16 WOMEN & WEALTH

ow

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A PRECIOUS
INVESTMENT
Investing in gems is largely an art based on passion and
knowledge. There are no rules or benchmarks.
By Elaine Boey and Emily Chow

O n May 29, 2012, two gems made headlines after selling for record
prices at a Christie’s auction in Hong Kong. The famed “Martian
Pink” diamond, a round, intense pink 12.2-carat diamond,
sold for US$17.3 million, almost double its presale estimate. The Etcetra, a 6-carat
Burmese ruby ring, sold for US$3.3 million, a record price of US$551,000 per carat.
Gems refer to coloured stones while diamonds are colourless. At one point,
keep trending up. Richard Wise, a
gemmologist, author and president of
R.W Wise Goldsmiths Inc, attributes
this upward pressure to growing
demand that far outstrips supply.
Demand from China is particularly
strong, he says. “Exceptionally fine
gems were commonly grouped into two categories — precious (diamond, ruby, [high quality, almost flawless] stones,
sapphire and emerald) and semi-precious (everything else, such as tsavorite, say, of five carats and above, are very
amethyst, aquamarine, peridot and cat’s eye garnet). Today, putting gems into popular. They are seen as a portable
these simplistic categories is no longer applicable (see terminology on Page 19). alternate way of storing wealth,” says
The rarer green tsavorite from Tanzania is far more valuable and more expensive Wise.
than a mid-quality emerald. The global supply of gems is
Prices of coloured stones with luminous beauty and scarcity are expected to fragmented and controlled by

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 17

governments or small companies. “Unlike gold and FAMOUS GEMS

diamond deposits, the deposits for gems are fairly
ere are a few exceptions such as emeralds from THE ROCKEFELLER
Colombia [said to account for 70% of the world’s supply] but SAPPHIRE
generally, the gem mines are small and can be exhausted This flawless 62.02-carat, rectangular
in two to three years. So, it is not commercially viable for cornflower-blue sapphire mined in
large companies to invest in and develop these mines,” Myanmar is considered to be one
says Russell Shor, a leading authority of gems from the of the finest gems in the world. It is
Gemological Institute of America (GIA). the most expensive sapphire in the
Gems from countries such as Myanmar, Zambia, world — carat-wise and in total price
Tajikistan and Madagascar are mined by artisanal miners — after selling for over US$3.3 million
(small-scale miners who use hand tools and work long at a Christie’s auction in New York in
hours). In contrast, diamonds are controlled by large 2001. The last Nizam of Hyderabad
companies (see “Diamonds vs gems” on Page 20). was said to have sold this gem to
nancial backing of large commercial John D Rockefeller in 1934.
enterprises, gems are not as well marketed as diamonds.
elds plc, which owns the rights to mine ELIZABETH TAYLOR’S
emeralds in Zambia, has recently embarked on a marketing PERFECT RUBY
campaign for the green stone. In contrast, De Beers has long Hollywood star Elizabeth Taylor’s
marketed diamonds to couples through its iconic slogan “A jewellery collection was sold in
diamond is forever”. 2011, also at a Christie’s auction.
nest gems can far exceed It included a ring with an 8-carat
is is ruby set with diamonds given to
ne rubies, with larger sizes commanding her by her then-husband Richard
exceptionally high prices. Fine deeply coloured rubies of Burton in 1968. The ruby, mined in
3-carats or more are a great rarity, although it is not unusual Myanmar and described by Burton
to come across diamonds of such sizes. as “perfect”, was auctioned off for
US$4.2 million.
MORE OF A COLLECTABLE
Investing in gems is largely an art based on passion and PRINCESS DIANA’S
ere are no rules or benchmarks. Unlike ENGAGEMENT RING
diamonds, there is no universally accepted grading system The oval sapphire engagement ring
or established pricing system. Since supply is erratic, that Prince William inherited from
nding investment grade stones requires some luck and a his late mother and gave to Kate
lot of patience. Furthermore, a growing number of treated Middleton in 2010 is among the most
cult for the famous in the world. The diamond-
inexperienced to identify genuine natural gems. encrusted, 12-carat sapphire ring
Anyone considering buying gems with the intention of reportedly cost Prince Charles
reselling them in the future needs a fair amount of knowledge. £28,500.
Buying gems is akin to assembling and acquiring a collection
of paintings, stamps and antiques, says Henry Ho, founder PIGEON’S BLOOD RUBIES
and chairman of the Asian Institute of Gemmological Rubies from Myanmar can fetch
Sciences. Some may also want to consider using a reputable a premium for their clarity
, quality
expert such as a gemmologist or rely on a lab report such as and colour. The best rubies are pure
those from the GIA to verify authenticity. red and are called “Pigeon’s blood”
Ho also advises potential investors to devise an rubies. These extremely rare stones
investing strategy. “Are you willing to dabble in stones are not found anywhere outside
that have no real demand but, with ingenuity and Myanmar. “Asking to see a Pigeon’s
creativity, [you can] add value to them and sell them? Do blood ruby is like asking to see the
ip your gems for a small margin and do this face of God,” writes Richard Wise,
many times over? Are you going to travel to remote places gemmologist and author, on his
nd gems? Choose an area of trade that is not too blog.
erent and daring but know that the

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 18 WOMEN & WEALTH
risk of losing all your money and being stuck with unsold “Buy for
gems is a common reality.” beauty, for self-
Like gold, gems do not pay dividends. As an investment, it satisfaction,
is more illiquid than gold. “Gold is a homogenous commodity for pleasure
that is easily purchased and easily sold on a daily basis. and pride of
Gemstones are unique. No two pieces are alike. They are rarer ownership.
and more portable. You can put a gem valued at US$1 million Buy as a hedge,
in your pocket and walk away but you can’t do that with gold as a way of
of the same value,” says Ho. This means that buyers need to preserving
be able to hold their gems for the long term. capital. Buy
The best investments are in the high end of this market, as a gift for
the finest natural stones of several carats, say gemmologists. loved ones
“These are stones in the top, top category, valued at at least and for special
half a million or a million greenbacks, says GIA’s Shor. occasions.”
Demand for the finest gems is always there and an investor – Ho
can always find willing private buyers or buyers through
auctions such as Christie’s that sold the Martian Pink and “Unlike gold
The Etcetra. and diamond
“If the auctioneer is excited about the gem, the market will deposits, the
be excited. And clearly, only the finest, most rare gems will deposits for
get the auctioneer to dedicate a large write-up to the gem or gems are fairly
maybe even put it on the cover of its auction catalogue,” says small and can
Wise. be exhausted
Such high-valued stones tend to be traded along with an in two to
independent valuer’s report such as that from the GIA, adds three years.
Shor. This report confirms that the stones are not synthetic, So, it is not
have not been treated and offer a probable country of origin. commercially
Such lab reports address concerns surrounding the identity viable for large
and authenticity of the gem. companies to
Treated gems generally trade at lower prices than invest in and
natural ones. According to Linda Rosen, president of the develop these
International Gem Society (IGS), some treatments such as mines.” – Shor
heating for sapphires or oiling for emeralds have become
generally accepted practice. “That said, an unheated
sapphire will fetch a higher price than a heated sapphire.
Nevertheless, the notion that the gem’s colour came out of
the ground is attractive to many collectors.” “People
are getting
WHO AND HOW MUCH? interested in
Synthetic stones have always been an issue in the gem things like
trade. Those buying gems must also be aware of the latest amethyst and
“treatment” of gems such as irradiation, coating, cavity aquamarine,
filling, hat and new dyes, and be aware of the reporting but on a much
criteria and comments from different laboratories, says smaller scale.
Wise. Having travelled to many gemstone mines around Trends are
the world, he has found the most concentrated source of like fashion,
synthetic stones at natural stone mines, where scammers sometimes
look for uninformed and eager buyers. it stays for
This is why the reputation of the source of gems is of utmost a long time,
importance. “Choose a supplier as you would choose a sometimes not.
doctor or a lawyer and ask and check on references,” advises This makes
Ho. gemstones
There is no universally accepted grading system for quite an
gemstones. According to Wise, the best quality stones are unpredictable
“translucent with fine colour in their purest form and very market.” – Poli

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 19
GETTING
STARTED
gem knowledge. In the 1950s, bead makers, collectors, international participants and
it created the international cutters, instrument and tools attendees. Ho says this is a
standard for describing manufacturers and distributors. must-visit.(www.baselfair.com)

4
diamond quality: the 4Cs (colour, It is a real mix of visitors,” says The Hong Kong
Those interested in learning cut, clarity and carat weight) Ho. (www.visittucson.org) Jewellery and Gem

2
more about gems are advised and the GIA International JCK Jewellery Fair is Fair is Asia's foremost
to visit gem and jewellery Diamond Grading System, the US' largest annual jewellery event. Hong
associations and to stay which is now recognised by show featuring thousands Kong is known for ease
abreast of the latest news in the jewellers around the world. of dealers. According to Ho, of travel, doing business
gem industry. Gem associations GIA has a presence in 17 cities. attendees can find watches, and seamless financial
that provide research and (http://www.gia.edu/) jewellery, diamonds, loose transactions. “The fair is duty
updates are the International Henry Ho, founder and gems, display and packaging, free and little paperwork is
Gem Society (IGS) and The chairman of the Asian Institute equipment and tools. “Retailers, required for importation and
Gemological Institute of of Gemmological Sciences, manufacturers, wholesalers, exportation. It is another show
America (GIA). suggest that newcomers attend large chain stores, gem lovers, that you cannot miss,” says Ho.
IGS (www.gemsociety.org) the top gem fairs to learn gem experts, gem labs and the (www.jewellerynetasia.com)

5
provides resources to help more and network. His five press all meet up in this lively The Bangkok Gems
its members identify different suggestions are: and animated city.”(www. and Jewellery Fair

1
stones and assess their profile. Tucson has an annual jckonline.com) specialises in loose

3
It offers an online gemology gems and minerals show The annual fair in Basel stones and jewellery. “Thais
course, news and technical attended by dealers is the ultimate show have nimble hands and create
guides. Members are those in from all over the world.There in luxury watches and finely detailed art and craft.
the trade, connoisseurs and is a widest assortment of jewellery. All leading global At this fair, you can fill your
gem collectors. gems, crystals and minerals. brands will dazzle with glitter inventory with colour gems and
GIA is a non-profit institute “Attendees are miners, big and brilliance. It is similar to mid-range jewellery,” says Ho.
that aims to be a resource on and small dealers, craftsmen, the JCK Fair but with more (www.bangkokgemsfair.com)

hard (between eight to ten on a Mohs scale, which estimates pink sapphire or tourmaline. Prices
scratch resistance through the ability of a harder material to of pink stones went up and it’s still
scratch a softer material). quite trendy. In Malaysia, people
In the gems trade, beauty drives demand and rarity still aren’t so big on gemstones.
drives the price. In almost all cases, the rarer stones will eir main thing is diamond and
fetch a higher value if there is demand. “Unless the item is gold. Recently, it’s been South Sea
in demand, then its actual rarity doesn’t matter very much. pearls. But some coloured stones
Fine amethyst is actually quite rare, yet due to relatively are gaining popularity. People are
ings getting interested in things like
Left: Blue topaz
really get interesting when a gem is both apparently and oval cabochon with amethyst and aquamarine, but on a
emeralds and sapphire
ese are stones that are in short supply much smaller scale. Trends are like
and also in high demand. Alexandrite and blue diamond Right: Oval cabochon fashion — sometimes it stays for a
prasiolite with
are good examples of gems that are both apparently and diamonds and peridots is makes
actually rare. Gems that fall into this category will command gemstones quite an unpredictable
the very highest prices,” says Wise. market,” says Poli.
Poli, owner of Poli Designs Sdn Bhd, a jewellery designer,
erential between smaller
e price varies according to the size,
colour and cut of the stone. For example, peridots are cheap
when they are small in size, but when it gets to a carat and
above, the price picks up a little bit, and that’s because it’s
rare. Prices can range from RM10 or RM20 per carat and go
up to thousands of ringgit.”
Demand is largely based on sentiment for a stone and
uenced by fashion trends. “In Japan about two
years ago, pink stones were sought after, whether it was

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 20 WOMEN & WEALTH

other company or anyone else that was

DIAMONDS VS GEMS trying to do that. I won’t say they were
successful but neither would I conclude
that they failed since they do control a
THE GEM industry is more diverse but and retail profit margins and ultimately small percentage of the trade,” says Shor.
much smaller and under-developed than lead to lower prices for diamonds. The lack of commercial viability means
the global diamond industry. It is also a In contrast, gems are largely mined that the gem market should continue
“freer market”, which is ideal for buying by small artisanal miners and located to operate as a free, fragmented
opportunities and remarkable profits. in emerging, less-developed countries market that is not dominated by one
Sales of gems are said to be only a such as Madagascar, Tajikistan, or a few companies. “Companies like
fraction of the US$70 billion international Colombia and Myanmar. According TanzaniteOne and Gemfields will have
diamond trade. News reports say about to Russel Shor, senior analyst at limited success if they only control one
US$13 billion worth of diamonds, mostly Gemological Institute of America (GIA), source of gems. There is limited financial
mined in Africa, are produced a year. these mines are generally small, with incentive, no return on investment, to
According to Bain & Company, a US deposits that can be mostly extracted invest a large amount of capital in a ruby
management consulting firm, 133 million within two or three years. or tourmaline mine that is typically small.
carats of rough diamonds are produced Gemfields plc, a UK company listed There just isn’t enough supply to make a
globally every year. on the London Stock Exchange, has profit,” says Wise.
In Secrets of the Gem Trade, Richard announced intentions to secure rights As the gems market is free, it has the
Wise writes: “In the case of diamond, to a large percentage of the world’s best buying and return-on-investment
an apparent rarity maintaining the price production of major gems and to opportunities. Auctions such as Christie’s
structure is created by high demand introduce modern mining processes. This and Sotheby’s are seeing more retail
coupled with a carefully controlled is to create a more predictable supply buyers instead of mostly wholesale
distribution system… Thus, the price of gems, which will assist in stabilising buyers. This promotes the price
of diamonds, as with all other gems, and establishing prices. Gemfields has discovery process as bidders compete
is based on beauty and [the laws of] also embarked on a marketing campaign against each other.
supply and demand. The difference is to promote coloured stones. It says it Another key difference between
that demand for diamonds is mightily already produces 20% of the world’s diamonds and gems is the primary
stimulated by advertising, and supply supply of emeralds, mined from Zambia, determinant of value. For diamonds, this
is, or at least has been, ruthlessly and 40% of the global amethyst supply. is its cut. Diamonds are meant to sparkle
controlled by the De Beers cartel.” It has also started producing rubies from and deliver brilliance or “fire”. This is
De Beers Group, a privately-held Mozambique. created in the cutting process whereby
company based in Africa, no longer TanzaniteOne Mining Ltd is another the cutter attempts to retain the most
controls the bulk of the world’s diamond company that is looking to control a weight from the stone while unlocking
supply. Now, there are four large portion of the global gem market. It its brilliance through a precise cut.
diamond miners in the world: De Beers, focuses mainly on tanzanite mined The more mathematically precise the
Alrosa, Rio Tinto and BHP Billiton. The in Tanzania, near Mount Kilimanjaro. diamond’s cut, the stronger its fire.
last two are listed on the New York Stock Celebrated jeweller Tiffany & Co Ltd For gems, the purity and beauty of
Exchange while Alrosa was established introduced this rare dazzling blue stone in colour determine quality. For example,
by the Russian government. More supply 1968, saying it is “the most beautiful blue for emeralds, old mine stones (those
in the market will squeeze wholesale stone to be discovered in 2,000 years”. mined during the 16th and 17th centuries
Both Wise and Shor, as well as many in Colombia) are priced for their pure
other industry observers, agree that it green hue and a honey-like quality of
would be very difficult to control transparency. This quality, says Wise,
the world’s gem supply. “It is can be seen when comparing them
very difficult to control this with very fine crystalline emerald mined
market. Years ago, some Thai recently. “They [old mine emeralds] do
companies tried to control indeed exhibit a thick crystalline quality
the supply of rubies and reminiscent of light passing through
sapphires, mostly honey or oil,” he writes in an article,
mined in Myanmar. “Pricing the Crème de la Crème of
There wasn’t any Gems”.

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 21
So it’s either fake or something has
been done to it,” says Poli.
Therefore, buyers must be
knowledgeable and lucky to find a
GEMMOLOGY
value buy, an authentically fine gem
LINGO
that is priced below retail. “Buying is
about knowing more than the seller
and the absence of a competitor,” says
Inclusion This refers Ho.
to flaws or material “You must invest only if it is a value
found inside a gem buy [lower than retail prices]. You
• never know what the selling price is.
Water Gem trading is a highly competitive
This is a grading of a market. When you decide to sell your
gem’s lustre and/or gem, you can be competing with
transparency and/or wholesale gem traders. Usually, it is
brilliance. Gems the guy who sells at the lowest price
or diamonds that that wins,” says Shor.
are very clear are
considered as “first DOES THE SOURCE
water”. The “second MATTER?
water” and “third In the gem marketplace, a fine
water” grades refer stone with a famous pedigree will
to stones that are not command an extraordinary premium.
as clear and thus, A natural sapphire from Burma will
not as valuable. often sell for twice the price of a
• comparable gem from Sri Lanka. “The
Precious and semi- country of origin is something that the
precious gems market appreciates. For example, they
These are groupings like rubies from Myanmar, emeralds
that are no longer from Columbia, sapphires from Sri
relevant. Regardless Lanka as well as Kashmiri sapphires,
of the type of which are velvety blue when the light
“All colours are created equal. Yet, a fine blue sapphire stone, if it is rare hits them,” says Shor.
commands a much higher price than a fine yellow sapphire. and beautiful and Wise warns against paying a
This is purely a function of subjective preference, which demand is strong, premium for the stone’s country of
manifests itself as market demand.” – Wise it is considered to origin. “Does the beauty of this stone
be precious, says from this source justify paying a
Richard Wise, premium price? The answer generally
There is also the danger of paying retail prices for a gem gemmologist and may be yes, if the best stones from the
only to sell it at a wholesale price. This is due to the many author. area in question are truly the best of
mark-ups that buyers have to pay when buying a gem from • their kind. However, it is important to
the retail market. “There are many hands that ‘touch’ a stone Rare or unusual stay focused. The aficionado collects
before it gets into the hands of an investor — the miner, gems gems, not generalisations. The gem
the cutter, buyers for large companies such as Tiffany and These are so scarce under consideration must be judged
Co, gem dealers and retail buyers/collectors. Each time and relatively for what it is — its beauty, not its
the gem is touched, the price goes up because each player unknown except geographic origin.”
adds his margin, marketing, sales and other overhead costs. to connoisseurs, It is also hard to determine
A successful trader will know how to circumvent some of such as andalusite, exactly where the gem comes from.
those players, or at least understand how a stone should be axinite, cassiterite, Labs such as GIA attempt to give
Mohd Izwan Mohd Nazam

priced accordingly,” says IGS’ Rosen. clinohumite and red a probable country of origin. This
Alarm bells should ring if a beautiful stone is offered at beryl. means that suppliers may not have
an extremely attractive price. “The general idea is that if the an idea of where the gems come
stone looks really good and it’s very cheap, something is from and their claims cannot be
wrong. Prices are usually based on the quality of the stone. verified.

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