VOL. 19, #2, Summer, 2001

New Ruby Finds: Burma, Madagascar, Warning: African Diamond Scam, Collectors Corner, Book Reviews, Gem Quotes, Auction News, In The News

  Jun 24, 2001   admin

TABLE OF CONTENTS

NEW RUBY FINDS
By Robert Genis

BurmaMap3.gifBurma
Rubies from the Kachin State in northern Burma (Myanmar) near Myitkinaare are beginning to appear on the market. This area has been primarily known for its jade mines. The trade, gemstone literature, and Burmese dealers call the area by several names; Naniazeik, Nanyarseik, Nanyazeik or Naniazeit. The gems will probably end up being called Nayar or Nanyar. Why the discrepancy? According to Ted Themelis, author of the new book, Mogok - Valley of Rubies & Sapphires, "It all depends whom you ask. There are more than 130 ethnic groups in Burma having different languages and dialects. This linguistic confusion adds lore and mystery in the Burmese affairs."

Brief History
The tract was first documented in the 1890's. It was estimated the actual area was only 10 square miles and noted that the gem deposit was alluvial. The deposit's rubies, sapphires, and spinels were probably formed eons ago in reactions between hot granite fluids, impure shales, and limestone. Although some further research was done in this area, the deposit was barely even visited during the 20th century. Western gemologists did come to the area in the 1990's, but little production was seen.

Present Mining Situation
For the last few years a few pieces of the new production have been trickling out and making their way on to the Mogok and Rangoon (Yangon) markets. With Mogok production declining, miners and diggers are traveling to the new area to search for gemstones.

Much of the area belongs to the Kachin Independence Army (who have made peace with the central government), and apparently the government is allowing the KIA to retain mining rights in parts of the area. In recent years, it has become government policy to "make peace" with as many ethnic rebels as possible. Many groups in the mining areas, such as the Wa, Kokang, Palaung, and the Shan, used to be soldiers fighting the government. Now they are simply gemstone miners.

The Burmese government has decided to make a thorough study. Presently, they have sent in their staff geologists to study the remainder of the area. The eventual goal is to either open the area to private mining licensees, or the government controlled Union of Myanmar Economic Holdings Limited (UMEHL) will conduct the mining.

"Getting to the area is a real trek," according to a Burmese dealer. "Much of the mining area is difficult to access, being in deep and lush jungles, with all the usual jungle denizens in abundance (poisonous snakes, leopards and tigers, malaria mosquitoes---including those that carry cerebral malaria). The easily accessible areas are already mined out. In the most remote areas, miners pack a few days' supply of food and water, walk into the jungle, and head back when supplies run low. A lot of these folks are Lisu people, who are accustomed to and skilled at living off the land. The mining itself is relatively easy, as stones are found a foot or two below the surface. There's abundant water for washing the byon (gem-bearing gravel). The primary obstacle is nature itself."

Access to most parts of the area is now restricted, with the exception of some areas controlled by the KIA.

New Production
The rubies are red/pink in color, bright, and do not need heat treatment. Some are eye clean with a little silk, although most are included with clusters of crystals. The color is quite distinct and desirable. According to one dealer, the new goods "have a slightly different bluish tinge, and the stones seem to have greater dispersion. The crystalline nature of the material means one sometimes gets some real screamers in terms of brilliance and dispersion. They also light up like a Christmas tree under UV-LW (long wave ultra violet), very similar to Mogok, and mildly under SW-UV (short wave ultra violet)." Most of the material is light in colors and tones and grades at AGL at 4.0-5.5 with 60-75 tones. Very few are "cherry lifesaver" red, but rather "electric magenta". However, a top, 4 carat, Nayar gem red is being offered for US$100,000 in Mogok. It is assumed the stone will re-cut into a clean 3 carat stone. Presently, blue sapphires are not being found from this new area, only purples and pinks.

Gem Identification
These new stones are very close to Mogok area gems in terms of colors and quality. In all likelihood, they will sell at Mogok prices. These gems are not at all like the Mong Hsu material, most of which is heated and/or fracture-filled. Of course, the Mong Hsu material sells for deep discounts to the Mogok material in the wholesale markets.

According to one Burmese source, "Due to the erosion of the material, the origin of the Nayar stones is easy to determine at the rough stage. The skin, or outer layer, looks very different compared to the Mogok material. However, once the stones are cut, detection is very difficult." Another dealer adds, "Often the skin of the rough is quite glassy, and there is plenty of fire present even in the uncut stone." Presently, it is virtually impossible to detect the difference between the Nayar material and the Mogok material after it has been cut. Extensive research may be undertaken by gem laboratories to differentiate the origins.

Spinel
There are presently conflicting reports about the Burmese spinel market. Some dealers state the Nayar area is producing 1-2 carat sized, candy-red spinels. It is reported the new area is also producing a pink/orange, similar to a padparadscha color. Others say the material coming out now is a surprisingly consistent hot pink which may finally turn spinel to a viable commercial item. These spinels are more on the purple/pink side and expensive. Everyone does agree that spinel prices are up. Way up. Estimates are spinel prices have increased fifty percent since January, 2001. Surprisingly, many gem red spinels are now being offered at ruby prices by Burmese dealers.

Mogok Production
The supply side of the Mogok material equation remains poor. Since demand for Burma goods is still strong internationally, there is continued upside price pressure despite weakening worldwide economies. A Swiss dealer is reportedly buying everything he can get his hands on and driving up prices. At least the new mining area is providing some new material while the supply at Mogok is thin.

The Kyat
The Burmese currency, the kyat, is sinking like the Titanic. Burmese sources state, "Fuel prices recently spiked up from 350 kyat per gallon to 1000 within one week. It has immediately pushed all prices up. The government arrested a few currency traders to stabilize the situation. (The kyat is now around 700.) Dealers are confused by the fluctuation of the currency and the general situation."

According to economic theory, a depreciating currency should make the price of Burma gems less expensive (in dollar terms). Instead, the Burmese dealers simply raise the asking price faster than the kyat falls. The reason is they use gems as their personal inflation hedge. Why hold the kyat when you can hold unheated Burma goods? The big dealers already have a house, a Toyota Landcruiser, and everything else money can buy. Since there isn't too much to purchase anyway, they don't have any particular need for more cash, so they just sit on their gems. Experience has shown them that holding gems never hurt, and as prices have continued to rise there is no rush to accept low offers.

Madagascar
The latest news from Madagascar is the new ruby finds. According to sources, "Ruby is on fire and is being produced by the hundreds of kilos." There are presently two finds. The first and best goods are from Vatomandri on the east coast. The discovery is alluvial, but when the goods are cut most are below a carat. Dealers state, "The material is gorgeous, almost luminescent. The material is crystalline and is better than the Thai material and closer to the Mong Hsu Burma material in appearance. It needs less treatment than the Mong Hsu material." This gem producing area was closed in December, 2000 via military check points. Dealers speculate the government wanted to control the "gold rush" fever about the goods. Officially, the government stated the plan was to build a "special economic zone" with communal mining, a centralized bourse for foreigner buyers, and collection of a 5% export tax. Some believe this was simply a pretense for government officials to "cherrypick" the mine. This area is presently still not officially open.

The second area is Andilamena, in the central highlands, 2 days from Antananarivo, the capital. To reach this area you must travel on a one lane highway, hopefully in a four wheel drive vehicle. When the road stops, it is still a 70 kilometer walk. It is such a hardship to get to the mining area sellers are now not only available at the mines, but also at the end of the road, and some of the goods even end up in the capital. Of course, there are no hotels nor amenities of any kind. Andilamena is now being mined by 30,000 diggers who live on cow and rice and live in grass shacks.

Unlike Vatomandri, the goods here are large, with many available 3-4 gram pieces. The quality of these goods is much lower, with many of the pieces only cabochon material. Most are horribly included and need cooked and fracture-filled. A small percentage of the material is clean, but the gems tend to be too red/black.

Some of the Madagascar material has rutile like unheated Classic Burma gems. However, the rutile is coarser and not in nests like the Burma goods. Colorless, transparent crystals (probably of zircon) are also seen. The key to collecting Madagascar ruby might be to buy the untreated stones soon. You can count on the Thai cookers to conduct every experiment they can think of in an attempt to improve the material. Once they decide on the best method, very few stones will likely escape their treatments. The best Madagascar stones give a red/pink Burma look at lower prices. Interestingly, the best Vatomandri rubies grade similar to the new Nayar, Burma production.

Ruby Market Recommendation
Based upon the new market production, we are updating our ruby market recommendations of Fall, 1996. Collectors or jewelry buyers should consider the following order of priority in their acquisition of rubies:

  1. Unheated Mogok or Nayar Burma ruby
  2. Unheated Mong Hsu ruby
  3. Unheated Madagascar ruby
  4. Heated Mogok ruby
  5. Heated Thai ruby
  6. Heated and/or fracture-filled Mong Hsu ruby
  7. Anything heated from the remaining sources

Structure your gemstone portfolio according to your finances. If money is not a major concern, try to obtain the largest Burma rubies you can afford. If you can afford only one gemstone, attempt to purchase from the top of the list. Move down the list based on your available funds. You may wish to diversify your portfolio with a mixture of all the types and varieties.

Obviously, in our opinion, the key to successful collecting is to focus on untreated and unheated gemstones. There will always be a shortage of this material worldwide.

WARNING: AFRICAN DIAMOND SCAM ALERT!
4-1-9...Call 9-1-1

The Pitch
I recently opened up my email to this letter:

"Sir,

I am Col.KIZOMBE Kamara, a former senior assistant leader of revolutionary united front of sierra Leone know as (R.U.F), with me is also (sergent) ZAKARY Sogo. Few weeks ago, we decided and made away with large quantity of (diamond) weithging 2.98kg which has been saved and deposited in a high security company before boarding for Dakar Senegal, where we have decided to stay temporarily and decide on what to do with those great resources which is our hope of life.

We got your contact from the internet and decided to contact you as an honest and trustworthy able businessman whom we can trust and transact business with. As a trusted and honest businessman like you, we would like you to secure our great ressources (DIAMOND) in your care as we have decided to order a command to the security Company to transfer our resourses to you depending on your urgent reply to our request.

Note that this transaction demands the highest trust security and confidentiality between us. Moreover it is risk free in the sense that i have taken proper care of all formalities regarding this transaction. For your assistance and co-operation I have decided to give you 15% of the total money generated from it,s sales and 5% maped out for miscellaneous expenses that we may occure during the process of transferring the ressource to your country.

As soos as the ressources mentioned above is successfully transferred in to your position. We intend to use our own share in acquiring estates and landed properties in your country. On commencement, I wish this transaction will take 14 working days to accomplish.

On request a certificate of deposit bond of the security company, together with the lab test result certificate of the diamond will be sent to you as soon as i hear from you. Feel free to contact me through my phone +221-664-52-16.

For my own interest please treat confidential.

Thanks yours sincerely

Col.Kizombe Kamara."

When I responded, I received the following letter from Col. Kizombe Kamara's MSN hotmail account:

"Dear Robert,

Thank you very much for your reply regarding the assistance that i needed from you in transfering my diamond to your country and in your position pending my arrival to meet with you.

My urgent decision to contact you is based on the fact that there is a committee curently sated up by the government of my country SIERRA-LEONE to trace and recover all diamonds that was taken aay from the country during the war. And there is no way that i can imagin loosing this diamond to the committee,as it the only hope of my life. The diamond which weighs 14,220 carats and worths about USD20Mln is deposited with a high security company here in DAKAR,(MODEL ASSETTS MANAGEMENT AND SECURITY COMPANY) waiting for my order to be transfered to your country.

After a breif meeting with the operational director of the security company, regarding the transfer of the diamond to your position. I was made to understand that the company lifts and transfers diamond and other similar items to any part of the world in coinjuction with U.K DIPLOMATIC CARRIER SERVICE COMPANY based here in DAKAR-SENEGAL.

I was made to understand that the diamond will be lifted and transfer to you position through diplomatic means of transfer, in the sense that the diamond will be assigned to one of the company's diplomat as a diplomatic personal effect, and it will not attract any airport security or customs checking until it reaches to your position.

On request i can send to you the deposit bond receipt of the diamond,and as well the laboratory test certificate of the diamond. I will like to remind you once again that this transaction is only known to you and me, and should be kept with your utmost secrecy and confidentiality until the diamond is finally into your position.

Waiting to hear from you soon.

Till then i remain with the best regards.

Kizombe Kamara."

The Proof
Wow. Was it my lucky day or what? I did not have to do anything and soon I would be living in a villa in Rio, or I could probably buy 200 D-IF's, or 60 Porsche Boxsters. I had just won the lottery. Suddenly, I remembered my father's sage advice, "If it sounds too good to be true, it probably is." Since I was not born yesterday, I wanted proof the diamond existed. I wanted photos and documents. What I got from Col. Kizombe Kamara were email photos of himself posing with what was purported to be bags and bags of diamonds. Didn't he say he had one large diamond weighing 2.98kg or 14,220 carats? (So what if that's 11,114 carats larger than the Cullinan, the largest diamond ever discovered?) But why quibble over such insignificant details?

Oh yes, and what about the documentation certifying the stone as natural and proof it was in safekeeping? I was faxed a document from the Modeal Assets Management and Security Company of Senegal stating they had possession of a trunk of diamonds. The purpose of the deposit was stated as being "for safekeeping". So what if I could not read the signatures of the financial controller or the operational director? Was it important the document looked like it had been created by a third grader? Oh yes, and the lab report. Well, do not look for a GIA grading report with holograms here. Instead, I received a black and white document from the Compagnie Accreditee Laboratoire of Senegal stating the 2.98 kg was natural. Color and clarity...what is that?

At the same time my deal was transpiring with Col. Kizombe Kamara, another gentleman named Tidjan Ufoh was trying to sell me the exact same stone. What a coincidence. Now I could have a matched pair! So much for our supposed utmost "secrecy and confidentiality".

The Infamous Nigerian 419 Scam
This "diamond deal" is the new version of a major criminal enterprise that has targeted people in over 60 countries. The scam has reached epidemic proportions and it now travels at hyper-speed over the internet. It is estimated The Financial Crimes Division of the Secret Service receives approximately 100 telephone calls from victims/potential victims and 300-500 pieces of related correspondence per day. The ruse purportedly grosses hundreds of millions of dollars per year.

What we really have here is a variation on an old scam called the 419, or Four-One-Nine Fraud. The name originates from the relevant section of the Criminal Code of Nigeria that deals with it. It is also known as the "advance fee" scam in that the collection of "up-front" fees from the victim is a prime objective. The advance fees can consist of processing fees, unforeseen taxes, license fees, registration fees, legal fees, audit fees, insurance fees, ad nauseam.

The 419 swindle originated in Nigeria in the 1980's. At that time, $25-$35 million was claimed to be on deposit with the Nigerian central bank. A multi-million windfall profit was promised for helping to wire the money out of Nigeria to America. Victims were requested to provide a company name, full address, phone and fax numbers, along with a bank's name, account number, and fax number. In the 1990's, the scam changed to offering Nigerian oil at below market prices. It is now morphing into diamonds and is targeting the gem and jewelry industry.

Goals of the Scam
This scam has many goals. Each level vaults the victim towards a more treacherous outcome. This is known as a scam within a scam. Here are the details:

  1. If you send the perpetrators your company information, they will attempt an "identity theft". They will use your letterhead to forge letters of recommendation to American embassies or to con other victims. If you give them your bank account number, they will create false documents and attempt to make unauthorized cash withdrawals from your bank. To make matters worse, once they have this information, it is a signal to the criminals that you are "hooked".
  2. They will attempt to extract hundreds of thousands of dollars for advance fees. After you send funds, the deal always bogs down due to numerous hurdles.
  3. Once you have paid the advance fees, you must travel to Africa to complete the transaction. This works because the victim now has time and money tied up in the project, he has a vested interest in the deal. If the scamsters cannot extract more money immediately from the victim in Nigeria, they will hold him for ransom.

Recent Kidnapping
On May 9, 2001 in Nairobi, Kenya, three Nigerian men were charged with kidnapping three American businessmen in a plot to collect $5.2 million in ransom. They pleaded innocent to all six charges of abduction and demanding money by false pretenses. The kidnapped American businessmen were William Daniel Marrow, 60, of Norfolk, Virginia, James Edward Harrel, 67, of San Diego, and Jurgen Robert Ahlmann, 58, of Escondido, California. The kidnappers lured the businessmen to Nairobi by claiming to have $9.5 million worth of diamonds to export. Kenyan police, in cooperation with the FBI, raided the suburban house where the three men had been kept since April 24. One American had reportedly been held in chains since January.

Why the Scam Works
There is an old saying, "You cannot cheat an honest man." Obviously, the victims must have had some larceny in their hearts and/or were blinded by greed. Although it seems unbelievable this con works at all, it appears P.T. Barnum was right, "There's a sucker born every minute."

Nigeria
Even though the documents and phone numbers were from Senegal and Sierra Leone in my case, the scam was still probably Nigerian. Most 419 letters and emails originate from, or are traceable back to, Nigeria. However, some do originate from other countries, mostly West African nations such as Ghana, Togo, Liberia, Sierra Leone, Ivory Coast, etc. When I refused to give Col. Kizombe Kamara the personal banking information he desired, he offered to meet me in London. Besides Africa, the Nigerians also have a major presence in England. In Britain, they are known for obtaining welfare benefits using a myriad of false identities. Many fellow countrymen work inside national and local agencies and have access to financial data and personnel records.

It is estimated 2-3 million people out of a population of 100-150 million in Nigeria are involved in criminal enterprises. Due to the corruption of the political system, Nigeria is considered a safe haven to conduct these ventures. Allegedly, many government officials are involved. It is believed the 419 Fraud is the third to fifth largest industry in Nigeria. The scamsters are very well organized and do excellent research in targeting their victims. Many Nigerians are educated with excellent language skills and they understand computers. Their job of internet mass mailing has been made even easier and more efficient with the availability of cheap, massive, email lists. Although they sure could use a spell checker, if my correspondence is any indication.

419 Coalition
There is a group designed to fight the 419 scam. It was created by C. A. Pascale of Alpha Electronics Inc., Harrisonburg, VA. He created the group with his own funds as a public service because he was sick of government inaction on this problem.

According to the 419 Coalition, when conducting business with Nigeria, the following rules are paramount:

  1. Never pay anything up front for any reason.
  2. Never extend credit for any reason.
  3. Never do anything until their check clears.
  4. Never expect help from the Nigerian government.
  5. Never rely on your government to bail you out.

Conclusion
When you receive one of these scam letters, contact the U.S. Secret Service in Washington, D.C. at (202) 406-5850 or fax a copy of that letter to (202) 406-5031. If you are an international victim, fax a hard copy of the 419 correspondence you received to the US Task Force at (202) 406-6930.Of course, you can always hit DELETE on your computer or email back the numbers "Four-One-Nine".

COLLECTORS CORNER

Madagascar Color Change Garnet
It appears the production of Madagascar color change (blue-gray in sunlight to raspberry red in incandescent light) garnet is played out. The present supply of these garnets is sitting in collectors' portfolios. According to our sources, they are still finding garnets, but the desirable colors are gone. Present production changes from pink-brown to brown.

Record Pearl Found Off Burma
A natural pearl, believed to be the world's largest, has recently been discovered in the waters off Burma. The saltwater pearl weighs 845 carats. One of the largest previously known saltwater pearls is the 450 carat Hope Pearl, named after Henry Philip Hope.

BOOK REVIEWS

Midnight in Ruby Bayou
by Elizabeth Lowell
Avon Books
386 pages, 2000, $24

"Moments later he was back in the ruby universe where everything was pure color, glorious light, and reassuring imperfection."

Finding a novel that revolves around gemstones is very difficult since Gerald Browne stopped writing about six years ago. It looks like Elizabeth Lowell is trying to fill this niche. She also has published books about amber, jade, and pearls. Her books can best be described as romantic suspense novels.

The real star of the book is the large and red "Heart of Midnight Ruby", although it is never really seen until the end. However, a great deal of attention is spent on 13 unheated Burma rubies between one and four carats that are worth $1 million wholesale. The main characters in Lowell's novels are the Donovans, an international mining concern with a gemstone division. In Midnight in Ruby Bayou, the story revolves around Faith Donovan, an up and coming jewelry designer in Seattle. It is her job to mount the 13 rubies and Owen Walker's job to protect her and the goods as she travels to a Savannah jewelry show. You must throw in the usual suspects - the FBI, Russian and American mafias, and a wealthy, but bankrupt, Southern family.

Much of the research Lowell has done to describe the Burma rubies - from the Burma color to the inclusions that prove no heat, is excellent. Burma ruby aficionados will read the ruby sections with a smile on their face. I understand this is simply a novel, but the one error made by Lowell is her statement, "...she needed an appraisal by a GIA certified lab." The GIA is a lab, they do not certify labs.

Who says all gems books have to be scientific treatises? This would be a great book to read during the summer. Heck, you can even take it to the beach. Have some fun.

You can purchase this book on-line at Amazon.com.

Gemstones
by Cally Oldershaw, Christine Woodward, and Roger Harding
Sterling Publishing Co., Inc.
76 pages, 2001, $12.95

This book was written by people associated with the Natural History Museum in London. Think of the book as an inexpensive coffee table publication. It is an excellent introductory gemstone book. The technical information is brief and accurate. The book is replete with drawings and photographs. It contains excellent micro-photographs of gemstone inclusions, as well as mining, antique jewelry, rough and cut gem photographs. The photographs are well worth the cost of the book. Highly recommended!

You can purchase this book on-line at Amazon.com.

Gems: A Lively Guide for the Casual Collector
by Daniel J. Dennis, Jr.
Harry N. Abrams, Inc., Publishers
192 pages, 1999, $29.95

"If you're tempted to say, "Well, I'm just not going to accept any gem that has been enhanced in any way," I can tell you firsthand that your resulting gem collection will be less significant than a blade of glass in a hurricane."

This quote illustrates how the author is attempting to make a very self-serving case for why you should buy treated gemstones. Since it is too hard to buy unheated gemstones, you might as well buy treated gems! The publication was written by a gemstone specialist from the Home Shopping Network.

This book is written from a commercial quality perspective. It discusses small stones and synthetic gemstones, not gem quality stones. It is not a book for the serious collector. Rather, it is more suitable for those whose collecting funds are extremely limited or are just beginning to collect. The author is focused on selling mass quantities of lower grade stones, rather than top collector gemstones.

In addition, the book contains misstatements and errors. For example, when discussing the glass-filling in rubies, the author states dealers accept gemstones that show no residue under a 10x loupe. Well, some dealers may, but consumers deserve full treatment disclosure, even if it is not obviously visible.

In discussing star rubies, the author states experts rarely, if ever, consider any gem that exhibits an asterism to be a top quality gemstone. Wow. I can only assume the author has never seen gem quality Burma star rubies and sapphires or chrysoberyl cat's eyes.

Although the author correctly pegs Kashmir sapphires as being at the top of the gemstone heirachy, he places Ceylon sapphires second. What about Burma sapphires? He states sometimes they are mistaken for top Ceylons. Obviously, this is wrong. Ceylons must be the only sapphire that suppliers can find in sufficient volume for the TV channels.

The author also says the most sought after spinels are the reds and the blues. What happened to the flame oranges and the hot pinks? He also says the top red spinels command $300 and up at three carat sizes. Really, please mail me some Burmas for this price!

Despite the negative tone of this review, the book has some good points. The author does an excellent job in describing how specific gravity and carat weight affect the look of a gem. Other good sections are: diamonds, garnets, pearls, zircons, and jade. Many unknown gemstones are covered in an interesting manner. If you want a non-scientific entry into the world of gems, this may be an interesting choice. It is an easy to read book written in an uplifting manner.

You can purchase this book on-line at Amazon.com.

GEM QUOTES

JCK, May, 2001, "Enlightened Illumination"
by Gary Roskin

"Some ruby dealers know that the weather as well as time of day will affect a gem's look. Cloud cover will enhance a ruby's color (less sky blue), whereas clear blue skies will give the stone a purple color. Light-colored ruby looks best under dim lighting (candlelight, low wattage incandescent lights, sunrise or sunset - roughly equal to 1,800 degrees Kelvin), and dark ruby looks best when the light is brightest - i.e., direct noonday sun. In fact, because of the smog and latitude of Bangkok, it is said that ruby that looks dark in Thailand will look even darker in the United States. Smog will actually lighten a blue sky. In cities with less smog, the darker blue sky will dull and darken a red gem. To make matters more complicated, light takes on a totally different color when seen indirectly - for example, inside at a north-facing window. In the morning, the light is bluish: from 11 a.m. to 1 p.m., it's a lighter, whiter blue. It shifts back to a more bluish color late in the afternoon."

The Guide, May/June, 2001, "Colored Stone Market"
by Stuart M. Robertson

"Overall, the Burmese gem trade remains mostly unchanged from that in 2000. Very little fine quality unheated Burma ruby is available and Burmese peridot, spinel, tourmaline, scapolite, and sapphire are very expensive with little active production. This has dealers concerned that shortages will be greater than initially expected. One dealer expressed the sentiment that, 'the lackluster economy has kept attention away from these problems. However, when the market improves and people start spending, the extent of the shortages will be evident.'"

AUCTION NEWS

Sotheby's New York, April
The New York Magnificent Jewelry auctions sold 418 lots, or 68%, for a total of $11,154,655. A cushion, VVS2, fancy intense, 3.08, blue diamond sold for around $120,000 per carat to a Los Angeles dealer.

Sotheby's Switzerland, May
The May auction in Geneva sold over $17 million. A 1.65, natural fancy deep green, VS2, round sold for $368,000 per carat to a Far East collector. A .70, oval, purplish red sold for $178,777 per carat. A 6.45, oval, Burma ruby fetched $43,905 per carat. A 9.60, sugarloaf, Kashmir sold for $29,499 per carat.

Christie's New York, April
Christie's Magnificent Jewels auction sold over $21 million, or about 83%, of the lots. The top lot of the sale was La Favorite, a 50.15 carat, D-color, potentially flawless, rectangular cut diamond set as a ring by Bulgari. The prize was purchased for $3,636,000. La Favorite was mined in South Africa and made its debut at the Chicago World's Fair in 1933. The diamond was a sensation during the Depression. People waited in lines to see the rock. In the 1960's, it was sold to a Frenchman.

The Rockefeller Sapphire, a rectangular-cut, Burmese sapphire of 62.02 carats, set by Tiffany & Co., sold for $3,031,000, setting a world auction record for the largest total and the highest price per carat for a sapphire. The gem was mounted by Tiffany and sold at auction in 1971 for $170,000, then resold in 1988 for $2.8 million. It went to an Asian private. A 1.08, round, fancy deep blue, SI1 also fetched $102,315 per carat.

Christie's Geneva, May
Christie's auction sold a 2.85, IF, vivid blue, pear shape diamond for $265,019 per carat. They also sold a 3.41, round, SI2, vivid yellow for over $110,000 per carat and a 3.54, round, vivid yellow, SI1 for about $106,000 per carat.

Christie's Hong Kong, May
A .73, princess cut, red diamond with I1 clarity sold for $536,918 per carat. A 4.50, marquise, vivid blue, IF reached $300,011 per carat.

Phillips Geneva, May
Phillips sold a 3.95, round old European cut, fancy deep blue, VS1 diamond. It sold for $420,698 per carat. They also sold a 2.06, fancy intense blue, pear shaped, VVS2 for slightly over $137,000 per carat.

IN THE NEWS

Diamond Broker Defied Ruler of Congo --- and Won
by Ellen Knickmeyer , AP, June 8, 2001

"Mbuji-Mayi, Congo --- The one he's rolling around in his fingers is nice --- 5.23 carats, nearly the size of a marble, pure and white. But the diamond that Alphonse Ngoyi Kasanji is talking about is the big one --- the one that got taken away. Kasanji holds thumb and index finger apart to illustrate: "Like this." He pinches a gap the size of a golf ball. And looks at the empty space, hard. Nearly 266 carats, the biggest diamond found in Congo in years, the stone had people across the country wearing T-shirts with its likeness and marching to defend Kasanji's right to it. It forced the 38-year-old diamond dealer to stand up to the ruler of one of Africa's largest and potentially richest countries and win it back. "It gave me a big problem. But it has also given me a gift," Kasanji says. "I can now fight in my life." Kasanji had a name for the rock --- "Ngokas," meaning simply "Ngoyi's" in his central African language. The rest of Congo knew it by another, simpler name: The Big Diamond.

The story began a year ago this week, when awed villagers found the gem at a muddy dig in south-central Congo. Now Kasanji is ready to tell the end of it, closing the mystery --- or most of it --- of the stone that roiled Congo and the intrigue-ridden diamond markets of the world. Slouching on a brocade sofa in his gilded, tasseled home in Mbuji-Mayi, Congo's diamond capital, Kasanji wags a flip-flop on one bare foot. He toys with the small stand-in for the Big Diamond, idly if not quite casually. "It was first quality," Kasanji begins. The Big Diamond turned up June 2, 2000, in the shovel of a family of diggers in a village-run mine 45 miles from Mbuji-Mayi. They were frightened and hid. Word spread quickly up the rutted dirt roads to the open-air diamond markets of Mbuji-Mayi. Crowds formed in town, waiting for a glimpse of the unpolished wonder. Kasanji quickly assembled his own crowd, fellow diamond dealers. Unable to buy the stone individually, they pooled resources --- selling cars and mortgaging homes, reportedly --- to buy it together.

Within days, Kasanji had acquired the stone --- for $4 million, he says. As soon as he got the diamond, Kasanji flew to Congo's capital, Kinshasa, to sell it. He left behind an abruptly enriched mining village, where an unprecedented Land Cruiser - and motorbike - buying spree was about to begin. Rejecting the first offer in Kinshasa, Kasanji picked up the stone and headed to another office. President Laurent Kabila's security agents arrested him before he got there. A stone that big, that valuable, the government figured, must have been found on government land. Security agents took the Big Diamond away, and Kasanji went to jail. The government released him a month later. It kept the stone. For investigation, it said. The faces of locals light up when they describe what followed.

Kasanji was popular, his profession and his ethnic group, influential. Outraged by the multimillion-dollar gem grab, Mbuji-Mayi's people took to the streets, marching, chanting, demanding the stone's return. Smaller protests hit the capital. The government, meanwhile, was hawking the diamond. It had nibbles, but no bites. There was talk Kasanji had threatened to sue anyone who took his stone. It went on for four months, with traditional chiefs pressuring Kabila's government all the while. Frightened officials even called out the troops to suppress one Big Diamond protest. Days later, Kabila summoned Kasanji. They met in Lubumbashi, another diamond city. For hours they talked, with the jowly Congo leader --- who was assassinated months later --- quizzing Kasanji on how he got the stone. " 'I hear what you say,' " Kabila finally said, according to Kasanji. " 'I think it's right to give back the stone.' "

But there were no buyers. After Kasanji's experience, no one believed the stone, once bought, would stay bought. After months of trying to sell the rock, Kasanji gave up early this year and flew to Tel Aviv, Israel. It was the base of International Diamond Industries, the firm to which the cash-hungry Kabila had sold the right to handle all Congo's diamond exports. Escorted by government agents, Kasanji watched the auction hammer come down on the Big Diamond. "A high-quality stone," recalls Lior Chorev of International Diamond.

Diamond industry press reports had estimated the stone's worth at $13 million to $20 million. Chorev won't say how much it went for, or who bought it. "We were more than satisfied," he says by phone, chuckling. Kasanji flew home with $6 million, he says. His battle "was against the highest personage of the country," Kasanji reflects now, reclining on a sofa in a home where safes hold baggies stuffed to the Zip-Loc with diamonds. He smiles, tucks the marble-size gem in a pocket, and stands to go. There are lots of diamonds left to buy."

The information provided in this newsletter 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. The gem market is speculative and unregulated. Certification does not eliminate all risks associated with the grading of gems. Recommendations are meant for those who are financially suited for the risks involved. Past performance is not a guarantee of future performance. Neither NGC nor The Gemstone Forecaster guarantee a profit or that losses may not be incurred as a result of following its recommendations. They may also hold positions in areas they recommend. Subscribers should not view this publication as investment advice, nor is it intended as an offer or solicitation with respect to the purchase or sale of any security.

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