When ‘Rare’ Goes Mainstream: Colored Gems' Market Share

When ‘Rare’ Goes Mainstream: Colored Gems' Market Share

In the spring of 2022, everyone wanted to buy emerald cut teal sapphire. This year it is blueish purple and lavender round sapphire, and my favorite - Vietnamese lavender spinel. But the story is the same: a particular gemstone, color or cut goes viral and within 6-8 weeks, the market is wiped clean and what’s left has risen significantly in price. Why does it happen so quickly?

It is hard to convince buyers of this, and I really don’t know why! With a few exceptions – such as amethyst – natural earth mined colored gemstones are rare. Really, they are! Purple sapphire – the latest fad – for instance, is much rarer than blue sapphire. Judging by what I see at gem shows the ratio is perhaps as much as 10:1. I can’t give you exact production, but I do speak from experience. I’ve been to hundreds of gem shows at this point and all I have to do is look at the offerings and speak to the vendors to know what is going on in their market segment.

I’ve watched white sapphires starting out cheap as chips in around 2012, as well as the beryllium sapphire from Songea (4mm and below trading at $1 a carat). Now both are nearly non-existent – even beryllium sapphires are hard to buy. Mahenge spinel started at $40 a carat for 4mm pieces back in 2012, and they cost about $100-150 for 1-1.5 carats. Now you cannot get them in the market at all except for what vendors have left over in their older stock.

Teal blue tourmaline from Brazil, dark purple sapphire from Sri Lanka, lavender and neon pink spinel from Vietnam, neon blue tourmaline from Namibia. All have come and gone since I started my business. There was a ton, then it went mainstream, then it went poof. At one point, we were selling Mahenge and Burma spinel beads for around $10/inch - anyone who bought it at that price is laughing now as there is none to be found anywhere! 

Once upon a time, the jewelry market was dominated by white diamonds. They are still in abundance, supply is still controlled and they are overpriced, but even now when you go to standard jewelry stores, 90% of what you see is white diamond jewelry.

Then the internet came along and the niche market I was in – untreated colored gems – gained public interest. According to an online article from CNBC (https://www.cnbc.com/2024/02/14/gemstone-engagement-rings.html), the colored gemstone market share in engagement rings has gone up from 5% to 15% in the last decade. Sapphire is one of the leaders in this market (also London Blue Topaz but let’s forget about that, it is NOT a rare stone). Natural (heat or no heat) ruby is being cited as difficult to come by, and part – but only part - of the issue is geopolitical conflict in the regions (i.e. Burmese ruby, but also any goods from Afghanistan and Russia, to name two additional examples). In 2023 alone, sapphire wholesale prices rose by 12% - meaning they rose faster than the S&P 500 Stock rates.

Other articles on gemstone market research predict a growth rate of 6% CAGR (compound annual growth rate) in the next decade https://www.credenceresearch.com/report/gemstones-market; most of this growth rate will take place in the United States. Synthetic gems will be the market leader, but in my opinion that is largely due to a more or less unlimited supply line in synthetics, whereas the growth rate of natural gemstones will be more limited due to supply and corresponding price rises. The rising prices may push the smaller collectors out of the market (though I hope that doesn’t happen of course).

While it is always difficult for an end consumer to directly benefit from the added value of the gems they own, the continuing digitization of colored gemstone market allows both buyers and sellers from all over the world to connect with each other, and it allows for more retail buyers to sell and trade their goods on platforms such as Loupe Troop, among others. Auction houses such as Christie’s report that jewelry items often fetch higher than asking prices, some ending up in bidding wars just like real estate. Investors are looking for places to put their money, and some of them have a lot of it.

That said, a retail buyer still has to hold on to their goods for a longer period of time for them to accrue in value, and of course the authenticity and rarity of the gemstones they sell has to be verified. Not all retail buyers do the same research deep dives that we gem dealers have to engage in to vet our merchandise; and the lack of buyer protection or the knowledge of how to buy goods from overseas has caused many retail buyers to sink considerable sums of money. But that is to be expected with any commodity and any stock as well. Smart buying is difficult! You don’t need insider information to make good choices, but you do need to have good research skills and most of all, you need to work with people you can trust.

It is important to note that the largest growth segment of the market is expected to be in certified gems. Overall, consumers prefer natural stones to synthetics, so among the higher valued certified gems we should see more of a price increase. In synthetics, where the cost is actually dropping so rapidly that gemstone dealers do not keep them in stock but buy them only on request.

Regarding certification for gems, a word of caution is in order. A ‘certificate of authenticity’, as it is often called, is not what the trade means by certified gemstones. We are only talking about authentication by an independent laboratory such as GIA or GRS, where for each gemstone, the main value determinants are listed – not the price or value itself, but the character traits of the particular gem that determines the price. The prices themselves are subject to fluctuation, and for the most part, this fluctuation has an upward trend.

A proper certificate primarily means that the gem is properly identified (i.e. as an emerald, and not as a lab created or synthetic emerald). But where treatment is available that affects value, such as heat in sapphires, this needs to be stated as well. For example, as there is no known treatment for garnets, they do not require that a certificate includes determination of treatment. The same goes for alexandrite, but in the latter case, synthetics need to be excluded because these have been common in the alexandrite market for some time. Origin matters at times but not all the time. For instance, it is not particularly important if a blue or purple sapphire is Madagascan or Sri Lankan, but if the claim is that the sapphire is Burmese, then an origin report is needed to verify this. With emeralds, this is important also, as Colombian emeralds are still considered the desirable and thus the most expensive. In the case of emeralds, treatment identification is paramount also.

When experienced US retailers source gemstones, this vetting process is incorporated in the purchase. Most of us work only with reliable companies. I have a small handful of providers in Hong Kong as well as in Bangkok for instance, and I don’t buy from anyone else overseas unless I can get the company verified through one of the dealers I know. And for more expensive gems, i.e. my larger emeralds and paraibas, I also buy only subject to cert. This means that I agree to the sale assuming that the lab we choose verifies the data that justifies the price. I will not buy an emerald that is stated to have minor treatment or less unless there’s a report that says so. In particular, it has to be a report I can use in the US, so all my Colombian purchases, even though initially certified in Colombia, then require a second certificate from, say GIA. Obviously with small gems, i.e. less than half a carat, I will forego this rather expensive process but a below half carat emerald is not something most buyers will regard as an investment in the first place. I am of course liable one way or the other if my claims are false but it is understood by both buyer and seller that verifying the data may be more costly than buying the gem itself, so it isn’t worth doing. I then have to rely on my sources being trustworthy – and I do.

Personally, I expect to see an increasingly sharp divide between luxury and mass market gems and jewelry. Synthetics will dominate the mass market simply because that is the only way to get something like mass market going in the first place. Other cheap gems (red garnet, amethyst, London blue topaz) will be next in line as a growing market segment. When I first started my jewelry, I was approached by stores to replicate my pieces for a mass market but I always had to decline. It was never possible, and it's even less possible now. And I actually prefer this because I know which homes my pricier pieces go to.

Sapphires, emeralds, rubies, but also tourmalines and spinel will have a cheaper segment for overseas goods that will not increase in value – here, I’m talking about more treated goods such as heavily filled emeralds, or less desirable colors like olive green tourmaline -  and a more expensive segment with certified gems that will see an increase in value in the coming years.

Let me end with a final word on my opening example. Spinel – one of my absolute favorite gemstones and one that I personally collect – has seen the sharpest rises in value (sharper than Paraiba tourmaline in my view). This is because while it has been distinguished from sapphire for several decades now, it only became publicly recognized when Mahenge spinel hit the market. It became a birthstone just a couple of years ago.

At the beginning of its popularity, there was sufficient supply of spinel to satisfy the small market segment of interested parties, but that has since changed. Neon colors such as Burmese red Jedi, Mahenge neon pinks and Vietnamese (and a few Mahenge) cobalt blues have captivated audiences all over the internet and now that the secret is out, the market is wiped clean. Spinel was never as ubiquitous as sapphire in the first place, and some of the production countries of the finest specimens such as Mogok and Vietnam are seeing little to no mining and trade, whereas the finds in Mahenge, Tanzania are at present exhausted. The sediment layer that contained them has been cleared and there’s nothing below. A new pocket has to be found and in the last decade, nothing has surfaced (yes, people are looking, of course they are). Adding lavender to the list of popular colors doesn’t help matters – pure lavender spinels without any secondary grey were always extremely rare, but the prices did not reflect this until this past year.

There are still some great buys to be found. Take a look at these beauties!