Tanzanite rally?

Prices have hit rock bottom but evidence suggests a rally might be around the corner.
Why tanzanite lovers should buy now – an attempt at analysis.

The eventful history of tanzanite

Ever since its discovery in 1967, tanzanite has held the gem world in suspense. The truly exquisite colour of this gem is one reason for its stellar rise, the other being Tiffany's clever marketing. For two decades the New York based company advertised Tanzanite and single-handedly made it America's most popular coloured gem after the big three, ruby, sapphire and emerald.

In 1971 the tanzanite mines were nationalized. For the next twenty years the output of top quality stones gradually decreased, for one because miners had to dig to ever greater depths, but certainly also because of inadequate mining techniques and, last but not least, because of theft. At the same time prices rose continuously and steadily.

Towards the end of the 1980ies things got turbulent. Up to 30.000 illegal miners in search of a fortune stormed the area and soon after the market was flooded with tanzanite in quantities never seen before. The result was a price drop of 60% in less than two years.

In 1990 the Tanzanian government had the area cleared and demarcated it into four blocks. Licences were issued, by and by mining and marketing got back on tracks. Prices started to rise again.

In 1996 Afgem Company acquired the licenses for Block C, moved in heavy machinery and after a few years started to surface-mine on a grand scale. In 2004 Afgem was bought by the TanzaniteOne Group, which ever since quite successfully tries to gain control of the tanzanite market, using De Beers marketing model as a blue print. Read more about this in our news article "Tanzanite – a new strategy" (2005).

The collapse of Lehman Brothers in September 2008 started a new descent. The economic crisis brought about a dramatic drop in tanzanite sales in the USA, which holds a whopping 85% share of the world tanzanite market. Once again prices plummeted by about 60%, this time in only one year.
The future

Prices will rise again. It does not take prophetic powers to say so. Economic data sound benign again and the predictions for economic growth say that the USA will come out of the crisis well ahead of the European Union.

Already tanzanite prices show first, albeit timid signs of recovery. This is probably due to the fact that the big traders, amongst them some that had pulled out of the tanzanite trade years ago – because of TanzaniteOne's rigid sales policy and sky high prices? – jump on the bandwagon and stock up while prices are still down.

As soon as demand for tanzanite picks up, particularly in the USA, prices will start rising again, slowly at first but when the wholesalers run low on stock and have to re-buy for market price, increases of 5-10% per annum can realistically be expected for some years.

At least that was the case in the beginning of the 1990ies. Since then tanzanite has gained even more in popularity and, above all, back then TanzaniteOne, a company that has the interest and the market power to drive prices up to the former level (and beyond?), did not exist.