Ceylon, Madagascar and Thailand are so different, it is because the market is not stupid and knows that the probability of false unheated in Burma is approx 5%, this on Ceylon is 25 or 30%, this on Madagascar is more and this on Thai is even worse !
And if the probabilities were all 0.1% and 1% I can tell you it would not impact the market !

 

[elmo]

Date: 1/24/2007 5:23:01 AM
Author: colorchange
And if the premium on Burma, Ceylon, Madagascar and Thailand are so different, it is because the market is not stupid and knows that the probability of false unheated in Burma is approx 5%, this on Ceylon is 25 or 30%, this on Madagascar is more and this on Thai is even worse !

Actually, in this case the market comes across as pretty stupid. According to Dick Hughes'' book, few to no Burma blue sapphires are heated; I think you''re pretty much agreeing. Don''t the price guides already show a premium for Burma origin? Why would an additional premium be associated with unheated material from an origin that isn''t routinely heated?

 

[colorchange]

Date: 1/24/2007 8:53:40 AM
Author: elmo

Date: 1/24/2007 5:23:01 AM
Author: colorchange
And if the premium on Burma, Ceylon, Madagascar and Thailand are so different, it is because the market is not stupid and knows that the probability of false unheated in Burma is approx 5%, this on Ceylon is 25 or 30%, this on Madagascar is more and this on Thai is even worse !

Actually, in this case the market comes across as pretty stupid. According to Dick Hughes'' book, few to no Burma blue sapphires are heated; I think you''re pretty much agreeing. Don''t the price guides already show a premium for Burma origin? Why would an additional premium be associated with unheated material from an origin that isn''t routinely heated?

Here we were talking of pink sapphires (and also of their close relatives rubies).
Fine blue sapphire from Burma are almost never heated, that''s true, but pink sapphires and rubies are.
Premium are quite different when it comes to blue sapphires.

 

[strmrdr]

One thing this thread has proven to me that my team approach to buying expensive rubies and sapphires is the right one.
Trusted vendor from a Trusted supplier, trusted lab(not always required but nice), Richard Sherwood as a check. (Rockdoc or Dave Atlas would work too)

 

[pyramid]

timmy


I came across your thread whilst searching for another and thought I would ask. if you are still reading the boards here, if there was any update from the appraiser on your ruby?