Gemstone-oriented adornments have a value that comes with their use and enjoyment, as well as an exchange value. No matter how much it is used, the value of a piece of gemstone-oriented jewelry based on its use does not change. A fine piece also maintains an exchange value, though not equal to the purchase price. It is common knowledge that if a brand-new automobile is sold immediately after its purchase, its price will depreciate by as much as half. This is because the dealer’s costs associated with selling the car are lost. Likewise, if a piece of gemstone-oriented jewelry is sold immediately after its purchase, the price will be much lower. Gemstones are not like gold, which is sold with only a service charge attached. Aside from situations where it is sold directly between customers, gemstone jewelry is like any other consumer product in that costs of distribution are incurred. Therefore, its retail price and exchange value will differ.
There are many items that look like gemstones but are not. Glass and synthetic stones are not gemstones. The separation of gemstone types discussed earlier in Chapter 3 also involves the classification of gemstones and those items that do not qualify as gems. For example, a stone that has undergone extreme fracture-filling treatment with oils or polymers has virtually no value as a gemstone. Also, no matter how large an Australian sapphire is, if it is dark and black it serves no purpose as a gemstone in an adornment. Even if it is an untreated gem of a prestigious type, a stone that lacks beauty, has an unsatisfactory tone, or contains defects is essentially not a gemstone, no matter what some may call it.
Additionally, precious-metal jewelry pieces that are embellished with small diamonds or other gemstones as accents do not qualify as gemstone-oriented adornments. Even if such pieces were to cost several thousand dollars, they have no value as gemstone-oriented jewelry.
The French gemstone merchant Jean Baptiste Tavernieer (1605-1689) traveled six times to India, writing
The Six Voyages in 1676. Tavernier wrote that diamond prices were calculated by “squaring the weight,” but this system no longer applies. The sizes of gemstones required for that era of selling large and rare diamonds to royalty are different from those of the modern age, where mainly smaller diamonds are sold to the masses, and supply and demand have changed accordingly. As Max Bauer wrote in 1896, “the esteem in which the different kinds of precious stones are held does not by any means depend solely on their beauty, durability, or similar characters, but is influenced by various external conditions. The prices demanded for precious stones are therefore fluctuating.” He continues to mention how the prices of diamonds rose steadily during the 17th century as production from India slowed, and fell quickly after the discovery of rich mines in Brazil in 1725. Prices gradually climbed again until the 1866 discovery of diamonds in South Africa. Prices rise when supply is low, and drop when new sources of supply are discovered. Demand is affected by economic conditions and political instability, and value is influenced when goods held in large inventories are suddenly released, lowering prices.
In February of 1980, the price of a one-carat round-brilliant-cut diamond with a D color and clarity of IF soared to $65,000. The reason? Diamonds had become an investment commodity in the United States. I clearly remember how just before the peak, when the price reached $40,000, the president of Tiffany & Co. took out an advertisement in the New York Times to the effect that diamonds had become too expensive, and should not be purchased at such inflated prices. This was a courageous statement, one that made me realize that gemstones are not commodities. Shortly thereafter, the price dropped to around $12,000. People who had invested in diamonds took considerable losses, and many diamond dealers and diamond investment to bankruptcy. At about the same time, there was an investment demand for rubies as well, and the market for them also rose and fell sharply. The problem was that at the time the U.S. market was based on grading reports.
In this way, systems and institutions can temporarily affect the value of gemstones. To avoid similar situations from occurring in the future and the accompanying loss of confidence in gemstones, it is important to clearly communicate the essential value of gemstones-the enjoyment of their beauty and the comfortable feeling that they bring about. This is something that gemstone dealers throughout the world must embrace and publicize on a daily basis.
Judging a gemstone’s value and assigning a price to it is described by the word “assess.” (Other terms such as “certify” or “appraise” are used, and these can be thought of as meaning the same thing.) The word “assess” implies a “price corresponding to value.” The value of the purchaser’s enjoyment, as well as any future residual value, is not included in an assessment. It is also necessary to understand that there are at least three types of assessments, each used for a different purpose:
An amount used for insurance replacement purposes. (Replacement Cost)
An amount given as an estimate for auctions or private resale. (Fair Market Value)
An amount based solely on the value of the component materials. (Materials Cost)
Beautiful jewelry such as “signed” pieces (name-brand jewelry with the manufacturer’s stamp) have a value that transcends time. Seeing how such pieces occasionally sell at auction for three times their estimated price reminds us of how wide the range of value for gemstone-oriented jewelry truly is.
To avoid worrying later about whether a purchase price was fair or not, you must choose the right store. Future problems can be avoided by buying from a jeweler who properly explains his product, does not make discounting a selling point, and insists on quality. Buying at such a store will allow more focus on choosing a favorite style, leading to a more satisfying purchase. Studying the methods of discerning quality shown in books such as this, and confidently buying and wearing various pieces of jewelry will increase the opportunity for comparison of pieces and discussion among acquaintances. The resulting exchange of information and increased exposure to gemstones will in turn lead to a higher level of understanding regarding differences in quality. As with anything else, the first step in being able to make an error-free choice is to cultivate a discerning eye. What is ultimately important is to be able to decide for yourself what is beautiful, and to wear jewelry with confidence. There is no value in blindly following the opinions of others or a quality analysis report, and wearing a piece without having a personal understanding of its beauty.
Gemstone Value Comparison Charts
The charts on pages 136 and 137 (Next Chapter) show the value references for 44 types of gemstones. They are intended to give an overview of the differences in the relative values between these gems. Comparing, for example, the value indexes for 10-carat-size gem-quality gemstones, untreated Mogok ruby is 12,000, aquamarine is 120, and citrine is 12. Even at the same 10-carat-size, there can be a hundred-or thousand-fold difference in value, depending on the type of gemstone.
Using the value of a one-carat-size, jewelry-quality round brilliant diamond as a reference of 100, the charts compare the three qualities of each gem in three sizes (10, 3, and 1 or 3, 1, and 0.5 carat-sizes). These indexes are based on 2001 market prices. The quality scales for all but two of the 44 gemstones indexed have bee printed in this book and my previous Gemstones: Quality and Value, Volume 1. Kashmir sapphire is extremely difficult to obtain, while blue zircon was omitted due to space limitations. Please accept my apologies for this.
From each quality scale, a median point was assumed and the various value reference indexes were built around these. While some gem-quality stones of exceptional value may have a value ranging from two times to as much as five times what is shown in the index, some accessory-quality stones only have a value close to the cost of polishing, due to a lack of beauty or conspicuous defects.
Twenty-seven of the gemstone types listed, including the various diamonds types, are stones that normally do not require treatment. The emeralds, rubies, and sapphires fashioned from high-quality rough without treatment are noted in the charts as untreated (N). Of the eleven gemstones that are heat-treated (H), aquamarine, pink topaz, green tourmaline, and amber may also be untreated, but there is no common practice of separating or nothing this. Colombian and Zambian emeralds are usually fracture-filled (impregnation-treated) with oil or resin, and turquoise is often impregnated with acrylic resins to enhance its color and / or prevent discoloration. These are collectively noted as impregnated (I). Jadeite is often waxed after polishing as a finishing step to improve the luster of its surface, but because this does not significantly affect quality, jadeite is listed as untreated (N).
There is a need for continuing observation to see how the market will react to issues such as high-temperature heat treatment and its effects on durability in Mong Hsu rubies, or the deterioration of oil and polymer treatments in low-quality materials, and how these will influence value in the future.
Sample Auctions
Hammer Prices
Occasionally tow or three private patrons at an auction will bid against each other and raise the price of an item to as much as three times the estimated hammer price. This is a tribute to the extremely beautiful, defect-free, and very rare nature of the gemstone-oriented jewelry piece in question. A high price is not a guarantee of fine quality, but high-quality gemstones will always command a high price.
1. 13 November 1995
Christie’s, Geneva
Pear-shaped diamond, 16.66 carats (D-VS1)
Ring by Van Cleef and Arpels
Total Price: US $1,755,310
(US $105,360 per carat)
This diamond was accompanied by working diagram stating its potential of achieving a clarity grade of Flawless(FL) if recut.
2. 21 November 1996 Emerald price estimated at US $600,000 (US $58,000 per carat)
This emerald was accompanied by a grading report from the Swiss Foundation for the Research of Gemstones (SSEF) stating that there was “no presence of filler.” This price was driven up by the fact that the stone was an untreated Colombian emerald.