NATIONAL GEMSTONE'S ON-LINE BROCHURE

Why Collect Gems?

The fascination with possessing gems is ancient and universal. Gems have intrigued and mystified us for thousands of years. They have been the gifts and ransoms of kings and queens, the reason for crimes of violence and the overthrow of rulers. Important gems are one of the most pleasing gifts to give or receive. Gems symbolize devotion and are the strongest way of saying "forever" to a loved one. Due to the indestructibility of gemstones, they can be passed from one generation to another National Gemstone's philosophy of collecting gems is analogous to owning other rare and beautiful objects such as art, antiques, exotic cars or collectibles: They should be purchased for their beauty, rarity and the enjoyment they give. If they retain value or appreciate, it is strictly a bonus.

Whether you are a connoisseur of fine objects or want to mount your gemstones and diamonds in jewelry, National Gemstone would be pleased to have you as a client.

Gemstone Collecting Is Fun
Unlike buying a stock certificate or a bond, gems are enjoyable assets to accumulate. Although gemstones do not provide income in the classical sense, they provide a "psychic" income unparalleled in the collector market. When you collect gemstones, you are buying a tangible that took eons to create. When you hold a fine gem in your hands, you may not be able to put it down - its captivating radiance glows and pulsates! Once you start collecting world class gemstones, you will never again look at gems on television or in a jewelry store in quite the same manner.

Gems are Rare, Geological Miracles Mined in Politically Unstable Regions
Gemstones are finite and new finds are becoming exceedingly rare. With the exception of diamonds, most gem sources are ancient and the best gems are long gone. The combination of geological factors necessary to produce gemstones is so precise that deposits are limited and widely scattered. Most extensive colored gemstone mining is accomplished with primitive hand tools, a method by which production cannot be accelerated to meet demand. Most deposits are too small to exploit economically with heavy equipment. The major sources of the world's finest gems are troubled third world countries. Colombia, Burma, Thailand and Kenya are politically unstable regions where supply could easily be interrupted. This is the reality of fine gems today. In the future, quality gemstone demand may be further increased by new collectors and investors searching for private asset based, hedge vehicles. A simple rule of economics is when the supply of any commodity decreases, prices tend to increase.

A Centuries Old Historical Appreciation/Gems May Preserve Capital
To Americans, the collecting of fine gems is a relatively new phenomenon. However, throughout history gems have saved people in times of political and economic crises, most recently in Nazi Germany, Vietnam, Iran, and Hong Kong. As a result of decades of political instability, currency devaluation and excessive taxation, Europeans, Asians and South Americans have long been aware of the important role gemstones play in preserving capital and as symbols of power and wealth. Based upon historical price data, quality diamonds and colored stones have proven themselves to be excellent long-term hedges against economic uncertainty and currency depreciation. The key to successfully buying gemstones is to collect when the markets are quiet and sell when the markets are hot. You can collect gems by allocating a certain percentage of your assets on a monthly or yearly basis. Gemstones may represent an ideal store-of-value if inflation accelerates.

Gems are Supremely Portable, Easily Concealed and Stored
Gemstones are the most concentrated form of wealth known to man. A gem worth $100,000 fits in the palm of your hand, yet weighs less than a penny! One ounce of the fine unheated Mogok Burma rubies could be worth over $60 million at current price levels. These facts make gemstones the ultimate crisis hedge. If you need a private, portable, non-detectable asset, gems are an excellent vehicle.

Gems are Anonymous and Private
Currently, gemstone and diamond transactions are not individually reported to governmental agencies. You can store your gems secretly in a bank vault or other secure location. This constitutes the extent of your maintenance. With gemstones, there is a confidentiality of ownership. However, we do recommend consulting a professional tax advisor for your personal reporting requirements.

Gemstone Reality

What makes National Gemstone different from most jewelers and gem dealers is that we specialize in the top 2% of the world's gem production. Although that makes our job considerably more difficult when buying, it also makes it much more interesting! In order to put this in perspective, please view the accompanying chart. Approximately 80% of all gems are low quality and usually sold on shopping networks and in retail jewelry store chains. Another 18% are found in fine jewelry stores. Only National Gemstone, a few gem dealers and a handful of jewelers search for and sell the top 2%. How do we prove this? We submit our gems to the world's foremost gemstone grading laboratories (American Gemological Laboratories and Gemological Institute of America) for independent verification of quality. If you want to collect world class gemstones or procure the highest quality gemstones for your jewelry, feel free to call National Gemstone at 1-800-458-6453 or email NGC, Attn: R. Genis


Why You Can Buy Gems At Near Wholesale Prices

The reason gems are typically priced so high to the ultimate consumer from traditional jewelers is, quite simply, the number of middleman hands the gem passes through. From the importer to the wholesaler, to the manufacturer, to the wholesaler jeweler/dealer, to the retail jeweler each individual adds a mark-up to support their business. According to The Dow Jones-Irwin Guide to Fine Gems and Jewelry by David Marcum, the average mark-up from wholesale to retail in a typical jewelry store for a $5000 piece of fine diamond and colored stone jewelry is 100-160%. In other words, a typical jeweler will buy (at wholesale) a diamond or colored stone for $5000, and sell it for $10,000-$13,000. As a result of buying through this traditional system, you can end up paying a considerable amount for gems and jewelry.

National Gemstone is unique in that we generally purchase colored gems directly from the source countries. Since National Gemstone buys from overseas sources, we can market gems at near-wholesale prices. It is that simple. By cutting out the numerous middlemen in the traditional marketing system, you can save money. In the case of diamonds, NGC adds only a very small mark-up from true wholesale. If price and quality are important to you, National Gemstone is positioned to serve your fine gemstone needs.

The Most Widely Traded Gemstones

Diamonds - White And Colored (Hardness: 10)

Originally derived from the Greek, "adamas", the name implies extreme hardness. Although diamonds are only carbon, they are the hardest substance mankind has ever discovered. Historically, diamonds have been purchased as symbols of love and trust; today many individuals utilize them as the ultimate form of concentrated wealth.

National Gemstone specializes in colored diamonds. These diamonds are extremely rare; it is estimated there are no more than 4000 carats of colored diamonds for sale at any given time vs. multi-millions of carats of white diamonds. Therefore, these diamonds are less susceptible to downward price movements. These richly hued diamonds, called fancies, are available from NGC in blue, pink, green, orange, yellow and champagne. Fancy diamonds are the ultimate connoisseur gemstones.


Emerald (Hardness: 7.5)

Since 2500 B. C., emerald was mined in Upper Egypt. The Cleopatra mines were "lost" for a millennium, only to be rediscovered in 1818 by a French scientist. In the early 13th century, Chibcha Indians mined emeralds in what is now known as Colombia. Other Indian cultures such as the Incas, Toltecs, Aztecs, and Mayans sent emissaries to barter for emerald. Early in the 16th century, the Spanish Conquistadors invaded South America searching for wealth. Although the Indians offered their emeralds and gold jewelry as gifts to the Spanish, they were tortured to reveal the source of the gems. The Indians never told the Spanish. According to historians, a Spanish settler rode into Muzo, Colombia with a horse that was lame. Upon checking the animal, he found an emerald embedded in its hoof. Everyone in the village retraced the animal's trail and discovered the now famous Muzo Mine.

Over the years, many corporations, government agencies, and individuals have sporadically worked the mines. Each attempt has had its share of corruption, thievery, and killings. Colombians refer to it as "emerald fever". In 1972, as the result of 900 deaths in the region, the Colombian government closed down the mines. Today, the emerald mines are leased to private businessmen. However, as long as "green fire" can be mined, murder and general depravity will surely be linked to the production of emerald.

The most prized emeralds are mined in Colombia, South America. Recently, new deposits of emeralds have been found in Zambia and Zimbabwe in East Africa. However, they are not as accepted as the Colombian gems, and tend to sell for a 50% discount to the Colombian gems.


Ruby (Hardness: 9)

Ruby is probably the most well-known colored stone. The Hindus call ruby "The Lord Of Gems". Chromium creates the beautiful red in ruby. The supply of these gems is severely restricted due to the political instability of the source countries in Southeast Asia. Further, mining methods are so primitive that pouring water on a hillside or sifting gravel in a stream represent state-of-the-art extraction. The two main sources of ruby are Burma and Thailand. The problem with Burma production in the "Golden Triangle", is that the region is extremely volatile. Ethnic tribes, such as the Shans and the Karens, have been fighting the Burmese Central Government since 1949. (Presently, there is a full scale civil war between the Karens and the Burmese Government.) The rarest rubies are mined in Mogok, Burma. In 1992, a new mine was discovered at Mong Hsu (pronounced Mine Shu). The problem with Mong Hsu ruby is 99% of the material is heated/fracture filled. Most Burma rubies sold in jewelry stores are treated Mong Hsu stones. Besides the Burma production, NGC also trades in Thailand rubies. They tend to sell at approximately 1/2 the price of Burma goods. Most collectors specialize in unheated Mogok Burma ruby.


Sapphire (Hardness:9)

Both ruby and sapphire belong to the same gemological family, corundum. However, titanium creates the blue in sapphire. The leading sources of blue sapphire are Australia, Madagascar, Thailand, Sri Lanka (Ceylon), Burma and the Kashmir mines in India. Kashmir sapphires are considered the ultimate sapphire. They are rich, velvety, and serenely soft. Originally discovered in 1882, the stones were so plentiful the locals would use them as flint stones. By 1925, the mines were nearly depleted.

Burma sapphires are also extremely desirable. However, Burma sapphire possesses the same supply problems as does Burma ruby, since the two are mined together. Burma sapphires are a rich electric blue color. Sri Lankan sapphires are relatively affordable, with the exception of a few fine stones. Stick with the top colors, or purchase gems that are not heated.


Spinel (Hardness: 8)

Many large red gems in royal vaults turned out to be spinels, not rubies as previously believed. As a matter of fact, the Black Prince Ruby and the Timur Ruby in the British State Crown Jewels, are spinels. Today, the finest spinels are found in the Mogok area of Burma before being smuggled out of Asia. There is some new East African and Vietnamese spinel, however, we do not recommend collecting these stones, except the finest specimens, because their colors tend to be pastel. Fine spinels are at least 200 times rarer than rubies, possess more "fire" (dispersion), and are available for 25% of the per carat price of Thai rubies. Spinel is not altered by heat or irradiation. The amount of fine spinel in today's market is severely limited. National Gemstone recommends gem reds, hot pinks, and flame oranges. Occasionally, NGC finds an amethyst, blue, or color change (blue to purple) spinel.


Tsavorite (Hardness: 7.5)

This beautiful green garnet was discovered in 1968 in the Tsavo National Game Park in Kenya. When discovered, miners thought they had discovered a new source for demantoid garnet. Demantoid is the only other green garnet (once mined in Russia) and now trades from $10,000 per carat and up. Many experts believe tsavorite will be the next demantoid, extinct and ultra-rare. Many tsavorite aficionados believe if tsavorite had been discovered before emerald, emerald would be called tsavorite, and tsavorite called emerald.

High quality tsavorite is 200 times rarer than emerald, is cleaner, more brilliant, is not altered with with oil or heat. Plus, tsavorite is available for 1/4 of the price of emerald. Today there are small mines operating in Kenya and Tanzania. Any stone above three carats is considered large. Sporadic production probably means higher prices.


Fancy Sapphire (Hardness: 9)

Most people tend to think of sapphires as being only blue. Actually, sapphires are discovered in a wide array of colors. The most sought-after fancy color is the padparadscha, which means "lotus flower". It is orangey-pink-salmon. The second most desirable color is electric pink. These stones are extremely vibrant and are often mistaken for, or sold incorrectly as, Burma ruby. Many speculators buy and sell violet, orange, golden, white and yellow sapphires. They feel that once these gems receive more exposure, they will become a favorite among connoisseurs. The main source of fancy colored sapphires is Southeast Asia.


Mandarin Orange Garnet (Hardness: 7.0)

In 1993, a new variety of spessartine garnet was discovered in Namibia, Africa. Mining is accomplished in a remote desert location under extremely difficult conditions. Most of the production is below one carat, although larger gems are occasionally found. Mandarins should possess a vibrant, electric orange color and be eye clean. This gem is one of the hottest new collector gemstones on the market. You can purchase one to three carat gems for $250-$750 per carat. These gems are not heated, oiled, or treated in any way.


Collector Gems

Other gems NGC trades in include: alexandrite, cat's-eye chrysoberyl, Burma star ruby, Burma star sapphire, demantoid garnet, grape and color-change garnets, Nigerian orange garnets and tourmalines, and red beryls. Call NGC or see How To Collect Gems for Fun and Profit and The Gemstone Forecaster for more specific information on these gems.

Corporate Services

The Gemstone Forecaster Newsletter
To keep you apprised of current market trends and profit opportunities, National Gemstone publishes a comprehensive newsletter. It is published four times per year. It includes informative articles, price charts, technical and fundamental analysis, topical interviews with industry leaders and specific portfolio recommendations.

Auction Representation
National Gemstone will represent you at major auctions if you are unable to attend, or if you need specific gemological or market value expertise. Contact National Gemstone for more information.

Overseas Representation
If you are searching for a major gem(s) that National Gemstone does not have in its inventory, or is not available in the US markets, National Gemstone will travel overseas to represent your interests. Contact us for more information.

Market Information
National Gemstone maintains constant communications with our clients to provide changing trend information, market updates and other pertinent data. Our international contacts monitor all important market centers which may affect your gemstone portfolio.

Portfolio Design
National Gemstone is qualified to assist you in the planning of your gemstone portfolio. NGC will assist you in placing the proper gem to meet the goals of your total portfolio.

Quality Control
National Gemstone is equipped with a state-of-the-art gemological laboratory. An experienced gemologist checks and rechecks each stone before it is shipped to ensure authenticity and quality control.

Eleven Guidelines To Buying Gems

  1. Learn to love gems for their beauty, portability, and privacy.
  2. Align yourself with a knowledgeable expert.
  3. Gemstones are primarily suited for the sophisticated individual with a substantial portfolio. Place no more than 10%-15% of your portfolio in gems. A beginning portfolio may cost you $10,000 (one or two gems). A well-diversified portfolio will run between $25,000-$100,000, or higher.
  4. Do not buy a colored stone without an American Gemological Laboratory (AGL) Colored Stone Grading Report. Not all colored gemstone laboratories are equal. Beware of most grading reports other than the AGL.
  5. Do not buy a diamond without a Gemological Institute of America (GIA) Diamond Grading Report.
  6. Be sure you are buying at near-wholesale prices. Subscribe to The Gemstone Forecaster and other publications.
  7. Beware of internet auction sites. Remember, if it sounds too good to be true, it usually is. Many dealers make false claims. What do you expect from stones for a few dollars per carat?
  8. View your gem portfolio as a long-term hedge. Allow time to liquidate. Gems are similar to real estate, rather than precious metals. Proper portfolio planning can alleviate this potential problem. Gems are instantly liquid, but at a discount.
  9. Buy the best you can afford. In up markets, "the best appreciates the fastest".
  10. Beware of boiler room gem scams. Watch out for Canadian firms with fake "look-alike" certificates and bogus price lists. Do not buy gems that are sealed in plastic or lucite boxes.
  11. Specialize in no heat, no clarity enhancement and no enhancement gemstones. It doesn't take a rocket scientist to figure out these stones are rare. Probably 99% of all emeralds are treated and 95% of all ruby and sapphire. You can choose spinel and garnets because they are not normally treated. These goods are the ultimate hedge because people will want them even in a bad market.

Payment, Delivery and Taxes

National Gemstone accepts cashiers' checks, money orders, money fund checks, personal checks, and bank wires in payment for gemstones. Delivery of your gems depends on the length of time it takes payment to clear normal banking channels. In order to speed the delivery process, we encourage the use of bank wires. We do not accept credit card, Paypal or fax orders.

All gemstones purchased from NGC will be sent to you, at our expense, via insured UPS or Federal Express. Conversely, please return gems via the same method. If you live in a large city, we can arrange Brink's deliveries for important gems. Contact National Gemstone for a quote on the extra fees involved with Brink's.

If you purchase your gems from outside Arizona, no Arizona sales tax is assessed. However, if you are an Arizona resident, you must pay Arizona sales tax.

Guarantee

If, for any reason, you are not 100% satisfied with your gem purchase upon receipt, National Gemstone will allow seven days, from the day you receive the gem, in which you may contact National Gemstone offices for a complete refund. As a general rule, if we UPS overnight to you, you should return the stone and grading report in the same manner. You pay for the return shipping back to National Gemstone. Upon receipt of the gem and grading report being returned to National Gemstone, we will return the funds in the exact manner. If you wired funds to National Gemstone, we will immediately wire back to you. If you sent a personal check, we will immediately return a company check. In the 30 years we have been in business, we have never had one complaint lodged against the company. We take our reputation seriously.

Disclaimer

The information provided here has been derived from research and sources believed to be reliable. However, no guarantee is expressed or implied as to their validity. Opinions included herein are subject to change without notice. Potential collectors should understand past performance is not a guarantee of future performance. This is not intended as an offer or solicitation with respect to the purchase or sale of any security, nor is it intended to be investment advice.


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