When I first started buying cut gemstones in 2008 and 2009, gemstone prices were vastly different from what they are now. In just a few years, gemstones went from near obscurity to becoming vastly popular around the entire world. The vast increases in price are due to the fact that none of this material ever existed in quantities that could satisfy any mass market.

Having blogged about investment gems several times this year, I would now like to share with you some of the gems that we at CRD have chosen to invest in - in this blog, in particular, I will focus just on paraiba tourmaline. To me, an investment tool is not static in price. If I buy stocks or bonds, I hope for them to appreciate in value until they are sold. It is the same with gemstones. Whoever can hold on to them the longest will accrue the largest value increase. One crucial difference, however: the markets fluctuate in price, and stocks can go down in value. I have never owned a gem or heard of a gem going down in value.

We joined the American Gem Trade Association about a decade ago, but we’ve rarely taken the opportunity to advertise the advantages a buyer has when shopping with an AGTA member. One of the primary member duties is to protect their clients from misrepresentation of stones and treatments that can affect their value. Transparency is our aim, ensuring that buyers receive exactly what they paid for and that they are happy with every aspect of a transaction. 

Colored gemstones have made significant progress catching up to the diamond market in the jewelry world. With lab grown diamonds steadily gaining market share, the value of diamonds is plummeting. Meanwhile the opposite is happening in the colored gem markets, especially when it comes to the most popular higher value gems: blue sapphire, ruby, emerald and Paraiba tourmaline.

Jewelry setting is a precise craft that requires skill, patience and delicacy. Yet even the most experienced setters occasionally crack or chip stones during the setting process. What happens then? Who assumes responsibility and how do you mitigate the risk? 

For most people who are born into a fixed price culture, it is an entirely new experience to make purchases without having a sticker price on the coveted object. Worse yet, if you ask for “the price,” the seller may look at you like you are from another planet. That’s because there is no “THE” price, other than the number arrived at after an exchange between the seller and the buyer. If you insist on a price, you will get “a number” but that number is not (necessarily) intended to be the price of the object that the seller wants to sell at. Nor may he or she even know (yet) what that price is. Because that depends on a lot of factors that are not technically tied to the object itself.

Value is not just determined by the cost of goods plus a markup in a bargain culture. It is the result of an exchange during which buyer and seller evaluate one another for their expertise, their financial ability, and where in the chain of ownership buyer and seller are located. I.e. if the seller is a miner and the buyer is a retail buyer from another country, the profit to be had is very large. But if the seller is a broker who has to pay the miner and the buyer is a wholesale buyer, the profit margin decreases.

However, in wholesale, purchases are based on quantity – where that is either the result of several smaller purchases on repeat business, or a larger one-time purchase of a parcel, or both.

The video above shows Yvonne's friend, Jochen of Jentsch Mineralien, buying minerals on location near Muzo in Colombia. 

It is very important for a gemstone seller, especially if they are in a developing country, to know what type of buyer you are. If you are visiting just once, making one purchase, and do not know gems or their prices, then you will have to pay top dollar. To avoid being pigeonholed as an easy target for a larger paycheck, here are some tips and tricks.

1.      Know your stuff! That is the single most important rule that you must follow. If you want to buy a no heat blue sapphire in Sri Lanka and you are not known to the seller or introduced (this gives you safety), then you need to know how to identify that the gem is heated. Even a Sri Lankan lab report is no guarantee, because most labs do not have the latest, most expensive scanning equipment you might find at GIA. I am not very good at knowing whether a gem is heated (many experienced buyers make very accurate guesses but I am not one of them), so I will not buy unheated material on location. I will go only through sources I trust. But, if you want to buy a garnet, and they are traditionally not treated, then you just need trained eyes to look for window and flaws, and you need to have researched the prices for comparable gems on some websites that have fixed prices.

2.      Show you can use your tools. Your ability to handle a loupe and tweezer, as well as when you need to use either, will be evaluated. The more experience you have with tools, the better your prices will be.

3.      Use recommendations whenever possible. If you got information about a specific seller from another seller, mention their name. Even when I do not have that, I will mention the names of well-known buyers that I have done business with, just so they know I am in the trade, and I have recourse to complain to one of my “colleagues” if I am given exorbitant prices.

4.      Buy a parcel! Single stones always go at a premium. Parcels are much cheaper and you will verify the price per carat, rather than by checking every single stone. The idea is to look at a parcel and just study the finest material in there. Don’t make that too obvious as you wield your tweezer. Look at each gem in the parcel and count in your mind how many good stones there are and how they should be valued. Parcels may include useless material and you may need to eyeball the percentage of that before you decide if the parcel price is good.

5.      Become a repeat buyer. Make a smaller purchase first to show your willingness to interact and then come back at a later point. I’ve done it where I would look at emeralds in Bogota first, get an idea of what people want to quote me, and then let them know I will buy once I return from my excursion to the mining villages. Then I purchase a week later, and during that week I will have got an idea of price and availability. This helps when I cannot return to the country another time. Leaving even a couple of days between your initial request and your purchase can help. But: don’t make the mistake of driving the price down too much or doing too much comparison shopping. Word gets around and that can be good or bad. Essentially you need to decide what kind of information about you you want to spread and you are the only one in control of that.

I realize these are tall orders. None of these tips and tricks are easy to follow. They also tell you why wholesalers get better prices than one off retail buyers. That said, you can certainly work on some of these tips. You can go online before you travel and do some research, you can bring a sample stone you want to match (maybe a small purchase from a reliable US seller). You can make sure you have cash on hand, and you want to give yourself a little time to get a feel for the trade on location.

Last but not least: what about buying ONLINE from an international vendor? You can, after all, bargain on sites like Instagram, as well as connect to a small seller in the middle of nowhere, as long as that seller has a cell phone and internet (hint: they all do!). My advice? If you don’t know the seller, then forget it. I wouldn’t do it, and neither should you. That’s just a recipe for getting ripped off, and it is totally obvious why.

Lab grown diamonds are rapidly increasing their market share but what happens to their value after you've bought one? Should you use them for the jewelry you want to make as an alternative to earth mined gems? 

Tariffs definitely affected attendance at the JCK Show. Some vendors decided not to attend and others scrambled to import their inventory. However, those who did come did well and Yvonne came home with some special discoveries. 

Back in 2020/21, I was trying to help a woman in her 30s looking for a career change into the gem trade. She had big ideas: learning CAD and to be a setter, getting her own cutting done, building a website on her own, designing a jewelry line... You name it, she was gonna learn it and do it. She was very over the top but also very motivated.  

One day, she asked me: how do you price gems on your website? What list do you use?  

I couldn’t stop laughing. Gemstone pricing is the secret of the Gem Trade. If you can take a look at a rock in front of you and say what it should cost based on estimated size, color, what you know about treatment, and all the nuances about inclusions, color in different lighting, etc. etc., then you will have already been well schooled in the trade. And I mean years. 

I had another (potential) client who wanted to invest in gems but never bought anything from me directly. She kept sending me links to gems to find out if they were priced right. She’d find flaws and ask me what discount should result once she talked to the vendor. I kept saying to her: “any vendor working with fixed online prices has already decided how to evaluate the flaws and consider them in the price. They know prices better than you.” Eventually I stopped trying to be helpful. I don’t know if the client ever made her investment.  

Buyers who are not in the trade often make mistakes. When I started out, I made them also. But one's capacity to judge gems and prices improves over time and this will make a huge difference.  

And therein lies the most important secret weapon to get lower prices. Even though the internet universe in which we now live has to operate with fixed pricing, gemstone pricing doesn’t work like shoes or washing machines. It works more like a commodities exchange but without the ticker tape.  

When you buy on location, you see this operate in full force. In the mining villages, but also in trading towns like Bogota or Bangkok or Jaipur, you’ll find people chatting in the village square, town center, or other designated trading place, showing one another parcel papers, sitting at tables in coffee shops with their wares on the table.

There’s a back and forth about who makes a first offer, and then who makes the counteroffer. It’s a bit of a sport for most traders. And even if there are legitimate “shops” or show rooms, trading isn’t any different. It can be quick or it can take all day. 

Your experience will be evaluated quickly, not just by the seller you might be dealing with but by everyone else watching. Calls will be made to get more or different gems.  

If you are judged to be a novice, you will lose your shirt at this point. But as a pro, you will be in heaven as you are in a unique position to show how much you know and make fair prices that both parties can work with. A gemstone seller will know and appreciate your knowledge. You will not make ridiculous low ball offers that only offend the seller so that he will try to cheat you next time. And you will not be paying too much either. Finally, you’ll be able to know a good price when you see one and a seller will be overjoyed when you do. He will want to do business with you because if you see a good price, you will acknowledge this by buying.  

To achieve low pricing, two other factors matter as well:  

Firstly, buying power: the more money you are able to spend, the better the discount you get. I periodically get asked for steep discounts based on the buyer having a tax ID. But if they want to buy a $50 stone for $25, this makes no sense for me. To take advantage of wholesale pricing, the key is quantity, not the tax ID number, which only allows you to save on sales tax.  

And secondly, you need to bring the promise of continued business. I have worked with each and every one of my vendors for years. I do add new vendors and try to find other business, but I also keep purchasing from the older suppliers, even when I can do better elsewhere. You never know when you will need them again.  

I’ll close this blog with something that you don’t need to get good prices: you need not be a registered US wholesale buyer with a tax ID. First of all, on location nobody cares what your reason is for buying, whether or not you want a stone for an engagement ring or a set of gems for resale. They won’t charge you US sales tax anyway. You may need a business visa to buy gems wholesale and export larger quantities, but for that, in turn, you will not need a tax ID.  

So keep these three things in mind when looking for low prices: know your prices, buy quantity, and offer continued business. It’s that way for me, and it will work well for you also.
 

Unfortunately, blogs can’t only contain good news. We are in the process of raising our prices on jewelry and custom orders because both the price of gold and labor have outpaced us. Any current listings on Etsy are staying at the current price but as new items are coming out, we have to make our adjustments upwards. (So shop that sale while it is still on!)

We completed our last price increase in the spring of 2022 but we tried to be modest at that time. However, our base gold price for that increase was $2000 per troy ounce and now gold is at $2500. To top that off, when you make price adjustments for retail you need a small margin in case it moves again. That means we have to use $2700 per troy ounce as a basis for calculating.

This is because you cannot change prices every five minutes as it is both confusing for clients and a lot of work. However, if you shop on any wholesale sites like Stuller or Ross Metals or Rio Grande, you can see that there are constant adjustments because wholesalers have a small margin. I am guessing that their websites adjust prices automatically. This would be impossible on Etsy.

Wholesalers rely on larger orders than retail, which is how they bridge the gap of their low margin. As a retailer, we cannot do that as we sell only one piece at a time, not 10 or 20 or even 200. Each piece we make is from scratch in terms of gems used, layout, labor, etc. The only thing we save on is that we do have molds for our pieces. But the initial layout and CAD work is not really accounted for (normally that would be ‘research and development’ and larger business have a % worked into their cost of goods for that).

In addition to the metal price increase, our setters are charging about 20% more. Given how we make our jewelry, the setters have most of the work. They never get to see the same layout twice and rarely use the exact same gems. The sizes of the gems vary more than diamonds, and colored stones are softer so that takes more time, as does hand applied millgrain, and the shaping of the prongs to claws (something you don’t see in commercial jewelry).

Last but not least, Etsy has been raising its own fees steadily, so our jewelry markup has to change from a very modest multiplier of 2.2 over cost to 2.5. Remember this multiplier is over straight production cost, so it doesn’t include my pay, Karen’s or Diana’s pay, or any additional supplies overhead such as the free shipping, boxes and packaging, or any other running expenses including phone, electricity and internet, office materials and miscellaneous. Standard suggested wholesale markup is x3, retail x5, but unless you are a very well-known brand your markups will not look anything like that! I am very good at reverse engineering the cost of jewelry I see online (occupational hazard) and I would say that places like Tiffany’s do have a 5x markup, and large chains that sell many items over and over (like say places like Kay or Zales) might have it too as they produce very cheap. Tiffany’s produces in-house, not overseas, or in the diamond district, so their basic cost is higher. And their quality is also far higher than that of chain jewelers.

Now there’s one perk of the current price dilemma: platinum prices have been nearly unaffected. My guess is that platinum doesn’t have industrial uses, and it isn’t considered as much of an investment as gold is – gold is a go-to for many investors when stocks and bonds are too volatile or in a downward trend.

Platinum production cost is now pretty much equivalent to 18kt white gold when it comes to making jewelry (platinum is much heavier so the pieces weigh more, that’s to be considered). It is easier to work with because it is a little softer, and it is considered more valuable an investment in terms of jewelry.

I am busily at work creating new pieces, rings in particular because they seem to sell out 90% of the time at present. I will add more platinum to the mix so that you can at least benefit from a more upscale piece if you have to pay higher prices. And I recommend that if you want something made in white metal, you use platinum instead. That will make it easier to set Paraiba or other softer stones, too. And that will make us very happy, lol.

Please allow some patience as we are slowly changing the prices anywhere. As I said, whatever is on Etsy, including prices for setting earrings etc, will be honored until it is changed (we will change the stacking rings and the custom listings). The price list on our website has disclaimers on it, and the individual listings on our site cannot be purchased outright, meaning that we will inform you of any change in price before you make the purchase!