Vol. 21, No. 1
Spring, 2003

TABLE OF CONTENTS

Beryllium  Diffused Treatment Issue
by Robert Genis
Every year one controversial issue seems to dominate the discussions and seminars at the Tucson Gem Shows.  This year it was the beryllium diffused treatment issue.  The laboratories argued about how to define and detect the treatment. Dealers and gem trade organizations argued about how to detect, price and disclose the material.

The Scoop.

When large quantities of low quality corundums were recently found in Madagascar, treating these stones became a high priority.  No matter what the Thai treaters did, the results were not impressive.  A Thai treater finally turned some corundum into beautiful intense oranges, yellows and padparadscha colors. Regretfully, many of these first new stones were sold by Thai dealers and were graded as simply "heated" by Japanese laboratories and sold to Japanese consumers.  Eventually, the trade became aware of the new treatment.  When the original treater removed the ceramic tiles in his oven and cooked a new batch of corundum, he could not reproduce the results!  He went back to examine the old ceramics from his furnace and discovered a small piece of chrysoberyl was stuck in the hot-face.  Of course, the logical conclusion was  the chrysoberyl was the cause for the color altering treatment.  Now the treaters started cooking everything they could find with beryllium.  The process finally expanded to crushing natural chrysoberyl crystals into powder with heat.

Treated Goods

Madagascar sapphires are dramatically improved with this new treatment. Madagascar green-yellow sapphires turned into intense oranges and  Madagascar pinks turned into oranges and colors similar to padparadscha. The most dramatic improvement is with the Songea (Tanzania) ruby. What starts out looking like bad garnet is being treated into vibrant gem red orange stones.  Tanzanian sapphires also turn into vibrant orange, yellow and purple colors.  Sapphires from Sri Lanka produce an almost unreal electric orange color and all Sri Lankan stones are expected to respond favorably to this new treatments.  The treatment also works well with Vietnam pink sapphire and ruby.  However, the treatment does not always work. Improvement in Madagascar rubies is presently inconclusive and the treatment does not improve Mong Hsu ruby. 

Detection
Standard gemological tests will not detect this new treatment.  It is the analysis of inclusions that give clues about the treatment.

Caveat Emptor.
If you plan on spending any money on any corundum, you had better trust your dealer, or have the stone independently graded by a major laboratory.  If you have bought any important corundum in the past two years and fear the worst, I recommend you submit the stone to the AGL or GIA immediately for a grading report.  Watch out for these stones at internet auction sites and even from your local jeweler. This treatment will not hurt the natural untreated gemstone market.  If anything it proves how rare and valuable are the non treated goods.  The more the treaters mess with the gemstones, the more valuable untreated or unenhanced stones will become.

 
How to Evaluate a Colored Gemstone
I have noticed some confusion lately in the collector gemstone market. Certain collectors are misplacing their priorities in purchasing gemstones with AGL documents.  Perhaps  a review of the basics is in order.

Country of Origin
First, the market has already decided gem quality Kashmir sapphires sell for a premium to gem quality Burma sapphire and gem quality Burma sapphires sell for a premium to any other sapphire source.  Also, gem quality "Classic Mogok" Burma rubies sell for a premium to gem quality ruby from any other source.  That does not mean that all Burmas and Kashmirs are better than all other stones.  This is simply not true.  The gem world if full of bad stones from Burma and Kashmir.  However, by obtaining an AGL Colored Stone Grading report, stones are graded in a linear manner that allows you to compare the stones to all the other gemstones in the market.

Treatment vs. Non-Treatment
Secondly, the market has decided that unheated gemstones are worth more on a per carat basis than heated gemstones.  Also, untreated emeralds are worth more than treated emeralds.  Although we can argue about the premiums and discounts for the treated stones vs. untreated gemstones, the untreated stones are deemed more valuable. This reality is reasonable and logical.

Gemstone Color
How much is the value of color in colored gemstones?  Again we can argue about the percentages, but the color of a gemstone is worth at least half of the total value of the stone.  Many dealers place a higher percentage on color than 50%.  It is irrelevant if we are talking about the AGL color/tone combination or other systems that define color with hue, tone, and saturation.  The bottom line is color is the most important aspect of a colored gemstone or colored diamond.  After all, we are buying colored stones and colored diamonds.

Gemstone Clarity
Clarity is also an important function of price in a colored gemstone.  The average value given to clarity is approximately 20%-30%.  Of course, the cleaner the stone the better.  Perhaps the only exceptions are inclusions that prove something.  Examples are the horse-tail inclusions of  a demantoid garnet or rutile silk or calcite in Burma goods.  These are not necessarily bad because they can definitively prove no treatment and/or country of origin.  You shouldn't be as critical of colored gemstone inclusions as you might be in selecting a white diamond.  This is also true in colored diamonds.

Gemstone Cutting and Finish
Cutting and finish are the last major category regarding the value of colored gemstones.  Most dealers give this between 10%-20% of the value of the stone.  This includes the gem's proportion, depth, brilliancy and finish.

AGL Comments

I think many are missing the most important factors in searching for collector gemstones by putting too much emphasis on the comments. This is turning the intent of the AGL document upside down.  I am not saying the comment section is not important.  The comment section is vital for country of origin, treatment and Total Quality Integration Rating (TQIR) information.  Remember, the TQIR is the lab's overall grade of a gemstone and any problems would show up in this grade.  See AGL Colored Gemstone Grading Report.
The problem is some collectors are placing way too much emphasis on the other comments, especially dichroic effect and texture.  Texture is the haziness that interferes with the passage of light in a gemstone. If the texture is obvious, the AGL will factor this into a gem's clarity grade.  Often the texture comments relate to the silk of an unheated sapphire or ruby.  Texture is often seen as giving Kashmir sapphires a velvety appearance. 

A gems dichroism is the phenomenon where you can see two colors emanating from the same place at the same time on a gemstone.  This is common and may minutely effect the color value of a gemstone.  For example, in a ruby you may see both red and pink or red and orange colors at the same time.
What I want to emphasize is dichroism and texture have little significance in the overall value of a gemstone, unless the texture comments or dichroism comments are prominent.  In the worst case scenario, a prominent  dichroic effect and prominent texture may effect the total value of the stone 5%!  Since this is true, do not allow yourself to be swayed on these relatively insignificant issues. Instead focus on what is truly important besides the country of origin and treatment issues-the color/tone clarity and cutting of a gemstone.

Summary
Collectors come in many shapes and sizes with different likes and dislikes.  Some emphasize size only or the bigger the better.  Others focus on color and tone or specific color scans.  Some are "right side of the cert" collectors.  They emphasize the clarity, cutting, depth, brilliancy percentages and finish of the stone irrespective of the color and tone.  No one knows what is right and what is wrong.  Collect whatever you like, you are collecting because some aspect of a stone is important to you.  However, if you are solely basing your decisions by deciphering the meaning of texture and dichroic comments in your trading equations, you are missing the forest for the trees.  Have some fun!

 

Tucson 03 Gem Show Report

The 30 individual shows that make up the Tucson gem shows started on January 30 and the retail Tucson Gem and Mineral Show finished on February 16.  More than 4000 exhibitors from all over the US and the world displayed in the community center, hotels, motels,  tents, warehouses and along the I-10 freeway to show their goods.  Approximately 35,000-40,000 buyers were anticipated but attendance was down based upon the ease of finding parking spaces.  You can buy fine gemstones and diamonds, mineral specimens, crystals, fossils, carvings, dinosaur bones and even clothing. Of course, you can also attend lectures, symposiums and seminars on a myriad of gemological topics.

New Show
The new Centurion Jewelry Show opened at the exclusive Westin La Paloma Resort and Spa from February 2-6.  The exhibitors were 100 top jewelry designers.  Approximately 500, by invitation only, prequalified retail jewelry buyers paid their own airfare to get to Tucson. The show paid for their rooms, food, and entertainment.  Booths cost the exhibitors slightly less than $20,000.  Reports indicate the show was successful.

Tucson Gem and Mineral Show
Many in the business stay to attend this retail show.  Business was brisk and well attended. The top exhibit was the various displays by Michael Scott, the ex-president of Apple Computer.  He is the premier collector of gemstones, crystals and specimens.  Also, The American Gemological Laboratories (AGL)  showed a fascinating display of beryl.

The Big Three
The big three remain the AGTA, the GJX, and the GLDA shows.  On the opening day, February 10,  the AGTA was packed.  Many booths had buyers three rows deep clamoring for goods.  These buyers were seen as the "professionals."  They knew what they wanted and they were going to cherry-pick the best goods the first day.  They were knowledgeable about treatment and country of origin issues.  Many buyers wait all year to obtain goods they cannot get from their regular sources.  Often, they come with "want lists" from their customers and they bought strongly the first day.  The next day, the same buyers descended on the GJX.  The GLDA seems to be  a declining show, with the exception of a few key exhibitors and the Idar-Oberstein section.  After the first opening days, serious buyers declined and so did the traffic.  The "lookers" and "bargain-hunters" predominated the last few days of the show.  The AGTA claimed attendance was up 16%.

Burma Goods
The story remains the same with Burma goods-very little production and strong prices.   Burma is in dire economic straits with inflation spiraling upwards at 50% a year, in tandem with a currency falling in value.  A massive run on Burmese banks in February forced the central bank to restrict money transfers and limit withdrawals from private banks to a paltry $500 per week!  Of course, this brought the gem business to a standstill.  Rampant inflation  appears to be the norm in Burma.  Many necessities of life are becoming almost unattainable for the average Burmese citizen, especially gasoline and rice.  Some Burmese experts predict if the politics get much worse, you may see an uprising against the government.  There appears to be a smoldering discontent in Burma right now.  One can only imagine what a revolution would do to the gem market.  The Burmese currency is a basket case.  The kyat traded for as high as 1500 to 1 US Dollar.  It has now settled around 1000 to 1. The Burmese would rather hold their money in ruby, sapphire and jade than their currency.  Now the list includes spinel, peridot, crystals, and any rough material.  The bottom line is the Burmese people have no confidence in the banking system, the economic system or the government system.  In other words, they would rather hold any tangible real asset over their fluctuating currency. This is the prime reason you are seeing no weakness in Burma goods.

Ruby and Sapphire
Very little unheated Mogok red Burma rubies and blue sapphires were seen at the show or purchased the first day.  Unheated Burma sapphire and ruby remain a hot and in demand gemstone.  Many dealers and jewelers were even asking for unheated Ceylon sapphires.  I saw large quantities of heated, fracture-filled Mong Hsu ruby.  We saw many of the beryllium diffused heat treated ruby.  They were perfect 3.5 color and 75 tone.  The price was around $250 per carat, but they looked like considerably more expensive stones.


Burma Spinel

The supply of moderately included Burmese spinels is ample.  One of the most difficult stones to buy are red and clean Burma spinels. The available stones commanded $1000+ per carat for carat sized stones.  Nanyar spinels are available in a myriad of red-pink to pink colors.  These stones are gorgeous, but they are not red.

Fancy Sapphires
Surprisingly, fancy colored sapphires were  a hot stone at the show. We found this amazing considering the new treatment problems.  Especially hot were yellow and purple sapphires from Sri Lanka and Africa.  Unheated Burma fancy sapphires were few.

Russian Demantoid
Without a doubt, the other hot stone at the show was the new production of Russian demantoid from the Klodovka Mine in the Urals.  More demantoid was available than ever before. Once seen as rare as Kashmir sapphire, now may be the time to buy this beautiful unenhanced green garnet. Who knows how long this production will last or if it is simply a flash in the pan?  Remember, Brazilian alexandrite and Brazilian Paraiba production was short-lived.  This stone may further hurt the emerald market.   Why buy a treated emerald when you can own a rare demantoid garnet that is not enhanced?

Tourmaline
The Brazilian Paraiba tourmaline supply is long gone.  Stones at the show start at $10,000 per carat.  Larger three carat "windex blue"  Paraibas at the show ranged between $15,000-$20,000 per carat.  The gem-quality blue tourmaline from Nigeria increased in price from last year.  This market is primarily dominated by German dealers. This is your only alternative of getting a Paraiba color at a reasonable price.

African Color Change Garnets

These stones with good changes were rare.  Most are too dark or too included.  One dealer showed an 8 carat and was asking about $30,000.
 
Emeralds

The traffic at emerald booths seemed sparse.  A few buyers searching for collectors asked for untreated emeralds.  Prices for untreated and clean Colombian emeralds are astronomical.

Tanzanite
The supply of Tanzanite is large and prices remain stable.   Demand for tanzanite remains strong and this stone has recovered from the terrorism links of last year.  Tanzanite is a big seller on tv shopping channels and in retail jewelry stores. We also saw a significant amount of chrome green tanzanite.  We saw one stone about 12 carats that the seller wanted $2000 per carat.

New Finds
A new red beryl find from Madagascar was also shown.  The rough probably can only be can cut into cat's-eyes or cabochons.   Also, from Madagascar was a dark pink morganite that cuts into nice cat's-eyes.

Summary
Tucson is the show practically everyone in the industry attends.  Many exhibitors came to Tucson with little to no expectations. Since many dealers sold merchandise, they were happy at the end of the show.  The gem market is alive despite the economy and the possibility of war/terrorism.

Mandarin Orange Garnet Update

In March of 1994, Alan Roup and his crew were searching for mandarin orange garnets in the hot and dry Namibian desert.  They were finding gemstones of good color but not gem quality.  By May, Roup was getting  nervous and worried.  He had spent three months of his life and a great deal of money setting up the venture and funding the mining operation.  His funds were growing low and depression was beginning to set in.  About May 20, the local "Chief" of the Ovahimba tribe suddenly appeared from nowhere.  He insisted they were mining on his mountain.  He advised Roup, since he did not have his permission to make holes in his mountain, his ancestors would make sure they would fail in their search.  However, if the miners provided alcohol for his tribe, he would speak to his ancestors to help find what they were looking for.  In order to pacify the elderly chief and maintain a good neighbor policy, they found two bottles of wine in the supply hut.  The wine was presented to the "Chief", who immediately started talking to his ancestors. The wine was handed out to his tribe and the drinking began.  The following morning the miners blasted the mountain in a new and untried location.  They rushed to discover the first gem quality mandarins.  There has been a continuous flow of the material ever since.  Coincidence? A deal with dead ancestors of another culture? Who knows for sure?
 
Brief Gemology
Garnet is not really a single mineral, but a group of similar minerals known as the garnet group. All garnets are silicates that differ in chemical compositions, but have similar atomic structures. Garnets are discovered in numerous colors, including green to purple, brown to red, and numerous varieties including color-change.  Spessartine is the species of the mandarin and is an uncommon garnet.  They range from reddish brown to yellow-orange in colors.  Mandarins are 7-7.5 in hardness, with no cleavage.  They  have very good wearability and require little care when mounted.   Spessartite garnets are also mined in Pakistan, Madagascar, Tanzania and California. Finally, these gems are not normally heated or irradiated so you can own this stone without fear of treatments.

Mining
In the early 1990's, two spessartite (also called spessartine) orange garnet mines were discovered in Namibia, Africa.   They produced an orange color unseen until the discovery.   According to Alan Roup, G.E.M. Namibia, Jerusalem, Israel  "The first Namibian mandarin mine, which I started, has been closed down for many years.  I am still mining the second area today.  I have recently formed a joint venture with my mandarin mine and are we prepared to start mining again."

The mining of the mandarin garnet is extremely difficult and is accomplished with hard rock mining.  According to Roup, "We open-cast mine along 900 meters of pegmatite stringer. We work with a dynamite compressor, jackhammers, front-end loader and a Caterpillar excavator.  We have 5 producing areas down to an average depth of 40-50 meters."  This is where the gems are brighter, cleaner, and purer in color. Despite the difficulty, Roup states, "We have a continuous production record of 4-5 kilos per month of cuttable material."

Ideal Mandarins

There is no other orange stone that possesses this  gem's vivid orange color saturation.  Mandarin garnet should have an electric orange color.  This is a true pure orange stone, and can best be described as what every orange diamond wished it looked like.  Mandarins generally do not have noticeable brown. It looks similar to a top quality flame orange Burma spinel, but the tone is lighter. It also looks like a top quality orange sapphire.  As  a general rule, mandarins  tend to have the exact same color/tone combinations.  The only real difference in quality in these gemstones are the amount of inclusions in the stone.  In a nutshell, the stones that are eye clean sell for more than the stones with eye visible inclusions.  Even the top gems have inclusions, but they are very difficult to see with your eyes because the stone is so typically saturated.   

Prices and Sizes

Typically, this gem is is cut to reflect its maximum beauty, rather than its maximum yield.  Any clean mandarin over one carat is rare.  Roup says, "About 65-70% cut to below 1 carat."   The hottest demand is for top gems in the one to two carat ranges, which sell between $250-$520 per carat wholesale.   Mandarins are available in oval, round, heart, octagon, square, pear, trilliant and marquise shapes. Stones over 10 carats are rarer than platinum ski tips.   Roup states, "In all the years we have mined these goods, our largest gems were 15.30, 12.60 and 11.17."  Regarding prices, "Our prices have been stable all along, except that our small sizes have doubled in price."  Since the gem is expensive to mine and cut, look for prices to remain stable or increase.

Marketing
According to Roup. "Our biggest customers are in Japan and the United States." Japanese consumers have historically preferred orange and yellow gems.  Although Americans tend to choose red, blue and green colored gemstones, a certain niche market is developing for different colored gemstones.  Regarding recent business, Roup continues, "We do feel that the last year has been somewhat slower than usual due to the lack of fresh material on the market, but we still maintain ties and receive orders from our old customers who now hope for production during 2003."

Nigerian Orange Garnet Competition
There is a relatively new orange spessartite garnet find from Nigeria, Africa. Although the stones are not as pure orange as the Namibian mandarin orange garnets, they tend to come larger, are cut better, have more brilliancy and are cleaner. However, they tend to have a noticeable brown component.  The Nigerian material is slightly less expensive than the mandarin goods, although the price of the Nigerian material has risen in recent years.
According to Roup, "My stone originally competed with the Nigerian material. It hit the market like a scud missile, caused us damage, and then no more scuds!  All other Spessartite mined, including the new production in  Madagascar and Tanzania, is of lesser saturation and does not compete directly with the Namibian mandarins." 

Summary

There probably will not be enough production to allow this stone to be a jewelry store staple. Presently, it is custom jewelers, manufactures, and dealers who cater to collectors who are buying these stones.  Mandarin orange garnet is one of the hottest stones in the market and there is little downside to owning this beautiful gem.

Price Trends
As you can see in Gemstone Price Charts:1975-2002, we are keeping all of our prices stable.  The supply demand equilibrium presently seems to be in balance.  We see no price weakness in high end goods.  If anything, we see prices slightly rising for unheated and unenhanced goods; however, this is offset by decreasing collector demand. 


On the negative side, retail sales are declining and consumer confidence is at a 10-year low. We may be in for a possible double-dip recession.   It is possible deflation could be  a negative for gemstones.   Further, gemstones are a luxury item, not a necessity.  Many investors portfolios have been ravaged due to the $13 trillion stock market wipeout. People feel poorer than they did a few years ago, even if all their gains were simply on paper.  On the positive side, commodities such as oil, gold, rare coins and real estate are increasing.  Have you seen the commodity index in the Wall Street Journal lately?  The trend of commodities is rising significantly.  Please note, diamonds and gemstones are a lagging indicator.  As a general rule, they will follow other hard assets up in value last.    Conversely, they will fall last in a declining market.


The supply of unheated and unenhanced gems are limited and this market reality helps limit collector quality downside movement in gemstone prices. Inflation is always a positive sign for gemstones-since they are viewed as true wealth.  It makes sense to keep collecting in a quiet market.


 

In The News
Forbes Magazine, February 26,2003
Assets: Gemstones as a safe haven - buyer beware

By Richard Chang
Gemstones are being sought after as safe haven investments as the stock market shows no sign of a sustained rebound.

Demand for diamonds is especially strong ahead of spring, the peak season for engagements and wedding preparations.

But precious gems do not guarantee a return on investment. Dealers certainly don't pay retail to buy from a customer, and making the right purchase is tricky, especially with vendors now selling on the Internet. Synthetic or chemically enhanced stones are offering sparkle and color that can deceive even the most experienced jeweler.

"There's no question right now that the movement is into fine rubies and fine emeralds," said Cap Beesley, president of American Gemological Laboratories, which has been appraising gems for 25 years in New York.

Truly rare stones don't have to be big to have value, he said, citing rubies and sapphires from Burma, and Kashmir sapphires as top choices. While a 17-carat Burma ruby, for instance, would be worth $6.5 million, a 3-carat one would sell for $7,000 to $8,000 per carat.  (This price seems too low to us.  Mr. Chang, please send me all your three carat unheated Burma rubies for this price! ED)

The proliferation of synthetic and cosmetically enhanced stones has bolstered demand for the finest natural gems, called "nones" because they are free of artificial enhancements.

A heat diffusion process widely practiced in Thailand, for example, could turn a dowdy ruby worth $20 per carat into a gem that could sell for $4,000 a carat, Beesley said.
Other cosmetic techniques include radiation, which can turn an off-white diamond into a fancy color such as green or yellow. White opals can be blackened through a chemical reaction; waxing Indian star rubies or sapphires can hide surface cracks and blemishes; and emeralds can be soaked in oil to fill cracks.

The market is also flooded with composite stones called doublets and triplets, depending how many parts are glued together.

These practices are acceptable as long as they are disclosed. However, many buyers are scammed into thinking that such treated gemstones are totally natural. Even retailers may be deceived because diamonds in particular, have become a high-volume commodity business as South Africa-based DeBeers has loosened its monopoly on the industry, with rival suppliers springing up in recent years from Russia, China, Canada, Australia and other parts of Africa...

With colored gems, color is by far the most important criterion. This is broken down into hue, or the precise spectral color (red, orange, yellow, green, blue, violet, indigo); intensity or saturation, defined as the brightness or vividness; tone, or how light or dark the stone is; and distribution of the color.

Both the intensity and tone of color can be significantly affected by the proportioning of the cut.

After a purchase, seek an independent appraisal even if the gem already comes with such a certificate, just to make sure there was no bias toward the seller. Reputable groups include the Gemological Institute of America (http://www.gia.edu/) and American Gemological Laboratories.  Backed by appraisals and money-back guarantees, diamond sales have surged on the Internet in the past few years...
 

The following is for snail mail only:
Write:
NGC
P. O. Box 42468
Tucson, AZ 85733
Call: 1-800-458-6453 or (520)-577-6222

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For comments, questions or price quotes E-mail NGC, Attn: R. Genis

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