The simple answer, one would think, is that it's just a matter of supply and demand -- if a lot of people want to buy a particular kind of gemstone and the supply is limited, the price for that gemstone will be high. However, that answer doesn't really tell the whole story of how things work in the gemstone business.
Consider the case of one of the most rare and expensive gemstones, diamond. In the 19th century, world production of diamond was only a few pounds a year. After the discovery of the huge South African diamond mines in 1870, diamonds were being dug out of the ground literally by the ton. There was such a glut of supply and so little demand that the British financiers of the South African mines were in danger of losing their investment. Their solution was to create the powerful De Beers cartel that to this day controls worldwide diamond production and supply. Quality diamonds are actually not scarce at all. But De Beers controls how much supply comes on the market and that keeps prices high.
The De Beers consortium also mounted a concerted decades-long advertising campaign to associate diamonds with love, courtship and marriage, under the now familiar slogan "Diamonds are Forever." The diamond engagement ring, once unknown in most parts of the world (including Europe), is now considered an essential part of the ritual of marriage. This was probably one of the most successful feats of social engineering in the 20th century. (In Thailand a bride still prefers gold, however).
In the colored gemstone world, there is fortunately no cartel, though many forces try to influence market demand and perceived value. Consider for example the terms "precious" and "semi-precious." As most everyone knows, the precious stones are diamond, ruby, sapphire and emerald. But did you know that the list of precious stones once included amethyst? What happened? The discovery of major amethyst deposits in Brazil made amethyst widely available and it was dropped from the list of "precious" stones. It would be hard to maintain prices for the other "precious" stones if one of the group sold for only $5 a carat! So amethyst was demoted.
These days some rare semi-precious stones such as alexandrite and demantoid garnet can be more expensive than ruby and sapphire. In fact the US Federal Trade Commission now discourages the use of the misleading distinction between precious and semi-precious gemstones. But ruby, sapphire and emerald continue to command a premium price in the market.
According to the International Colored Gemstone Association (ICGA), the "traditional gemstones" -- ruby, emerald and blue sapphire -- command a premium price in the market due to "their lasting appeal and distinguished history." Even though today most of these stones are treated or enhanced in some way, the price remains precious, though ruby and emerald tend to be more expensive than sapphire. The ICGA identifies another category of gems that they call the "new classics" -- tanzanite, tourmaline, aquamarine, imperial topaz and tsavorite garnet. These stones are considered "the rising stars of gemstone jewelry" and they are also rising in price as their popularity increases. Tanazanite, in particular, has been very heavily promoted.
Less well-known stones which are not heavily marketed often have very reasonable prices in the market. These stones, which the ICGA calls "collector's gems", include spinel, zircon, moonstone and morganite and other beryls.
Then there is a list of gems the ICGA calls "affordable gemstones" -- nicely colored stones which have good availability and attractive prices. These include amethyst, citrine, ametrine, peridot, rhodolite garnet, blue topaz, iolite, kunzite, diopside and andalusite.
What all this makes clear, we think, is that there are several factors at work in determining gemstone prices. Supply is of course important, but the marketing power of the jewelry industry is also a major factor in determining the demand level. If a gemstone is not widely available or not considered mainstream or "fashionable," it is unlikely to be marketed heavily and the price is likely to be lower. If a gemstone has a very good supply, as in the last category, there is not much the jewelry industry can do to influence prices unless they can control the supply like the De Beers cartel did with diamonds. But thus far there are no signs yet of a citrine cartel.
So what does this all mean for you? In our view, there are still many good values in the gemstone market. In the "precious" stone category, it is still possible to buy nice blue sapphires from Madagascar, Africa and Sri Lanka starting from under $200 a carat. The market for fancy colored sapphire has changed with the introduction of beryllium treatment -- the prices have dropped and the colors are more dramatic. Tourmaline may be a "new classic" now, but prices are still attractive and the range of available colors and cuts seem to have increased as tourmaline gets wider distribution. Burmese spinel, with its excellent hardness and clarity, continues to be a great buy. The brilliance of zircon is hard to equal unless you buy diamond. Then there all the affordable stones still available for less than $10 a carat -- wonderful stuff like garnet, topaz, amethyst, citrine and fire opal.
In the end, the most important thing is that you buy the stones that you will love and enjoy. But if you're looking for the best values, have a look at some of the lesser known gems that haven't yet been marketed heavily.
No comments:
Post a Comment