The Arcane World of High Priced Gems

by Richard W. Wise

© 2008

“I am showing you this in absolute confidence, you understand Mr. Wise and I am asking you please not to mention this stone to anyone”.

So begins a conversation not unlike many similar conversations I have had over the past few years with dealers who specialize in ultra-rare and very high priced gemstones. The place, Las Vegas 08, the gem an extraordinary, ultra-rare fancy color diamond, the price, somewhere north of 10 million dollars.

Ultra-high-end gemstones exist, are bought and sold in their own world or rather in two contradictory worlds. Remember the Star Trek episode. The Enterprise discovers a new universe that is the flip side of our own, its just the same only everything is backwards. Sound familiar? (pictured above 6.04 carat Fancy vivid blue, internally flawless. Sold: Sotheby's Hong Kong, U.S. $7,981,835.00 world record: 1.3 Million per carat)

Baubles, Bangles and Glitz:

First there is the glitzy universe or world of the auction houses which has become increasingly the venue where the ultra-fine and ultra-rare and therefore ultra-chic are sold and lately a world record price shattered at every auction.

“Ego is out there, these people want to be seen and the item and purchase price are very public.” says Gloria Lieberman, head of the jewelry department at Skinner’s Boston where the dealer/retail buyer mix is currently 60/40. The dealers still bring in more dollars, but the auction houses see the handwriting on the wall. They are directing more and more of their marketing toward consumers. The auction market is becoming increasingly a retail venue.

Burning the Stone; Mum’s the Word:

Then there is the universe of the old-line, high end dealers where discretion is the watch word. Picture richly paneled walls, men in conservative well cut suits floating down silent hallways. The reality may be the rabbit-warren at 580 5th Avenue but, hey, lets maintain the illusion.

“At all costs they avoid burning the stone”, says a prominent dealer, “If the price, even the fact of the stone’s existence becomes too public, some buyers will shy away”. This is known in the trade as burning.

This dealer cites the example of the 76.45 carat Archduke Diamond named for the Austrian Arch Duke Joseph August. Molina a high-end Phoenix Jeweler, made a very public show of owning the stone even allowing singer Celine Dion to wear the Archduke on a TV special. In the dealer's world, this is very bad form. One dealer who was interested in the stone for a client declined to show it once he found out about all the hype surrounding the gem. “Our clients wouldn’t be interested.” The stone had been burned.

Auction prices are “an indication not a guideline of a gem’s value” says Marc Lazar a dealer with a mind boggling inventory of ultra-fine white and fancy color diamonds who has, in the past,bought and sold diamonds at auction. “You have to know the details. Who was the buyer”? asks Lazar. Was it a dealer or a retail buyer with a lot of money who didn’t mind paying a high price. Conversely, warns Lazar, a stone may sell for a low price at auction.

Why would a dealer pay a high price on purpose? As part of a strategy to ratchet up the value of other similar gems he already holds in inventory.

One source has suggested that this is exactly what happened with the record ruby sale in 2006. An 8.67 carat “pigeon’s blood" ruby that sold for $425,000 per carat shattering the world’s record per carat price established just the year before when a 8.01 carat of similar color went for $275,00 per carat to a private Asian buyer. (image above left). Lawrence Graff, perhaps the world's most prominent dealer, bought the second stone. According to my source, he didn’t mind paying the highest price ever paid for a natural ruby because he had several more rubies of similar size in his inventory and a rising market raises all boats (more). The stone has since been reset and modestly renamed The Graff Ruby.

Obviously this sort of wheeling and dealing is not a method you should try at home. As Marc Lazar points out: You must know the market, know the gem, be at the auction and know to whom it sells. Only then are you in a position to decide if the new world's record price is a true indication of the gem's market value.

Tanzanian Spessartite: A New Kid on the Block:

Bored with million dollar gems? In my last postI suggested that the fine Nigerian spessartite was becoming scarce and that prices were rising. A new production of spessartite from Tanzania came on line just last year. As to the color, you be the judge. To my eye the yellow secondary hue is stronger thus diluting the orange making the general run of material from this new source inferior to the best from Nigeria but the two pictured here are certainly worth a second look. The yellow secondary hue being brighter---yellow is the brightest hue---you get a punchy saturation. Much of this new production has eye-visible inclusions, but you will never get run over in a cross-walk wearing one of these beauties. Compare these to the two images in last week's post. and you will see what I am talking about. The good news is, a fine spessartite garnet can be obtained for hundreds per carat not thousand or millions and frankly a fine spessartite will blow the doors off of most fancy color orange diamonds at a fraction of the price.. (5.75 square cushion, 9.4 mm square. 2.26 hexagon, 7.12 x 8.04 mm courtesy GemNut:)

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Interested in learning more about the connoisseurship of fine gemstones? Read the book that appraisers, dealers and jewelers rely upon. Secrets of The Gem Trade will provide you with the tools you need to understand and appreciate fine gemstones. Learn the true grading criteria for diamonds, pearls, garnets, ruby, sapphire and opal. All of today's most "precious gemstones". Read a free chapter online at the Secrets website: or just order it for $35.95 from Amazon.com:

whether you like to know what the best colour is in Tanzanite, or how to grade a Diamond, you will find it in this book. No other book I read before dealt with this topic is such detail as Richard Wise's masterpiece."

A. Van Acker, FGA
Amazon June 2005