Best gemstones for investment

[Arkteia]

For investment Coloured Diamonds are the best. If you want to invest in Coloured Diamonds you will be always benefited as the values of coloured diamond is increasing day by day. Specially Pink diamond, it is very rare; for this reason its demand is ever increasing.

I have a simple question. A colored diamond costs an arm and a leg because colored diamonds are the rarest of all diamonds. However, how rare are colored diamonds if gem-grade diamonds are not that uncommon? Are colored diamonds investment only as long as diamonds are viewed as such? I am interested in colored diamonds, but the prices of better ones are so prohibitive...

 

[PrecisionGem]

Gemstone investment is a subject to be approached with fear and trembling. Just about every negative comment made above is true. Liquidity, market access, overcoming the gap between wholesale and retail are all concerns. However, it is also a fact that gems have increased dramatically in value since I became active in the trade some 37 years ago.

I recall a Sotheby's auction I attended in 1984. There were two 20+ carat Kashmir sapphires on offer. Hammer price approximately $250k each. Today's price at auction: $200-250k PER CARAT. I recall another opportunity I had (and missed) to purchase a major color diamond at a knockdown price. It was a seven figure buy and my client passed. The appreciation on that gem alone would have made for a nice retirement.When I decided to liquidate my inventory and retire to writing a few years ago, I sold a few of my finest stones to clients, but most went on the wholesale market and all brought a nice return. To be a successful gem investor you must be very savvy, extremely patient and buy only the best.

Good to see you back Richard!

 

[LocaLaPerla]

Very interesting input - thanks very much everyone!

Richard - I must track down a copy of your book! I am new to this forum, however, I saw reference to it elsewhere about a month ago, in relation to your decision not to include Akoya pearls in your book. (If I recall correctly, due to the decreasing / minimal nacre thickness and the processing that Akoyas are commonly subjected to - leaving them not substantially different to a high quality imitation). Apologies if this was not your exact argument, as I have not yet read your book, however I found your position to be both intriguing and refreshing in its honesty and your book has been on my radar ever since! A lovely surprise to see that we can benefit from your years of experience here also - thank you.

As a brief comment, I do agree with seaglow above in relation to gems of spectacular colour perhaps having an edge over other, lesser known, rare gems that one hopes may have an investment edge. Many of the gems that you have listed are both captivating in their beauty (not just to me, but have made waves throughout the industry) and occur in relatively few or small deposits. A spectacularly sized and coloured buy may find the right buyer.

I would perhaps say that this area is not too unlike like any other where the goods are non-fungible (i.e. not all the same.) On that note, it is impracticable to compare gemstones to gold, where each bar or coin is essentially the exact same thing - 99.999% AU, with a transparent, tradable price per ounce. That scenario is simply not the case in a complicated market such as coloured stones).

Essentially, the better your buy, the greater your chance at a decent profit - which Richard has almost perfectly summed up above in his reflection that one needs to be 'very savvy, extremely patient and buy only the best.' To do this, however, you must understand and study the market and become extremely knowledgeable about the stones that you are interested in and potential end consumers. If there is a fatal flaw in the original purchase - whether it is to do with the aesthetics, a gemological issue with the stone (wrong ID, unidentified treatment, synthetic etc.) or merely that you overpaid for it, the purchase is going to be difficult to offload at a good margin. It is no different to, for example, property or large M&A corporate activity. Due diligence, specialised knowledge and ensuring that simplified assumptions are explored or risk tested first, along with timing, can go a long way to success or failure.

 

[Sagebrush]

LocalLaPerla,

Thanks for the kind words. My reason for excluding akoya pearls from my list of precious gemstones had to do with the thin nacre (0.25mm on average constitutes "thick" nacre on a GIA report) together with the so-called "Japanese Process" which bleaches and "pinks" the pearls, which provides the illusion of a rose overtone.

I was criticized by one reviewer (1st ediiton) on Barnes & Noble's site for excluding turquoise from my list. Though I didn't mention turquoise specifically, the real problem is finding a piece of turquoise that has not been "stabilized" a word that seems to mean anything from plasticizing to dyeing and anything in between. In the 2nd edition I have added a number of gems.

RWW

 

[theredspinel]

LocalLaPerla,

Thanks for the kind words. My reason for excluding akoya pearls from my list of precious gemstones had to do with the thin nacre (0.25mm on average constitutes "thick" nacre on a GIA report) together with the so-called "Japanese Process" which bleaches and "pinks" the pearls, which provides the illusion of a rose overtone.

I was criticized by one reviewer (1st ediiton) on Barnes & Noble's site for excluding turquoise from my list. Though I didn't mention turquoise specifically, the real problem is finding a piece of turquoise that has not been "stabilized" a word that seems to mean anything from plasticizing to dyeing and anything in between. In the 2nd edition I have added a number of gems.

RWW

Please stay! Hope you hang around and post liberally now.

 

[LocaLaPerla]

RWW,

Thank you for the explanation!

By way of my explanation - I am reading the book 'Jewels - a Secret History' by Victoria Finlay' which was gifted to me some months ago. (I have been making embarrassingly slow progress as I only finished my GG not long ago and my brain has been a bit overwhelmed).

I'm not sure whether you have read it or were aware of the reference to your (first) edition in the Pearls chapter of book, however I did check it last night, and it was published in 2006, so it has been around for a while. It is absolutely non-critical of your stance, just a short, one or 2 sentence reference (pretty accurate as well), and it supports the author's conclusions - that Ago Bay / the Japanese waters are becoming polluted, therefore Akoyas are being cultured for the minimum PGP of 6 months, rather than the original 18 months - 2 years, resulting in thin nacre. As I alluded to yesterday, yours was the first professional opinion I'd heard that seemed to go against the grain of the general '4 types of pearls, each are wonderful in their own way', industry spiel - so I have been intrigued as to the rest of your book since. (My brain and my finances are still recovering from my studies unfortunately, but it is firmly on my list now!)

It is interesting that many people have a hard and fast opinion of which gemstones are important or should be included in a book or on a list, for example, without realising how quickly things like supply, treatments, new discoveries, a new synthetic or a natural disaster (including water pollution or red tide, in the case of pearl farms) or war can change the current dynamics of the market. I congratulate you on writing on the current state of the market, as you saw it, rather than merely repeating a list of historically important or popular stones, echoing those who have done so before you. Incidentally, I have various conflicting thoughts on stabilisation of turquoise, which I think mainly stem from the fact that the Gregory Method is proprietary and so little is actually known about it.

For those of you who haven't read Finlay's book, it's an interesting and enjoyable take on gemstones and the industry (so far, at least!), as Finlay is a journalist, rather than a gemologist, so approaches the subject from the point of view of researching and discovering the stories, history, unknown facts and interesting personalities behind the industry. (When I do manage to pick it up, I find it very engaging!)

Cheers

 

[Sagebrush]

LocalLaPerla,

.Victoria is an exceptional journalist. I met her when she attended one of my AGTA Tucson lectures in 2004 I believe. Jewels, A Secret History is a great book, both entertaining and, at times, profound as is the one she wrote on Color or Colour!

One of the problems of the rise of the gem lab is that thesis labs really work for the industry. This represents a sea change. Back in the day, GIA and others were primarily educational institutions. That is not so today. Today a large percentage of their revenue comes from their labs. Much time is spent in an attempt to sugar coat the language used on lab reports to make them acceptable to the trade. In the 80s "thick" nacre was defined in the GIA Colored Stones course as 0.50mm of nacre. Now, it seems, thick is a relative term that relates only to the average thickness seen on these pearls with no reference to durability or visual quality.

The problem is much broader than pearls. Descriptions on colored diamond grading reports can only be described as tortured, but I digress.

RWW

 

[LocaLaPerla]

Thanks RWW for your experienced insight!

I think that about all I can add to your wisdom here is to emphasise that (in terms of GIA), all pearls are deemed to have 'acceptable' levels of nacre 'quality' (as opposed to 'thickness'), unless falling into the category of 'nucleus visible' (self explanatory) or 'chalky appearance' (defined as having 'an obviously dull nature' - however side notes in the Graduate Pearls course do note that thin nacre can be a cause of this.) I have always thought it a bit odd that 'acceptable' is the highest grade, particularly when all of the other value factors have such varied and complex grading systems, however I largely reconciled my internal questions by noting the considerable overlap with the 'luster' factor.

This current inclusionary style approach of starting with an assumption that all pearls will meet a minimum acceptable standard, unless proven otherwise, seems a reversal of a past, more standard style of actively measuring and assessing each pearl's nacre quality against objective standards, including (I am gathering, or perhaps solely) on the basis of its nacre thickness. (Having only been born in the mid-80s, it is so wonderful to learn these small anecdotes of information that don't tend to be taught or in technical books - so thank you again for sharing!)

I realise that this conversation has strayed off topic a fair bit, but I would be very interested to hear your thoughts on the Tahitian government having recently announced that it will abandon its minimum nacre thickness requirement of 0.8mm (across 80% surface area) of pearls for export?

Finally, that is lovely that you met Victoria. She is a very engaging author and her research is fantastic. I felt sure that you would be aware that you were referenced in her book, but I also thought that you would have a general curiosity (as I would) as to who was referencing you and where, when I mentioned that I'd read about your book just recently. When I saw that the book was published 11 years ago, I thought that I should clarify myself!

Many thanks all!

 

[Sagebrush]

LocalLaPerla,

I am not sure how I feel about government as opposed to free market's setting quality standards. There are times when the free market approach is best and times, as with health care and education, when the market must be carefully regulated. On balance, I believe, there must be a lot of producers looking to market these pearl plated beads putting pressure on the government. Before the Tahitian regulations were implemented, the world price of black pearls dropped rather dramatically.

When nacre is thin, the untreated pearl simply does not exhibit the qualities that had made pearls so desired over the millennia. All we are left with is the brand name. Maybe what is needed is a new gemological definition of "cultured Pearl."

RWW

 

[PrecisionGem]

Government regulations and involvement in healthcare and education have worked so well, certainly they should get involved in regulating the gemstone industry. Maybe the feds should regulate the angles and designs of faceting stones! Why not! The government could grow into a whole new department. I can see it now..... The United States Department of Lapidary Regulation.

 

[Lisa Loves Shiny]

Government regulations and involvement in healthcare and education have worked so well, certainly they should get involved in regulating the gemstone industry. Maybe the feds should regulate the angles and designs of faceting stones! Why not! The government could grow into a whole new department. I can see it now..... The United States Department of Lapidary Regulation.

That made me spit out my coffee. Lol

 

[LocaLaPerla]

RWW,

Very interesting points! I'd never thought of it as government regulation / intervention akin to health or education before. I do understand that Tahiti is doing it pretty tough, in terms of its economy, so no doubt producers are increasing pressure.

Coming back to Akoyas (bit of a circular discussion in the end!), I thought that there was a 0.25mm nacre thickness minimum on exports from Japan, however I cannot now remember if that is a government regulation or a move introduced by the / one of the industry representative association(s). (I know that I should look it up but I'm on the move at the moment and it's been a few years since I studied this in detail - apologies). I seem to recall that a government department took care of the practicalities. A low threshold but rather ironic given your views on Akoyas above, RWW!

Precision Gem, Lisa RN - imagine the career opportunities for gem lovers! All of that distracting sparkle would be unlikely to boost government efficiency rates, in any event!

 

[Sagebrush]

Gene,
I think I should clarify! I am all for free market capitalism in the gem business. After all nobody is likely to die if they can't afford a sapphire. . I misspoke. What I should have said was: "I don't believe a FOR PROFIT approach works well in education and health care." The free market implies a choice.

Situations of life and death such as the famous case of the Epi-pens (protected by U. S. patent) that escalated from $40 to $600 each for no other reason than to further fatten a fat cat, illustrate the need to either regulate or replace the current health care system.

There are numerous examples of people here in the U.S. who pay ridiculously high prices for pharmaceuticals that can be had for pennies on the dollar in other countries. The epipen is not sold in a free market. The patent creates a state protected monopoly.

Sorry to digress in this way. Political debates should be taken up elsewhere.

 

[Seaglow]

I found this article to be very useful about investing in gems.

https://www.gemsociety.org/article/investing-in-gems/

 

[Sagebrush]

Seaglow,
I agree with the author on a couple of points. Semiprecious is a distinction without a difference and terms like investment grade are meaningless.

Strictly speaking, the author is not talking about gems as investments so much as giving advice as to how a retailer should buy. There is a difference between making a markup and making and investment.

The real issue is liquidity and market access. When I was a relative newby I attended a resale viewing at Sotheby's. On offer were two Kashmir sapphires, each 20 plus carat emerald cuts. I was investigating the characteristics that made these gems so valuable, I was not in a position to buy. The stones were exceptional and sold for upwards of $250k each. Today, 38 years later, either of these stones would sell for over 250k PER CARAT. Even figuring in a 15% auction commission that's a pretty good return on investment and any auction house would jump up and down at the opportunity to auction those stones. On the other hand, try auctioning a 20 carat rhodolite garnet. You'd be lucky if a second level auction house would agree to sell it.

RWW