Investing in Gemstones

I sometimes get asked if gemstones are a good investment, and if so, how to get started.

The answer varies, depending on what the investors goals are.  For most people not in the gem industry. investment can be broken down into three categories:

  1. Short term investments
  2. Long term investments
  3. Legacy investments

Each of these has its own benefits and pitfalls, but the common requirement to be successful in each is Know What You are Doing. Either by research and study, or by getting trusted expert advice.

1.  Short Term Investment

The attraction of short term investment is to buy ‘a bargain’, currently worth much more than you paid, and then on-sell it to someone at a price closer to its market value.  There are certainly genuine bargains to be had, either through luck, in depth market knowledge, or usually a combination of both.  But for every genuine bargain there are perhaps ten deals that look like bargains, but turn out to be not so good later on.

On the whole, the vast majority of gem traders describe their products honestly.  Out of hundreds I have dealt with in Sri Lanka and Thailand over the years, I don’t think a single one has knowingly sold me something that isn’t what they said it was. But whether it was a ‘bargain’ or not, was completely up to my knowledge that, the very very good, price they offer may actually be twice the going market rate for that particular gem.  Or just what degree of heat treatment it has.  Or just what process was used to give it that particular colour.

When I first began to buy gemstones in Sri Lanka many years ago, I was very fortunate.  One thing that helped was that the country was still fighting a civil war, and apart from UN observers that rarely stepped outside their compound, there were very few westerners, and even fewer looking to buy gemstones.  I was treated very well by the traders I bought from, and was able to get some very good pieces at prices just not possible any more.

ruby ring 2ct
2 carat Ruby Ring with white sapphire. Bought 10 years ago in Sri Lanka for $500, the gemstone is now worth over $5,000
This fantastic flawless 7 carat Tanzanite was bought in 2008 from Zams in Colombo. The price of Tanzanite has fluctuated, but the price of a rare and beautiful stone like this will always appreciate.
This 4.5 carat Tsavorite is perhaps my favourite. Tsavorite is a fantastic but underrated gem – the same colour as emerald but the same refractive index as sapphire, and ten times rarer than either.

The problem for me though, is that as a short term investment, they are useless – because they are so good, I don’t want to part with them.  I would much rather keep them as a legacy asset for my children and grandchildren.

Nevertheless, it proves bargains are possible, even for the novice, but needs luck (in my case) and/or knowledge (which for me came later on).

There is another case too, and that is just to buy the gemstone for its own beauty.  Certainly, that was the basis for all my early purchases.  Because whatever I spent I thought was a worthwhile amount to get a beautiful gemstone.  In this case the monetary return is secondary to the subjective feeling of owning something really beautiful.

2. Long Term Investment

As long as the gemstone is genuinely a precious gem, then at some point in the future it will be worth more than the amount paid, whatever that amount was.  Say the market price for a particular sapphire is $1,000, but you pay $2,000.  You have lost out in the short term, but within, probably not more than, ten years,  it will reach the initial value paid, and in 20 years will be worth $4,000, after 30, $8,000, and so on.  The average 7.2% yearly appreciation in value overtakes whatever ‘mistake’ may have been made at the initial purchase.

Even for someone quite clueless, the intrinsic value of owning something rare and precious will be great enough in the long term to overcome the high price they may pay.  To give one example, 30 years ago I bought a diamond engagement ring for, what was to me then, a considerable sum of money – $2,000 – a months salary.  It was bought the most expensive way possible, from a retail jeweler who specialized in engagement rings. Now, the diamond in that ring is worth over $15,000.  So in the cold light of purely and investment, the amount I paid was not so bad.  But in addition to that, I had the pleasure for 25 years of seeing a very lovely diamond grace the hand of a beautiful woman.

g-tea-aqu-001001-6-45-new2Gold Sheen Sapphire Collectors piece Unique

Bought right, Aquamarine and Gold Sheen Sapphire are both excellent long term investments.

As long as they are the genuine article, buying gemstones with the view to keep them as a long term investment carries little risk.  Of course, if you can get a good price in the initial purchase, all the better.

3. Legacy Investment

This is the big one.  The one that is for the benefit of your kids and grand kids, to build an collection that will be a secured asset well into the future.

There are sound investment reasons to do this, but here is just one that I think is a compelling justification.  Say you use your saved cash to invest in property; the ‘buy in’ amount is going to be around $500k at least.  Yes, property will always over time increase in value, but it is not without overheads.  The land price might increase, but the building and fixtures are continually depreciating.  And then there are bad tenants, changes in zoning, and many things that can happen that you have little or no control over.

Consider gemstones on the other hand.  The overheads are minimal.  You may keep them in a safety deposit box at the bank for a trivial amount per year, or in a safe at home.  Insurance is no more than any other asset you own.  The appreciation of the asset is about the same as property, with without anywhere near the overheads and complication, and with complete control over the assets.  Instead of needing half a million dollars to start off, gemstones can be added to incrementally for only a few thousand dollars a time.  Then, should at some point you need to sell, there is the flexibility of selling in small units rather than one big chunk as you would with property.

Natural Ruby Cabochon No Heat
Natural, unheated Ruby is a fine way to start a long term or legacy investment in gemstones.


Whatever the investment type may be, I can’t stress enough how important it is to research yourself or get expert advice from someone you can trust.  The longer the term you plan to invest, the less risk there is, but it is still better to get off to the best possible start.


About my company, SJW Gems: My goal with SJW Gems is to give you the best, most beautiful gemstones I can find, tested in my own lab, at a price far below anything you would expect to pay elsewhere. I try to adhere to my personal motto of ‘twice the size at half the price’.

I only buy stones that I like, and would like to have in my personal collection. So, I am happy to offer my personal guarantee that if you are ever dissatisfied with your purchase from me, for whatever reason, I will buy the stone back from you at the same price you paid.

You can read the history and more information here –


The Problem with Ruby

I don’t know about you, but I love rubies. There is nothing like the flash from a ruby in warm light. Well cut natural rubies have, I think, the best light enhancing and return characteristics of any gemstone. I have seen several ‘pigeon blood’ rubies, selling for over $15,000 per carat, and they were so beautiful that if I had had the cash on hand to buy them, I would have.

But we have a problem in the ruby market. About five years ago, ‘neuvo riche’ Chinese were buying gemstones like their was no tomorrow. With a preference for red gemstones, with a preference for ruby. No problem with that, but demand far outstriped supply, and predictably, a lot of manufactured ruby started to enter the market.

No one who can afford it wants manufactured ruby when natural ruby is available. But it was cheap, and I believe very few vendors tried to pass it off as natural ruby. This is an example of manufactured ruby:

Ruby Earrings

It looks pretty, very clear, and not at all expensive.

However, the problem that developed was mines were opened that produced very low grade ruby, normally not even considered for gemstone use. The rough from these mines was then put in a bath of acid for a week or so, dissolving out all of the iron and other impurities. What was left was technically ruby, but looked like a pinkish chalky substance. This would then be placed in a furnace and packed with glass beads at high temperature (2,200 celsius), perhaps with some chromium to improve the colour, for 100 hours.

The intense heat fuses the glass to the chalky ruby and produces a clear, solid looking stone, somewhat similar to the rough, but with much cleaner optical properties. This is known as ‘glass filled ruby’. And it is still, technically, natural ruby.

Heat treatment for corundum is nothing unusual. It has been done for many hundreds of years and is an accepted treatment to improve colour. When done properly, the treatment is permanent and will generally increase the value of the gem. But intense heat treament (over 1,600 celsius) will cause structural problems, and though the stone will look good initially, it will become degraded and lose value.

Glass filled ruby is perhaps the worst of all possible heat treatment. For a few months it looks great, really clear, and with the right additives during heating can even approach the excellent colour properties of pigeon blood ruby.

As time goes on however, stresses caused by heating cause the glass to develop microfractures. As well, glass is still only glass, will scratch and crack with everyday wear in jewelry. Typically within a year the gem is not looking good at all. And this can never be fixed. Reheating will just destroy it and the flaws are embedded throughout the stone.

Because of demand, glass filled ruby flooded the market, being sold as ‘Natural Ruby’ – which is was, technically. More savvy buyers might ask if it was heat treated, to which the answer would be ‘yes’ – there being nothing wrong with heat treating in the normal case.

Perhaps the biggest issue is that when is is new, glass filled ruby is very hard to tell from normal heat treated ruby. Inspection through a 10x loupe or even gemologist microscope generally won’t reveal it, and it tests just like normal ruby with a refractometer. It requires a lengthy several hundred dollar lab analysis to identify it correctly in the early stage. (later on it becomes obvious, but by then it is usually too late).

What the buyer thinks is that they are getting a bargain. What looks like $5,000 per carat ruby being offered for only $2,000.

Here is a ruby I bought two years ago. It looked great when I bought it, and a bargain at only $200, I thought.

Glass filled ruby

It is easy to see just with the eye that there are cloudy areas in this gem. This is what happens with glass filled ruby, the glass develops fractures and destroys the appeal of the gem.

Magnified Glass Filled Ruby

At higher magnification even more problems can be seen. The white areas are shattered glass within the stone. Surface inclusions have also become apparent. None of these flaws were observable when I first bought this ruby.

And so that is the problem. The market was flooded with this utter crap glass filled ruby, and there is still a lot of it around today. Fortunately today though, it is fairly easy to spot – you can see many vendors on Silom Road offloading it for 50 Baht ($1.50) a carat or less. The signs still say ‘natural ruby’ but the price makes it obvious it is glass filled. Incidentally, it is not even worth 50 baht, you are better buying just coloured glass for a few cents, which at least will be more durable.

Nevertheless, ruby remains a truly beautiful gemstone, but understandable doubt has been sown in the minds of buyers due to the glass filling practice.

So if you want to buy ruby (and you should, because it is beautiful), look for ‘Natural UNHEATED‘. Whether glass filled or not, a loupe is usually sufficient to determine if a gem has been heated. If it is unheated, then there is simply no way it can be glass filled.

Rubies, Rubies, Rubies

We have just started cutting the first of the ruby rough from Madagascar. This is 100% natural ruby with no treatment from a very, very old deposit. Cutters at the factory are complaining about how hard it is, and this is from people used to cutting ruby and sapphire. We are using about 50% more diamond abrasive as well. I am not sure what that means on the Mohs scale, but it certainly seems harder than normal corundum.

We are seeing to consistent colours so far – a lovely rose colour and a deep, rich plum, both with excellent saturation. The colour and saturation is consistent and make for very good matching in jewelry sets.

Rough Ruby
Rough Ruby straight from the mine

All of the rough we have cut has produced cabochons. The stone sliced so far is too opaque for faceting.

Ruby Cabs
Natural Ruby Cabs, No Heat, No Treatment
More information on this ruby parcel is available on my website –