Investors

Top 10 Investment Gems

Gemstone investing is not for everyone. But for those who love fine gemstones and beautiful jewelry, rare gems have a good history of increasing in value over time. When the stock market is declining and currency is losing value, gemstones tend to be a reliable store of value that is also compact, portable and private.

Though gemstones are not as liquid as gold, a high quality Burmese ruby or Ceylon sapphire will always retain its value. New discoveries, like the valuable neon spinel discovered in Mahenge, Tanzania in 2007, provide new opportunities for collectors. But in general, the world demand for fine gemstones far exceeds the supply, and gemstone prices mainly move upward over time.

Any high quality gem may be worthy of investment. But based on our years in the trade, here is our list of the top 10 investment gems.

1. Ruby

Fine ruby is the rarest of all colored gems, and Burmese ruby has long been the premier investment gem. Fine unheated Burmese rubies in larger sizes draw prices as high as $300,000 to $400,000 a carat at auction. Vivid red -- a color known in the trade as pigeon's blood -- is the most valuable color. Rubies tend to have inclusions, so color is more important than perfect clarity.

Burma rubies are by far the most valuable, but fine unheated rubies from other locations -- Madagascar, Mozambique and Tanzania -- are rapidly increasing in value.

2. Blue Sapphire

Based on sales from the top auction houses, blue sapphire is the second most popular colored stone for investment.

The rarest sapphires are from Kashmir, but no new material has been mined there in more than 100 years. Next most valuable is Burma sapphire, followed by Ceylon and Madagascar. Fancy color sapphires -- yellow, pink and padpardascha -- are now popular with investors as well.

3. Emerald

The emerald market has seen some turmoil as a result of controversies over treatments with artificial resins, but fine untreated emeralds continue to be reliable investments.

Colombian, especially in large sizes, continue to be the most valuable, followed by the top Brazilian emeralds. Some high quality emeralds are also mined in Zambia. Investment grade emeralds must be untreated.

4. Spinel

Spinel is a relative newcomer as an investment gem, but in fact some of the most famous rubies in the world, such as the the Black Prince's ruby in the British Crown Jewels, are actually spinels.

The most valuable spinel colors are red, hot pink and flame orange. Red Burmese spinels and the neon pink-red spinels from Mahenge, Tanzania have the best investment potential. Spinel is completely untreated and prices on fine pieces have risen significantly in the last 5 years.

5. Tsavorite Garnet

Tsavorite Garnet is a rare gem from East Africa that has begun to challenge emerald as the finest of the green gemstones. Unlike emerald, tsavorite is always untreated, and it has more brilliance than emerald due to its higher refractive index.

Tsavorite over 2 carats are very rare, and fine stones over 4 carats count as exceptionally rare. Colors range from mint green to a deep chrome green.

6. Spessartite Garnet

Spessartite Garnet is a bright orange garnet colored by manganese. The finest examples, often referred to as Mandarin Garnet in the trade, are a pure orange that is one of the most vivid colors in the gemstone world.

The pure orange specimens are very rare, and come mainly from Africa, particularly Nigeria and Namibia. Large clean stones are quite valuable and display remarkable brilliance.

7. Alexandrite

Alexandrite is a rare chrysoberyl that is popular with collectors for its striking color change and excellent hardness (8.5 on the Mohs scale).

Alexandrite was first discovered in Russia and Russian specimens are very rare and valuable. Today the highest quality alexandrite comes from Brazil, with medium grade material from Tanzania.

8. Jadeite Jade

Fine translucent emerald-green jadeite is known as Imperial Jade. This rare gem is found only in Burma (Myanmar) and is coveted by collectors around the world, especially in Asia.

Type A jadeite is untreated natural Burmese jadeite where the color is 100% natural. Only certified jadeite of this quality is deemed worthy of investment.

9. Imperial Topaz

The Ouro Prêto area in Minas Gerais is the source of the rarest topaz known as imperial topaz. This topaz is golden-orange to orange to pink, pinkish-red or violet in color.

The color should be completely natural, with no enhancement by heat or other methods. Stones with a hint of pink or red are the most valuable, with a pure red natural topaz counting as extraordinary.

10. Paraiba Tourmaline

Paraiba tourmaline is a rare copper-bearing variety of tourmaline with a distinctive neon-like glow. It was first discovered in the Brazilian state of Paraiba in 1989. Since then small deposits have been found in Nigeria and Mozambique

The Brazilian paraiba is still the most valuable, but color and clarity are more important than origin for these rare gems. Clean paraiba tourmalines with exceptionally vivid color are the most valuable.

The New Trend - Investing in Colored Gemstones!

Psssssst... "The smart money is going on the colored gemstones".

It seems that maybe, choosing a diamond for an engagement ring to give to your fiancé is beginning to look quite commonplace, unimaginative and somewhat passe.

Most people in the industry are aware that the whole "diamonds are a girl's best friend" phrase was just part of a sophisticated marketing exercise by De Beers in the 1930s. They used Hollywood movies and stars to promote diamonds as the number one choice for engagement rings.

It worked, and while diamonds are still the first choice for most people, the shrewder buyer is looking at other options and discovering a wide variety of beautiful alternative gemstones.

Diamonds are not, and never have been, in short supply.

Burma produces 90% of the world's rubies and it is common knowledge that large, unheated red Burmese rubies are extremely rare. This has been the case for many years. Fine, large unheated Burmese rubies sell, on average, for about $160,000 - $420,000 per carat.

These gems are hardly ever seen on the market. If you are in possession of one, keep it under wraps. If you know of the whereabouts of such a gem, buy it if you can!

Gem traders in Myanmar (Burma) took a record $1.44 billion at a 2 week trade show in November 2010. Four thousand of the traders were from overseas. Earlier trade shows in March and October made 400 and 700 million Euros respectively. This year's Hong Kong Gem Show in September 2011, was the biggest and most popular yet.

Foreign demand, particularly from Asia, for Myanmar's natural stones is huge and is continuing to grow. The Chinese and Indian markets are the main buyers and are driving the demand for gemstones.

Colored gemstones have always been "in vogue" amongst those with discerning taste. Kate Middleton's 12ct sapphire engagement ring reinforced this fact. Received from Prince William who had inherited it from Princess Diana, it had a huge impact on engagement rings, with many gemstone Internet sites crashing as people rushed to copy the royals.

When Jackie Onassis received an emerald engagement ring from John F Kennedy, the result was that emerald engagement rings became one of the most popular choices for brides-to-be in the mid-1950s.

The trend is being seen much more now in the world of celebrities; Penelope Cruz recently received a huge blue sapphire as her engagement ring. Jessica Simpson was given a 4 carat Burmese ruby and diamond ring.

During difficult times, people look at alternative investments and at the moment there is a lot of talk about investing in gemstones. Many investors have left the usual paper investments alone and switched to hard assets. Having something real in your possession seems a much healthier and secure option than gambling on numbers and forecasts.

Good quality colored gemstones are hard to find and with supplies dwindling, they will only get rarer.

At a Christie's auction in Hong Kong, in the autumn of last year, a 7.04 carat Burmese ruby sold to a private Asian buyer for $2.9 million. That's $411,000 a carat. However, this is not the record! The world record was $420,000 per carat or $3.62 million for an 8.62 carat Burmese ruby.

Usually, the redder the ruby, the more valuable it is. However, sometimes a ruby will fetch a high price if it is free of inclusions, regardless of how red it is. An example was at a Christie's auction in 2005 when an 8.01 carat Burmese ruby sold for $2.2 million, or $274,000 per carat. This ruby was only 65% red but free from inclusions.

These Burmese ruby earrings weighing 5.12 and 4.24 carats sold for $2.59 million at a Christie's auction in December 2010.

Dealers are now being contacted by investors and asked to present a collection of stones for their perusal.

It's true that gold has always been a favorable option but it's not as easily transportable as gems and so, rubies, sapphires and emeralds are now rising in value as smart investors expand their portfolio and the emerging Asian markets lead the way into the gemstone world.

These Kashmir sapphires, of 8.74 and 8.65 carats sold for slightly over $2 million, Christie's December 2010.

India and China have a long history associated with colored gemstones. They are a part of customs and folklore going back thousands of years, and are believed to bring good luck and good health. They are as much a status symbol in houses and at dinner parties as big diamonds are to Western society.

Nowadays, these Asian countries have the financial clout to buy what they want. The middle classes of India and China have grown, meaning that there are now a great deal of wealthy Chinese and Indian gemstone buyers. Chinese dealers can pay high prices for rare gems and still sell at a higher profit margin to the Chinese market. The present yuan against the dollar scenario is also playing its part. Meanwhile, in India, jewelry has always been classed as a solid investment and an alternative to money. The difference is that now, a larger percentage of the population has the means to purchase it.

Rare gemstone prices are already going through the roof. According to dealers, prices for high quality rubies have doubled in two years. Even stones of average quality are up 20% this year according to some dealers. The price increases in precious gems have now filtered down to semi-precious stones, especially gems such as spinel, which has risen in price considerably.

It seems that history is indeed repeating itself. In bygone times, colored gemstones were more highly prized than diamonds. If colored gemstones were marketed as cleverly as diamonds were in the 1930s then things would really take off.

Perhaps, those in the know like it just the way it is.