Investing In Coloured Gemstones Even in a Volatile Market
Coloured Gems in your investment portfolio, could be a way to keep diversity as you hedge in a volatile market. Through centuries of market swings, gemstones have rebounded in ways similar to precious metals. Currently, coloured gemstones provide a good store of value, and if bought at the right quality, can earn a reasonable return. Valuable jewels are fetching their highest sales at major auctions, proving that gemstones are a smart, long-term financial opportunity.
At a recent Christie's auction, a rare 22.86-carat ruby set in a ring by Harry Winston sold for $7.2 million. This was well above its pre-sale estimate of $2.0-3.0 million. A pear-shaped emerald necklace of 75.61 carats sold for $4.34 million, well above its $2.3 million estimates. And a JAR (Joel Arthur Rosenthal) multi-gem necklace sold for a hammer price of $380,000, crushing the original estimate of $100,000-150,000.
A coloured gemstone collection will hold its value or provide a better return on your investment when the stones have a status of being rare or those of extraordinarily large carat or fine quality. Any high-quality gem may be considered worthy of investment when they are of excellent clarity, colour, and cut.
These are the primary factors considered when pricing collectable or investment gemstones. The past decade has witnessed a resurgence in the appreciation of precious stones as a distinct style statement, for privately-held collections, and as a profitable investment option to offset the fluctuating value of the dollar.
Tip #1 - Gemstones are resold and distributed for a number of market segments.
This also includes jewellery (brooches, earrings, necklaces), luxury fine art, gemstone collectables, and investment gems. Each of these groups of fine gemstones will have an appraisal value which may be higher than the cash value at the time of sale.
Investment Gemstones to Consider
- Fine Rubies
- Blue Sapphire
- Spinel
- Emerald
- Alexandrite
- Spessartite Garnet
- Tsavorite Garnet
- Imperial Jade
- Tourmaline
- Topaz
Gemstones are a Speculative Commodity
It is important to understand the economic principles of speculative commodities when investing in precious gemstones. Gemstones are traded as financial instruments that can bring significant returns, but also involve some risk. This is no different from buying and selling stocks and bonds where market influences can drive prices up or down. The volatility in the movement of securities such as gold, gemstones, and other speculative commodities can rise from frequent price changes - so be prepared to ride out a volatile market by investing in high-quality gemstones and remaining patient.
You can absorb much of the risk when you buy and sell gemstones during times when others are in a holding pattern. Also, keep in mind that many different trained specialists are setting the value on stones every day. This also contributes to the volatility of the market and the sale price of gemstones. To offset market volatility, many larger distributors like De Beers will have a large collection of stones appraised to obtain a value for the entire collection.
Within these collections (also called sightings), there will be individual stones that are above and below the established quality and value. Keep in mind that selling gemstones - like any other investment, requires a buyer when you want to cash out. Without liquidity in the market, "cashing out" can be a slow process.
Tip #2 - Here is where you can overcome market volatility.
Partner with a commercial buyer who may very well be your personal jeweller. Some gemstone jewellers act as resellers, offering single or lot stones that they have purchased directly from a source. This way, you can obtain quality stones that are priced below average and are of good quality for investing.
Deciding to Invest in Gemstones
Today's internet-savvy collector is more confident when it comes to entering the gemstone market. They are able to conduct their own research into an industry that is now more transparent with information concerning authenticity and value. It is easier to verify comparable pricing, technical information, and certifications of gemstones, which removes the uncertainty and the risk.
Haruni Fine Gems suggests that you always partner with a valued and certified gem professional when building your gemstone assets. When compared to diamonds, gemstones simply are not marketed and discussed as widely, but they still pack a powerful financial punch into a very small asset. Often, their per carat sale value will overshoot diamonds as the very finest, quality gems continue to set new world record prices.
Tip #3 - The key to gemstone investments is to "buy low" and "buy right".
Do your homework to get the best prices, preferably at wholesale. Your success depends on finding the right sources, such as a gemstone dealer with access to both valuable gemstone lots and rare or high-quality single stones.
Increase your Gemology Knowledge
For starters, conduct some research via 3rd party websites like The International Gem Society, as they are an excellent source of general information including gem pricing, a buyer's guide, and locating gem auctions around the world. You will find plenty of articles on gemology, synthetic gems (as wearables to safeguard your valued gems), along with information on how gems are tested and identified.
You will find many helpful websites on comparing gemstones as an investment. Overall, the most profitable gems are the classic ruby, blue sapphire, and Ruby Spinel. You will discover that even a small increase in a stone's dimension can change it's worth. The larger the stone, the higher the value of the asset. But, a gemstone with poor lucidity will diminish its price tag. Increase your knowledge of the different grades of gemstones which are based on clarity and structure. Look for gems with a minimum of flaws to add to your gemstone investment portfolio.
Tip #4 - To succeed as a gemstone collector takes patience and knowledge of the marketplace.
Some investment gains may happen with an automatic turnaround of excellent quality gems you purchased at a good price. More often, you will work to collect a superb set of gemstones, then wait for favourable market conditions where your persistence will be rewarded with profit.
Gemstones That Overcome Market Volatility
Typically, investment gemstones are those that are 2-carat weight and above. Smaller gems are considered for the jewellery market unless you have an unusually large lot. Another requirement for an investment gemstone is one that demands a hefty price on the market - usually above $3000. In a volatile market, you will get the best return on investment gemstones when you buy stones that have a rarity factor. Rarity factors include more than supply and demand when it comes to gemstones:
- a rare colour or an exceptional grade
- a lack of flaws within the stone
- where the stone was mined or produced
- rare stones like coloured diamonds, untreated rubies, and sapphires
In addition to a carat, clarity, colour, and cut, investment gemstones will also be appraised according to their availability and origin. Some stones are rare because they are mined from exotic locations or from places where the ore is limited. These are the investment gems that fetch a higher value on the market. And finally, you may consider investing in antique gemstones that have a storied history or gemstones with a unique colour. When you enter these niche markets, the prices can quickly double or triple when compared to a gem of the same size and cut.
Unlike real estate or mutual fund investments, gemstones have been accruing their value for millions of years buried deep in mines. A beautiful, rare, and precious gemstone can bring the owner wealth and fortune - even in a volatile market where the dollar has a fluctuating value.
Gemstone Market is Expected to Grow
When you consider that nearly 85% of all gemstones are sold into the jewellery and ornaments industry (with gem-studded earring being most popular), and diamonds taking an 80% share of all revenue created by gemstones - you understand that coloured gemstones for investments are somewhat of a cottage industry. When it comes to gemstone investing, there are many players and there is no lack of good investment opportunities. The market for gemstones is so good, that many of the leading companies are expanding their mining, production, and processing capacities for all gemstones.
Still, the industry puts much more emphasis on the mining of diamonds over coloured gemstones. This is not bad news if you plan to enter into the gemstone investment market. Actually, this industry trend will increase the demand for high-quality coloured gemstones, as the overall supply remains fragmented. When looking for gemstones for investment, you will find most of the supply coming out of the Asia-Pacific regions (China, India, and Japan) and the southern and eastern regions of Africa.
Partner with a Trusted Gemstone Dealer
Take care to partner with a trusted and accredited jeweller such as Haruni to avoid buying synthetic gemstones which are chemically identical to mined stones, but are only worth pennies on the dollar. The key is in finding the right sources as you build your gemstone collection. This will generally be a gemstone wholesaler or a well-connected jeweller that buys directly from a primary or Tier 1 dealer (those companies that mine and cut the stones for resale).
Haruni is not a financial advisor and cannot guarantee any returns on gems bought, but has the experience and the sources to know when a gemstone is priced well and what makes the good value in the gem world. Haruni is happy to share that knowledge with you.
Contact Haruni today. We are an accredited jewellery dealer who can offer you good deals on investment quality stones such as rubies, sapphires, and emeralds. Haruni can even mount your favourite collectable in a one-of-a-kind setting to serve double-duty as an investment and as a fine piece of wearable jewellery.