What your investment adviser forgot to mention

Pandemic, war, energy crisis, climate change and high inflation. Life is not easy right now.

As always in difficult and insecure times people look for ways to protect their properties and thus hard assets like real estate, gold, art and gemstones enjoy rising popularity.

Now, gemstones have some invaluable advantages over other assets. They are highly compressed value which can, should need arise, be transported easily and inconspicuously.

Upon hearing the word "gemstone" most people immediately think of diamonds. These have some advantages over coloured gem stones.  Diamond prices are, more or less, controlled, quality criteria are standardized the world over and they are relatively easy to sell.

On the other hand coloured gem markets are not regulated. Prices are not controlled and can vary considerably in different parts of the world, according to their popularity there.

The reason why investments in coloured gems are highly interesting is simple: return rates can be much higher than with diamonds.

However, there are some things to be considered, which, to our experience, investment counsellors hardly ever mention.

• It takes time! We recommend an investment horizon of at least twenty years.
  Before you can sell your gems at a profit, prices must have risen markedly. As a rule you will most likely offer your gems not to private people but to professionals like goldsmiths and jewellers. Now, to entice these guys to buy, what you have must either be extraordinarily rare and/or be offered well below running market price.
  You see, no goldsmith will want to buy from you at market price. Why should he? If a customer asks for a ruby he will get several specimens on consignment from his regular wholesale supplier. He can return unsold stones and he will get generous terms of payment so he can make and encash the piece of jewellery before he has to pay the wholesaler.
  When buying from a private person he not only must pay cash on the spot, he also does not know when, if ever, he will be able to sell the gems.
   
• Different from e.g. gold, which in principle can be sold any time at the daily rate, there is no such thing as an "outlet".
  Ever so often private people offer us gem stones. Actually, they don´t really offer their gems, they ask us to buy them and they are flabbergasted if we don´t. "But aren´t you gem dealers?" they ask. Well, we are but that does not mean that we have to buy your stones. If quality is not right, price is too high, if the stones do not fit into our stock or if we just returned from a buying trip and our war chest is empty, we won´t buy. It´s as simple as that.
  
  Now, after these disadvantages, let´s have another look at the significant advantages coloured gems have over other assets.
   
• The concept of security always played a major role when investing in gem stones. Other than houses, art, precious metals or vintage cars this part of your wealth can be moved readily, easily and fully inconspicuously.
   
• Given enough time coloured gems can yield very attractive profits, indeed. Red spinels, for instance, which we sold in the 1980s for 1000 Schilling (€ 72.67) per carat, now fetch up to € 2000 p.ct. and Paraïba tourmalines, which today cost € 30.000 p.ct., could be had for 20.000 Schilling, approximately € 1450 p.ct.
   
• And last but not least we must say that rubies look much nicer than a parcel of shares, particularly when worn around the neck ;-)