Tucson 2008; New Market Realities for a New Century

Exceptional Spinel Enters The Market.

©2008

by Richard W. Wise, G.G.

Cut gems from the 52 kg. giant crystal found last August at Mahenge, Tanzania were very much in evidence at the 2008 show. The material is exceptional! Although the occasional dealer is calling it red, for the most part it is a light-medium toned visually pure pink to orangy pink hue. (image left, run of colors of Mahenge spinel, photo: Jeff Scovil)

The best gems from Mahenge exhibit awesome saturation with little or no gray or brown mask. It is fair to say they are the finest pink spinels ever seen by this writer. A few dealers who appear to have the market cornered are asking very aggressive prices; others are more moderate in their demands. This explains the current broad spread in asking prices. There are a still a few bargains out there but even the current low end represents a 50% increase over prices being asked just a few years ago—though it must be admitted that this material is of higher quality than the best that was then on offer. (image (below right). one of the rare pinkish red spinels from Mahenge, weighing over 12 carats: photo courtesy Vincent Pardeau)

Market Manipulations:

For the second time in recent memory, alert dealers have managed to short circuit the normal market forces of supply and demand. The usual scenario, large amounts of rough from a new strike enters the market and prices drop. The discoveries of spessartite and red tourmaline in Nigeria eight or nine years ago and more recently the large strike of Pakistani peridot of five years ago provide excellent case studies. In both instances, large parcels of high quality rough hit the market all at once, depressing prices. (see my Gem Collecting for Fun and Profit). Now, it appears, the dealer community has begun to wise up.

The first instance of this sort of market manipulation occurred with the 2004 discovery of cuprian tourmaline in Mozambique. Kilos of rough were available but a few well capitalized dealers managed to corner enough of the material to successfully demand high prices and other dealers simply followed their lead. In what was apparently a well orchestrated campaign, these same dealers were able to co-opt CIBJO and convince most of the major gem labs to ignore all existing conventions and adopt the term "Paraiba" to describe the Mozambique material.

The Paraiba play was cunningly conceived and brilliantly executed and there is nothing morally reprehensible about cornering a market if you can pull it off. Is it good or bad, that's debatable. Those that missed the boat argue that it was a bad thing because, well because they missed the boat. Others believe that stabilizing the market price is good for everyone but regardless of which side one might come down on, it must be recognized that the fact that the normal freewheeling market forces of the past have been short circuited twice, does signal a potentially big change in the fundamentals of the colored gemstone market. In future, small dealers who wish to get in on a new strike will have to be quick on their feet and collectors even quicker.

The second time around we know that several large spinel crystals including the 52 kilogram monster mentioned above were found in Mahenge, Tanzania. According to an early report just 2% of this material was facet grade. Still 52,000 grams equals 260,000 carats. If we figure a 30% yield that would translate into 78,000 carats of vibrant pink spinel. Unlike the situation in Mozambique, the Mahenge strike was small and containable. Informed sources tell me that two, perhaps three dealers acquired the lions share of the rough much of which was cut in Bangkok. The pink spinel from Mahenge is among the finest ever discovered but if your looking to acquire a few stones, be prepared to pay a stiff price.

Spessartite; More surprises from Tanzania:

A new strike of Spessartite Garnet has also been found in Tanzania. In a recent post on the GemologyOnline Forum www.gemologyonline.com, ICA (International Colored Stone Association) Ambassador Eric Saul www.swalagemtraders.com reports that this new material was found at Loliondo, an area close to Serengeti National Park and only 7 kilometers away from the Kenyan border. (image right: Top row, Nigerian spessartite rough. Bottom row: rough from new Tanzanian strike Image courtesy Precision Gem)

One dealer in Tucson had a large parcel of cut gems from this source. The stones differed from and were inferior to Nigerian spessartite, they were a medium (40%) toned highly saturated orange with a strong yellow secondary hue (yO) and all showed visible inclusions.

Gene Flanagan www.precisiongem.com had better luck. Gene was able to find a few good pieces of rough that cut into bright eye-clean gems (image left; Custom cut Tanzanian spessartite cut by Gene Flanagan, image courtesy Precision Gems) still, I see a good deal of yellow in the gem which the best of the Nigerian spessartite does not show. To be fair, this conclusion is based on a very small sample of the Tanzanian material so stay tuned for further updates.

Next: Problems in Paradise; the Tahitian Black Pearl market. Stay tuned.

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posted by Richard W. Wise @ 9:43 AM