07.06.2023 GEMSTONES: A SPECULATIVE INVESTMENT?
It is not only in times of crisis that investing in gemstones enjoys great popularity. Natural, untreated colored gemstones in particular are an excellent addition to an existing investment portfolio thanks to their stable value. But how crisis-proof is an investment in gemstones really and which stones are suitable as a long-term investment option without speculative character?
IS A GEMSTONE INVESTMENT SPECULATIVE?
Almost all of the world’s noble houses have secured their long-term wealth with collections of jewelry and/or precious stones. And in times of crisis, jewels have always served as an escape currency. As an investment, they are attractive primarily because they are not volatile, are small and easy to store, and have a concentration of value that is many times higher than any other known investment. In addition, rarity and demand are steadily increasing, driving up prices and naturally protecting the stones from inflation. In recent years, colored gemstones such as ruby and sapphire have experienced an increase in value of around 6-8% per year.
In this sense, gemstone investing is not speculative at all; in fact, it is a rather conservative investment in value. As with all forms of investment, there is some risk involved, but investing in gemstones is not expected to increase in value exponentially, nor is it expected to decrease drastically in value. Gemstones serve to preserve the value of liquid assets and should be considered as a long-term investment option.
In recent years, colored gemstones such as ruby and sapphire have experienced an increase in value of around 6-8% per year.
WHICH GEMSTONES ARE SUITABLE FOR INVESTMENT?
Not all gemstones are suitable for investment. Only natural-colored, untreated gemstones of high quality are suitable as investments. Conservative gemstones include, above all, the three classics ruby, sapphire and emerald. If you have a long-term time horizon, diamond is also an option. Those who already have some gemstone portfolio can also supplement it with tourmaline, alexandrite, tanzanite and others for diversification. Unlike traditional investment gemstones, these rarity stones are more speculative and can appreciate significantly in value if they suddenly become fashionable and demand increases. They are recommended for experienced investors only.
The ruby is the red variety of the mineral group corundum and is often called the “king of gemstones”. Rubies in pigeon’s blood red – a strong red with a tinge of bluish – are particularly sought after. The ruby is the gemstone with the greatest increase in value in recent years: Its value has increased tenfold since 1995.
Sapphire is also a variety of the mineral corundum. While red corundum is called “ruby”, all other colors are grouped under the name “sapphire”. The best known is the blue sapphire, but there are also sapphires in other shades such as pink, yellow and orange. Especially larger and therefore rare sapphires are suitable as an investment.
Emerald is the green variety of the mineral beryl. It was already mined in ancient Egypt and nowadays mostly comes from South America, Africa and the Ural Mountains. Emeralds almost always have small inclusions called “jardin”. The greener an emerald is and the fewer inclusions it has, the higher prices it fetches.
Tourmaline occurs in a wide variety of colors – it is not for nothing that its name, which comes from Sinhalese, translates as “stone of mixed colors”. The intense turquoise-blue Paraiba tourmaline is particularly sought after. In recent years, the price of top-quality tourmalines has risen sharply.
The color-changing chrysoberyl is known under the trade name “alexandrite” and owes its name to the Russian tsar Alexander II. Depending on the composition of the incident light, alexandrite shows a color change from green-blue to strong red. Tourmalines in intense colors are especially interesting for investors.
Blue to purple tanzanite is a variety of the mineral zoisite. It is named after its location in Tanzania and, according to legend, was discovered by an employee of the New York jeweler Tiffany. In the last 40 years, the gemstone has been subject to strong price fluctuations, but since it occurs only in a limited area and the amount found is becoming smaller and smaller, a significant increase in value is to be expected.
GEMSTONE INVESTMENT WITH LOW RISK
An experienced dealer will advise you competently and carry suitable stones in appropriate quality and with certification.
If you don’t want to pursue a speculative investment strategy, you should focus on untreated and certified jewels when investing in gemstones. “Untreated” means that the stone has been cut, but the color and purity have not been artificially “enhanced.” Also, an internationally recognized certificate from an independent gemological laboratory is essential. It certifies the authenticity and value of the stone and enables a serious resale as well as the insurance of the jewel.
In addition to the quality of the gemstone, which is primarily determined by the 4 Cs Carat (weight), Color (color), Clarity (clarity) and Cut (cut), you should also make sure that the gemstone “lives”. This means that it sparkles and shines and – most importantly – pleases you and gives you pleasure.
When purchasing gemstones for investment purposes, it is advisable to visit an appropriately specialized gemstone dealer. An experienced dealer will advise you competently and carry suitable stones in appropriate quality and with certification.