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In current times, more and more people invest in gemstones or gemstone jewelry.
Gemstones are a real asset with a substantial value. They are not subjected to high volatility like gold, stocks, or bonds and are perfectly suited as asset protection for value preservation. The supply volume of gemstones has become much scarcer over the last few years and the worldwide demand has increased significantly. When investing in particularly rare gemstones, one can benefit from a good performance (= an above-average return) over a longer period of time.
Gemstones are rare natural resources of nature. Each gemstone is unique. One can compare the market for gemstones well with the art market. Every work of art, whether a painting or a sculpture is unique. The market for gemstones and art is not liquid, like gold or diamonds, with daily reference values of performance. It takes some knowledge and market access through a suitable partner who has the expertise and the worldwide network, for the right decision in buying and support in a future sale.
Of course, there are some things that should be considered when buying gemstones as an investment to make the right investment decision. If you want to learn more about suitable gemstone investments, read on!
You may ask: What kind of investment is this?
Investing in gemstones is an investment made in a physical asset containing a real value, without the volatility and high stability of value. Market prices have been moving in only one direction in recent years. Gemstones as an investment are becoming more and more popular due to their scarcity as a rare natural resource and the strong increase in market demand.
Gemstones are an excellent way to diversify the portfolio and reduce risk relative to other investments because, as a long-term investment, they do not fluctuate as much as gold, stocks, or bonds. The performance grows over time, the longer the investment horizon the higher the return.
If you decide that gemstones are right for you, there are several types of gemstones, including of course the 3 classics of colored gemstones: rubies, sapphires, and emeralds.
The average return for all types of low-risk investments (e.g. treasury and corporate bonds, preferred stocks, gold, real estates) is for a 10 year investment horizon between 2 and 7%(1/2/3). Individual stocks may have had higher returns in the recent past in line with bearing higher risks. The question is what future market performance will look like and whether these value increases can be expected to continue.
In comparison, gemstones show a constant and high performance. Depending on the type of gemstone, annual average price increases of 5-8%(4) have been observed in the market. For ruby 8%(4), sapphire 6%(4), emerald 5%(4). These figures are based on all qualities and sizes depending on the gemstone. For particularly fine and rare rubies, sapphires and emeralds due to their quality criteria and origin, double digit increases in value between 10 to 12% have been seen by market experts in recent years and will continue to be so in the future.
If you invest in gemstones with an investment horizon of 10-20 years, this is a good time horizon for an ideal return. The value of a gemstone depends on its color, size, cut, and clarity. All factors influence the price of any stone. The rarer and more valuable a gemstone is considered by experts around the world, the higher its market value today and also its future performance.
The rarity and quality of a gemstone are decisive for its current and also future value. It is no secret that the 'Big 3' - the colored gemstone rubies, sapphires, emeralds as well as colored diamonds are ideal for investment as loose stone or processed in a piece of jewelry. In addition, there are individual other gemstones such as the Paraiba tourmaline, alexandrite, or demantoid which due to rarity and popularity promise constant high price trends.
For natural colored diamonds (yellow, pink, blue, and red) you have to make a very high investment volume because the market prices are in a different dimension than all other gemstones. The sale is usually possible only through international auctions, due to the high value.
Less known but still popular gemstones like Paraiba Tourmalines, Alexandrites, or Demantoids show an attractive performance, but the market volume is rather low, especially on the demand side when reselling for a smaller circle of collectors.
With the three colored gemstones ruby, sapphire, and emerald one is on the safe side. There is a suitable size or carat weight for every investment volume and one can be sure that there is a larger number of interested buyers worldwide, either as a dealer, jeweler, or collector if one is aiming for a resale.
From the market point of view buying and selling a ruby, sapphire and emerald are the best asset class. The same is true for performance. As constantly high global demand meets ever-decreasing supply, this is where future price trends are almost certain to be at a high level.
What is important is the quality of the gemstone and the treatment. Untreated gemstones are best suited for investment. In the case of sapphire and ruby, this implies that they are not heated, as 98-99% of all sapphires offered on the market are heated, a common and traditional form of treatment that does not require labeling according to CIBJO. Emeralds are usually oiled and that is why the degree of oiling is critical, the best emeralds to invest in are those that are not oiled or only slightly soiled.
Besides the historical value development and the price development to be expected in the future, it is also a criterion for gemstones, similar to art, that you see the beauty and that you like it. Since an emerald is always green and a ruby always red, the Sapphire offers a wide variety of colors in all colors of the rainbow, in addition to the most well-known blue hue, for every individual taste.
Looking at the three colored gemstones, the enormous price increase of rubies and emeralds in the last 3-5 years is particularly striking. Especially with rubies from Burma but also Mozambique. Similarly with emeralds from Colombia. The value development was strong that one must ask oneself, how does it go on? Always only in one direction, because the worldwide demand for fine qualities is constantly increasing and from the countries of origin much less supply comes to the world market.
In the case of sapphire, the value development has been observed steadily at a high level in recent years, not as rapidly as with ruby or emerald recently. For this reason, sapphire currently offers very good opportunities, as there is still catch-up potential, and you get more carat weight for your investment amount. The market still expects significant price increases, which international fairs have shown this year, especially sapphires from Sri Lanka and Burma are currently very sought after. Across all sapphire colors prices are rising, the classic is of course blue, but also intense pink and violet tones are in demand, in addition to the rarest sapphire, the Padparadscha sapphire.
First, the quality of the gemstone is crucial. For this, the 4C's help you to estimate the quality. The most important is the color, but of course, clarity and size are also important factors for the current and future value.
Gemstones for investment should be untreated. That is, a colored gemstone in natural color, which has not been heated or treated in any other way. For this reason, certificates from internationally recognized laboratories are important to ensure this. The origin is becoming increasingly important for gemstones as an investment. Premium rates are paid in the market for particularly rare deposits.
It is quite simple, everything that was rare is valuable, everything that is or becomes even rarer, will become even more valuable.
The rarer a gemstone is, the higher its market value due to its size, color intensity, and quality.
When choosing the pathway investing in gemstones, it is recommended to buy one precious expensive colored gemstone than three gemstones for the same investment amount. This is because the more precious a gemstone is, the higher market demand it has and also the higher possibility of selling it faster at the desired price. The rare is always the most in-demand.
Gemstones are ideal for admixture if you already have other asset classes, such as shares, gold, or even diamonds. The allocation of an investment figure for gemstones would be subjective to your personal preference of how you want to diversify your portfolio of investments. Generally speaking, you should invest at least $10,000 but preferably more than $25,000 in a rare colored gemstone that promises maximum performance in the market.
Gemstones are not suitable as a short investment. It should be at least 10 years, ideally 15 to 20 years. There is no clear price index for gemstones by which you can read the monthly performance.
The price development happens over the years due to more rare stone occurrences and the rapid increase of demand worldwide. For this reason, you can only profit from gemstones in the long term.
The comparison of Gemstones with art is quite accurate. The beautiful painting or sculpture of a well-known or emerging artist can be valued annually, but for a correspondingly high return, you should own the work of art for as long as possible.
Trust is crucial when buying a gemstone, especially at higher values for investment. The goldsmith or jeweler demonstrating expertise should be the first choice. You should question the quality, treatment, and origin of the gemstone.
Also, keep in mind to only buy gemstones from a goldsmith or jeweler who has high expertise in colored gemstones and can also present a wide variety of stones for intention. This way you can learn more about stones and make the right investment decision. Not every player in the jewelry and gemstone industry has in-depth gemstone knowledge, daily practical experience with it as well as international market access. However, this is crucial as well as the most direct access possible to particularly rare gemstones to offer an attractive investment price.
The market for gemstones is not liquid. This implies that there is no daily reference price like gold. You can compare the market for gemstones very well with the art market. In the investment phase, you need a competent and trustworthy expert who has excellent product and market knowledge as well as an outstanding network for gemstones to be able to offer you that special stone at a particularly good price. Good advice is the key to quickly understanding the product 'gemstone', the quality differences, and often the aesthetics & beauty play a role in the selection. Quantitative factors such as treatment and origin should be additionally secured by a certificate.
If you want to sell your gemstone again, you ideally also need an expert with market access, preferably internationally. Of course, you can always sell gemstones at auctions. However, it is always recommended to have the support of a market player who, as in the art market, has an excellent network and can assist in the de-investment phase to achieve the desired selling price in the market. It is always advisable to trust a partner who has the expertise and market access to achieve the best result for a client, the maximum return when buying and selling gemstones.
An investment in gemstones is an investment in a substance value. However, you do not have a regulated and liquid market, but you have much greater opportunities and returns than stocks, government bonds, and gold.
The crucial aspect is to have the right partner on your side to choose the right investment with expertise and market access or network for a particularly rare and valuable gemstone at its good purchase price point. On the other hand, also with the sale, the network and the expertise are crucial.
Above all, when investing in gemstones, you should keep in mind to enjoy the product, find the selected gemstone beautiful, and know about its rarity. Through the expertise of your selected partner, you can get background information and key knowledge aspects to make the right investment decision for a great return on investment. The market for fine and rare gemstones knows only one direction and it is a lucrative investment with the right partner on your side.
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