Tucson Gem Market: What's In and What's Out – February 2024

For the gem dealer, gems are exactly what the title of this blog suggests: a financial instrument which, if purchased and sold wisely, will yield an increase in value over time and ideally generate a living. So for us, gems are the stocks, options or futures of the trader on Wall Street; and they are the properties of the real estate investor. Additionally, however, gems are really cool to look at, easy to keep and transport, and finally, buying them can take you into the world of international treasure hunting. All of which adds to gems being a lot more fun than buying stocks or bonds, or pork skins for that matter. It’s a commodity like gold, but it isn’t publically traded because the knowledge base required to evaluate the worth of an individual gem is far larger than what you need to know to buy commodities, stocks, or even houses. I speak from some experience: I have my series seven, I worked in the foreign exchange market, and I have bought and sold real estate both for personal use and investment.

How, then, would gem dealers report on the current pulse of the gem market, as measured by prices and availability (as well as gossip!) of Tucson 2024? Let me give you a glimpse by discussing some of the gems that I had mentioned as purchase options for me for Tucson and how I fared as I shopped and chatted with my favorite dealers at the shows.

1. Kornerupine: there has not been any production of Kornerupine in several years. Material may still be available but the locals are not doing any digging and the market in Arusha has dried up. Current productions (which are miniscule) are dominated by greenish material from Madagascar without tri-chroism. This does not generate retail interest as there are other, now cheaper, gems available in those colors (i.e. tourmaline). Dealers were showing more material this year but with sharply increased prices. In fact, prices to buy are higher than the prices in my shop, and the material is not flying out the door even at my lower prices. I therefore opted against purchase.

2. Benitoite: 100% of the material available directly at the shows is now overpriced in my view, except for the vendor I use who has only 5 US buyers (from what they told me) out of 15 total that receive a share of the quarterly production. Pieces over .25 cts are very rare. Most buyers do not resell right now, the market is fairly wiped clean except for collector’s pieces at very high prices, and there’s little being shown at GJX or AGTA, which means that people are holding back what they have. It’s a complete seller’s market as the material generates retail interest from collectors. Anything semi useful that hits the market at a reasonable price moves quickly.
   
   
3. Cobalt Spinel: the market is a little soft this year despite dwindling production. Out of the half dozen or so vendors carrying it, a few had lowered their prices for the more glowy but poorly cut material that had dominated offerings of the last several years. One dealer claimed that most of the very measly production from Luc Yen is going into the hands of one company and they are not reselling right now. A few other vendors needed money as the market of 2022 was very slow – at a near standstill starting July – and so vendors dug deep into their old inventory, offering it at good prices. I was able to move several nice pieces for a smaller markup directly at the show. I left behind a near 1 carat 6mm round that I really wanted but the money didn’t stretch. The Mahenge cobalt spinel, by contrast, entered the market at too high a price because it was being priced in comparison to Luc Yen material – but in my view, investors didn’t consider that the Mahenge discovery would at least temporarily dilute the market and therefore prices should have started lower. Also, most Mahenge has too much grey in it, which makes it a little too similar to the slightly more available Sri Lankan material. It is a good time to buy cobalt but also a good time to hold on to it. The prices of cobalt never scare me as the material has so much inner beauty that it will retain value (better than Benitoite in my view, simply because it is just as rare and much more beautiful).
   
   
4. Grandidierite: dealers are not buying any right now. Madagascar had overproduced once they found deposits in the south and there was a sense that there is a lot of gemmy material out there which led to high asking prices at ground level. As it turned out, most of the material that is currently mined is just ornamental quality (to make pebbles to put into bowls, or lower quality beads). The gem quality is still very rare but consumers have a sense of the prices being too high – they might also be right! – so vendors are now stuck with the material that they cannot move without a loss. It’s best to wait this out and see if prices come down. I have material still from my own purchases in Madagascar and I am selling that down at lower prices than the current market. But I also will not reinvest in the near future unless I find something unusually pretty and reasonable.
   
   
5. Burmese Jedi Spinel: for geopolitical reasons, production is at a near standstill and what little is coming out of the region (illegally, I presume), is not that good. Only old material is floating around, with decreasing availability and increasing prices. Several of the vendors who used to specialize in it have left the market and concentrated on other goods because getting into that market is just too difficult. There are still older productions of melee though not as abundant as in 2019 and before. I tend to buy goods that have tiny flaws, eye clean if possible but not loupe clean. I personally feel that while the clean material is over-valued, the very slightly included material is undervalued. Flawless (or nearly flawless) gems attract private investors and dealers with big pockets, who are taking the long term view that these are still worth their money.
   
   
6. Sapphire: there are many sub-markets here so I can only mention a couple. Smaller size blues are usually Madagascan these days and readily available if heated but prices have gone up. Unheated fine quality blues (like royal blue no heat) have jumped up a lot in the last decade or more because demand is outpacing supplies. Blue sapphire is probably the most well-known and ubiquitous investor tool for the private buyer, and it is a popular engagement ring alternative. The retail market remains strong as U.S. buyers are becoming more educated and are increasingly demanding unheated goods. World demand is also on the increase, especially foreign markets. Melees prices are steadily increasing at a slower pace, this year the older parcels are starting to be sold out and newer and more expensive productions are hitting the market, with corresponding price changes of about 10% over last year (some are 20-25% more). The same is true for the colored melee, in particular, purple. Darker purple melee remains sold out as the only newer goods in purples are coming from Madagascar, and below 2mm they barely have lavender color.
   
   
7. Ruby: smaller heated Burmese material (3mm and below) is still readily available though prices start jumping up at 2+mm. The finer and less pinkish goods are now sourced from Mozambique, market prices this year are the same as last year or even a tad softer. Most vendors seem to think that the reasons for this are mostly the world economy. Demand has been high for fine goods, in particular 2+ carats with pigeon blood certs, even though those have a darker color than buyers usually anticipate when they see the gems in real life.
   
   
8. Emerald: this is always a complicated market because there are literally dozens of substances that are used to enhance emeralds, from various natural oils to synthetic oils and mixes (some of them colored), waxes, resins like Opticon and ExCel, and even hardeners and glue. Not all of these treatments are permanent so the emerald needs to be re-treated. While gem sellers have to answer all buyers’ questions regarding treatment, if the right questions are not asked then answers will not be volunteered. One should generally assume that all emeralds on the market are moderately to significantly treated as those with insignificant to no enhancement require certificates from independent laboratories and are priced much higher due to their rarity. I have noticed that in the last 2-3 years, public awareness of emerald treatments has increased sharply and even an uneducated buyer will ask me to get them an emerald with “less” treatment rather than more. Buyers don’t always understand the meaning of their request but they do understand – correctly – that there is a distinction to be made both in terms of value and in terms of “shelf life” of some treatments. I have pulled back a little from the emerald market for this reason, trying to source melee from Zambia, Pakistan and Afghanistan (the latter is very hard to do nowadays, also for geopolitical reasons). Those tend to require less oil. Russian emeralds are a complicated product because of the war in Ukraine, and some large retailers have backed out of buying Russian goods altogether. Colombian material is 99.9% treated but U.S. sellers are rushing to get most of their goods checked. Correspondingly, prices here have risen as well.
   
   

I could go on and on. Consumer interest in natural colored gems remains high, but of course the higher prices of gems, and everything else for that matter, are slowing spending. I expect a sluggish recovery just because the high prices are here to stay for the most part, and income has not gone up correspondingly. We will just have to see how the situation progresses.

Questions? If you would like to know more about the market of a specific gem, let me know and I will make inquiries. Much of the information one can obtain in this secretive market is haphazard and anecdotal, but much of it has also proven to be highly reliable, as the number of companies that are movers and shakers in this trade is smaller than you might think

And inside the trade at least, we all benefit from information being sufficiently accurate to provide us with direction. Gem dealers are competitors but they also rely on the trades they do among themselves to be safe and functional, just like the stock market and the real estate market. The industry is based on trust, and this trust is enforced by social pressure (less so by laws as most laws have little international enforcement, and this business is 99% international). If you cheat another gem dealer, that information gets out. And then you are out too. Sometimes for good.