Collecting Gemstones During a Recession
by Robert Genis

Many unheated and/or unenhanced gemstones have been climbing rapidly in price the last few years.   The main movers have been garnets and anything unheated or unenhanced from Burma.  Collectors are confident buying unheated gemstones, with independent grading reports,  and any garnet without fear of treatment.  The declining stock market, consumer confidence, and the current recession have caused the colored gem market to stop its double digit increases from the last few years. 

Does this mean you should stop collecting gems?  Of course not.  Sometimes, it is good to review the basics of gem collecting.  First, collect what you love. You should have acquired a fascination for colored gemstones. You should feel pleasure from buying and owning top gem quality colored gemstones and colored diamonds. Collecting should be in your blood. Second, you should buy gemstones relentlessly.  It should not matter if the market is rising, flat or decreasing. The business cycle should be irrelevant.  If you have the funds, it should not matter if the US economy is in an expansionary or recessionary phase. As a matter of fact, when prices are weak or flat, your dollars may go further in a down market.  This is the key to successfully collecting/investing, whether it is in the gemstone, collectible, real estate or stock/financial  markets.

Economic Cycles and Gem Prices
The gem market has evolved over the years.  During the investment boom of the late 1970's and early 1980's, the main goods people bought were heated Thai ruby, heated Ceylon sapphire and white diamonds.  When the recession hit during Ronald Reagan's administration, most of these goods plummeted in price.   In retrospect, these gemstones were never really rare and have never recovered in price.  However, certain stones moved contracyclically.  For example, stones that bucked the downward trend were Kenyan tsavorite, Burma spinel and colored diamonds.   Interestingly, these stones that were not heated or treated in any manner.  The only other exception was oiled Colombian emerald, which  rose throughout the 1980's.   However, treatment issues still haunt this stone today.

The short recession of 1990-1992 had very little affect on gem prices. Unheated Burma sapphire and ruby were stable.

Today's recession seems to have affected lower quality and treated gemstones more than unheated  gem goods.  The recent Gems and Jade Emporium auction in Burma sold almost $31 million worth of jade and ruby.  Despite the world's weak economy, this indicates the insatiable demand for Burma goods. The bottom line is high quality gemstones often operate in their own pricing cycles, almost irrelevant to world economic cycles.  Treatments, bad publicity, plus supply and demand seem to have a more vital effect on gemstone pricing.
Recently, a client called and said, " Please give me one of those $10,000 unheated Burma rubies.  At least I know it will not be worth $1000 tomorrow, like my  technology  stocks."  He has  a good point.  Natural unheated or unenhanced gemstones will always be rare, irrespective of economic conditions.  This limits their exposure to downward pricing.  Further, most collectors are long-term oriented and have the income  not to be "forced sellers."
So have fun and keep collecting!

The Flower Diamond
by Robert Genis

Many may remember the 1964 role of Peter Sellers as Inspector Clouseau, the  French police inspector in The Pink Panther. The suspicious, blundering Clouseau was always one step behind everyone else. He was hot on the trail of a famous jewel thief who was planning to make off with an expensive gem known as the Pink Panther.  The Pink Panther diamond was named because it had an inclusion that resembled a leaping panther. While the stone was fictional, it does illustrate that inclusions can be valuable, if they resemble something. The Pink Panther diamond also  starred in three sequels.

Fast forward to the the jungles of Minas Gerais, Brazil in 2000.  It is a hot and humid day.  An old timer Brazilian miner is searching the streams for anything of value.  In his spare time he digs for diamonds and gemstones with a shovel.  He has spent his whole life in abject poverty.  Suddenly, his eyes catch a glint of something shiny on the river bank.  He  strolls over to investigate and finds a 6.23 octahedron with an unusual inclusion.  It looks like nothing he has ever seen before.  Although he is unsure of what it is, he puts it in his pocket and keeps searching for stones.

In The News
Asia Times
December 4, 2002
Thailand's gem capital
By Michael Spencer
"The provincial town of Chantaburi in eastern Thailand seems an unlikely center for international commerce of any description, but a combination of factors has earned it a solid reputation as one of the most important gem-trading capitals of the world.

Located some 250 kilometers from Bangkok, the town owes its prominence to the nearby presence of a legendary gem mountain known as the Khao Ploei Waen. In the past sapphires and rubies littered the ground there in such quantities that village children used them as marbles or smashed them into pieces for the pleasure of making colored sparks fly. It was this treasure trove that put Chantaburi firmly on the map as one of the world's top gem-trading locations, an accolade it still merits today.

The local gem traders' association estimates that today at least 80 percent of the world's rubies and sapphires transit Chantaburi at one stage or another on their journey from the mine to the retail outlet.

But in the 1970s and '80s the town's centuries-old commerce looked to be on the point of collapse. Local mines were all but depleted and supplies of high-quality rubies from Myanmar were becoming increasingly difficult to obtain. There were imports from Cambodian mines just across the border but supplies were shrinking rapidly. With some deft footwork, local dealers developed overseas supply networks for rough gems and maintained the town's preeminence by capitalizing on the skills of its craftsmen.

The real savior of Chantaburi's status as a gem-trading center, however, came in the form of the colorless geuda sapphires that began to arrive in large quantities from Sri Lanka in the 1980s. Over the years, Thai gem cutters had developed a lucrative sideline of heating gemstones to improve their color and selling price. The process was known for centuries as a way of deepening the color of rubies and sapphires, but Chantaburi craftsmen elevated it into an art form involving a combination of heat, pigments and luck. When they applied their skills to the colorless geuda stones, they were able to imbue them with hues similar to the best Myanmese and Thai stones, in the process providing a lucrative new income source for the local dealers.