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:)

Stay tuned, click on my rss feed (the neat little widget, top left) or sign up to receive GemWise by email.

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

The Baroda Pearls; Another Auction Record at Christies

New Auction Record For Natural Pearls:

The April 25^th Christie’s sale followed a now familiar patter of jaw dropping, world record prices for large rare gem. Previous records for Burmese Rubies and Kashmir Sapphires have been smashed. The Baroda Pearls (image left), a double strand of 68 natural pearls that were formerly the property of the Gawkwar of Baroda was auctioned along with matching brooch, earrings and ring for the record sum of 7.1 million dollars. At this same sale a 22 carat Kashmir sapphire also set a world record (see previous post).

In the 19th century, the maharajah of Baroda, Khande Rao Gawkwar, came to possess the necklace that became known as the Baroda Pearls, The necklace was among the most expensive pieces in the Baroda Royal Treasury and remained one of its prized jewels throughout the 20th century.

The 825 square mile former principality of Baroda is located in northwestern India 148 miles north of Bombay. In 1907 Tiffany’s gemologist G. F. Kunz described the Baroda holdings as “among the greatest jeweled treasures of India” and estimated that the total value of pearls held by the Gawkwar to be 12 million dollars. The original “Baroda” necklace was composed of seven matched and graduated strands and was examined by Kunz and estimated by him to be worth a half a million dollars.

According to Christie’s the current necklace is composed of two large strands made of pearls from the fourth, fifth, sixth, and seventh strands of the original, joined by a cushion-cut Cartier diamond clasp. The 68 graduated pearls match in color, luster, and shape. The previous record for natural pearls at auction was set by Christie's in Geneva in November 2004 at $3.1 million, for a two-strand natural pearl necklace.

Since about 1949, the natural pearl market was basically D.O.A (dead on arrival) though price lists like The Guide have continued to quote wholesale prices for natural pearls; there was essentially no market for natural pearls in the United States. Why, a combination of the Wall Street crash of 1929 and the emergence of the cultured pearl in the late 1920s. According to Elisabeth Strack author of Pearls the market fell by 85% in one day in 1930 when banks refused to accept pearls as collateral for loans to pearl dealers. I recall a conversation with David Federman in 2001 to the effect that this market was making a comeback.

Judging from at least one show in Tucson, the natural pearl is back. Several dealers featured natural pearls and natural pearl prices have experienced stratospheric price increases since the first record breaking auction sale in 2004. I had dinner with the Swiss dealer who brokered the Baroda Necklace. The next day he showed me a graduated double strand of white roundish natural pearls that he had on offer at 2 million dollars. According to this dealer the price of the strand had increased by a factor of ten over the past five years. Another savvy dealer, Jeremy Shepherd, President of Pearlparadise.com told me that the largest percentage increases have been in commercial grade natural pearls.

According to CIBJO rules a natural pearl is simply a “pearl” with no qualification required and the use of terms based on classic localities such as “oriental pearls” is also allowed.

Prices Up or Dollar Down in Las Vegas

As for prices for gems and jewelry, prices are up or as one dealer put it, prices are exactly the same for fine gems; the dollar has simply lost 35% of its value.

Interested in understanding more about the grading of fine pearls? Follow me on gem buying adventures in the pearl farms of Tahiti. Visit the gem fields of Australia and Brazil. 120 carefully selected photographs showing examples of the highest quality gems to educate the eye, including the Rockefeller Sapphire and many more 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. Read a couple of chapters online: www.secretsofthegemtrade.com.

Buy it on Amazon: www.amazon.com

Kashmir Sapphire Sets Record; A Victory for Style Over Substance?

A Victory of style over Substance?

April 25^th at Christies, in a packed auction gallery, lot 261 a cushion cut 22.66 carat Kashmir sapphire set in a pendant surrounded by diamonds sold for a world record price of $3,064,000 to an anonymous bidder. At $135,000 per carat, this sale topped the former world record held by the 66.02 carat “Rockefeller Sapphire” a Burmese gem that sold for $48,871 at auction in 1991. This sale marks the ascension of sapphires found on a rocky hillside in the Indian State of Kashmir into the pantheon of super-star gemstones.

Speaking in the wake of the sale, Christie’s Head of Jewelry, Rahul Kadakia, made the following rather curious statement:

“This auction marks a turning point in the jewelry world where original design, rarity and provenance prove to be just as important as the quality of a gem.”

What precisely did Mr. Kadakia mean? Is he celebrating the final triumph of style over substance? Does he mean that the sapphire in question though rare is not so fine? The record breaking sapphire pendant (above) is certainly not a striking example of original design.

According to Christopher Smith, Vice President & Chief Gemologist at The American Gemological Laboratory, the sapphire in question is a “nice stone”. Smith, who has seen the stone but under less than ideal circumstances, makes the point that sapphires of the finest color tend to be a bit dark particularly in subdued lighting. This stone is a bit lighter and brighter at about 70% tone on the AGL scale where 80% would be ideal. The stone is well proportioned, brilliant and on a scale of 1-10 would rate between 8-8.5.

As to the gem’s provenance, interesting though not remarkable, it was never owned by royalty nor lost on the field of battle nor has it had any remarkable stories or curses associated with it. It was purchased by James J. Hill, a Minnesota industrialist of the Gilded Age, and given to his wife, Mary, on Dec. 24, 1886. Originally part of an elaborate necklace—since broken up-- the sapphire remained in the Hill family until the death of Hill’s granddaughter Gertrude Boeckmann Follett, in 2006.

So what business does a nice sapphire like this have claiming a record price? Well though it may not be able to stand toe to toe with the former record holder, the 66 carat Rockefeller Sapphire (image:right), which is in Smith’s words “extraordinary” and one of the “world’s preeminent sapphires”, it is rare. Kashmir sapphires in excess of 20 carats are quite rare and if you own one it’s a seller’s market.

The fact is the finest of the Kashmir sapphire has been recognized as the top of the mark in sapphire almost since the stone’s discovery in the late 19^th Century. Celebrated for it’s cornflower blue color and its trademark sleepy quality, a gem with proven Kashmir provenance commands four times the price of a comparable Ceylon stone and twice the price of a comparable Burmese sapphire. Due to its beauty and rarity it was the next logical candidate for gemstone super-stardom.

Is this a “turning point”, a victory of style over substance, of provenance over quality in the gem markets? This much is obvious, just the price of natural Burmese ruby skyrocketed in the wake of the record breaking sale of the 8.01 carat gem at Christies just two years ago, Kashmir prices, already edging toward $100,000 per carat wholesale, will strengthen. Anything with a Kashmir certificate from gem quality to aquarium gravel will see a big boost in asking prices and the publicity will further induce star-struck consumers to choose geography first and quality second. But, this is not a new trend rather just a continuation of a trend that has been in evidence for quite some time.

Follow me on gem buying adventures in the exotic entrepots of Burma and East Africa. Visit the gem fields of Australia and Brazil. 120 carefully selected photographs showing examples of the highest quality gems to educate the eye, including the Rockefeller Sapphire and many more 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. Read a couple of chapters online: www.secretsofthegemtrade.com.

Buy it on Amazon: www.amazon.com