Do Gemstones Ever Lose Value? Our Perspective

When I first started buying cut gemstones in 2008 and 2009, gemstone prices were vastly different from what they are now. This was particularly true of gems we used to call “semi-precious,” which was a term that referred to any gem that was not a diamond, emerald, sapphire or ruby. (Oddly, therefore, the term “semi-precious” would have had to include spinel or tourmaline for example, which can sell for higher prices than emerald or sapphire.).

Here are some examples of prices I used to encounter: amethyst used to cost $2/ct, indicolite tourmaline was $8/ct, Mahenge spinel started at $40/ct and tanzanite was as low as $3/ct for small gemstones. Other spinels were $10-25/ct. I bought 3-4 carat pink spinels from Sri Lanka for $40/ct, and I remember cutting a 4-carat neon pink Mahenge spinel down to 3.5 carats just because it would look prettier and sell more easily. I bought it for $1000/ct from a mixed bag in 2011. I sold the piece for $27000 in 2020 and now it might fetch double that. Had I left it at 4 carats, it would have fetched over $50,000 back in 2020.

You can see them in the shop here

When considering what will happen in the gemstone market, you need to look at how prices first came to be as high as they are now.

My explanation is this: as online buying became popular, many gem and bead sellers that had relied exclusively on selling wholesale to small shops and jewelers, started to venture out and offer their products on the internet. I remember that several bead stores I used to go to around 2007-2012 went out of business as a result. Sellers from overseas started shipping retail directly to consumers. Essentially, these were new products on the market at that time, as beforehand you could only obtain them through a brick and mortar business. I should add that most of these businesses did not carry any kind of exotic gems. They would offer the big four: diamond, emerald, sapphire, ruby and little else.

During the initial years of my online shop (opened in 2009), I noticed that customers became increasingly knowledgeable and interested in beads and gems, finding themselves attracted to the colors, varieties and design options. Back in 2010 none of my clients knew what an apatite was, nowadays they are looking for kornerupine, benitoite, triplite and all kinds of other gems with funky names. They ask for lab reports and inquire about detailed properties of the gemstones.

What does this tell me? It tells me that gemstones went from near obscurity to being vastly popular around the entire world in just a few years. Just consider one gem: benitoite. It always came from just one small mine in California and that mine has long been exhausted. Nowadays buyers in Japan are crazy for it and I sell anything I can get my hands on. Benitoite looks just like sapphire but costs a lot more money, yet buyers keep coming, when supply has been at zero for a number of years already. The few vendors who still have benitoite are putting ugly rough inside quartz, and other minerals into acid baths to try and unearth the last few pebbles of value, and they will be sold out by 2028 (that’s what I was told anyway). Said vendors restrict buying to 3x a year with a buyer list of 15 names, because otherwise they will be overrun.

Bixbite, or red emerald, is another example. The mines in Utah have stopped yielding, and to get out just a small amount of rough requires a financial investment into equipment that renders the process moot. Bixbite is already trading upwards of $5000/ct for morsels, and the few people who still have it don’t stress about selling it because whenever they do in the future, it will fetch more than it does now.

Amethyst has gone from $2/carat to $40/carat since 2010. Regular tourmaline has gone from $8 to $100, Mahenge spinel from $40 to $500. Those are today’s wholesale prices for specific sizes (in the case of Mahenge spinel I am referring to 3mm sizes for instance). I don’t want to disclose all wholesale prices here, but this will give you a rough idea.

Why these drastic increases? Because none of this material ever existed in quantities that could satisfy any mass market.

Back in 2014 and 2015, when I was refining my line and started coming out with art deco style designs with colored gems, several stores asked me if I could create lines for them with my color combinations. I had to tell each of them the same thing: I can only make unique pieces because the gems are too varied for the mass market. I cannot make 5 or 10 rings with a 2-carat neon spinel in the center, or a line of studs with jedi red Mogok spinel pairs, or 20 solitaire pendants with a 6mm round kornerupine. That is why I never grew into a large business with a wholesale presence. I sell too many unicorns.

At this point in the argument, many buyers object in the following way: you don’t know what is in the earth, especially in places like Africa where the underground wealth these places possess has only been minimally explored. And this is to some degree quite true.

However, what this argument is forgetting is (a) how huge the demand for specialty gems really is, and (b) that people “on the ground” in the places we are discussing also have access to the internet and see the prices that gemstones fetch nowadays. That means that even wholesale buyers who travel to these places find themselves faced with demands for high prices at the source. Back in 2010, the landscape was completely different than it is now. Fewer people traveled to these faraway places and locals had little understanding of the retail market in rich economies.

While in my view, a complete understanding of what the wealth of fully developed nations really comes to when you actually live there does not yet exist, people do know that this is where the wealth is concentrated and they hope to participate in its acquisition. And who can blame them? Therefore, if an unsuspecting Westerner shows up at the gem market in Ratnapura or Nivitigala, Sri Lanka, they will be sold whatever they are willing to buy at whatever price they are willing to pay. You can trust that locals have checked out the international market by looking at prices on Instagram, eBay, or wherever else they need to look to find out what you might pay. They know that wholesale buyers like us, while buying quantity, will pay a lower price, so the hope that the unsuspecting buyer ends up in their shop is high! As most of these countries do not have buyer protection laws for returns, for instance, sellers are safe in that if you pay too much, that is not their problem to solve.

Still, you might argue, a new find could drive prices down somewhat, could it not? Yes, I think that is certainly possible, but it depends rather a lot on what is found, the quantity in which it is found, what it will cost to mine and process the material, and what the current market demand is for the stuff that is unearthed.

I will close this blog with an example of a new find of tourmaline in Ethiopia. As you may have heard, the Swiss Gem Lab SSEF has been testing samples of a new paraiba type tourmaline find in Ethiopia. The article went viral and it seemed like the news was everywhere but if you look carefully, there is just one original article here. There is ONE photo but if you read what the photo says, only two stones in the photo are reportedly from Ethiopia. I have been getting requests for information from the wholesale trade to find out what is happening and have put feelers out.

You can find the gems above in the store here and here.

So here is the gossip I have discovered, and it rings true to me. The area is already sealed off by the government and all artisanal mining has been prohibited. The Ethiopian government is working with a large company that is investigating the find and sending out geologists to survey the area. Only some of the material is copper bearing, and very little has made it to the market. Dealers are saying that what is out there now is most likely not  Ethiopian and it’s being constantly recycled (meaning the same photos are being shopped around). The area is “swarming” with Brazilians. Why Brazilians? Because they know this trade best, they work in large loosely connected families that pool their resources, and they are already on the ground in Mozambique to funnel the material onto the retail market through their networks. I expect, therefore, that the Brazilian vendors I work with will be offering the material once it has been properly investigated, then mined and cut.

Pricing for the material is therefore expected to be the same as the Brazilian and Mozambique stuff that is already on the market (this has been confirmed to me by two sources – prices on the ground are already astronomically high). Distribution will be meticulously controlled as demand is already so high that it cannot be met. This is in fact why prices are through the roof: vendors know that eventually they will sell if they are patient enough. And even if they do not get current market prices, they can then sell at a small discount, which means that the material they have held on to for years is still far more valuable than it used to be. After all, the world’s population is not decreasing, economies are continuing to expand and those two factors are constantly increasing demand for materials that exist in finite quantities – quantities that can never meet demand, quantities that mean one can never even make a single small jewelry line with gems that look identical!

As this is an opinion piece, I am inviting comments. What are some observations you have made that might shift this picture, lower prices or lower demand? Or do you have any market insights that confirm this impression?

We would love to hear from you.