GemWorld-ASSETS and INVESTMENTS

GemWorld Tid bits . . .

COLLECTING and INVESTING
in gemstones
For Fun and Profit
Not only is it fun to collect gemstones, but you can profit from them also. Most gems continue to go up in value. Timing, buying right, and selling right are key issues in making profits. Gemstones in particular provide a storehouse of value. They take up very little space and are very portable. These are some of the reasons why buying gemstones makes sense.

Cycles play an important role in the gemstone market. Historically, the rise and fall of stock and bond prices go opposite the rise and fall of hard assets such as gemstones, gold, silver, art, antiques and collectibles. When the hard asset market is overpriced, huge amounts of money flow into stocks and bonds. When stocks and bonds are overpriced, huge volumes of monies move into hard assets. The stock and bond market has made an upward move in price for nearly two decades and is now overpriced and poised for a major downturn correction. It is now time for the money to move and flow into gemstones and other hard assets.

This cycle of events takes place about every 18 years and has been true for the last 200 years until this last cycle, which is overextended. Gemstones, gold, silver, and other hard asset prices started their upward trend in 1968 and made their peak in 1980. The stock market and bonds started their upward trend in 1981. The Dow Jones Industrial averages went from 780 to nearly 11,000 within the last 20 years with only one correction in 1987. A major correction and a change in direction is certainly overdue. It is best to buy gemstones and other hard assets now before they make their upward move. True investors will buy before they see a move in markets. Speculators buy after they see upward market momentum. John Does or ordinary Joes and Janes usually end up with the Old Maid. They get in well after others made money and want a part of the action, but it's usually too late.

Interest rates have an influence on the gemstone market. If one studies history, especially economic history, one will find that when interest rates drop, stocks and bonds rise in value. Interest rates have fallen since 1981, which is why stocks and bonds have increased in value. When the rates can no longer be lowered, these rates will rise. At times it seems to be so subtle because of temporary pullbacks. When long-term interest rates rise again, stocks and bonds will falter in value. These huge sums of money will have to find another home such as gemstones and other hard assets.

Another reason is "inflation". When an economy needs to be stimulated because it's running sluggish or the government needs to pay off more of its debts, it cranks the printing presses to make more money. At one time in the near to distant past, the American dollar was tied to the value and amount of precious metals (such as, gold and silver) the government had on hand as assets. Each dollar was backed by an asset. You could literally take a piece of American paper money and exchange it for its value in gold or silver. Today, there is no limit as to how many dollars are in circulation. The government can print any amount of money at its whim. When there is twice the amount of money for the same goods to be purchased, the goods now will cost twice as much because there is double the amount of money to buy them. The way to beat inflation is to buy the goods before the masses discover its trickled down effect. Then sell the goods just before inflation has peaked. Do you remember silver starting out at about $1 per ounce in early 1970's and then rising to $50 an ounce at the end of 1979? Or, gold going from $32 an ounce to $800 per ounce. After 1980, the feds tightened the money supply and silver dropped down to about $3.50 an ounce a few years later and gold dropped below $300 an ounce. It's going to happen again!

Another reason is supply and demand. The world’s supply of natural gemstones is limited as to what already exists. No more is being made. If it is being made, it takes eons of time to produce a natural gemstone. Many of the large producing mines of the world are already mined out, or nearly so. Although there are new discoveries, even these are limited supplies and will eventually be depleted. As the worlds population increases, so will the demand. Those who have the stones are finding ways to promote gemstones to the masses. At one time it was the elite of the Western World and the European countries that had an interest in these items. Now, the masses of the world will be wanting to own natural gemstones.

Another reason why to invest in gemstones is that the costs of mining keeps going up. The gemstone material is no longer just lying on the surface to be picked up. The miners have to go down deeper and deeper to find the good material. The deeper one goes, the more expensive it is to mine. These rising costs are later figured into the value of gemstones. When it comes to opals, the deeper one mines, the poorer the quality. The reason for this is that there is more water in the opal and its surrounding material. The more water there is in opal, the more chance it will crack or craze. As we move into the future, I can only see natural gemstones going up in value.

The gemstones that are more likely to go up in value are your scarce and rare gemstones such as Benitoite, Tanzanite, Alexandrite, Tsavorite, Dematoid garnet, Rubelite tourmaline (true red color and hot pinks), Verdelite tourmaline in emerald green color, Indicolite tourmaline in sapphire blue color, Chrome tourmaline, clean Kunzite in larger sizes, Andalusite, Axinite, Fancy Diamonds (of color such as red, green, and canary), Color-change garnets and sappires, Precious opal, Fire agate, True green jade, large Peridots (over 15 carats), Euclase, Cassiterite, Kornerupine, Chrome Diopside, Brazillianite, Lazulite, Spessartite garnet, Zircon (not cubic zircona--CZ), Star sapphires and rubies, Chrysoberyl cat's eye, any expensive gemstones that have cat's eyes or asterism, Bixbite called "Red Emerald" is related to the emerald but is strawberry red in color", Red and pink Topaz, unusual and rare pearls, high grade pearls, deeper blue Aquamarine, and high quality emeralds, rubies, sapphires, chrysoberyls, and Spinels (especially in larger sizes).

For investing purposes, you can purchase the gemstones loose or in settings. If you wear them, they may have to be recut if scratched, chipped, or damaged. If recut, some value will be lost because the stone is now smaller and or lighter. If not recut, some value will be discounted because of the acquired imperfections. Occasional use is okay if one is careful. There are many famous stones that were worn admirably in past history that have pedigrees and are quite valuable today because much care was taken to preserve the integrity of the stones and the settings. Keep in mind that timing, buying right, and selling right are key issues in making profits.

The amount to spend is relative to how much money you are investing in gemstones and if you paid a high price, extremely overpriced or under priced amount, or got a bargain. Bargains can be had at depressed sales, liquidations, estate sales, going out of business sales, garage sales, yard sales, and even at swap meets. Some people do not know what they have or the value of the piece. Some do not care, but need immediate cash to bail them out of a problem. Quality reputable jewelers who are there to actually help you and not gouge you are good places to buy, especially for their creative designs, both in the use of certain gemstones and the creativity and quality of the settings. The prices are also dependant on the type, color, quality, and size of the stone. It is best to shop around, learn about the stone, compare, and then make a quality decision. Also keep in mind that, even though a price is shown for a piece, some prices are negotiable. The price shown is what the jeweler or vendor would like to get and is sometimes a "top-dollar" price or a high markup. The best thing to do sometimes is to "make an offer." They will either refuse, accept, or make a counter offer. If you are lucky and can buy from a miner, or wholesaler, you eliminate the middle man or woman, and can get a better price especially if you buy in lots (kilos) and put out a sizeable outlay of cash. I, myself, prefer to buy stones individually. When purchased in volume, a lot of the stones will be junk. To determine quality of a stone, bring along a 10X loupe and take a look at the inside of the stone in bright light. Putting the stone on the edge of a lamp shape will reveal even more of what is inside. When the stone is half in the light and half out of the light, this is called "candeling," which allows one to see the imperfections on the inside of the stone that are called "inclusions." Also examine the facets or the surface of the stone to check the quality of the cutting and polish. A stone that is well polished will not have any dull areas, lines, or ridges on the surface. If a jeweler or vendor sees that you have a loupe, there is less chance of him or her taking advantage of you.

The most important thing is to collect and or invest in a way that interests you. Some individuals want one of every stone that exits. Another individual starts out collecting just red stones or green stones. Some will favor one stone such as ruby and will continue to purchase quality high-grade rubies over a period of time. Others collect every type of beryl that exists such as Emeralds, Aquamarines, Bixbites known as "Red Emeralds", Golden Beryl, Morganites, etc. Some collect or invest in one or two stones a year. Others collect and invest as the opportunity arises.

The choice is yours. The important thing is to have fun.

We appreciate any and all comments

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