Frequently Asked Questions About Gemstones

Q. ISN'T THE GEMSTONE MARKET CONTROLLED BY A MONOPOLY?

A. Monopoly control is a characteristic feature of the market for only a single gemstone: diamond. All other gems are free-market commodities, and price and availability are functions only of supply and demand.

Q. AREN'T GEMSTONES CONSIDERED SPECULATIVE INVESTMENTS?

A. The reverse is true. Gemstones are the original commodities that were considered valuable. They have the oldest track record of appreciation of any tangible commodity, including gold. The gemstone market is global and extremely stable; prices move in broad trends, rather than sudden movements. Stocks and bonds are actually far more speculative than gemstones.

Q. WHY HAVEN'T I HEARD ABOUT GEMSTONE INVESTING?

A. The concept of gemstone investing is new in the United States. The opposite situation prevails in Europe and the Far East, where gems have been used as a store of value and a means of transporting wealth for centuries. Gemstones are accepted throughout the world as concentrated items of wealth.

Q. IS IT MORE BENEFICIAL TO INVEST IN ONE LARGE STONE OR A NUMBER OF STONES?

A. The secret of portfolio planning is balance. A portfolio containing several stones of high quality is generally preferable to a single stone. This gives the portfolio flexibility because of worldwide geopolitical diversification. A gemstone portfolio can be built by adding one gem at a time.

Q. WHAT KIND OF RETURN CAN I EXPECT FROM A GEMSTONE INVESTMENT?

A. The function of gems in a portfolio is for preservation of capital and long-term growth. The optimum holding period is 5-10 years. Gemstones have always far exceeded the inflation rate in appreciation; however, market fluctuations require that stones be held at least 3-5 years for an average appreciation rate to apply.

Q. CAN I WEAR AND ENJOY GEMSTONES PURCHASED FOR INVESTMENT?

A. Investment stones are basically the same as the gems you find in jewelry stores, only more carefully selected for size and quality. There is no reason whatever why investment gems cannot be worn in jewelry, as long as care is taken to prevent loss or excessive wear. A simple repolishing operation generally can restore a gemstone to its original brilliancy, with very little weight loss.

Q. HOW CAN I LIQUIDATE MY GEMSTONE INVESTMENT?

A. Gemstones are bought and sold on a daily basis all over the world. Jewelers are all potential buyers, as are investment gemstone dealers. Gems and jewelry are regularly sold by major auction houses. The simplest method of liquidation, however, is to allow the original seller to broker the stones. This assures the most credible possible transaction for both buyer and seller. The time required for liquidation is a function of the price originally paid for the stone, the holding period, and the state of the economy and gemstone market at the time of resale. Gemstones, like real estate, are best considered for long-term growth and should not be relied upon for short-term cash needs.

Q. WHAT IS THE FUTURE OF THE GEMSTONE MARKET?

A. The jewelry trade has begun a massive publicity campaign about colored gemstones. This will create a huge demand for gems over the next few years. Gemstone supplies, on the other hand, are becoming steadily lower. Major gem-producing countries are experiencing internal problems, such as super-high inflation rates (Brazil), socialistic governments (Tanzania, Mozambique, Madagascar, Cambodia) or the threat of invasion (Burma, Thailand, Kenya). The combination of increasing demand and decreasing supply will put strong upward pressure on gemstone prices.

Gemstones are held primarily for preservation of capital against inflationary losses in purchasing power.  Their rate of appreciation, relative to the rate of inflation, is spectacular.