||Vol. 21, No. 3
TABLE OF CONTENTS
Burma Gemstones: Banned
by Robert Genis
On July 28, 2003 President Bush signed the Burmese Freedom and Democracy Act
closing the U.S. market to imports from Burma (Myanmar). The ban went into
effect on August 28. This political action was taken in response to the recent
arrest of Aung San Suu Kyi, the Nobel Peace Prize laureate who has been held
by the country's ruling junta since May 30. The new law imposes economic
sanctions for three years on the government of Burma. The United States
imported $356 million worth of textiles, clothing, footwear and gemstones from
Myanmar in 2002.
Although the bill appears to be targeting the textile business in Burma, the
legal importation from Burma into the United States of ruby, sapphire, jade,
spinel and other gemstones is over. It will NOT be illegal to buy and sell
these goods in the United States, but no new gemstones will be allowed.
Aung San Suu Kyi
Suu Kyi was arrested after a violent clash between her supporters and
pro-government groups outside Rangoon (Yangon). Suu Kyi's National League for
Democracy party won national elections in 1990, but military leaders blocked
her from taking power. She spent more than half of the past 13 years under
house arrest. Aung San Suu Kyi recently had major surgery for an unspecified
reason at a private hospital in Rangoon. Burma's foreign minister predicted
Aung San Suu Kyi would not remain in detention.
Pressure is growing between the leaders of Burma- Generals Than Shwe, Maung
Aye and Khin Nyunt. On July 23, under threat of Burma being kicked out of the
Association of Southeast Asian Nations (ASEAN), the Burmese generals released
91 political prisoners. Malaysian Prime Minister Mohamad is leading an effort
to have Burma expelled from ASEAN. In late July, the Japanese government cut
off economic aid and debt relief worth $224 million to Burma. In response,
Burma's Prime Minister proposed a "road map" toward democracy with free
elections, but no timetable has been set.
While the Burmese government keeps issuing statistics showing the economy
growing at double-digit rates every year, western economists do not believe
these numbers. The Burmese economy is experiencing skyrocketing prices for
gemstones, rice, cooking oil and other basic commodities. A run on commercial
banks this year forced most of them to close, unable to collect loans or pay
depositors. Burma's currency, the kyat, has plummeted 30% against the U.S.
dollar on the black market this year. Some estimate the new U.S. sanctions
has already cost textiles workers the loss of about 350,000 jobs in Burma.
The reality of sanctions
What is unusual about this embargo is the US is not a major trading partner
with Burma, and the embargo is unlikely to have any real impact on the
internal policies of Burma. The countries that do trade with Burma are China,
Singapore, Malaysia, Thailand, India and Japan. The sanctions will not work
unless the U.S. can get China and the other ASEAN nations to go along.
Ironically, in the case of the gems, those involved in smuggling are often
fighting to overthrow the military junta. Therefore, a case can be made that
the embargo will actually hurt those who are fighting repression. Of course,
the Burmese government cannot even control many mining areas. These are truly
lawless frontier areas.
The generals in Burma ignore world opinion and the only people who will
probably be hurt by such sanctions will be the poor. With the opium, heroin,
methamphetamine and timber trades to profit off (trades which are already
banned), they can live quite nicely.
Many Burmese experts feel the net effect of this new bill will be to further
increase the power of the Burmese junta, because poor and hungry people are
easier to dominate. The sanctions will probably only affect the average
Burmese people who could care less about politics. The Burmese do not like
the government anymore than anyone else does. In Burma, there are no welfare
or unemployment benefits. Families must now struggle to put food in their
mouths. In many third world countries, when a families only source of income
is taken away, people die. No money usually means no food, no medicine and no
school for the kids.
Have the over 40 years of sanctions done anything to produce change in Cuba?
Did sanctions work in Iraq? Sometimes an embargo policy sounds good, but is
Smuggling Burmese Gemstones
Most legitimate gemstone dealers legally import Burmese goods into the United
States. However, the vast majority of gems are smuggled, both within and
outside of Burma. Nobody wants to pay the taxes or even let the Burmese
government know they have money. The typical route for a gem is from a mine,
then into someone's pocket for a trip to Mandalay, Rangoon, Mae Sot, Maesai or
Bangkok, then on to a foreign dealer. The government never knows and never
gets any money from the trade, and the miners and dealers make a living.
The US is not really a big market for Burma stones, because the total value of
all stones coming out of Burma each year is not especially large anyway.
However, for the connoisseurs who want unheated Burma goods and view them as
the creme de la creme of the gemstones market, these events are not good
news. Who knows if these goods will become like Kashmir sapphires- ultra rare
and the only way to purchase these goods is from collectors who will want high
prices. If there is no new production, how can they ever replace their
goods? This is the feeling of owners of Kashmir sapphires. Will the
collectors of Burma goods follow their suit?
Million Dollar Question
The million dollar question is will gemstones be banned from legal
importation, or will creative dealers find a way to circumvent the law?
Whatever the case, you can expect these goods to rise in price if any enter at
According to Ted Themelis, a leading expert on Burma, "neither the Burmese
kings, nor the colonial British rulers, nor the present Myanmar government,
nor President Bush can actually control the gems of Burma. History speaks for
itself." Although it is impossible to predict the
future, it is safe to assume Burma goods may rise dramatically in
price...especially when the gemstones presently in the pipeline are gone.
Collecting Green Diamonds
Natural green colored diamonds are extremely rare and desirable. The beauty of
these gems has spawned unprecedented desire and unparalleled prices for these
diamonds by collectors and connoisseurs. According to Stephen C. Hofer,
author of Collecting and Classifying Colored Diamonds, "Natural green
diamonds are rare and old and are simply created by a set of unique geological
What the Hope diamond is to blue diamonds, the Dresden Green is to green
diamonds. Interestingly, in 2000, the Dresden Green traveled to the
Smithsonian Institute for a special exhibit alongside the Hope Diamond. It is
apple green and weighs 40.70 carats. The Dresden Green is notable because of
its natural green inherent body color and remarkable cut. The diamond derives
its name from Dresden castle where it was on display continuously from 1768 to
1942. Some speculate the diamond may have originated from the diamond mines in
the district of Golconda in India. Others contend the stone is Brazilian. The
large green diamond was brought to London and cut in 1726. In the early 1740s,
a Dutch merchant sold it to Frederick Augustus, King of Poland, for $150,000.
Augustus constructed the Green Vaults at the Historical Museum to display his
treasures. During World War II, the Dresden Green, along with the rest of the
collection of the Green Vaults, was moved to safety out of Dresden. However,
this did not deter the Russians who took possession of the collection during
the war and then returned it in 1958. The Dresden Green has been publicly
redisplayed ever since.
GIA Examines The Dresden
The GIA examined the stone in 1988. The Dresden Green diamond was proved to be
not only of extraordinary quality, but also a rare type IIa. The clarity grade
determined by GIA was VS1, and the gem has the potential of being internally
flawless. Unbelievably, the GIA graded the symmetry good and the polish very
good. This is amazing for a diamond cut almost three hundred years ago.
According to an internet colored diamond dealer who deals primarily with
collectors, "I tend to trade about one or two a year. The last stone I sold
was an oval 1.20 fancy intense green diamond. The color looked like the
evergreen trees of Washington state or a bluish green, even though the grading
report did not mention blue. The bluish secondary color gave the stone a
richer tone and made the green look greener than a yellowish secondary."
Hofer only sees about 10 per year, although there may be 20 a year on the
market. Whatever the numbers of greens available, they are rarer than
Most green diamonds are pale in color with light tones and possess little
value. The most desirable color grades are fancy, fancy intense and fancy
vivid green. Fancy vivids are the most desirable color grade and can sell for
two or three times a fancy intense. A fancy deep or fancy dark green are too
dark and sell for discounts. The two main secondary colors are yellow and
blue. A blue secondary may make the stone appear greener but might also show
some grey. If the stone is a pure blue green, it may look like the Windex
blue of a Paraiba blue tourmaline and will be very expensive. Yellow greens
usually sell for discount to the blue greens and pure greens. When a lab puts
grey or brown on a green diamond grading report, the price drops
Grading Green Color Problems
Some colored diamond dealers contend green diamonds are harder to grade than
other colored diamonds. Many gem dealers make the same argument about grading
green colored stones. If you see two fancy intense blue diamonds together
they will look alike. It is the also the same for pink and yellow diamonds.
However, this is not true with green diamonds. You can have two fancy intense
green diamonds and they will both look slightly different in color. This is
why each green diamond is priced individually. Also, many greens are often
cut into radiants to enhance the green color. You have to look at greens
'upside down' to see if the body color is truly green.
The green color in natural diamonds is caused by the natural radiation of the
earth, probably uranium ore, while the earth was forming. This is why the
green color is usually only a few micrometers deep. This reality makes it
difficult for laboratories because treated-green diamonds also obtain their
color through radiation techniques. Since radiation is the cause of color in
both cases, it poses an identification nightmare. Hofer explains, "Mother
nature colors green diamonds with low doses of radiation over long periods of
time and man uses high doses of radiation over short periods of time. It was
easy to detect the treated greens prior to the 1960s. They were all zapped
with a mossy-like green color. Now, radiation treaters have refined their
technology and the dollars are so significant, unscrupulous treaters can
effectively mimic natural green diamonds."
The stakes are high in this arena. A natural fancy intense green can
wholesale over $100,000 per carat and a treated green is practically
worthless. Hofer states, "What we need to do is build a database of the
physical and optical characteristics of known green diamonds and a database of
known treated green diamonds. The problem is the known greens are so rare,
the task is daunting."
Laboratories are looking for unique identifying characteristics. If not
present, the labs will call the stone indeterminate or a positive
determination cannot be made with gemological data currently available.
The GIA is ultra-conservative in giving a green a natural designation. I have
heard of a dealer that shipped directly to the GIA 'in situ' a green diamond
encased in 48 pounds of dirt from the Brazilian jungle. As the diamond went
from the 'polishing windows' stage to the final cut stage, the stone was
constantly resubmitted to GIA so they were aware of the stone's progress. The
stone ended up with a natural green designation. This is only way to make sure
you obtain a natural classification from the GIA. With any other method you
risk the GIA giving the stone every test known to man, and you will probably
still will get a not determinable comment. Hofer concludes, "This is
Despite the recession, natural green diamonds remain strong in price. These
stones are so rare and are in 'strong hands', downside price action is
limited. There are so few public sales, it is hard to track prices, but prices
are probably rising. A carat size fancy green can, wholesale for
$60,000-$125,000 per carat. A carat size fancy intense green starts at
$125,000 per carat. In 1999, a .90 carat fancy vivid green, VS clarity sold
for over $730,000 per carat at auction.
Consider yourself fortunate if you get to see a natural green diamond.
However, only trade these stones with grading reports from the GIA. To those
lucky enough to own a natural green diamond-enjoy.
International Market Updates
The Burmese military held an auction in early August. All the goods were
rough. The vast majority of the stones were Mong Hsu ruby, peridot, and
jade. The quality of blue sapphire was low. The three most interesting
gemstones sold were:
* A 13 carat Nanyar ruby. It would probably cut into a 7 carat gem but
would be moderately included with many included crystals. It was probably a
4/75. The stone sold for US$260,000.
* A 7 carat Nanyar ruby that was clean and would probably grade as a
3.5/75-80. It would probably recut to a 4 carat stone. It sold for
* A 13 carat Mogok with two surface fractures. The stone had clarity
problems. It would probably end up as a 7 carat and would grade as 4.5/75.
The gem sold for US$51,000.
The first two stones were bought by a consortium of Indian and Burmese
dealers. They paid US$360,000 and immediately sold the stones to a Bangkok
dealer for US$400,000.
Madagascar: Gem industry in need of regulation
Sapphires were first discovered in Madagascar in 1998. Today, gem shops
line the road where just a few years ago there was nothing at all. One
Madagascar politician recently said that just 20 kilograms of sapphires could
repay all the country's outstanding international debts. The Malagasy
government wants to clean up the industry, regulate the trade in precious
stones and insure that Madagascar reaps the rewards of its gemstones. The
World Bank recently approved a US$32 million loan agreement to help the
country manage its mineral resources more effectively. The Mineral Resources
Governance Project will be implemented by the Ministry of Energy and Mines
over the next five years. The main problems are the country's inefficient
small-scale mining methods damage the environment, most gems are smuggled out
of Madagascar with little economic benefit to the country and the use of
children in the mines. Children as young as eight are being used in mines
because they can get into the cramped spaces more easily than an adult.
Therefore, children are often exposed to very serious dangers and can die of
suffocation if the mine caves in.
The project aims to reform the sector's legal framework, establish
administration offices close to the mines, set up a certification program for
dealers and attract more investment from the private sector. A further effort
to improve the sector is the creation of an Institute of Gemology-a gemology
school which will teach a gemology course and train locals to cut stones. Of
course, all the stones presently are sent to Thailand or Sri Lanka for
treatment and cutting.
Gem traders say there's been renewed interest in Sri Lanka gemstones. More
international buyers have recently been visiting the country than years past
looking specfically for unheated gemstones. Sri Lanka is attempting to
'brand' blue sapphire as its most valuable stone. The argument is Sri Lanka
produces the best sapphire in the world and they should be branded as a purely
Sri Lankan product just like Ceylon Tea. But others say it's a mistake to
stress geography instead of quality - especially when many gemstones in Sri
Lanka actually come from Madagascar and Tanzania. Sri Lankan traders visit
Africa to buy rough stones which they bring home for cutting and polishing.
It's difficult to establish their origin when they leave the island for
export. Further, most dealers believe Burma sapphires are superior gems.
There are 3,000 gem mines in Sri Lanka but some argue the future of the
industry lies in developing a superior processing center for high end precious
stones. Sri Lanka needs specialized cutters with considerable experience to
compete with the Thai cutters. The National Training Institute turns out 250
gem cutters a year but says the current demand is huge - for 5,000 additional
people a year.
Currently, business is good because buyers are no longer scared away by bomb
threats in Colombo while the rival gem centers of Hong Kong and Bangkok are
still affected by the negative impact of the Sars virus. Also, the new ban in
Burma may lead many Americans to visit Sri Lanka, instead. Collectors are
considering obtaining their new gemstones from this source.
International Colored Gemstone Association August 23, 2003
"Genis, who is a veteran commentator on the gem trade issues that is known
for his emphatic, no nonsense writing and opinion..."
Gem Market News
Volume 22, Issue 5, Part 1
"Prices for hot pink and fine red spinels have increased significantly
over the past two years. Fine red spinel is increasingly scarce in the market
and demand for these untreated gems remains strong. Origin is playing a big
role in the pricing of spinel. A Burmese deposit produced a very rich red
material that is uncharacteristic even for spinel.
Advisors report Myanmar's Mogok is producing some fine pinks and red spinels,
but ruby production remains limited at this location. Spinel-an unenhanced
gem-remains a stone to watch for the coming holiday season."
Secrets of the Gem Trade
The Connoisseur's Guide to Precious Gemstones.
by Richard W. Wise
Brunswick House Press, Mass.
274 pages, 2003, $79.95
This brand new book contains more detailed information than many introduction
gemstone books. Although you will probably not learn any insider secrets in
this book, it is worth the price simply for the gemstone photographs. Many
are by the top gem photographers in the world including the Van Pelts, Scovil
and Hammid. The publication has numerous spacing and editing mistakes.
Despite these flaws, this is a welcome addition to any collector gemstone
library. Wise has some new and different ideas to add to gemstone
Precious vs. Semi-Precious
Richard Wise makes the argument that throughout history the concept of which
gemstones constitute precious gemstones has changed. For example, in 16th
century Italy, diamonds were considered below ruby in the gemstone hierarchy
and sold for 1/8 of the price of a ruby. In the 19th century, gemstones
were divided into precious and semi-precious categories. He contends the
division of gemstones is wrong and the result of market snobbery. He makes a
strong case that many new semi-precious gems, such as tsavorite and tanzanite,
were never even discovered 50 years ago and are more beautiful than many of
today's precious gemstones.
Country of Origin
Wise also contends country of origin is based upon the conservatism of the
professional gem dealers who control the market. He believes they always fall
back on the old sources as being better than the newer sources. For example,
all things being equal, it is agreed upon by those in the trade, a Burma
sapphire will sell for more than a Ceylon sapphire and a Kashmir sapphire will
sell for more than a Burma stone. Of course, a "Classic" Mogok Burma ruby
will also sell for a premium to a Thailand ruby. Wise believes you should
look and collect stones from all areas, irrespective of country of origin. He
argues there are great Thai rubies and bad Burma rubies. Although this might
be technically correct, few argue a top Thailand ruby comes anywhere near a
top "Classic" Mogok Burma. I do not believe this is due to being
conservative, but the reality of which stone is generally superior. Which one
would you rather have?
According to Wise, "beauty drives demand and rarity drives price." He
argues there are two types of rarity, actual and apparent. Gems that are
found in small numbers are actually rare. Gemstones that are in high demand
and relatively numerous are apparently rare. For example, white diamonds are
apparently rare because the annual production is about 120 million carats.
Unless a stone is in demand, the actual rarity does not really matter. For
example, taaffeite or Benitoite are actually rare but so few people trade in
the goods the rarity is moot. The best stones to collect are stones in high
demand and short supply.
The new 4C's
The 4C's of diamonds and gemstones are color, cut, clarity, and carat
weight. Wise wants to throw out the carat weight parameter and substitute
crystal. First, let's briefly discuss the 3C's. Of course, the first C is
color. The author spends a great deal of time explaining the Munsell color
theory. Collectors who utilize the AGL grading system may get confused
throughout the book by Wise's use of percentages. For example, when
describing the color of sapphires, Wise may use 85% blue and 15% purple to
define a top gemstone. When discussing ruby, he may describe a pigeon blood
ruby as being 85% red. Do not confuse his percentages with the AGL color
scan. As many know, 70% primary color is about as good as you will receive at
the AGL. The same is true with his discussion of tone. He states the optimum
tone for ruby is 80 and sapphire 85. Do not be confused by these numbers if
you use the AGL system. The second C or the cut section is very well done and
you can learn a great deal about this subject. The third C is clarity and Wise
accurately states clarity is an important factor in determining the country of
origin of precious gemstones.
The new fourth C, or crystal, is where his proposition gets a touch dicey.
Wise has a hard time defining exactly what he means by crystal. His basic
definition is the ultra-transparency of a gemstone. He sites historical
references of this gemstone attribute and explains how Golconda diamonds are
more pure than diamonds from other localities. He argues that some gemstones
are clearer, cleaner, or crisper than others, yet this is not directly related
to clarity. He contends a stone "having a good crystal" will not lose it's
beauty in various light sources. He uses Kashmir sapphire as an example of a
stone that is not flawless, having microscopic inclusions which creates a
sleepy appearance, yet the color still remains strong in all lighting
conditions. One problem with Wise's fourth C is the term is often misused by
wholesalers. They tend to describe all their stones for sale with this
term. It is often confused with brilliancy and clarity. Also, he recommends
no way to quantify this aspect of a gemstone. Maybe it could be defined upon
a 1-100 scale, but a great deal of research would have to be done in order to
even attempt to quantify this subjective parameter.
Wise wants to throw out the term dichroic effect and substitute multicolor
effect. He describes how the face of a gemstone can be a mosaic of colors.
Wise defines the multicolor effect as a gemstone having the tendency of
showing two or more colors or tones at the same time.
Regarding collecting, the author correctly maintains you can only become a
connoisseur by constantly viewing and comparing gemstones. He advises
collectors to not buy parcels of gemstones. He also mentions buy only the
best if you are going to invest in gemstones and lists a few American
gemological labs. He states labs are good buying points for a collector but
you should not 'buy the cert.' These are trade secrets?
Probably one of the best sections is fancy colored diamonds. If you are
considering buying a colored diamond, this section may be vital to you. He
explains the GIA-GTL grading system in a logical and well thought out manner.
He also discusses the weaknesses of the grading system and how you need to
look at a fancy colored diamond and not 'buy the cert.'
Even though this section is thin, the author argues for full disclosure of
all treatments and collectors should ask for a laboratory report on important
The bulk of the book are mini-profiles of the numerous colored gemstones and
diamonds. The main sections are alexandrite, beryl, corundum, chalcedony,
garnet, pearls, topaz, opal, tourmaline, spinel, tanzanite and the eight main
colors of colored diamonds. You can learn about the history, sources, colors,
crystal, enhancement, rarity and other nuances of these gemstones. This
section can be used as a reference book, and you can simply read the parts you
are interested in.
It is obvious Richard Wise has a love and passion for gemstones. This
radiates throughout the book. Highly recommended.
You can purchase this book on-line in the bookstore.
In the News
International Herald Tribune -Gem
Jewels in the portfolio
by Holly Hubbard Preston IHT
Saturday, August 2, 2003
Patience and deep pockets required
The gem dealer Robert Genis tells of a client, a former technology
executive who sold most of his investments at the top of the market. The
client recently asked Genis to find him unheated Burma rubies, reasoning that
$10,000 invested in such stones "would not be worth $1,000 tomorrow, like some
of my technology stocks that are down 90 percent."
Precious gems, long sought after for their beauty and collectible status, take
on a luster in a glum economic marketplace. Easily storable, highly liquid and
always in demand, top-quality sapphires, diamonds, emeralds and rubies - known
as the big four - have earned a reputation over the centuries for being sound
Genis's clients are high-net-worth individuals who routinely spend anywhere
from $10,000 to hundreds of thousands for a single stone.
Top-quality Burmese rubies that are truly natural, meaning they have not been
subject to heat treatments or other types of color enhancements, have not
fallen in price since 1988, according to Genis, the publisher of The Gem
Forecaster, an online trade newsletter that tracks prices. Among the very best
rubies, Genis said, "double-digit price increases are common."
Larry Myint, a Burmese dealer who relocated to New York 10 years ago, said
that unheated, natural Burma rubies and sapphires were getting ever rarer.
Myint, who travels to Burma at least four times a year to buy gems, said that
many of the country's top-producing mines "are nearly exhausted," while many
others have shut down completely.
The purchase of an unheated Burmese ruby can run an investor $50,000 or more
per carat. Still, at the resale level, Burmese rubies, along with other prized
gems, are commanding staggering prices. In May, the auctioneer Sotheby's sold
a certified 5.33-carat oval-shaped Burmese ruby, which it initially estimated
at $250,000, for $359,000. Not including fees, that works out to $67,355 per
carat. In 1988, Sotheby's sold a comparable 5.62 carat cushion-shape Burmese
ruby, included in a Cartier-made diamond ring, for $58,700 per carat.
Similar pricing trends are to be found for untreated emeralds, for unheated
Burma or Kashmir sapphires and for diamonds, in particular natural, fancy
colored diamonds, in the most rare hues of red, green, pink, and blue.
Lisa Hubbard, director for international jewelry sales at Sotheby's, said that
emeralds were valued by the auctioneer at anywhere from $500 to $100,000. Of
the big four precious gemstones, they probably represent the softest part of
the market. Hubbard said there is no dearth of emeralds, while rubies are less
There are a number of rare semiprecious stones, such as tsavorite, demantoid
garnet and red and blue spinels, that have some potential to appreciate. But
Hubbard warned that investors should understand that per carat prices are much
more volatile and in most cases drastically lower compared with the prices
commanded by the big four.
"Peridot, amethyst, tsavorite are all extremely attractive," Hubbard said, but
"in the end they are still semiprecious stones."
There are exceptions. Anyone in possession of a large demantoid garnet, a size
that is rare for this brilliant green-hued, diamond-like stone, could see
tremendous potential upside at auction, Hubbard said. Sotheby's sold a
five-carat demantoid garnet five or six years ago, Hubbard said, that was
initially estimated at as much as $3,000 per carat. It sold for $25,000 per
carat at auction, which she said was comparable to what a top-quality precious
stone might have commanded.
Such examples are few and far between. While it may make sense for a collector
to buy a demantoid garnet or tsavorite for its beauty, for pure investment
purposes, Hubbard advised sticking to the big four precious gemstones,
particularly those that are certified as "natural" or "untreated."
Harry Winston, proprietor of the New York-based jeweler House of Harry
Winston, echoed that advice, adding that he did not see the ranks of the big
four expanding soon. Among these "blue chips," Winston noted a shift in
customer demand away from colored precious gemstones toward fancy colored
diamonds. In terms of both value and growth, fancy colored diamonds are
offering perhaps the best return on investment. In June, Sotheby's sold a
fancy 7.21-carat vivid pink diamond through its Hong Kong office for
$2,951,950, or nearly $410,000 a carat. The Sotheby's record for a white
diamond was set in May 1995 in Geneva, when a 100.1-carat stone fetched
$16,548,750, or just over $165,000 a carat.
"This is not a trend - it is about rarity," Hubbard said.
Not every mine produces colored diamonds, nor are sales of such stones
controlled by De Beers, which until recently all but monopolized the white
diamond trade, she said.
Prices for white diamonds have been on a slump since the 1980's, as have
prices for gold and silver. What's to say that other precious stones, as a
hard asset, won't do the same?
Genis, who has studied the pricing trends of all three categories, said that
because the supply of unheated and unenhanced colored gems, including
diamonds, is limited, downside movement in collector-quality gemstone prices
also tends to be limited. Likewise, inflation, when present, is a positive for
gems, he said, as they are viewed as true wealth.
But among the big four, of course, there are differences in quality - and
quality is critical to value.
H.A. Hänni of the SSEF Swiss Gemological Institute said, "There are thus
rubies of bad color, manufacture, small size, which thus would never be
respected as 'gemstones' in the sense they could be rare, beautiful, and
expensive." Even at his level, he added, "We have unfortunately seen many
'paperweight' emeralds which were insured for millions."
Trying to determine the relative value of a precious stone, including the most
certified, can challenge even the trained eye. Unlike the white diamond
industry, Genis noted that there were less standardized pricing indexes for
colored gemstones and fancy colored diamonds. Colored gemstones are typically
graded on the four C's: color, cut, clarity and carat size, with color
generally accounting for half of the value. The origin of the stone and its
natural condition must also be factored in.
Though it might be tempting to purchase a stone from its source, Genis said
that an investor should think twice about doing so. His clients used to pay to
send him to visit dealers in key gemstone-producing locales around the world.
Genis no longer makes such trips.
"Those dealers knew I was on the clock, paying for hotels and under pressure
to buy," he said.
Now suppliers send him stones from around the world that he can evaluate
better with his own lights and master stones. He and his clients, Genis said,
get much better deals as a result. Getting a deal is key. As Antoinette
Matlins, a Vermont-based author of several books on collecting gems and
jewelry, said, "The closer to wholesale you buy, the more immediate your
return on investment will be."
One of the best places to do this, Matlins said, is auctions, where she said
that initial valuations were often low-balled to protect the auction house.
Though investors have been known to quickly sell their assets to take a
profit, Hubbard at Sotheby's, who has 25 years of experience in the business,
said investors in general needed to hold their gems a minimum of 10 years to
How much of one's portfolio should be tied up in an investment? Gemstones,
like gold and silver, have long been seen as hard assets, worthy of at least a
limited degree of investment. One collector interviewed for this story, a
former securities executive, advised holding no more than 10 percent of one's
investment portfolios in gemstones, loose as well as stones incorporated into
"Family gems are a liquid asset," she said. "Think of all the people who have
started over, after losing everything, using those gems."
The International Herald Tribune
Romancing the stone: precious tips
by Holly Hubbard Preston
Saturday, August 2, 2003
Investors thinking about parking part of their portfolio in gemstones will
spend as much time doing due diligence as they would for any other asset
category, maybe even more.
That is the opinion of a former securities executive turned avid gemstone
collector. The collector, who requested anonymity, readily admitted to
spending two years doing research before he could work up the courage to make
his first major purchase, a $75,000 stone. His portfolio is now valued at more
than $1 million.
Gemstones are a complicated investment play. With that in mind, Lisa Hubbard,
executive director for international jewelry sales at Sotheby's, offered this
emphatic advice to would-be gemstone investors: "If you are talking about
investing, you have no business dealing in anything other than the best level
that you can afford."
Even the most beautiful Thai rubies, for example, will generally not command
the per-carat price at auction that a much rarer Burma ruby will. The same
goes for an African emerald compared with one from Colombia, consistently the
source of the world's finest emeralds.
Even within those guidelines, identifying the best can be an immense
Color, particularly natural color, is the key. According to Antoinette Matlins,
a gemologist in Vermont, natural-colored gemstones and natural fancy-colored
diamonds are "most prized" among collectors and offer the best long-term
values. Matlins estimated that natural, untreated colored gems are worth 10
percent to 20 percent more than precious stones that have been treated or
whose color has otherwise been enhanced.
That differential, she added, is "nowhere near" what she thinks it will be in
another five to 10 years.
Since the 1960's, Matlins said, the gem trade has been trying to keep up with
demand for precious stones by taking lesser gems and exposing them to heat and
other treatments that would brighten or even change their color while removing
inclusions that affect clarity. Until about five years ago, she said, these
treatments often were not disclosed. With attention and demand shifting to
natural or untreated colored stones, Matlins said, it is more important than
ever to have a stone thoroughly evaluated before making a purchase.
Cap Beesley, president of American Gemological Laboratory in New York, said
that more often than not, clients come to him for evaluations after they have
parted with their money, sometimes more of it than they should have.
He advises would-be investors to always ask to have a stone sent to a lab of
their choice before making a purchase. If the dealer or supplier balks at
this, Beesley said, a buyer should suspect the quality of the stone.
The cost of lab evaluations at American Gemological ranges from $75 for a
basic identification to $185 for a full grading report.
An example of a detailed, color-grading report can be found in The Gemstone
Forecaster, an online gemstone trade journal that is published by Robert Genis
(www.preciousgemstones.com). A sample report from Beesley's lab, with
an explanation of how to decipher it, is featured on the site.
But whether you should buy gemstones at all depends on how you perceive their
value, said Denny Cummings, a wealth management adviser at Merrill Lynch in
"You first have to determine what you hope to achieve by investing in
gemstones," he said. "Enjoyment of owning the stones should be a significant
part of your motivation, since they don't provide current income and may or
may not enjoy price appreciation."
Even if they do appreciate, the spread between the bid and ask price "is often
a problem," he said. "Unlike stocks, where you have an efficient high-volume
market where the spread is rather narrow, the spread can be much wider with
hard assets like gemstones." Given these dynamics, he warned, someone buying
gemstones as a hedge against inflation could end up buying high and being
forced to sell low.
The following is for snail mail only:
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Call: 1-800-458-6453 or (520)-577-6222
- ( ) I want to receive a hard copy via snail mail.
Enclosed find my check for US$29 for one year (four
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