Gem Market Pulse – December 2017

The National Retail Federation reports strong business during the five-day Thanksgiving holiday weekend. The NRF estimates that 174 million consumers shopped during this traditional start of the holiday shopping season. According to the report, which is posted on the NRF website, “Average spending per person over the five-day period was $335.47, with $250.78 — 75 percent — specifically going toward gifts. The biggest spenders were older Millennials (25-34 years old) at $419.52.”

The strong turnout can be attributed to a number of factors including mild weather as well as more optimistic outlook on the economy stemming from strong gains in the US stock market and low unemployment this year.

As for what sectors performed well, there were no surprises. Consumers reportedly purchased clothing and accessories, toys and games, books, electronics and gift cards. Just how well jewelry performed is not yet known. So far reports from GemGuide subscribers about business in their stores this season has been mixed. But most are optimistic in noting that the most buyers turn out in the last few days before Christmas.

When Bigger Gems Are Not Necessarily More Expensive Gems

The size of a gemstone is generally expressed by its weight. The weight of a gem is measured by metric carat, which is 1/5 of a gram. Traditionally, the price of a gem is expressed “per carat.” Although there is no magic formula to assess the correlation, as the weight of a gem increases so does its per carat price. Of course, this is not absolute. For example, the price per carat of an extra fine quality ruby will increase far more substantially with size than would be the case for amethyst. This is because as the size of the stone increases, the population of comparable stones decreases. Rarity has considerable influence on value. This is most apparent in the fine and extra fine grades. However, if the population of larger stones remains sufficient for demand, as in the example of amethyst, then the effect on price will be negligible. Although there aren’t many gemstones in nature that come in very large sizes, when they do, pricing them can be a challenge. Gems like morganite, heliodor, topaz and most quartz varieties will not demand substantially high prices per carat when they are really large, especially when they cannot be mounted effectively in jewelry. Just as rarity influences value, so does utility. For example, a 100-carat heliodor may be a beautiful gem, but there is not much demand for such a size mounted in a piece of jewelry, therefore that stone will not be priced at a premium. Similarly, one would find a citrine weighing a few hundred carats to be sold at a lower per carat price than of similar quality 15ct one.

Another factor in accurately estimating value is to understand where the particular stone being examined fits into the overall market for that variety. The degree to which a gem’s value is influenced by its individual traits in relationship to the most active trading range within the total population of the variety constitutes its “core” range. In other words, the core range is an expression of a particular gem’s position within that larger group relative to the most commonly traded

or core of that group for the purpose of analyzing the influence that each trait contributes to the stone’s predicted value. For example, research of Akoya pearls demonstrates that pricing is most consistent within the 5.5 to 7.5mm sizes. Akoya pearls that are otherwise comparable are more costly as they deviate from the core range regardless of whether they are smaller or larger. So, when pricing a gem material one must consider where it fits in regard to the overall market.

In 2015, the 15.04 Crimson Flame Ruby sold for $18.3 million or $1.2 million per carat at Christies, well above the presale estimate. When it comes to beautiful gem quality natural ruby, sapphire and emerald, the bigger the better!

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