Sunday, April 17, 2011

All Sales are Final: How to Save When Buying Gems

The wholesale price of any particular gem can vary drastically – as much as, I kid you not, 90% - depending on the context in which it is bought.  But: is extremely hard to get super low prices on gems, and unless you live in the right place, know the right people, and are willing to do a lot of hard work, it is simply not possible.  While I do manage to get gems at very good prices most of the time, even I rarely save that much. 

If you manage to save 40-50% over the average internet price of a gem, or perhaps 70% over a sale on T.V., then you’ve done good and your investment will retain its value over time.

What follows are some do’s and don’ts when you want to get low prices.

1. Don’t buy on the web or on T.V.:
Buy direct whenever possible.  A photo (or the flat screen) is never 100% accurate.  Also, when the “wholesale” website is open to the public, then that’s not really wholesale.  Prices can be lower than retail, but photos, listings, shipping, or producing a gem show take time, and time is money.  If you must buy on the web, make sure you get an inspection period and a return option.

The downside to buying direct: most sales are final.

2. Save by buying at shows:
Gem shows are definitely worth it.  Even gem dealers sometime buy from each other at shows!  Sellers have to make back the cost of their booth, and a show is a good way of advertising and connecting with potential new buyers.  But don’t rush yourself to buy. Walk around. Prices can vary drastically.  Take your time looking at the gems, and have them weighed before committing.  A low per carat price can fool you about the cost of a larger gem.  Make sure you have good lighting.  And ask questions about treatments.  If you don’t, you won’t be told.  Don’t just ask “is it natural?”  That just means it’s not synthetic.  Plus, many sellers think that “heating” does not mean “treating.”  So ask: “is it heated, oiled, glass filled?”  Finally, double check the invoice (make sure you ask for one).  Shows are busy, and both buyers and sellers can make mistakes.

The downside to buying at a show: gem show parcels, especially the loose ones in the little bowls, can contain scratched stones.  And sales at shows are definitely final.  It may be hard to get in touch with the same seller if you want to re-order (many are not on the web, and/or they live far away), and sometimes their non-show prices are higher.  Some sellers only sell at shows, period. 

3. Save by matching your own pairs for earrings:
When you try to match gems yourself, look for relatively uniform parcels – that saves time.  But: the more uniform the parcel, the higher the per carat price. Again: time is money. Use the groove between your index and middle finger on a tray to see how the gems will look against the skin.  Don’t work in dim lighting conditions and loupe your gems when you’re done.  Make sure you match color and size!

The downside to matching pairs yourself: some gems are incredibly hard to match.  Tourmaline and spinel are among the toughest.  You can think you matched your pair perfectly but when you go outside in the daylight you see that one gem is more pink, one more blue, etc.

4. Save by buying parcels:
This is definitely not for the uninitiated, but in rare cases, the savings are incredible.  However, a parcel may be large, so even if the per carat price is $1, you may have to dish out several hundred bucks for a ton of gems most of which you’ll never sell. 

When you buy a parcel, this is the most important rule of all: make your calculation based on one, ten, or a few more gems you know you can sell.  The sale should make you your money back on the entire parcel.  That’s how low the price has to be for you to make this investment.  80-90% of a parcel may be unusable material, and the lowest priced parcels are very uneven in quality.  So if you have time, put to one side the very best stones.  Regard the rest as garbage and recalculate the per carat price of the parcel based on what you’ve pulled out.  Is it still worth it?

Once, I was presented with a 50 carat parcel of untreated half to one carat Afghani rubies for a very low $40 per carat.  It was an “all or nothing” buy, no pick.  The parcel was very glittery and beautiful, but after I spent about 15 minutes pushing to one side the really nice stuff, the parcel that was leftover looked dull and unappealing.  Meanwhile, I had not even pulled out 10%.  That meant the per carat price was $400 for the good stuff, and that was way overpriced.

The downside when buying parcels: you can get sucked in by a few pieces of glitter and lose your shirt.  Parcels are for the long haul if you want to use most of it, or a quick turnaround based on one or two pieces only.  And – yes, you got it: all sales are final.

5. Save by Bringing Cash on a Friday:
First of all, most gemstone sales (except for shows and the web) are cash sales.  Most of the time, you can still get an invoice, just ask.  But some sellers travel, a parcel can have several bids on it on the same day, meanwhile, any check can bounce.  A credit cared sale can be challenged.  Cash is the guarantee.  Cash down on a memo of 60 days is a possibility, but cash is paid down first, and cash is king.  Cash on the table, not in your wallet (you might literally have to put it out there to get the lowest price).

And what’s the story with buying on a Friday? Gemstone dealers go home for the weekend, and they need some money to bring home.  The younger ones want to party.  So if you pay cash out on a Friday, especially later in the cay, you’ll get the lowest prices of the week.

The downside to cash buys: an experienced gemstone dealer will ask you one of two questions you should not get suckered into answering (or answering honestly).  One: “how much cash do you have on you?” And Two: “what is your budget?”  If you give an honest answer, the price they give will reflect what you said.  Then you will never know how low the offer was really going to be.  So just look at the parcel, then ask for a price.  If the price is more than you want o pay and you say that you don’t have that much on you, you’ve got the upper hand.

The Final Word: if you have someone in the industry that you trust, use their expertise.  Let them help you, and if you can, show them what you are considering buying.  People who have done this for a lifetime always know more than you do.  By the same token, if you’re a repeat buyer, you are always honest and you always pay (on time), sooner or later you will be offered very good deals.  In the long run, honesty pays – both for the gemstone dealer and for you.  A lost reputation is a lost future opportunity.

A Parcel of 2.5mm Burma Pink Sapphires: looks very sparkly but only 10-20% are usable.

Sunday, April 3, 2011

“Could This Gem be a Little Bigger?” (How Big is Your Wallet?)

I get asked the question posed in the title about once a week.  Two out of three times I don’t hear back after my response.  I guess it's time to cut down on some of these questions, and put the request for bigger gems into perspective.

Let’s start with basic gem sizes and weights: each mm increase in diameter roughly doubles the weight of the gem.  Since gem prices are determined by weight, this also doubles the cost (or more, but I’ll get to that later).

An approximation of colored stone weight can be given by referring to standard diamond weights.  Here’s the standard table for brilliant cut diamond rounds:

1.3 mm
.01 carat
2.1 mm
.04 carat
3 mm
.1 carat
3.4 mm
.15 carat
4 mm
.25 carat
5 mm
.50 carat
6 mm
.85 carat

Now let’s make some sample adjustments for other cuts:
4mm round = 5x3 oval (1mm more in length, 1mm less in width, now you can do the rest)
5mm square = about 1.5 times the weight of a 5mm round (because you have to add in the corners)
5mm triangle = about 1/3 less than a 5mm round (because you cut down from the diameter)

Note that cabochons weigh roughly twice the amount of the same size faceted gem. 

Next, there are some basic adjustments for colored stones:
1. Most colored stones are denser, so they weight a little more.
2. Most colored stones are cut more deeply for color, so they weigh more again (if they are brilliant cut, they are cut like diamonds, but step cut for instance is rounder in the back and therefore heavier).

A good rule of thumb is that colored weigh on average 1/3 more than diamonds of the same weight.  So a 6mm round, or a 7x5mm oval weighs about 1 carat or a little more.

Finally, with some gems the size affects per carat price – drastically.  So let’s look into that.

First, we can exclude some gemstones where the per carat prices stay relatively constant, regardless of size.  That’s Amethyst, Apatite, Citrine, Chrome Diopside, Iolite, Mexican fire opal, Moonstone (and Labradorite), Quartz (any not already listed), Spessartite, Topaz (any)
Zircon.  Take this list with a grain of salt; there are always exceptions for special cuts or huge sizes.

Next, here are some gemstones where the per carat price jumps only in the large sizes.  The equal sign denotes price constancy.  The multipliers are in terms of the base price.  Also, I am only here talking about untreated stones.  So no heat, no oil, no glass filling   Oiled emeralds are probably similar in price, heated sapphires might be up to half these prices, but glass filled rubies are essentially worthless.

(Disclaimer: these multipliers are rough guidelines at best.)



Below 1 ct
1-2 ct
3-5 ct
5+ ct
Aquamarine
=
=
x 4
x 10
Peridot
=
x 2
x 2
x 10 minimum 
Red Garnet
=
=
=
rare
Rhodolite Garnet
=
=
x 3
x 5- x 10
Spinel
=
x 5 or more
rare
NA
Tourmaline
=
x 2
x 10
x 10
Tsavorite Garnet
x 5 after .25 carat
x 10
rare
NA


There are many exceptions to this, i.e. huge sizes in aqua or peridot can command prices in the hundreds of thousands.  Origin also plays a role with most of these gems.  Other prices fluctuate according to demand. 

Lastly, here are the gemstones where the per carat price jumps drastically starting with small sizes:



.10-.25ct
.25-.5ct
.5-1ct
1ct
2ct
3ct
4-5ct
Alexandrite
x 2
x 4
x 10+
x 20+
Rare
NA
NA
Diamond
=
x 2
x 4
*
*
*
*
Emerald
=
x 3
x 6
x 10
x 15
*
*
Ruby (Burma)
x 2
x 5
x 20
x 45
x 100
x 1000
x 1000
Sapphire (Ceylon)
x 2
x 4
x 12
x 30
x 30
x 30
*
Sapphire (Australian, Thai)
=
=
x 4
x 8
x 10
x 15
*


* These are prices I was asked not to provide.  Not so much that they’re a secret, but the fluctuations can be drastic.  Suffice it to say that a large diamond approximates the price of a large ruby, or more.  Diamonds are more available but controlled, rubies (Burmese, untreated) in the 3+ carat size are nearly non-existent.   So those two are more or less the two most expensive gems you can buy in large sizes.  Emeralds are cheaper and larger sizes are available, but they too can be in the hundreds of thousands in the very large sizes (5 carats or more).  Sapphires are also more abundant and will cost quite a bit less than rubies in the large sizes.

To those of you who have been quoted prices by me that are blow this list: congratulations. I probably got a good deal and passed it on. 

More about how to beat prices on gems in my next entry…


Matched Pair of 4mm Unheated Ceylon Sapphires I recently acquired