Tuesday, March 20, 2007

Big Spike in Topaz Prices


















Mine Owners Manipulate Local Market

By Richard W. Wise, G.G.

© 2007

Collectors in the U. S. have noticed a substantial spike in topaz prices. Rumors have recently been circulating in the trade to the effect that price hikes were the result of forced closings of topaz mines by government environmental officials. I heard similar rumors from usually well informed dealers on a trip to Brazil in late January. (image: above left slightly orangy-pink Imperial topaz ring courtesy R. W. Wise, Goldsmiths)

According to David Epstein, author of The Gem Merchant and an American dealer living in Brazil the latest price increases are a result of market manipulation by the owners of Capão, Brazil’s largest commercial topaz mine. According to Epstein, Capao’s owners are systematically buying all the peach topaz produced by the 10-12 smaller mines currently active in the area in the topaz producing area. (image left: 0672 medium toned pinkish orange summer or ripe peach topaz from Capao Mine) Capão is located about five kilometers from the small village of Rodrigo Silva almost dead center of the two hundred ninety square kilometer topaz belt running in an east-west direction west of Oro Preto. (Image above: #2622 2.13 carat light toned pinkish orange spring peach topaz) For more on the Capão mine: http://Topaz; A Visit To the Mine

This buy up has been targeted at stones in the peach hues that the mine owners consider undervalued. Peach can be best defined as a pinkish-orange-brown to orangy pink range of hues. You will note that I do not use the term "Imperial" because the traditional distinction between precious and imperial makes little sense. Is an Imperial topaz not precious? Imperial is one of those terms that confuse rather than clarify. I like the terms spring, ripe and winter peach. A bit faciful? Yes, but fairly descriptive. As the orange tone deepens the stone goes from spring to ripe to overripe (winter), rotten would work but thats a hell of a way to market a gemstone.

The geographically limited production of topaz has made the market control scenario more than just possible. Commercial quantities of precious topaz ( all topaz other than the blue irradiated material), is mined in just one place, a twenty-square mile area in the Brazilian state Of Minas Gerais immediately adjacent to the city of Oro Preto. Capão is, in fact, one of only two large mechanized mines and the only one that currently sells commercial quantities into the world market. According to Epstein Capão’s owner Dr. Wagner and chief buyer Sr. Edgar have been aggressively buying up peach stones for more than two years.

Capão's aggressive buying has born fruit. Prices in Brazil have jumped between two to three times previous levels. Oddly enough topaz prices in the higher priced pink, red and sherry colors have remained stable. According to Epstein, Capão's principals believe that prices in these rarer categories are already high and they miners feared a falloff in demand if they attempted to push them higher.

Quick Review: The Gem Merchant, How To be One, How to Deal with One by David Stanley Epstein:

David Epstein’s The Gem Merchant has been out for several years but I have had a number of readers contact me for advice on how to become a dealer. Read this book! It is an excellent primer for those interested in entering the arcane world of the gem dealer. If you are interested in tax-deductible travel to exotic places, buying and selling beautiful things, read this book before you buy your first air ticket.

Mistakes made by neophyte gem dealers can be costly. David Epstein has been a practicing buyer’s agent in Brazil for twenty years and he knows whereof he speaks. This book will save you money.


"This book should be carefully read and digested, by those involved in buying and selling gemstones..."

Austrailian Gemmologist

Order direct from the book's author
www.gembuying.com


Interested in reading more about real life adventures and secrets of the gem trade? Follow me on gem buying adventures in the exotic entrepots of Burma and East Africa. Visit the gem fields of Austrailia and Brazil's famous Capao mine. 120 photographs including some of the world's most famous gems. Consider my book: Secrets Of The Gem Trade, The Connoisseur's Guide To Precious Gemstones.

“Wise is a renowned author... He’s
done a marvelous job of this first book, monumental work, a tour de force...My recommendation: Buy this book”.

Charles Lewton-Brain, Orchid

Only $39.95. You can read a couple of chapters online: www.secretsofthegemtrade.com.

Buy it on Amazon: www.amazon.com



Monday, March 12, 2007

Gem Collecting for Fun and Profit







Collector’s Corner; How and What to Buy

© 2007

Everybody wants a steal, 'er, deal:

I get a lot of emails from my readers with various questions. Friday I got a call from Diane, she read the book and wanted to know what stones a budding collector should be looking at. Now, when most people ask me that question what they really mean to ask is “what is available and cheap.” Why not, everybody wants a deal. Thing is in gemstones there are two kinds of deals.

As a collector you should be looking for the fine and the rare. Fact is, in gemstones just about everything that is fine is, in fact, rare, the finer it is the rarer. I like to use the example of amethyst. Amethyst is quartz which, geologists tell us makes up almost 26% of the earth’s total bulk. So quartz isn’t particularly rare but, a beautiful transparent deep purple quartz that exhibits red scintillation in incandescent light is extremely rare. (Image above: #6999: 15.06 carat custom cut Deep Siberian Amethyst)

You can buy amethyst for between $1.00-100.00 per carat, quite a price spread but you will probably pay $50-100 per carat for a #1 color “deep Siberian” amethyst described above depending upon size, clarity, crystal and cut. You can buy #2 color, a beautiful deep purple amethyst that does not exhibit the requisite red flash for maybe $20-$35 per carat. Given the fact that #1 color is hundreds of times rarer and perhaps three times the price, you figure it out.

What’s hot, what’s not:


In Secrets Of The Gem Trade I write about something that might be called the Gemstone Market Price Cycle or (GMPC) (love those acronyms) The cycle works like this: When a new gem or a new source of an existing gemstone is found, the new material floods into the market increasing availability and decreasing price. Gems, other than diamonds, normally occur in fairly small pockets so the flood doesn’t last long. What does happen is the increased availability stimulates interest which translates into market demand. As demand increases the material begins to run out and as supply decreases, prices increase. By the time the dust clears the market price is higher than before the new material was found. (Image above: #6064: 6.93 carat Nigerian Spessartite Garnet)

Recently we have seen this happen with several gemstones. Consider spessartite garnet, the 4th most brilliant gemstone. A decade ago, most jewelers had never seen a spessartite never mind the hot tangerine orange gems available in the market today. Most fine spessartite came from one source; The Little Three Mine in Ramona California. This material was extremely rare in the marketplace and sold for fairly high prices. One knowledgeable dealer told me that the total production from Little Three was probably on the order of 10,000 carats. There was simply not enough spessartite to make a market which gives rise to the paradox that if its so rare that no one knows about it, there is no demand. (Image right:#8084: 9.51 carat Nigerian Spessartite Garnet)

Enter the Nigerian find: All of a sudden there are Nigerian dealers all over Tucson with plastic bags full of juicy fruit orange rough. There is high quality spessartite everywhere and was it cheap. I remember selling 5+ carat extra-fine pure tangerine orange gems to collectors for $275-300 per carat. In the six years or so since the Nigerian strike the GMPC has played out; demand has increased, supply has decreased and prices have doubled. Prices now are higher then they were before the strike when the stone was a good deal rarer.

Of course this all took place BGT, Before 24 hour Gemstone Television really took hold back in the good old days when the free market was still alive and well. No one successfully had cornered any gem deposit and there was little if any hype to distort natural market forces. The effect of the shopping channels can be gauged by looking at Andesine, a form of sunstone that has become the darling of gemstone TV and is being sold by the shovel full to the unsuspecting at ridiculous prices.

Strategic Collecting:


So what’s a collector to do? Fact is the GMPC is still valid so long as y’all keep a jaundiced eye on gem TV. Two stones, spessartite and Peridot, particularly the material from Pakistan that began to trickle into the market in 1995 are still on the downside of the cycle, and, in my opinion, available in fine quality at reasonable prices. As for Spessartite, buy the high grade light-medium tone (30-40%) pure vivid orange to cinnamon orange. Remember once you go beyond medium tone, orange becomes brown and that is to be avoided.

Pakistan Peridot:

At its best, material from this source sports a medium grassy green primary hue. The best will read as as a strong medium toned green with just a touch of yellow and beware the gray mask. Pakistan Peridot will stand toe to toe with the best Burmese and is far superior in both size and color to the stones from the traditional Arizona source. Stones are eye-flawless and readily available in 5-10 carat and even larger sizes. (Image above: #7033: 8.09 carat Custom cut Pakistan peridot)

The rough material is getting scarcer and there is upward pressure on prices which are beginning to be felt in cut gemstone market. Peridot also has built in demand, it is also the traditional August birthstone. Every summer I have August babies come into my gallery, see cut stones from this source and fall in love.

My recommendation: buy Spessartite and Peridot and buy only the best. And, just three words of caution to those of you who think that you that you can steal a fine gemstone on Thai websites, Fleabay or Gem TV, get over it! I recall one client, I think he was a Dentist, after I told him a story of one of my trips to Burma asked me, "but do they know what they have?" The Burmese have been digging ruby since the Bronze Age. Gems are one of the world's oldest articles of trade. Fine gems made their way from Afghanistan to to ancient Sumer as early as 2000 B.C. With all that history, do you really believe these folks haven't figured it out? Take my advice: If it sounds like too good to be true, it is too good to be true!


Book Review

Extra-Lapis #10: Opal, The Phenomenal Gemstone

by Richard W. Wise
© 2007

It just arrived, my latest Extra-Lapis, this one #10 entitled; Opal, The Phenomenal Gemstone. For those of you who don’t know, Lithographie, LLC of East Hampton, Connecticut www.lithographie.org. publishes an English version of the famous German gem/mineral magazine Extra-Lapis. In the past few years monographs in this series have focused on gold, tourmaline and emerald along with numbers dedicated to important gem/mineral locations such as Madagascar and Pakistan and occasional forays in to mineral kingdom with issues on fluorite and calcite.

Extra-Lapis #10 is the latest word on opal. It includes articles on all the current producing areas as well as historically important locations both major and minor. The latest theories on what causes those tiny little silica spheres that create play-of-color to do the thing they do and much more.

Great writers too: The great husband and wife writing team Si and Ann Fraser kick the issue off with an overview of opal’s history as a gemstone. Much of this information is old hat but well organized and presented and include the intriguing assertion that Mexican opal was certainly known and valued by the Mayans and Aztecs and that, despite Pliny’s famous description, opal may not have been known by the Romans at all. In other articles; Veteran dealer Andrew Cody provides an overview of sources in South Australia, Elizabeth Smith, author of Black Opal Fossils of Lightning Ridge contributed an excellent piece on current conditions and mining at “The Ridge” including a scrumptious photo essay on black opal nobbies.

Other articles provide beautifully illustrated history and updates on diverse sources such as Slovakia, White Cliffs, Queensland, Virgin Valley, Honduras and Ethiopia. There is a map of worldwide opal locations, an interesting but incomplete glossary of opal terms. What is missing is a good bibliography and a solid discussion of opal classification and quality grading.

This latest 112 page offering is, like all the others, beautifully made and wonderfully illustrated. The editors go to great expense: Each softbound issue is printed on heavy chrome coat, printing and image reproduction is of the highest possible quality.

Extra-Lapis #10 is highly recommended to anyone interested in gemstones and is a must have for opal enthusiasts. The price is for #10 is $30.00 for a single issue but if you will take my advice buy a four issue subscription for $90.00.

Interested in reading more about real life adventures and secrets of the gem trade? Follow me on gem buying adventures in the exotic entrepots of Burma and East Africa. Visit the gem fields of Austrailia and Brazil. 120 photographs including some of the world's most famous gems. Consider my book: Secrets Of The Gem Trade, The Connoisseur's Guide To Precious Gemstones.

“Wise is a renowned author... He’s
done a marvelous job of this first book, monumental work, a tour de force...My recommendation: Buy this book”.

Charles Lewton-Brain, Orchid

Only $39.95. You can read a couple of chapters online: www.secretsofthegemtrade.com.

Buy it on Amazon: www.amazon.com