Gemstones - Your long term investment option - JewelInfo4u

From the beginning of human history gemstones remained the objects of desire. They have been coveted for their beauty and brilliance, revered for their mystic powers and highly esteemed for their value. So it is no wonder that at the turn of the new millennium, gemstones have emerged globally as one of the most popular mode of investment. However, investing on gemstones is not a new phenomenon. Since ancient days, men were aware of the value of gemstones as a shield against economic uncertainties at the times of political upheavals. To hit it off as a gemstone investor, one has to make intense research about the gemstone market. It is also important to understand gemstone quality and grading system. The precondition of becoming a gemstone investor is developing love for gemstones. Because love for them will make you know more about them. So before becoming an investor, know your gemstones first. 

Gemstones have some unique economic features that make them a money-spinning investment.

• Unlike other forms of investments, gemstones retain their value for centuries. The value of money or currency fluctuates with time depending upon the whole gamut of the political environment. But, gemstones with their intrinsic value, outlive all the odds of time to give you a fabulous return at the time of your needs.
• The gemstones are the most portable among all the assets that a man can make in his lifetime.
• They are the super concentrated form of wealth which can be stored or concealed with utmost privacy. Thus history is full of instances of the fugitives of the Royal families fleeing only with the confidence of the Jewellery of their womenfolk.

To begin with, investment in gemstone is very different from any other investment schemes. Many people all around the world are victimized in gemstone forgeries only because of the fact that they are not equipped with sufficient information for making intelligent investment decision.  The dynamics of gemstone investment is ruled by some unique features of its own. 

First of all, gemstones are not the assets that can be readily liquidated.

The gemstones investments are more like real estate investments rather than precious metals like gold. This means they preserve value but they are not supposed to fetch handsome profit over a short period of time. One who wants to make quick profit by reselling Gemstones are recommended to stay off this sector. According to the seasoned investors, one should keep a stone for at least ten years to cut a substantial profit out of it.  

Making a Portfolio

An aspiring investor should devote time for a proper portfolio planning. Many leading firms can assist you in the planning of your gemstone portfolio so that you can buy proper gems to make your dream portfolio come true.

Before setting off, one should remember gemstone investment is meant for the well informed and cultivated individual with a substantial fund. One must have a substantial buffer over his savings. At the very beginning it is recommended not to place more than 10%-15% of your saving in gems. As a beginner, make a portfolio spending not more than $10,000 comprising one or two gems. View your portfolio as a long term shield. Always remember an instant liquidation of gemstones is possible but only with a discount. A handsome portfolio may cost you between $25,000 and $100,000, and still higher.  

Information is the key factor for becoming a matured gemstone collector.

As a beginner you must back up your lack of experience by making huge independent researches. You have to accumulate the profit history of different stones from different business magazines and evaluate them. Avail yourself a regular subscription to The Gemstone Forecaster and other publications.

You can also initially enter into a partnership with a knowledgeable partner.

Disbelief is regarded as a virtue in this area of investment. Checking and rechecking are the key components for verifying the true value of a stone. 

The natural corollary of becoming skeptical is to going for the appraisal of the stones.

An appraisal means the evaluation of a gemstone by a neutral, third party.

For making a confident purchase, appraisal is essential. An appraisal helps you to know the cash liquidation value of the stone. It also eases the insurance procedures. The appraiser should be hired by you, independently and with utmost caution, for appraiser is the person who is assigning value on your stone. The person should be reliable and reputed, because in an unorganized industry environment, the appraiser’s opinion may not be always correct.

Analyze the demand curve of a particular stone in the current market

Depending on the desirability of the stone at a particular point of time, the price fluctuates. At this moment, world’s most traded gems include emerald, ruby, original and fancy sapphire, Mandarin orange garnet, Alexandrite and Spinel. Demantoid garnet, cat’s eye and color changing garnets are also all time collectors’ favorite.

However, the demands for particular stones are not fixed and vary from time to time. Good investment is all about good return and the general rule, “buy when they are priced at low and sell them when the market is hot”, is not applicable here. In gemstone investment, the thumb rule is, “buy the best you can afford ”because in resale market, "the best is appreciated fastest".  

Always buy your gemstones from reputed Jewellery House or gemstone supplying companies 

It is extremely important to enquire about the company from which you are making the purchase. The credibility of the company depends on such information as for how long the company has been in the business, their previous performances viz a viz customer satisfaction and customer complaints and so on. You can know all these information by calling the Consumer Protection Agency. Always deal with the company who take their reputation seriously.

One should make the company put all the information about the quality of the stone along with the terms of dealing, in black and white. It is generally prudent to stay off the companies which approach on their own with unbelievably lucrative investment offers.

The industry experts generally advise against dealing with the tele callers, for the major gemstone scams of the world used telemarketing as their tool.

Be wary of the forged certificates

The certificate is the integral part of a gemstone purchase and yet most of the frauds occur through forged certificates.  A certificate is an identifying document by gemological laboratories that records the variety of the stone and confirms its natural origin.

It is advisable that never buy  a colored stone without an International Gemological Laboratory  Colored Stone Grading Report and never buy a diamond without an International Gemological Laboratory of Diamond Grading Report.

Just any certificate offered at the time of purchase is no better than a blank piece of paper. In countries like Japan, all gemstones are sold with a laboratory certificates. But in many countries, including the USA, there is no stringent law banning unauthorized persons offering a certificate. As such some certificates are reliable but most are not. Forged certificates are also in wide circulation. Certificates therefore should not be regarded as the ultimate form of guarantee

Stay off sealed gemstones 

As a precautionary measure, never purchase a gemstone that comes in a sealed package. Never buy gems that are sealed in plastic or Lucite boxes. Be cautious whenever you are making any purchase over telephone or through internet. Even if the buyer provides a repurchase certificate, always make sure of the existence and credibility of the company itself, because it may happen when you are considering a resell you might not find out the company at all. 

The value and grading of gemstones are hugely subjective

Although rules of the 4Cs, that is, color, clarity, cut and carat weight are the universally accepted norms for determining the value of the stone, on the economic side the factors that finally dominate the value of the stone are the retail price, wholesale price and replacement cost of the stone. Because of the presence of numerous middlemen, there arises an infinite gap between the wholesale price of the stones and their retail prices. 

Your chances of making good profits increases when you keep in mind the following points.

• Always try to deal with such companies who collect their gems from the source country itself, thereby offering authentic stones at near wholesale prices.
• Try to buy rough stones and then arrange their cutting yourself. It will give better price at the time of resell.
• Instead of buying stones haphazardly from here and there, try to purchase a bulk amount at one go. You will make profit by selling individual pieces at a much higher price.
• Be informed and try to avail the opportunities of new discoveries. Many gemstones like alexandrite or tanzanite do not have steady supplies because their production is only sporadic. Whenever a pocket with substantial reserve is discovered, stock some good amount of them, even though market at that point of time is flooded with their supply. After a short while you will find their supply starting to decline until another deposit is found. According to the rules of demand and supply you will get much higher price when this spate of insufficient supply continues.

Being patient is absolutely necessary to make your investment profitable.

It is the rarity that makes the gemstones so special and precious. The deposits of most precious gemstones are few and scattered over the continents. Extraction is also troublesome as their occurrence coincide with the high politically volatile regions. As such it is nearly impossible these days to find the best grade gemstones which only a few companies can afford to offer. On the other hand, it is equally hard to hunt down a willing buyer offering rewarding prices. 

An astute investor is one who instinctively knows what is good and what is bad. So trust your eyes and intuition to examine the following points:

• How brilliant is the stone?
• Whether the color is uniformly spread?
• Is the durability of the stone sufficient?
• And most importantly, how great is the overall appeal of the stone to you?

Last but not least, if you become defrauded, immediately lodge a complaint at the consumer protection organization and prevent others being cheated in the same fashion.  

Some useful URLs

http://www.faceters.com/askjeff/answer47.shtml

http://www.factbites.com/topics/Federal-Trade-Commission

http://www.hardassets.com/kits_gems.htm

http://www.hardassets.com/publications_gems.htm

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