Pricing

Knowing When to Sell Your Colored Gemstones (& When to Wait!)

Knowing When to Sell Your Colored Gemstones (& When to Wait!)

A couple of months ago I asked one of my gem sellers if I could "memo" (i.e. the jewelry trade practice of borrowing) his 1.07ct Benitoite that he had just acquired, and list it in my shop for sale. “No,” he said, firmly. “Because it will accrue value faster than inflation, so it’s better for me not to sell it right now.” Better than an 8% annual inflation? Yes, better than that. And he’s right (too bad for me but a smart move).

In Tucson 2022, the first Tucson with a sizable show of international vendors, I spent just about every penny I had in the bank. And then I did something crazy: I put many of those gems in a box, for later, even though I was flat broke! I also locked in several payment plans for merchandise so I could avoid paying more for the same stuff a few months later. To do this, I used up the “street cred” I had built up with them over the last decade or so. I’ve had to pay some purchases off very slowly, but my vendors know that in the end, I am reliable, and if they needed a little extra cash or I needed to stretch things, we could up or down the payments as needed. The basis of such deals is a lot of trust, but that goes both ways as I also trust my suppliers to be honest about their goods and current pricing. 

In the past few years, I've had several clients tell me that they'd rather save up and wait to buy a larger Paraiba (or other gem, but mainly Paraiba) at a higher price, but that strategy has backfired; unless they save very quickly, inflation will outpace them. As a gem seller it's tough to tell people "please buy now and find a way to finance on your own, it is better for you" and not sound like I'm giving a sales pitch. But I will say that the last few years have borne out my predictions.

 

1.8-carat Paraiba Tourmaline Trillion Sugarloaf Cabochon
1.8-carat Paraiba Tourmaline Trillion Sugarloaf Cabochon

 

It’s been a tough 2022 sales wise but I am happy with what I own and not worried that I will get stuck with my gems. The Paraibas have already accrued over 20% since I bought them in February, and while the trend may level off, I am certain they will never go down. Other gems, like my powder blue cobalt spinels (and a few deeper ones I have), will accrue more slowly, but they have already exceeded blue sapphires of the same color in value. My 2.2ct blue Burma sapphire has already doubled in price since I got it in 2020. My emeralds are up 30% since the same time.

Three Blue Spinels from Luc Yen, Vietnam.
Three Blue Spinels from Luc Yen, Vietnam

 

I did sell all my Benitoites, unfortunately. Should have saved those too, lol. Instead, I took one of my red spinels off of the website because I realized that it had been there since 2019 and the price was now too low. While I am happy to pass good purchases on at a discount, there is such a thing as feeling that the value of an item has not been fully appreciated. So now I get to enjoy the spinel myself until I feel it may be time to put it back out there. In the meantime, this is a good opportunity to get it certified – not something that’s needed for most spinels because they have no known treatment, but I do recognize that many novice buyers feel reassured by this (whereas any buyer should certify origin and treatment of any sapphire of value). My two rubies on Etsy, meanwhile, are quite reasonably priced at this point but I’m leaving them up for sale as my heart beats faster for spinel than ruby. And I am, after all, a gem seller, not a gem hoarder! :)

 

AGL Certified 1.32 ct Unheated Ruby from Lake Baringo, Kenya
AGL Certified 1.32 ct Unheated Ruby from Lake Baringo, Kenya

 

(Entertaining side note: Pantone just named “Viva Magenta” – 18-1750 – to be the color of the year 2023, and of course the AGTA followed suit, wanting to market gems of that color to promote sales of Magenta colored gems. But what gems are those??? Magenta colored Mahenges are completely wiped off the market, Magenta Burma spinel practically sold out, and ruby doesn’t have that color, it’s more red. That leaves a few not easy to come by Magenta red tourmaline as the only option. Am I wrong about that? Do you think that pink sapphires or some rubies are 18-1750 or rather a different tone? Let me know, I am drawing a blank, and I love that color.).

Viva Magenta — Pantone's Color of the Year, 2023
Viva Magenta — Pantone's Color of the Year, 2023

 

But I digress. Let me pass on another anecdote. One of my old friends in the trade, Jaimeen Shah from Prima Gems, once said to me that you can measure the health of a gem business by how long it can hold on to merchandise. If a seller needs to flip gems for immediate cash, then the business is in bad shape. If he or she can afford to hang on to their stock for over a year and be blasé about making the sale, then they are doing very well. A healthy business might keep stuff in the safe for decades. They might even put higher price tags on their gems and then just shrug their shoulders if you ask for “their best price,” telling you that they don’t care if you can’t buy it at the full asking price. They figure that sooner or later, it will sell, and they are right. (Asking for the best price is a practice that many of us find rude – a healthy business is not desperate to make a buck).

If you enjoy buying gems but also enjoy selling and trading, don’t fret if things aren’t moving right now. And don’t get desperate. Give it time. While there are gems that really never have much value – iolite and apatite come to mind – the sheer rising of labor costs over the last half decade have even made those more expensive than they used to be. You may remember for example that back in 2010, you could buy cheap citrine and amethyst for $1/ct wholesale, and those days are long gone despite the fact that the vast availability of both gems has not changed one bit.

Remember that as the public gets educated, colored gems will become more and more of an alternative to diamonds. This is a good thing for you if you already own some colored gems because while white diamond supply (for jewelry) is virtually endless, this is not the case for most colored stones. Not just for the short lists of examples you find online, but really it’s true for most of them, even the non-spectacular. The exception I want to hedge over is quartz, and if you throw in bead quality gems the situation might be different. Rubies, sapphires, emeralds, any spinel, any zircon, any apatite, peridot and iolite even, are rarer than diamonds. They are just not all super pretty or sparkly or super hard and durable. They are also not carefully controlled and cultivated.

 

4.8mm Emerald Cut Blue Gahnite Spinel from Nigeria
4.8mm Emerald Cut Blue Gahnite Spinel from Nigeria

 

Already one can see the influence of clever marketing strategies affecting colored stone pricing on the commercial market. Padparadscha sapphire and aquamarine come to mind, and blue sapphire, as we find European royalty and international movie stars flaunting their colored stone engagement and anniversary rings. Before 2014, lighter to even medium colored aquamarine traded at $5-15 a carat. Now they are at $35, and larger specimens are $100/ct and up in the trade. In Madagascar, prices of aquamarine went up by a factor of five in the last six years.

 

Aquamarines From a Recent Shipment from Madagascar
Aquamarines From a Recent Shipment from Madagascar

 

It should be noted that aquamarine, especially fine goods, were fairly underpriced given their availability, at least in my view. Maybe that’s because the lower quality goods are very light colored and sort of, well, boring looking. Prices of color change garnet have gone up similarly – and those don’t look boring to me at all. I don’t mean the ones that just lightly shift “hues” like from pinkish to purplish, but the ones that shift from teal blue-green or grey blue-green to purple, or a strong pink to a strong purple. Lindi (Tanzania) appears to be mined out, and Bekili (Madagascar) is right now difficult to come by and difficult to export.

 

 Bekili Color Change Garnets (From a Recent Shipment from Madagascar)
Bekili Color Change Garnets (From a Recent Shipment from Madagascar)

 

The upshot: if you own some finer quality gems, reasonably well cut, low on inclusions, pretty, and let’s just say to be on the safe side, not quartz, then I think you can expect a continuing increase in value. Granted it is harder to resell for a retail buyer, but whatever you paid whenever you paid it, expect it to be at a higher price now. And this is NOT the case for your engagement white diamond which loses 10-20% of its value as soon as you leave the store with it (one last note on that: untreated colored diamonds, especially pinks, reds, peach, blue, natural grey, purple, green, have skyrocketed in the last 20 years. Pink diamonds have doubled in just the last two years, one of my vendors told me. So those are not to be compared to white, which are up right now because of supply chain issues but will come back down when that is resolved. Remember that Russia is a huge supplier of white diamonds and right now we are not buying anything from Russia.

 

Matched Pair of Radiant Cut Fancy Yellow Diamonds, 1.01 Carat Combined Weight
Matched Pair of Radiant Cut Fancy Yellow Diamonds, 1.01 Carat Combined Weight

 

I’ll end this blog with a quote from an overseas vendor that was part of a conversation literally today, when I told him that this year has been slow (something everyone in the trade is saying): “Good stones in the safe are not going anywhere… nor is their value.”

3.71-carat Mahenge spinel set into rose gold with peach diamonds, mahenge and Burma spinel.
From the Title Photo: Rose Gold Necklace
Featuring a 3.71-carat Mahenge Spinel Center Stone
and Halos of Peach Diamonds and Mahenge and Burma Spinels
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The New “Gold” Rush: Colored Gems

The New “Gold” Rush: Colored Gems

If you’ve been buying gems in the last few months, you will have noticed that gemstone prices have been sharply on the rise. Obviously, this is a general trend as supply chain issues, wars, border closures and internal political problems have disrupted the entire world, not just the world of gems.

The Paraibas shown below were worth only 1/3 of their current value when they sold in 2016:

 

paraiba tourmaline

Paraiba cabochon, 2.05 carats, sold in 2016 for $1537

paraiba tourmaline

Paraiba Cabochon, 1.51 carats, sold in 2016 for $2718

paraiba tourmaline

Paraiba Cabochon, .68 carats, sold in 2016 for $679

paraiba tourmaline

Paraiba Cabochon, 2.75 carats, sold in 2016 for $2200

However, in the gem trade in particular, there is more pressure for material than there has been in several decades, and not just the past couple of years since Covid.  Back in the 1980s and early 90s, there was a bit of a boom with amethyst, citrine, red garnet and topaz among others, but it’s been fairly even-steven until more recently.

When I started selling loose gems around 2009, very few buyers were asking for unheated sapphires or unoiled emeralds, and nobody asked for cobalt and jedi spinel, hauyne, benitoite or kornerupine, even Paraiba, although all of those gems existed back then! These days, we see a much more educated buyer who wants to know the origin and treatment of gems, and who is requesting certificates for evidence.

This is likely due to the increase in internet education and direct (international) internet sales, but it is also the result of celebrities buying colored gems. Nowadays, buyers know what kinds of gems are rare and they want to have something unique rather than what they can get in a regular jewelry or chain store at the mall.

 

pink spinel
This neon pink Mahenge spinel pear sold for just $616.50 in 2012

 This change in consumer behavior has caused luxury jewelry brands to pay significantly more attention when they acquire gems, and that in turn has led to a squeeze as no colored gemstone worth investment attention comes in near sufficient quantities to meet such a demand. In Manhattan we can see this trend unfolding first hand because most of the luxury brands, including but not limited to Tiffany’s, have their main location in NY and operate closely with the Trade on 47th Street.

 

18k White Gold Blue Sapphire and Diamond Ring selling at bluenile.com for $66,000

 

Word on 47th street has it that since 2021, these major jewelry houses are investing significant funds into securing gemstones with fewer treatments and enhancements, and paying a premium for acquisition! Some go as far as refusing to buy any gems from conflict zones such as Myanmar, the Congo, Afghanistan, or gems that have significant treatment like resin treated emerald from Colombia. Even heated sapphires are avoided in the market these days despite the fact that over 95% of sapphires are routinely heated, making unheated sapphires very hard to come by and expensive. This is a very significant development in the trade and I want you to take note of this, both with regard to what you want to buy but also with regard to what you have!

Now, let’s look on the supply side. Here, there has been an opposing trend, with production, availability and international exports actually shrinking. I was told, for example, that diamond prices have increased about 15-20% in just a few months. This has been the result of several major developments since around 2020, mainly of course the pandemic, but that has been by no means the whole story.

But let’s start with Covid 19. Some border closures remain in effect more than two years post the initial lockdowns. Otherwise, entry is subject to long quarantines, as is the case in Hong Kong and Vietnam, which are both facing some of their worst outbreaks since 2020, just as they were getting ready to reopen more broadly and had reduced their quarantine time. While Hong Kong does not produce gems, it is a major center for faceting them and for jewelry production and thus very important to the trade. With increasing pressure from China, many do not expect Hong Kong to be a major player in the industry in the future.

 Map of East Asia

Map of East Asia

 

Gems from Vietnam have gained a lot of popularity lately, in particular, with cobalt spinel but also the somewhat lesser known lavender and pink varieties. But export from Vietnam is still mainly achieved by direct export, that is, by taking the gems or the gemstone rough across the border in person, i.e. by airplane from Hanoi to Bangkok. Needless to say this has been near impossible for over two years now, and things are not yet improving. In addition, the government has banned mining in the Luc Yen region, so while the gemstone market has reopened, there isn’t much new material. I do not know the reason why, unfortunately.

 

cobalt spinel
.39 carat cobalt spinel pear from Vietnam currently in our shop

 

Thailand has just recently eased its restrictions but even though it is richer than Vietnam, vaccine and testing capabilities are not at the level that we can expect in the US, Canada or Europe. This will continue to disrupt trade as Bangkok is one of the world’s leading gem cutting and trading centers. Export has been largely by shipping since 2020 (rivaled by direct export before that). Word also had it that in Tucson 2022, Thai buyers came to purchase as opposed to selling, because, as a Bangkok buyer told one of my sources, some prices on sapphire in the US were lower than in Thailand by as much as 40%.

Also, because of the many border closures, tourism has not yet returned to its pre-pandemic levels, and countries such as Thailand, Vietnam but also Sri Lanka (among many many others) suffer from the lack of tourist income. In fact, Sri Lanka, a world leading producer of corundum, is on the verge of total economic collapse; there are food and fuel shortages, and the government is no longer able to pay back its foreign debt. This has a direct impact on mining because much of the small machinery used runs on diesel.

 

More on the crisis in Sri Lanka

 

But not all supply chain problems in the colored stone industry are due to the pandemic. Political crisis has impacted the government of Myanmar, for instance, when in February 2021, the fledgling democratic government was taken over by the military party, the Junta once again. So Western nations cannot buy gems from Burma (Myanmar) anymore unless they want to buy them from a political dictatorship. The small illegal trading along the border between Myanmar and Thailand is down as well. Already exported Burma ruby and sapphire, but also spinel, have continued to rise in price, while at the same time, the major jewelry houses will no longer buy any ruby from Burma even though it’s not officially banned. As is so often the case, these companies think ahead by more than just a few months, and they do not want to advertise gems that come from conflict zones regardless of when they were sourced.

Moving East along the map, The U.S. withdrawal from Afghanistan and its pursuant takeover by the Taliban has resulted in similar restrictions on the trade, impacting imports of emerald, for example. Gems can find a path out of the country via less traveled routes but that, too, has become very difficult. As far as I know there’s no gem purchasing right now on the open market in Afghanistan. Previously, the democratic government supported by the US was making import and export easier.

Speaking of the Asian continent, exports of demantoids and emeralds from Russia have always exacted a price to the government - I’m going to leave you to ponder the ethical distinction between what constitutes a government tax or a government exacted bribe in the case of a dictatorship. It has therefore never made sense for Russian gemstone sellers to bring back their inventory from a show outside of Russia.  Once exported, the gems remain in places like Hong Kong, where they have been since 2020 when travel there became nearly impossible, and will continue to sit now that Aeroflot is grounded and other air traffic to Russia on hold. Russians cannot leave the country, so they also cannot get to their merchandise to sell it.

From Russia, one’s thinking wanders naturally towards the Ukraine, and to the export of natural topaz. I witnessed a sale of natural bi-colored cognac (see video below) and blue topaz in Tucson. The seller was maybe 22 years old, and he had mined the gems together with his father. With poor English but a lot of pride, he was able to tell us exactly the block and lot number of his find for proper block chaining; meanwhile a well-known cutter who also observed the sale weighed in on how he would shape the rough. The deal was done, both parties were happy, and the grapevine tells me that there are further attempts to continue this fledgling business relationship during war time. I don’t know the details, and if I knew I would not share.

 

One of the natural bi-colored cognac topazes referenced above

 

Last but not least, there have been some events unrelated to the pandemic or governmental crises. For example in 2018, the Tanzanian government prohibited exports of facet gemstone rough because it – correctly - perceived that the main profits in colored gems occur after the rough material is faceted, not before. The Sri Lankan and Colombian governments, have long restricted the export of gemstone rough, for precisely this reason. But both countries have been perfecting the cutting trade for many years, whereas Arusha, Tanzania had no more than a few dozen experienced cutters when the then new government suddenly instituted its new law, and despite many of the master dealers meeting with the president directly, the law was upheld for over a year.

When Covid hit in 2020, the Tanzanian president claimed that Covid did not exist in Tanzania and that masks were unnecessary. As a result, a few of the major gem dealers that had helped to build the trade in the 1970s simply retired and some even left the country. The Tanzanian government has since adopted a less strict stance towards gemstone export – partly because its president died in 2021 (from Covid, it appears), and the new president has a different agenda. But the Tanzanian economy has suffered nonetheless because aside from gemstones it mostly lives on tourism. These days, most of the export from Arusha is in the hands of well-funded Sri Lankan families who have tried their luck elsewhere. And many of these goods, in turn, are sold to China and other Asian countries for higher prices than they fetch in the United States.

Sri Lankan traders also happened to be involved in the event that caused the present export blockage in Madagascar that started just a few days post border reopening in November 2021. The story was all over Tucson but I also know some of this from my Malagasy friends who heard the same rumors in Antanarivo. In early November, a passenger boarding a diplomatic flight refused to check in his hand luggage even though it was slightly overweight. The luggage was eventually opened and revealed a parcel of uncut gems with an invoice for garnet for approximately USD 13000. The gems, however, were sapphire, and the estimated value is over a million USD. The traveler was arrested and all airport customs officers were also arrested for accepting bribes. (It’s a very tiny airport so imagine a couple dozen arrests). In addition, five members of the “Departement de Mines” were arrested for accepting bribes. As a result, mining sapphires (from Ilakaka) is forbidden right now and the mining director is currently hiding somewhere on the island.

All this said, keep in mind the following: the French word for bribe used by the Malagasy, is the word “cadeau” which actually means gift. This is VERY telling as it isn’t a word used merely to obfuscate the fact that a bribe is paid, but also because the need to secure food for the family without losing face by admitting one’s poverty is best recharacterized as the request for a voluntary gift. Border officials and mining department employees have very low salaries, but they are uniquely situated to be able to slow down or speed up the export of a rich Vahiny (stranger) by kindly requesting a small present. Really - the presents are small, no more than perhaps $25, which equals a weekly salary (this is a low salary even for Madagascar). Some gifts can go up to $100 but I have not personally seen anything larger than that.

That said, tens of thousands of USD, and an invoice that understates the value by 95%, is another matter entirely, and one where the government will not ignore the issue (in fact one may surmise that the government would express some interest in a more “official” bribe in form of a tax). So, once said Sri Lankan with a diplomatic passport was caught and put behind Madagascan bars, no bribe was large enough to buy him back out. And people in the mining office have decided that returning to work could get them arrested. Not even employees of DHL are willing to send packages with gems now, even if cleared by the mining division. The income even at DHL is pretty low, the substitute income one can expect from working at customs, at an international shipping agent, or a government office (like mining) is now just too risky. So at the time of this writing, these offices are, and remain, closed.

As it always is in economics, the causes for rising prices, and this includes gemstones, is never straightforward, and it involves certain contingencies that one may not have expected, like an overweight piece of hand luggage!

For this particular blog, I conferred with nine knowledgeable people that shared information with me that I would not have otherwise had access to. I, and my readers, owe them our thanks.

Here are a couple of lovely spinel examples currently available in our shop: 

 

Elongated pear-shaped lavender Vietnamese spinel
Elongated pear-shaped lavender Vietnamese spinel

 

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