THE GEMSTONE FORECASTER VOL. 13, NO.4 - PART ONE

TABLE OF CONTENTS PART ONE
SAPPHIRES: THE PRINCE OF GEMS
by Robert Genis

History
The English word sapphire comes from saphirus in Latin, safir in Arabic, sappheiros in Greek, and sauriatna in Sanskrit. All of these words mean blue. Many people believe that all sapphires are only blue. Of course this is not true. Sapphire comes in pink, yellow, orange, green, gray, white, peach, teal, lavender, and even color change as well as numerous combinations. Of course, if a sapphire is red, it is a ruby.

Before gemology became a science, stones were grouped according to color. For example, all red stones (ruby, spinel, and garnet) were called carbuncles, which meant, "the color of glowing embers." Likewise, most of the blue sapphires in the Bible and old writings were not sapphires at all, but rather lapis lazuli, which was a common gem in Afghanistan.

In 1802, France's Count de Bouron discovered that sapphire and ruby were different colors of aluminum oxide of corundum. He utilized specific gravity, hardness, and chemical analysis. His findings shocked the gem world.

Gemology
The majority of atoms in sapphire are aluminum and oxygen or iron atoms. One or two titanium atoms is all that is needed to create the blue color in sapphire. When a crystal has both titanium and iron, only then does it create the beautiful blue of sapphire. Ruby and sapphire are both ultra hard at 9 on the Mohs scale. Sapphires have a relatively high refractive index, which provides sparkle and brilliance. Due to sapphires cleavage they resist breakage.

Gem Island
In 850 A. D., an Arab writer wrote, "In the mountains there precious stones are found of various colors, red, green and yellow, most of which are washed from caverns or crevices by rains and torrents." Of course, he was writing about Sri Lanka. Before being renamed after independence from the British, the island was known as Ceylon. Many gem dealers still use this name. Before that, the island was known as Serendip. The geological reason for all the gems in Sri Lanka is the central mountains of the island. They reach a mile and a half high. Over time, when it rains, gemstones wash in all directions towards the sea. Today, all mining is done by hand, which is the law so that the government can extend the life of the mines. Sapphires are most commonly found in rice fields near streams in low, flat lands.

Burma
Burma is undoubtedly one of the most well known gem names in the world. Dealers and collectors both love Burma sapphire. The Mogok mines of Burma have been mined for probably 1,000 years. Burma ruby, sapphire, and spinel are the world standard. All stones originally mined in Burma were decreed to belong to the King of Burma. Along with Sri Lanka, during the Middle Ages, Burma started selling its ruby, sapphire, and spinel to India. Buyers noticed a difference even back then. According to ancient writings, the Sri Lankan sapphire was larger and lighter. The Burma sapphires were described as "possessing a steel blue fire." In 1865, the British took over Burma. The recent military government has taken over Burma, and renamed it Myanmar. Today, Burma sapphire occupies an exalted, almost mythical place in the gem world. As a general rule, you are looking for a milk-of-magnesia electric blue. Fine Burma sapphire presently trades for a 100% premium over sapphires from other locales. Add another 30% for no heat. Burma sapphire is calculated to be 100x rarer than Burma ruby, and is available for 1/4 of the price. Burma sapphire has almost perfect color, extreme rarity, and an inconsistent supply. Most of the miners who were working Mogok have left and are now working the new Mong Hsu ruby mine. Many collectors contend that Burmas will eventually reach price parity with the Kashmir gems, and are buying whatever is available.

Kashmir
Today, Kashmir sapphires remain at the top of the gemstone hierarchy. The blue they possess is 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. Kashmir is a mountainous region in northern India. Due to its beauty and towering mountain ranges, it is often called the "Switzerland of India". Much of the minor production today is smuggled out. The region is so inaccessible that it can only be reached by foot or mule. Mining is sporadic and only attempted for a few weeks in the summer. In the winter, temperatures can fall below -45 degrees F, and blizzards can last for weeks. These stones are so rare, only a few may be available at any one time. Today, you can easily spend $5000-$10,000 for a carat size gem, $10,000-$15,000 for a two carater. Larger stones can go up to $50,000-$60,000 per carat. Kashmirs are known for their soft blues. This is due to the presence of rutile needles. Kashmir sapphires trade for 100% premium over sapphires from other locales. Add another 30% for no heat. Any Kashmir sapphire should come with an AGL or Gubelin certificate stating the country of origin and heat treatment.

Fancy Sapphire
Although most people tend to think as sapphire as being blue, actually sapphire comes in a wide variety of colors. They range in hues from orangy-pink-salmon, pink, orange, golden, purple, yellow, color change, green, and white . The major source for these gems are Sri Lanka, Thailand, and Burma, Australia, East Africa, and even Montana in the United States.

The rarest and most valuable collector fancy sapphire is the padparadscha,which is Sinhalese for "lotus flower". This gem is occasionally found in Sri Lanka. The color can best be described as a light pink-orange. A gem padparadscha will range between $5000-$10,000 per carat. Large padparadschas can exceed these prices. Some unscrupulous dealers have been selling some of the new African fancy sapphires as padparadscha. However, these stones have too much orange-brown to be properly labeled as padparadscha.

The second most valuable sapphire is the electric pink. The best of these stones have a pure vibrant color without violet or purple. What makes these stones exceptional is an electric intensity and a tone that pushes it way above a pastel color. Although technically classified as pink sapphires in America, some cultures, such as the Japanese and certain European countries, buy and sell these stones as "Burma rubies". This makes it very difficult for US collectors. The main sources of these gems are Burma and Sri Lanka. Commercial quality pinks sell from $500-$1500 per carat. Gem pinks sell from $1500-$3000 per carat. Large multi-carat sized pinks can exceed $4000 per carat.

Yellow and golden sapphires are an interesting gem to collect for collectors on a moderate budget. These stones should look like a canary diamond; bright, vibrant goldens and electric orangy yellows. They should not look pastel. You should not have to use your imagination to see the yellow, even though the unheated yellows tend to be lighter in color and tone. Sometimes collectors may find a non-heated stone from Africa or Srl Lanka. These gems are relatively unknown by "the public". Many collectors believe that once they receive more exposure, they will be a favorite among connoisseurs. Yellow sapphire is available for $350-$600 per carat in two to five carat ranges. Ten carat sized stones can reach $850 per carat. Goldens are available for $450-$700 per carat for two to five carat sized gems. Large goldens can reach $1000 per carat for ten carat sizes.

Sapphires are also discovered purple. Some exceptional purples are found in Africa. They are often described as intense cherry-orchid purple. Exceptional one carat purples range from $375-$475 per carat. Two to five carats can reach $750-$1000 per carat.

For the collector who cannot afford an alexandrite, Africa also mines a color change sapphire. They tend to go from a grayish blue in daylight to a cranberry red in incandescent light. These stones are hot collector items.

Finally, green sapphire is a relatively abundant stone. They usually have black or gray secondary colors and sell below $50 per carat.

Blue Color Saturation Caveat
In a nutshell, the higher percentage of blue in a blue sapphire, the more valuable the stone. Color purity and saturation are the keys to value. Often you hear, "the darker the color the better". This is wrong. The dealers in Thailand have so much low grade Australian blue material, that they figured the only way to sell these goods was to repeat this lie. Inky black sapphires are a curse, and are not worth more than $10-20 per carat. Sapphires should be a rich, pure blue, not black/blue.

Heating
Approximately 90-95% of all sapphire is heated. Gems have been heated for over 4000 years. Indian gem dealers discovered gems improved with fire. The old method, which is still used today, involves putting rough or finished gems in a crucible. This process involves no science, gauges, meters, timing, or control. Basically, the stones are put inside a steel drum. The drum is open at the top. Fire bricks line the bottom of the tank, leaving a circular opening from top to bottom. The fire is ignited with kindling and charcoal, then the crucible is inserted. The stones are cooked overnight. Other cookers utilize electronic furnaces and computers. They use chemistry, engineering, physics, and magic. They bathe the gems in oxygen, hydrogen, and cycle the gems with precise digital increments. Every cooker has his own theories and secrets. By using this alchemy, they make brownish sapphires blue and black sapphires blue.

One thing to remember is that heating sapphire is a permanent process. Sapphires have all the right internal chemistry inherent in the crystals. They just were not in the earth's surface long enough, or were not located in exactly the right hot spot of the earth's crust to arrange the atoms properly. Heating only rearranges the atoms, it does not add or subtract atoms. Some yellow, golden, and orange sapphires are irradiated. This is not acceptable. The simple way to detect this is what is called a fade test. Simply place your stone in the sun for a few days. If it fades, it is irradiated.

Conclusion
Every serious collector should own at least one blue sapphire. Many start with Sri Lankan gems and work their way up to Burmas and Kashmirs. Sapphires are inexpensive compared to diamonds, rubies, and emeralds. A one carat D-IF diamond can sell for $15,000 per carat. A 3.5 unheated Burma Mogok ruby can sell for $20,000 per carat or more. A 3.5 Colombian emerald can also exceed $20,000 per carat. Fine one carat Sri Lankan sapphires, as a general guideline, can range from $2000-$4000 per carat. Similar Burmas can range from $3000-$6000 per carat. Kashmirs can easily sell for $5000 to $10,000 per carat. Are sapphires expensive? Yes, but compared to the BIG THREE, they are rarer and a bargain. If you are on a budget, you can also collect fancy sapphires. The range of prices and available colors meet most budgets.

Unlike cars that rust, furs that deteriorate, and buildings that crumble, gem crystals are permanent and will be here after the sun burns out. Never forget what a famous gem dealer once said, "We only borrow these beautiful things. Crystals last forever...and pass from one life to another."

INTERNATIONAL MARKET UPDATES
DIAMONDS

Shortages & Price Increases
There remains a tremendous shortage of 3/4 to 2 carat GIA graded diamonds. Buyers are looking for diamonds without any cut problems. The primary shortage is in E-J color and VS1-SI2 clarity. Diamond dealers are having trouble finding any stones to quote to customers. Prices are firm for 1.25-1.75 fancy cut diamonds, especially marquise cuts.

DeBeers announced a 5% diamond price increase for large, high quality diamonds. DeBeers said it was responding to increased demand for diamonds in North America, Europe, and Japan. Dealers suspect the move was partially done to satisfy the Russians, who want to sell their diamonds independently. DeBeers is trying to renew its five year pact with Russia.

Production
Diamond production rose from 100.8 million carts in 1993 to 107.5 million carats in 1994. Australia led the production with 43.8 million carats. Of course, Australia primarily produces low quality melee (small stones). Just about every diamond producer increased production except Russia, which stayed the same. Russia is still second in production with 25% of the world diamond market.

Argyle Pinks
Argyle Diamonds of Australia sold this year's entire production of 45 carats of pink diamonds for $4.15 million. Buyers from the Far East, Japan, and Europe purchased the majority of the collection. The most sought after stones had grading reports designating them as fancy intense purplish-pink. The main diamonds of the collection were a 2.8 emerald cut and a 1.05 round.

THAILAND

Ruby And Sapphire
The market is slow and brokers are complaining. Japanese buyers are no longer coming to Bangkok. However, prices are up 10% for fine ruby and sapphire. Commercial quality gems are the same. Exports of colored stones have plunged 22% for the first four months of 1995. Low end manufacturing has moved to India and Sri Lanka. A new 7% VAT which is levied every time a gem changes hands is depressing the industry. A thousand Thai workers have been laid off.

SRI LANKA

Availability of Ceylon sapphire is down tremendously. Yellow sapphire is up 40% due to a new heating process. The cookers have figured a way to take the unheated yellows and turn them into golden/oranges. Once heated, the stones are sold wholesale in the Far East for $600 per carat. Fine pink sapphire and blue sapphire is scarce. Dealers are traveling to Japan, US, and Europe to market these goods at higher prices.

Civil War
In October, Tamil guerrillas killed 19 Sinhalese civilians. According to witnesses, "The villagers were killed like dogs with machetes." In November, thousands of soldiers recaptured Jaffna city, the rebel stronghold, for the first time in five years. The Sinhalese are the majority of the nation with 17 million. The minority Tamils are trying to create a homeland in the north, saying it will end discrimination against them. Since 1983, 36,000 people have been killed in the conflict.

AFRICA

Tanzanite
Tanzanite from 1-4 carats are difficult to locate and demand is strong. Mining production remains slow, and prices are up from 25-40%.

New Find
A new find near Mozambique on the Ruvuma river has produced chrysoberyl, sapphire, alexandrite, colorless topaz, light colored spinel, occasionally ruby, and even diamond. Some experts predict this is the find of the decade. Reports claim 25 carat chrysoberyl cat's-eyes, and 8 carat alexandrites have been discovered. Production is in its infancy in the mining of the Mozambique belt. Geologists are looking for the hard rock source. Mining today is alluvial. The availability of these gems could increase if the source is discovered. Nine major foreign companies control the mining rights in the region.

Orange Mandarin Garnet
National Gemstone has been overwhelmed with the response to our last Gemstone Forecaster (Volume 13, #3), regarding the new mandarin orange garnet. For those of you who want the stone, please remember we are trying to buy more stones. We have heard excuses that the production is nonexistent in carat plus sizes, that we are in the rainy season, and that the political situation is deteriorating in Namibia. Whatever the reason, please be patient while we attempt to procure more gems. Please e-mail, write, or call us at 1-800-458-6453 to get on our waiting list.

JAPAN

The Japanese purchase $23.5 billion worth of gems and jewelry each year. Japanese women own an average of 14 pieces of fine jewelry. Further, 76% of marrying couples have diamonds with an average weight of .45 and costing $4470. The average Japanese consumer spends $5900 per year on jewelry. According to a Wall Street Journal survey, 87% of Japanese do not expect the economy to improve in the coming year. Jewelry consumption is slowing down, with imports dipping 1.7 % for 1995.

BURMA

Ruby, Sapphire and Spinel
Two carat Mong Hsu ruby is getting hard to find. Experts seem to agree the mine will be depleted in two years. Mogok Burma ruby and blue sapphire are impossible to locate. The available Burma spinel is priced so high US dealers cannot buy the stones and resell them in the US, or the stones are so included they are not acceptable to US collectors. At Sotheby's in Geneva, a 27.37 Burma ruby sold for $4 million, or over $146,000 per carat. This was the highest price ever paid for a ruby at auction.

Visit Myanmar Year - 1996
According to SLORC, the military government that controls Burma, 100,000 tourists visited Burma between April 1, 1994 and March 31, 1995. In fiscal 1995, tourism earned SLORC $30 million, making it the largest source of foreign exchange. Recognizing the potential, SLORC has proclaimed October 1, 1996 to September 30, 1997, "Visit Myanmar Year". The target is to attract 500,000 tourists. Why SLORC will not reach its target:

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