Quality, Rarity & Value; Pricing the Crème de la crème of Gems, Part III

By Richard W. Wise, G.G.

© 2006

Lab Games:

Over the past two decades we have seen the proliferation of the gemological laboratory. Ostensibly the function of these labs has been to provide gemological services that require a higher level of expertise and technology than that available to the average jeweler-gemologist and to “certify” the identity, origin and treatments, if any, done to a particular gem.

It is no accident that the growth of the gem labs has coincided with the booming market for colored gemstones. The labs have provided the credibility that has for so long been missing and made this rapid growth possible. The labs are not the only cause; the advent of aggressive marketing spearheaded by the television shopping channels has had a strong impact. We have entered the Age of Information; today education in the form of books, magazines and information provided by the shopping channels themselves has replaced the age old “keep em stupid” strategy that has for so long been favored by the industry.

Cuprite tourmaline from Paraiba, Brazil (see post Pricing the creme Part II) pretty much had the market to itself until 2001 when Cuprite tourmaline in northwest Nigeria and just lately similar gems in Mozambique. Dealers working with these stones naturally wanted to cash in on the Brazilian gem’s market cache and call these gems Paraiba. This has sparked a lot of controversy in the gem trade and promises to create a lot of confusion among collectors. In February 2006 the Gemstone Industry Laboratory Conference (GILC), a committee made up of representatives of most of the leading labs met and decided that they would use the term Paraiba to describe this variety of tourmaline regardless of its source.

Image: Paraiba tourmalines; origin: Brazil. The pear shaped gem (left) is the highly desirable Carribean Blue (image courtesy Pala International)

The standard scientifically accepted nomenclature for describing a gem is to use the species name followed by the variety and finally origin, for example, species: Corundum, variety: ruby, origin: Burma. Until just recently this standard had been applied universally by gemological laboratories. The GILC’s action effectively turned the standard terminology on its head. Thus, it is now possible to encounter certificates with language such as: species: Elbaite tourmaline, variety: Paraiba, origin: West Africa, the proper variety name, Cuprite, is simply ignored.

It is important to recognize that although the public is wisely demanding written assurances from gemological laboratories of type, treatment and origin of gemstones prior to purchase, these certificates, grading reports or whatever euphemism is used to describe them, come from dealers and it is the dealers and jewelers who purchase the reports and are, therefore the laboratory’s best customers. Laboratory reports have become defacto sales documents and labs are under pressure from the dealers to put the best spin on things. Just as the public has begun to trust the labs to "certify" and thus guarantee that a stone is what the seller says it is, the labs have begun to betray that trust.

Reductio ad absurdum; geography versus beauty:

Unfortunately uniformed buyers have reduced the appreciation of the qualities described earlier (see posts Pricing the Crème Part I & II) to the absurd pursuit of any gem with a desirable geographic pedigree. Kashmir gems without the fine color and lacking the misty quality, emeralds that look like broken coke bottles and Burmese aquarium gravel will command a premium price in the market simply because the have an origin certificate from a recognized gem lab and despite the fact that they lack the very qualities that made these gems great.

This absurdity is the result of a very common market assumption that involves the logical fallacy of assuming the inverse. The proposition: All gem dealers are idiots may or may not be true but assuming the inverse: All idiots are gem dealers is both logically invalid and demonstrably false. Each of us knows at least one or two idiots who are not gem dealers. Likewise the proposition: All the finest rubies are from Burma may also be true but the inverse: All Burmese rubies are fine is also invalid and demonstrably false.

Gems are all about beauty. They have no nutritional value; they won’t keep the rain off or warm you in winter. What does it matter where a gem was found so long as it is beautiful? The fact is there are some very fine rubies found in other geographic areas and some really poor quality found in Burma. In the final analysis it matters little weather the stone was found in Burma or New Jersey.

The problem is, the market subscribes to this fallacy and geographic pedigree does affect price. Returning to cuprite tourmaline, the Paraiba designation does carry a market premium. The action taken by the labs sacrifices consistency for the sake of marketing and can do nothing but sow confusion and foster distrust among consumers.

This just in….

I am hearing a new rumor. According to sometimes reliable sources, the American Gem Trade Association (AGTA) Board of Governors has voted to reverse the decision made by its lab representatives at the GILC meeting in February. Stay tuned…

Richard W. Wise is a goldsmith and gemologist and is president of R. W. Wise, Goldsmiths, Lenox, Ma. Gems & jewelry available at: www.rwwise.com . His critically acclaimed book, now out in paperback can be reviewed at www.secretsofthegemtrade.com.