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colored stones as investments

gongli

Rough_Rock
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Jul 24, 2011
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82
Hi everyone

I came across this article this morning..

http://www.economist.com/node/21528623

I really wonder about stones trading for $150k/ct. As Ed Bristol mentioned in a previous post, some of that, atleast so I thought, had to do with the cachet of the jeweler (Cartier etc), but I suppose there's actually more big clear stones trading like that nowadays. I suppose I have to take another trip to the natural history museum and look at that kind of gem. I guess now that there's this superrich class of people out there buying like that, then that might push everything up. I especially like the last line!!! :lol:

they mention kate middleton again, i was wondering if anyone knows the origin or other technical specs of her 18ct sapphire?

-Neal
 

Upgradable

Ideal_Rock
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Problem is, as I see it, do schmoes like us have the money to truly buy top color stones in sizes large enough to draw the attention of a top notch (top money) buyer? I'd guess not for 99.9% of us. The gemstones that we buy, even though we are well schooled and incredibly picky when it comes to color and quality, should only be purchased for personal enjoyment! There is no guarantee we'd ever be able to sell them for a profit on the second hand market. We'd be lucky to recoup what we paid. There, now you have my perspective. :read:
 

bright ice

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Upgradable|1315666856|3014386 said:
Problem is, as I see it, do schmoes like us have the money to truly buy top color stones in sizes large enough to draw the attention of a top notch (top money) buyer? I'd guess not for 99.9% of us. The gemstones that we buy, even though we are well schooled and incredibly picky when it comes to color and quality, should only be purchased for personal enjoyment! There is no guarantee we'd ever be able to sell them for a profit on the second hand market. We'd be lucky to recoup what we paid. There, now you have my perspective. :read:
DITTO, I agree!
 

gongli

Rough_Rock
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Jul 24, 2011
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yes i didn't mean to say that regular people should be thinking of stones as investments... just personal enjoyment.

what i was getting at, on the contrary, was that i *really* doubt these superrich are reading and learning gemology, they're just buying up expensive stuff because they see it's expensive and they've got money and the... brains... so my hunch is that some of these 150k/ct stones are probably relatively more expensive than they were before these global superrich started bidding... these are the same people who pay $2k+ to armani for $20 jeans..

-Neal
 

Upgradable

Ideal_Rock
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Well, I agree. And the rate of depreciation of gemstones is much slower than that of Armani jeans!! :lol:
 

Arkteia

Ideal_Rock
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The superrich may have the same feeling for color as we do and they probably buy good stones. The per carat prices are probably not what they used to be but I think that the main thing that drives them up is not the abundance of rich customers from India and Hong Kong. After all, there used to be rich customers from US, right? And no one complained that they were driving prices up...

Two things. One is, scarcity. Old deposits have been exhausted, and new are hard to find. I think we have seriously depleted Mother Earth over centuries, and it is simply hard to find a good stone. Second, prices are tied up to inflation. Prices of gold being up reflect inflation being up, and I think you can calculate real inflation by comparing the prices of gold last year with the similar prices this year.

It is hard to resell a stone at a profit, and we are lucky if we are able to resell it at the price we purchased it. So it is not an investment, nor will it be.
 

Pandora II

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1) Can you buy at source at less than wholesale prices?

2) Do you have enough knowledge, experience and capital to buy the real and right stones/rough at the right price?

3) Do you have the channels through which to sell the end product at enough of a profit to cover all the expenses involved in 1, 2 and 3 and still make money?

If you can answer these three questions in the positive, then yes, coloured stones can be a good investment. Otherwise, they are not = although they certainly hold up better than shoes and handbags long-term! :bigsmile:

Regarding the big spenders - I would guess they fall into three camps: a) serious collectors who will pay big money for top quality stones. b) People with money to burn who like the shopping experience at places like Graff, Moussieff etc and know that they will be getting a fabulous stone even if they are paying as much for the box as they are for the rock. c) People who are conned by 'investment' firms who tell you what a great investment you will be buying and overpay by a huge margin for something that will sit in a safe until the time the poor sucker tries to sell it.

Kate Middleton's sapphire is from Sri Lanka and is actually only around 8 carats - it is set in 18kt gold which is where the confusion comes from - and is not that great a stone - it is overly dark and not premium colour. It was bought from Garrad's catalogue in 1981 for £28k so not a particularly expensive stone even at the time.

It's true that prices soared after the engagement.

The emerald guy I met that I mentioned in another thread was from Gemfields, which is mentioned in the article, and he made it very clear that he wants to see coloured stones back on an equal footing with diamonds. Half the issue with coloured stones is the paucity of supply compared with diamonds, but he believes that his mines are turning out enough high quality good for it to not be out of the question. Guy Clutterbuck is also an emerald expert, but also deals in other stones and what he doesn't know about the market isn't worth knowing - he has AMAZING stones(also one of the few non-bearded gemmologists :bigsmile: )

One issue that is worth bearing in mind is that any investment in coloured stones can be trashed in minutes if there is a new find - for example the South American amethyst finds in the late 1800's dropped the price from equal to that of diamonds to the cheap prices we know today - there must have been a lot of devastated jewellers sitting on extortionately expensive stock that they took a huge loss on. If Paraiba tourmaline was to be found in x location in HUGE quantities of clean, top colour stones next week then there would be a lot of people seeing their $10k/carat stones lose a massive proportion of their value. So it's a bit of a gamble at best.
 

Harriet

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crasru|1315678614|3014502 said:
The superrich may have the same feeling for color as we do and they probably buy good stones. The per carat prices are probably not what they used to be but I think that the main thing that drives them up is not the abundance of rich customers from India and Hong Kong. After all, there used to be rich customers from US, right? And no one complained that they were driving prices up...

Two things. One is, scarcity. Old deposits have been exhausted, and new are hard to find. I think we have seriously depleted Mother Earth over centuries, and it is simply hard to find a good stone. Second, prices are tied up to inflation. Prices of gold being up reflect inflation being up, and I think you can calculate real inflation by comparing the prices of gold last year with the similar prices this year.

It is hard to resell a stone at a profit, and we are lucky if we are able to resell it at the price we purchased it. So it is not an investment, nor will it be.
There is a significant difference between wealthy consumers from the US and wealthy consumers from emerging economies like China -- the latter appeared suddenly, which accelerated the rise in prices.
 

gongli

Rough_Rock
Joined
Jul 24, 2011
Messages
82
By global superrich I mean in the West and East - throughout the globe. For example there's Kim Kardashian who I'd count as the superrich type, just as much as the Middle Eastern and Asian princelings. And there's always been rich people, true. And her gemological taste ... differs.. from mine :lol:

And I don't have facts and figures to back this up, but I personally agree that in the last few decades the gap has widened dramatically globally in real terms. I don't think we have a gentleman/aristrocrat leisure class, yet, like the British empire had, but I think we're headed that way and we may well go well past that. It will look different, perhaps less Western-centric, more technological, and different politically and militarily - but I think the wealth gap is important, and increasing, and affecting many things including our little gemological activities, in some ways.
 

LD

Ideal_Rock
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If you have money to burn AND you know what you're doing, buying the biggest and best may well be an investment - think Elizabeth Taylor as an example. She REALLY knew her gemstones and bought premium items that typically increased in value. However, if you were to buy (for example) a 10 carat diamond, if you wanted to sell it, it'd have to be sold to (a) a collector who just happened to be looking for that particular stone or (b) at auction. There's no guarantee you'd make a profit AND you'd have to factor in selling commissions etc. It's very similar to gambling but with stones instead of chips!

I don't believe the Kim Kardashians of this world (and I may well be completely incorrect) know enough about diamonds or coloured stones to know what's a good price in the first place. They just pay what's asked! That means that their items are unlikely to be good value for money because it'll be overpriced and then will need time to close that gap and start to show a profit.

Some gemstones (and they don't have to be big, huge diamonds) now hold a greater value than they did, say, 10 years ago. For example, a 3ct Paraiba Tourmaline of the best quality will now (probably) be worth more than it was when bought but it still needs a buyer!

As for Kate Middleton's sapphire? There have been numerous threads on that stone/ring. The value in that one is not actually the sapphire but it's history. On it's own merits, if it were owned by a member of the public, the sapphire would, unfortunately, be unremarkable and I've certainly seen nicer, better quality, sapphires on this forum!
 

smitcompton

Ideal_Rock
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Feb 11, 2006
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2,689
Hi All,

I think some of you may have some investment grade stones even now. But my theory, which I have stated here already, is that I look to see how much I would have to pay today for the stones I bought 5 yrs ago. If they are substanially more, I tell myself I made a good investment. There are a few I would sell because I don't like them anymore, but I might break even, which I don't think is bad. Its the gold of course that brings the price to even.

I went to look at my jewels this past week and found that each time I go, I feel differently about them. Right now, I like my emeralds again---glad to hear they are going up.

But yes, I do think gems can be an investment, but not for all folk. Some on here do have investment grade gems.
 

minousbijoux

Super_Ideal_Rock
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12,424
So I agree that unless you have the right connections, an uncanny ability to "buy low and sell high," and the technical knowledge, it would be ridiculous to think of gemstones as an investment vehicle.

That said, how many times have we heard from members here in discussing their collections that they "bought at the right time"? I know these individuals didn't set out to buy mahenge spinels or paraiba tourms or spess, or whatever as investments but bought them because they loved them. The end result though, is that if they chose to, they could likely sell them for more than they bought them for. A nice unintended consequence.
 

smitcompton

Ideal_Rock
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2,689
Hi,

Just wanted to add. How many people will really be interested in Elizabeth Taylor necklace for wearing. That is a piece that needs a royal occasion. I would never want it. As Diana" sapphire is too dark, these emeralds are too dark for me to call beautiful. I want the Tiara, for i have many occasions to wear that piece.

Annette
 

fzpanda

Rough_Rock
Joined
Aug 22, 2011
Messages
59
For me, I don't mind investing in gemstones as long as I like them.
 

LisaRN

Ideal_Rock
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Isn't investing in colored stone unpredictable? You could buy a top Alexandrite or Ruby thinking you are making a great investment. But if another mine is discovered then the rarity decreases as does your investment. I think it is best to invest in our happiness and the joy we feel when we wear our colored gems.
 

LD

Ideal_Rock
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LisaRN|1315705966|3014756 said:
Isn't investing in colored stone unpredictable? You could buy a top Alexandrite or Ruby thinking you are making a great investment. But if another mine is discovered then the rarity decreases as does your investment. I think it is best to invest in our happiness and the joy we feel when we wear our colored gems.
Yes and no! Take Alexandrite for example ....... I think there have been around 8-10 countries where Alexandrite has been found (in very very very small quanities by comparison to other gemstones). Of the Alex that has been mined, only a tiny portion is top quality. Compare that to the number of (for example) sapphires that are mined each year and it's a tiny percentage. Yes, another mine could be discovered but the chances of it being a high yielding/high quality mine that outstrips others gemstones if fairly limited (not impossible but probably not likely). So these gemstones are, by comparison, so limited in either supply or good quality that they tend to hold their value much more than other gemstones.

A top colour in any gemstone (if you're lucky) may hold its value but it's unlikely to increase expotentially in your lifetime - but there are exceptions.

I agree however, that one should NEVER buy to invest. I have never ever bought with a view to financial gain at some point. I've only bought because I've loved the gemstone.
 

gongli

Rough_Rock
Joined
Jul 24, 2011
Messages
82
another angle is that pretty much any investment is unpredictable. right now gold is the cat's pajamas, nothing makes as much sense as gold, the only thing the gummint can do is roll their printers .... so if history is any guide, it's going to be worth less than toilet paper in about 3 hours. ive "invested" in stock in eras including dot-com where the business plan did and still does make so much sense all around - but a "parcel" of my landscape pebbles is worth more now than those "investments" - how much better to have known about and invested in some of our favorite stone vendor's wares with that money then? i even know a fellow who confidently "invested" a good portion of his physician parents' retirement fund in yahoo ... at the tippety top of its bubble ... he even told me its P/E of 127 was not so bad, just skewed because they didn't have much earnings (i tried as hard as i could to get him out but he wasn't having it. i never had the money to take anywhere near as big or important a bet - but ive been atleast as off before). as for me, id have been looking at some very pretty rocks all these years, oh, in addition to my landscape pebbles, and would never had bothered with that nonsense.
 

Harriet

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Messages
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smitcompton|1315697718|3014694 said:
But my theory, which I have stated here already, is that I look to see how much I would have to pay today for the stones I bought 5 yrs ago. If they are substanially more, I tell myself I made a good investment.
Exactly. If you have a rare stone that cannot easily be replaced, you've probably done well. However, as Pandora pointed out, you also need to find the right buyer.
 

ame

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Joined
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Messages
10,763
Harriet|1315682561|3014554 said:
crasru|1315678614|3014502 said:
The superrich may have the same feeling for color as we do and they probably buy good stones. The per carat prices are probably not what they used to be but I think that the main thing that drives them up is not the abundance of rich customers from India and Hong Kong. After all, there used to be rich customers from US, right? And no one complained that they were driving prices up...

Two things. One is, scarcity. Old deposits have been exhausted, and new are hard to find. I think we have seriously depleted Mother Earth over centuries, and it is simply hard to find a good stone. Second, prices are tied up to inflation. Prices of gold being up reflect inflation being up, and I think you can calculate real inflation by comparing the prices of gold last year with the similar prices this year.

It is hard to resell a stone at a profit, and we are lucky if we are able to resell it at the price we purchased it. So it is not an investment, nor will it be.
There is a significant difference between wealthy consumers from the US and wealthy consumers from emerging economies like China -- the latter appeared suddenly, which accelerated the rise in prices.
This was going to be my response too.

My husband pointed this article out to me as he reads that magazine religiously.
 

Edward Bristol

Brilliant_Rock
Trade
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One important thing here is the sales channel.

Without a sales channel any product is financially worthless. That used to be the problem with private investment into gems - no sales channel - no value.

Fortunately the web has opened sales channels for pretty much everybody. If you bought Mahenge spinels 10 years ago you would have no problem selling them today via facebook, ebay and Co.

You can bore yourself to death with put-options on crude oil and mutual funds, but not with gems.
 

TristanC

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Jun 6, 2011
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995
Too many topics being addressed. I think as investments - no. If they are such great investments, the traders, brokers and jewellers would be hoarding. After all, they have the knowledge, the inventory, the financial ability and the industry contacts to take and hold the gems etc. They would still rather sell them on as the margins and the ongoing trade/sales are better revenue than any perceived potential future gain. The more erudite people on this forum have already touched this topic more succinctly than I can.

I Do think the uber gems are worth buying, but how many of us can afford them? Many automatically diss the rich as being tastelessly rich, but in reality I think they are far more savvy than we give them credit for.

As for the rate of wealth in China and India, there have been a rapidly increasing group of super rich, and there is tons of new money floating around. But the US has gone through similar periods in its history, just not in very recent history. Although the Dotcon era made so many millionaires that there was a massive boom in luxury and consumerism etc before the party ended.

I wouldn't confuse resentment with stupidity. We can tell ourselves all we want about how the rich are (insert dismissive term), but when we're done, they will still be rich. We will still be the same as we were.

One day your turn may come, and when that happens, and you wear your 15ct E VS2 ring to a black tie event after carefully selecting it... will you appreciate that people will simply assume you paid a ridiculous sum for it and that it was gaudy? I think not.
 

Harriet

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Good post, Tristan!

Given the uncertainty in the US and European economies, some financially savvy people are amassing collections. The idea is that gems are tangible and portable assets, not a classic investment vehicle like, say, securities.
 

mastercutgems

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Great Topic and some very intelligent answers... :appl:

This is an age old question that has been asked many times on this and other forums.

In these uncertain times as well as when times were much better; there is no real guarantee of anything being the best, most sound investment. Some think that a home, food, water, etc. that one may be able to survive a meltdown of the society as we know it is the best investment??? There may be some sound advice in there somewhere; some say security bonds, some say utility stocks, then there is gold, silver, art, antique swords, cars, land, etc. the list goes on and on...

Take it from someone that has invested heavy into gemstones; rough and cut; for the last 20+ years. I have seen some gems get cheaper and most get more expensive; but you have to weigh in on the quality and the rarity of the said mineral.
Take for example natural Blue Topaz from Russia was more expensive than Aquamarine in the 1920's then they found they could irradiate and heat the very abundant silver topaz and wallah; you have a flood in the market for blue topaz that are in every intense color of blue you could think of. Not a good investment... But if you invested in fine unheated or treated Burma ruby, Colombian emeralds, and Burma or Ceylon fine sapphires in the 5+ carat range well you all know what they go for now... So buy quality; you will enjoy it forever... and if you need to sell it; you will usually find someone that will like it and want to pay you something for it.

But as for investments; it all depends on what society we are in as to what investment is the best one...

If the society is in dire straights and food is needed then food will be the best investment; if everyone needs to drive somewhere fuel will be the needed investment; so it is a question that has been asked of the ages and there really is no one answer that is correct; it all depends on what is needed or desired at the time you want or need to sell something.

My humble advise is put back the necessities that you need to carry on every day life and if you have anything extra, buy many different things as the most diverse portfolio will usually get you through the tough times; but always have the necessities, food, water, first aid, etc. then some gold and silver in small sizes; a few utility stocks, then a sprinkle of fine gems here and there will not hurt anything :) but it is all personal choices and only you can decide what is right for your portfolio...

This is not meant to scare anyone of any impending doom as none of us know what is in the immediate future. Just govern yourselves accordingly :) Enjoy your life, family, and also enjoy what you do invest in...

Most Respectfully;

Dana
 
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