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Gems
as Investments
Gems
must nevertheless be considered speculative investments.
The key to an investment is its liquidity (ease of disposal)
and the nature of its ultimate sale, because profit
is realized only at this stage. Some gems, such as diamonds
and fine, small rubies, emeralds, and sapphires are
very easily sold, because the market demand is very
large.
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But
how will the owner sell his gem? If he bought it at
retail prices, and sells it to a merchant some time
later, he may only be paid half of the retail value
at the time of sale. |
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Even
if the gem doubled in value in the intervening period, the
seller ends up only with the amount he used to purchase the
gem. In this case he has lost money, because inflation has
diminished the purchasing power of the money he receives.
If the seller finds a retail Customer himself, however, he
might double his money. So the invest¬ment potential of
a gem depends largely on how it is ultimately con¬verted
back into cash.
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DIAMONDS,
GEMSTONES & CRYSTALS
FACTS & FIGURES |
| Another
factor is marketability. A very unusual or rare
gem may bring a high price. But if the owner wishes
to sell his stone, he may find that few people
will buy it from him, because its scarcity has
prevented the development of a widespread demand.
The only buyer might then be another collector,
or a connoisseur of fine or rare gemstones. These
people do exist, and ultimately may be a significant
factor in the gem trade. Thus, the ultimate marketability
of rare stones will depend on the ability of gem
dealers to make these gems widely known and ap¬preciated.
Some gems have risen dramatically in price in
recent years. Tanza¬nite, for example, virtually
unknown in 1965, more than quintupled in price
within a decade. This was the result of good marketing
to create a demand for the gem. Aquamarine of
fine, dark blue color showed similar price appreciation.
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Other
gems also rose substantially in price. An important
factor to consider in examining this performance
is the sale ability of gems, compared to other
investment items. Almost even culture uses gems
in some way. Gems may play a role in international
politics and finance, whereas antiques and art
do not, or certainly not to the same degree. |
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Are
gems, then, a good investment? The answer is a qualified yes.
The qualifications are: specific type of gem, purchase price,
marketabil¬ity, quality of stone, ultimate disposition,
the fashion of the times, and the state of the economy. These
factors may dissuade the would-be gem investor, and this is
certainly an area where expert advice would be welcome. |
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