The Effect of Fashion and Availability on Gemstone Pricing
(Editor’s note: As we prepare for the shopping and jewelry making coming up at Bead Fest, I need to brush up on my gemstone pricing knowledge. You too? Read on!)
Color and clarity are the big drivers in what makes a mineral a gemstone. But just when you think you know what everyone means when they say “gem,” a new discovery is made or a historical deposit plays out. And everything changes.
ABOVE: These round brilliant rubellites (18.58 carat total weight) show why this variety of tourmaline is one of the most sought after gemstones in finer qualities, because of its rich hot pink to red colors. Photo Mia Dixon, courtesy Pala International.
Quality grades seem like they should be fixed, but they can flex. For example, Kashmir sapphires used to be the top-quality blue sapphires on the market. But Kashmir stones have largely disappeared; as a result, they’re considered to actually be above the top grade. The standard “extra fine” blue sapphire category is now built on stones that are actually not quite as fine as Kashmir stones.
When New Gem Deposits Are Found
New deposits of gem materials, too, can be found that produce gemstones of higher quality than historically available material. Often these are small discoveries that play out quickly. Other times, the finds are significant and cause a readjustment in expectations.
This happened years ago when Zambian emeralds were discovered. It also happened when a significant find of rubellite, normally considered a Type III gemstone, was made in Nigeria. The Nigerian rubellites still contained inclusions, but they were nowhere near as heavily included as Brazilian material. So much Nigerian material began coming onto the market, at lower prices, that newcomers to the industry expected that eye-clean, inexpensive rubellites were the norm.
Normally if a new find raises expectations like this, then supply suddenly or eventually stops, market expectation continues to be high for a while. People may shy away from material from older deposits—the former top-quality material—because they think those stones are actually “lower” quality. It takes a while before people realize that the recent discovery was an anomaly.
Supply and Demand’s Effect on Gemstone Pricing
The value of a stone, regardless of quality, can and is affected by simple supply and demand: how much material is being produced at the mine, and how “hot” is the market demand for it. Tanzanite is an excellent example of this kind of value fluctuation.
When tanzanite first came onto the market, no one knew about it, and there wasn’t much of it. Even Tiffany & Co. couldn’t make a dent into the public consciousness. However, as more stones came on the market and people became familiar with tanzanite, demand went up. So did the price. When a large new deposit was discovered that produced larger crystals of better quality, the price fell because of the increase in supply. Once demand and supply equalized, the price stabilized, although at a lower level than the initial price.
Mining Costs Stay Consistent
Prices of all qualities of gemstones are affected by supply in other ways. While everyone wants top-quality material (which is by nature very rare), for the miner, it costs as much to find ordinary material as it does to find gem material. When there is enough top-quality material to cover the miners’ costs, then the price on lower quality material stays lower.
However, as deposits play out, or if only lower quality material is available from a deposit, prices rise because miners spend the same amount of time digging out one kilo of rough as they used to spend digging five kilos. Cutters pay more for the rough, so buyers pay more for the finished stones. Higher quality goods may almost dry up as custom cutters and purveyors of high-quality gemstones search high and low for exceptional rough.
Higher prices for mediocre goods can be exacerbated if fashion or other trends dictate that a particular color or stone is “hot” in a market—notably the US market. For example, as the color pink has grown in demand in the US, the demand for pink has moved worldwide, and pink gemstones, especially pink sapphires, have grown in demand. Even stones that are not the finest pinks can still get huge prices as buyers were simply interested in getting something pink, and not in the quality of the material.
Understanding Gemstone Pricing
The only way to bring your expectations into line with the marketplace and understand gemstone pricing is to shop the shows, like Tucson and Bead Fest. Talk to dealers. Compare. Hone your abilities to detect differences in qualities. Look around. And always stay alert for the new deposit of material that may not yet have been discovered.
Sharon Elaine Thompson is a GG and FGA who has been writing about gemstones and jewelry for Lapidary Journal Jewelry Artist since 1987. She also writes a line of birthstone romance novels under the name Liz Hartley.