Investing in Rubies, Sapphires, Emeralds, & Diamonds


The world-wide economic system is seriously out of balance. Even a casual reader of the newspaper can observe that almost all national economies are beset by shortages of goods, over-abundance of paper currency, and lack of inter-governmental cooperation. What can the average American citizen do to protect himself? In addition to careful investments of a conventional sort, I would suggest as a partial answer to these difficulties the purchase of a quantity of rubies, sapphires, emeralds, and diamonds for investment purposes.

This past May, at a Sotheby Parke Bernet auction, a 44 carat sapphire sold for $200,000. Three years previously a stone of similar quality and size had been sold for $60,000. The Enid Haupt emerald, a 34.30 carat deep green stone, was sold at auction in New York City for $385,000—40 percent above what it had fetched four years before.

It is easier to study the results of the past 3000 years than it is to predict the next 6 months' price pattern in rubies, emeralds, sapphires, and diamonds. Investment prediction is essentially based on a study of the past. Santayana, the Spanish philosopher, wrote "History repeats itself—first as a tragedy, next as a comedy." Let us take a shortcut together through the history of gems and jewelry and try to understand what can be expected in 1974 from an investment in rubies, sapphires, emeralds and diamonds.


In the Bible we find frequent references to rubies: "Who can find a virtuous woman? For her price is far above rubies." (Proverbs xxxi, 10) Where did these biblical rubies come from? Probably from the ruby mines at Mogok, Burma (where the finest shade of rubies are mined). Ruby mining has always been a primitive affair. The mine essentially is a well, hand-dug by a family of a few people, to a depth of perhaps 10 to 30 feet. A man is lowered by a rope pulley system to the bottom where he scrapes up layers of gravel. The gravel is then lifted by buckets to the top of the well. After the day's scraping is concluded, the man, his wife, children, and partners sort the gravel for possible ruby crystals. This system, though extremely primitive, is still used today because it prevents careless crushing of the fine and valuable crystals of ruby that are found haphazardly imbedded in the rock. At the Mogok mine site ancient cutting tools have been found, giving archeological proof that mining for ruby rough (as the uncut crystals are called) has been going on since prehistoric times. The chips of crystal rough are eventually cut and faceted and set in a piece of jewelry. The ruby may be shipped through a network of merchants to China, to the Middle East, and even as far as distant Europe.

Since Biblical times there has been a slow but constant evolution in emphasis, from the style and workmanship of the jewelry mounting to the stone itself. An analogy might be made: once the picture frame was important and ornate; now the canvas itself, often unframed, is the key value. This change in emphasis is very important in determining the investment value of a gem stone as well.

Archeologists have discovered beautiful emerald necklaces from the early dynasties of Egypt. Although the settings are designed in a spectacularly simple manner, the emeralds themselves are generally of a poor quality and unfaceted. The gold workmanship, though, is of the highest standards.

Similarly, if we visit the Metropolitan Museum of Art in New York and see the fabulous Morgan Collection of Medieval and Renaissance jewelry, we can appreciate the extraordinary workmanship of European jewelry makers. The finest artists of the Renaissance had a much stricter period of apprenticeship than a painter today might have. Ghiberti, for example, began as a goldsmith in the 14th century and only later became a painter. Botticelli, a consummate painter, was also trained as a sculptor and goldsmith. The result of this interdisciplinary training was that jewelry was sculpted, crafted, and finished in an artistic and meticulous fashion.

In examining a boat-shaped pendant from the Venetian school of craftsmen of the 16th century in the Morgan Collection[1] we can see that the pendant, perhaps six inches high, is an exact scale reproduction of a Venetian trading ship. The sails are of finely worked gold, the bow of the ship is enameled, and natural pearls dangle playfully from the bow. Colored stones (rubies, sapphires, and emeralds) mined in India and in remote Burma stud the edges of the deck. These colored stones however were chosen primarily for their color. The style of the cutting was en cabochon—having a rounded top. If such a stone was faceted, the faceting was crude—en table—with only one rudimentary, flat surface.

Because the painters were also goldsmiths it is not surprising to find so many Medieval and Renaissance paintings accurately portraying the jewelry and gems worn by royalty and the wealthy. In the Vienna Art History Museum hangs Holbein's sumptuous portrait of Jane Seymour, Henry VIII's third wife.[2] She wears Burmese rubies and pearls in her hair in a piece of jewelry called a bordure. Around her neck is a jewelled collar called a carcanet, of sapphires, diamonds, and enamelled gold. Her dress is ridged with emeralds and pearls and the whole effect of blended jewelry and costume forms a breathtaking image of opulence.


British opulence was far exceeded by the French Royalty. In the Court of Louis XIV, "The Sun King," gems and jewelry were an intrinsic part of the royal life style. Louis XIV used the vast amounts of gems he purchased to cement foreign political marriages by giving enormous gem dowries to his relatives. He maintained the support of his noblemen by giving them extravagant gifts, and finally and most importantly, Louis used gems as collateral for the huge debts he owed the merchant bankers.

In the 1640's we hear of cutting stones in 16 facets.[3] What this means is that diamonds, now coming in increasing numbers from India and Brazil, could be cut and faceted to unlock the brilliance within the stone. Light could enter the stone and because of the phenomena of optical reflection and refraction could emerge and "sparkle."

The "Sun King" had many theories about how to live a civilized life. He had fairy tales read to him each night, never ate less than a 12 course meal served on golden plates, and felt that rubies, sapphires, and emeralds, because of their lovely colors, were appropriate for daytime wearing. Colorless diamonds would only be donned at night when their "fire" or brilliance could add magic to his candlelit dancing ballrooms.

An extraordinary thing happened to the "Sun King" late in his reign. A Scotsman named John Law (who had studied finance in Amsterdam and gambling in Venice) proposed to King Louis XIV that he issue paper money. I would suppose that after having spent his lifetime amongst the material, real world of brocades, rugs, tapestries, colored stones, diamonds, and silver and gold coins, Louis XIV thought this novel idea extremely bizarre. To ask a French subject to accept a piece of paper, in exchange for tangible gold or silver coin, seemed too ridiculous for words to Louis and he flatly refused.

After the death of Louis XIV, John Law had greater success with the Duke of Orleans, Regent of France. The new government of France accepted John Law's proposal and the Scotsman became the most influential economist of his time. Money was printed and accepted and a great prosperity took place in France in the mid-18th century.

However, much like developments in our times, the French government secretly began to print vast amounts of paper money. [4] Gradually a discount was established between the worth of paper money and gold and silver coinage money. At this point John Law formulated his second great innovation—the flotation of a huge stock issue. With the Court's approval he issued stock in a new company called "The Mississippi Company." This company had all rights to develop the vast territory called Louisiana in the western part of North America as well as parts of India and the Far East.

John Law had engravings printed showing the cliffs of Louisiana covered with emeralds! [5] People were anxious to get rid of their devalued paper money and used it to buy shares of Mississippi Company stock. Prices boomed on the stock exchange. Mississippi Company stock offered at 400 French livres rose to 18,000 livres within three years' time. During this period of time the word millionaire first came into use.

The government printed and loaned more and more money to sustain and fuel this speculation. Prices for food, rent, and clothing increased astronomically, as could be expected. Paper money again started to sell at a discount to gold and silver coinage. Suddenly the stock market started to weaken and within a year completely collapsed. John Law fled to Venice and died penniless. Throughout this monumental collapse of the French economy, silver and gold coinage maintained its value, as did ruby, sapphire, emerald, and diamond jewelry.[6] This collapse so seriously weakened France that economic historians point to it as a causal factor of the French Revolution of 1789.


It is clear that throughout history gems have been a satisfactory alternative to paper money and common stock shares. For one who wishes to act on this knowledge, important practical questions remain: how and where do you buy a ruby, a sapphire, an emerald, or a diamond today? What do they cost? How do you judge the value of a gem stone? The answers are quite obvious. Just as people have come to rely less and less on their next door neighbor for medical advice and instead increasingly seek the help of a doctor or better still, a specialist, so, too, a specialist should be consulted when buying a gem for investment purposes. A reliable precious stones dealer or a fine jewelry firm with an outstanding reputation in the community is most likely to be the best guide to the investment possibilities in gems.

What is not often realized is that a dealer in gems sells a customer two things: the gem itself, and his advice concerning values and future values of the gem. That part of the price paid for advice is often a great bargain over a period of time.

The dealer should be able to educate the customer by showing him a large selection of rubies, sapphires, emeralds, and diamonds. The dealer should discuss the merits and demerits of each. Ultimately, however, the purchase of a gem stone will undoubtedly reflect the aesthetic choice of the buyer. Before arriving at the retail store, or at the dealer's office, I would recommend two preliminary steps: visits to the museum and a study of various gem books. These visits and books will reveal some of the following factors to be weighed in deciding how much and what to pay for a colored stone or diamond.

Rubies, sapphires, and emeralds appear in small amounts all over the world and are marketed in a completely competitive way in almost every major city in the world. Diamond sources, on the other hand, are highly industrialized and the supply is carefully managed by the marvelously efficient DeBeers Consolidated Mines, Ltd. (known in London as the Central Selling Organization). The difference between the marketing structure of these two—the colored stones and the diamonds—gives an investor two different investment possibilities.


The ruby is a red variety of aluminum oxide. The redness of this mineral species, corundum, is due to traces of chromium. While "A Rose is a Rose is a Rose," as we all know, red is not always red. Depending upon the shade of red, the size of the stone, and its freedom from internal flaws, you arrive at the proper valuation of a ruby. Judging the purity of the red, it must be remembered, is somewhat subjective and estimates will vary even between experienced reputable dealers. Assuming "near gem" color, a one carat ruby could sell for $10,000 per carat. The same "near gem" color in a ten carat stone could sell for $30,000 per carat or a total of $300,000 for the gem stone. Fine rubies above 5 carats are rare and above 10 carats almost unobtainable.

"Gem" ruby color is called by dealers pigeon-blood color. This trade term, used by experts who presumably have never seen pigeons' blood, is a velvety, deep red. The center of the red band on a color spectrum matches the red of a Burmese gem quality ruby. If you go to a florist and purchase a Happiness Rose, the intensity of the red in the rose should match the red of a Burmese faceted ruby. The ruby, therefore, combines the velvety feeling and the striking color shade of a rose. In addition, because of the faceting, it possesses the magical quality of "fire" or liveliness due to the light which is reflected and refracted within the stone.

If the ruby is not from Burma, its color will be a less pure deep red and may contain a darker red often with a touch of violet. These (mostly Thai) rubies will not contain tiny rutile needles (known as silk) which are minute crystals and indicate Burmese origin. Often what the Thai stone might lack in shade of color will be made up for in "fire" and in freedom from internal flaws. Thai ruby prices are significantly less than Burmese rubies but have been increasing rapidly.

In addition to Burma, Ceylon, and Thailand, rubies have been found in Africa, where the color is closer to a garnet-like darker, often violet red.

Burmese mine output has declined over the ages. There are extremely few new gem quality stones coming into the market. What is seen in the world gem markets and in the fine stores are old-mine Burmese rubies. These might be in the form of a round ruby bead, part of a Burmese necklace. Each bead can be cut into two pieces by a skilled cutter and faceted into a beautiful gem stone. A faceted Burmese stone which is in an old estate collection can also be removed from its mounting, recut, and made more beautiful.

Because of the rarity of the Burmese shade of color, more and more Thai rubies are being accepted as close to gem quality. Besides the faceted ruby, rubies are also cut en cabochon. Some cabochons possess a star—or what gemologists call asterism—due to shafts of light which intersect within the ruby and channel light into whitish, relatively straight lines. The color of the finest gem star rubies is lighter and paler than pigeon blood faceted stones.

By leafing through gem books, one can get a clearer idea of the disposition of gem mines as well as pictures of gem quality stones. By going to museums you can see the actual stone and train your eye to get a feeling for the "platonic" perfect gem color. Seeing the shimmering red color of the Rosser Reeves star ruby in the Smithsonian Institute, or the delicate DeLong star ruby in the American Museum of Natural History is an important first step in gem appreciation.

Sapphire, like ruby, is also part of the corundum mineral group. Corundum which is not red is called sapphire. Sapphire's color comes from the traces of titanium, iron and chromium. The finest color in sapphire is deemed to be blue and the finest shade of blue comes close to the velvety blue of the cornflower, known as Kashmir color.

A one carat near-gem Kashmir color sapphire can be worth $3000 per carat and a near-gem two carat stone can reach a price of $4000 per carat. Sapphires of up to 50 carats are not unknown and larger sizes have reached prices above $5000 per carat.

In ancient times there were sapphire mines in Kashmir, India and that term is still used by dealers to denote this fine delicate color. Much more common than the Kashmir or Burma sapphire are the sapphires from Ceylon which are lighter in shade and often under a microscope or jeweler's loop evidence sharp liquid inclusions called feathers.

Fine quality sapphires are being mined in Thailand and just as Thai rubies are coming to occupy Burma's pride-of-place position, so too Thai sapphires are used as a substitute for the rare Kashmir sapphire.

Star Sapphires are more common than star rubies. The fine Star of India which is in the American Museum of Natural History can give one a fine idea of what a fabulous gem star can look like.

Green and yellow sapphires, fairly common, are much less desirable colors than blue sapphires although they have gained in popularity in the past few years. Prices are generally 80 percent less than the blue variety of sapphire.

Emerald green is not quite the color of "grass." Rather, its gem color is darker in hue. A fortunate visitor to the Shah's collection of emeralds and gems in Iran will immediately recognize the lively deep shade of fine Colombian emerald. Emerald is a beryl mineral species which contains traces of chromium to which it owes its color.

The finest examples come from Muzo or Chivor in Colombia. By the 18th century the Indian mines were played out. What remains today, aside from Colombian mines, are sites in Africa and Brazil.

The chromium in an emerald imposes pressure upon the atomic lattice structure of the emerald crystal so that it can rarely achieve a size over 12 inches. Large size emeralds, therefore, are a rarity. Emeralds are often criss-crossed with internal flaws—called by the trade "jardin"—or garden effects which seem to add to their organic appearance and do not overly detract from their value. A one carat near-gem color emerald can sell for upwards of $10,000 a carat and larger sizes can sell for even higher per carat.

The Haupt stone, auctioned at Parke-Bernet in New York, a 34.30 carat gem, has a tinge of yellow which heightens its organic feeling and also provides an indication of its Colombian origin. The $11,200 per carat price it fetched was not unexpected by the trade.

A dealer in colored stones, therefore, will be able to present to the investor a selection of rubies, sapphires, and emeralds and give him a choice of shade and nuance of color.

Today for the most part the value of the stone and not the setting will account for most of the value of the piece. In general it is more advisable to buy a smaller ruby, sapphire, and emerald that is free from internal flaws rather than a larger highly-flawed stone. There is a trade off between color and clarity. In other words a stone can have excellent clarity but poor color and often be worth as much as a stone with poor clarity and excellent color. In the long run, the more flawless stones have proven to be superior investments.


The diamond is an entirely different form of investment proposition. In the late 1800's diamond mines of consequence were discovered in South Africa, larger than the previous Brazilian and Indian mines. Within two decades, with the help of Cecil Rhodes, a tight control over the South African production was achieved by the DeBeers Consolidated Mines Limited.

Unlike the family-type colored stone mining operation, DeBeers employs thousands of miners and centralizes the grading and processing of diamonds. Through extremely modern technological break-throughs DeBeers has managed to upgrade diamond production and standards through the years. The uncut rough crystals of diamonds are sent to London where a DeBeers wholly-owned subsidiary (the Central Selling Organization) 10 times a year ships a "sight" (a canvas sack of rough diamonds) to a select group of approximately 250 clients. As about 85 percent of the world's diamond output is purchased for resale by the Central Selling Organization, these "sights" greatly affect the world-wide diamond price. There is little room for bargaining and generally the distirbution clients accept their parcels of goods and either cut and polish the diamonds themselves or sell the canvas of rough diamonds to another dealer.

In an analysis of diamond price trends, economist Peter Crawford of First National City Bank said in the NATIONAL JEWELER (May 1973): "Assuming that diamond prices fluctuate with the overall price level, the level of stock prices and the price of gold, it turns out that the overall U.S. price level is by far the most important influence on diamond prices.

"A statistical regression indicates that half carat diamond prices tend to rise by 13% or so for each 10% rise in the Consumer Price Index. Two carat diamond prices tend to rise about 20% for every 10% rise in the Consumer Price Index."

What this means is that over the last half century when the demand is there the Central Selling Organization has liquidated its diamond inventory at higher prices. When the demand has slackened the C.S.O. does not flood the market; on the contrary it releases fewer diamonds thus stabilizing the diamond price. The stated policy of DeBeers has been to maintain the diamond as a superior asset to paper currency. During the last two or three years the C.S.O. has been aware that the dollar and other currencies have lost a great deal of their purchasing power. Accordingly it increased the price of rough to their dealers as well as markedly expanding the amount of rough sent from London. In 1973 the C.S.O. raised the price of diamonds on four different occasions and the total price increase averaged 70 percent. A very extraordinary year! DeBeers has also conducted a tasteful and effective advertising campaign throughout the world to win public confidence for the long term prospects and value of diamonds.


When we speak of a one carat round perfect diamond we have a clear idea of what is meant. There are four factors in evaluating a gem stone: (1) its color; (2) the perfection of its cut; (3) freedom from internal flaws or fractures in the stone itself; (4) carat weight—the heavier the more valuable but a one carat highly spread diamond isn't worth as much as a perfectly proportioned 3/4 carat stone. The proportions affect the optical clarity of the diamond. The Gemological Institute of America with offices at 11940 San Vicente Blvd., Los Angeles, California, and 580 Fifth Ave., New York City, has perfected a uniquely accurate system of grading the color, the cutting perfection, and the clarity of diamonds. Therefore, if a diamond dealer in Buenos Aires telephones a dealer in Hong Kong and says he has a D-flawless, both parties understand each other. D refers to the color. Is it perfectly white? If so it is termed D color. Throughout the many diamond offices in the world a D colored sample stone is kept on record by the dealers. If a stone has a slight amount of yellow in it, it might be an E, F or G color. The term "flawless" means the stone is cut perfectly and is free from internal fractures. By having standardized the grading of diamonds the GIA completed the rationalization process for diamonds. In other words the diamond syndicate effectively controls the supply of rough (even though some believe the Soviet Union is starting to make inroads in DeBeers' hegemony) and the GIA has enabled diamond dealers to talk a common language.

A D-flawless one carat stone today could realize upwards of $5000 per carat. This price is well above the approximately $3000 per carat it fetched 18 months ago (although down from even higher levels several months ago). A two carat diamond normally sells at least 50 percent higher per carat than a one carat stone or approximately $8000 per carat. And price increases geometrically as the size increases. A price of $25,000 per carat for a very large size D-flawless diamond is not unreasonable. The all important certificate of D-flawless issued by the GIA gives the diamond the accolade of "gem." As the size goes down and the quality goes down the potential for value retention also declines.

Colored stones are in a completely different category. Although much research has been done on grading rubies, sapphires, and emeralds, if I telephone a dealer in Buenos Aires or in Tokyo I can tell him I have a beautiful red ruby but the exact shade of red cannot be transmitted over the telephone. Secondly, fractures are more diverse in colored stones and similarly cannot be graded by a uniform rating system. In addition, and most important for the investor, colored stones are not controlled by a central selling organization and are therefore sold strictly according to supply and demand.


United States government import figures show the colored stone and diamond import values have increased sharply in the last 10 years. The value of imported ruby, sapphire, and emeralds has increased eightfold since 1964. The value of imported diamonds has increased fourfold since 1964. In 1964 $4 million of rubies and sapphires were imported and $3 million of emeralds were imported. In 1973 an estimated $24 million of rubies and sapphires and an estimated $36 million of emeralds entered the country. Total diamond imports (rough and cut) were $250 million in 1964 and an estimated $900 million in 1973.

What is the outlook for the coming year? The last 18 months have witnessed major rises of 100 percent on many qualities of gem rubies, sapphires, emeralds and diamonds. Japanese and European buyers moved both into and out of the market in large numbers. Barring a worldwide recession in 1974-75, I assume there would be a continued demand for precious stones. Softening in the Japanese market (which has occurred) might be met through increased demand from another increasingly prosperous section of the world.

The appreciation of a colored stone transcends language. A Chinese physician in Hong Kong, an Isphahani rug dealer, and a Rio de Janeiro auto executive will all be drawn to a fine colored stone. Unlike a Jackson Pollack modernistic painting or a Chinese Northern Sung scroll, one does not have to come from a certain cultural milieu to appreciate a fine shade of Burmese red.

Synthetic colored stones have not made inroads on the demand for ruby, sapphire and emeralds although they have been on the market for nearly 50 years. Genuine diamonds have been hurt by imitation only to a small degree. (Synthetic stones can be differentiated under the microscope from genuine stones through the presence of minute gas bubbles, straight striae or growth lines and through various spectroscopic difference.)

In addition to buying stones, you should also know the basics of selling them. Because of world-wide appreciation, a precious stone can and should be sold the same way it might be bought: through a specialist with a good reputation—a reputable dealer or a fine retail jewelry establishment. While it is true there is at least a 30 percent wholesale to retail mark-up on jewelry, the buyers' market is a competitive one. By using common sense and offering the stone to a highly reputable dealer, you can generally obtain a fair price.

Auction houses are another fine avenue of sale with world-wide selling facilities. It should be remembered that it takes time to dispose of a piece of jewelry through auction and, of course, there is a commission charge.

The Gemological Institute of America can study your diamond or colored stone. If it is a diamond, the Institute will provide you with an expert certification of its grade. If it is a colored stone, the Institute will not grade the stone but it will determine and issue a certificate stating whether it is genuine.

My recommendation is therefore not that you put all of your assets into rubies, sapphires, emeralds, and diamonds (which after all pay no dividends and are not quoted each day in the WALL STREET JOURNAL), but that you consider diversifying in part into them. Perhaps 20 percent of one's assets might be prudently placed into these gems. By so doing, one has an investment which can be readily sold at the present time and, if the last few thousand years of experience is an indication of the future, which represent a continuing source of value wherever men or women treasure beauty.

Bernard Zucker received his A.B. in economics from Yale University and graduated from the Harvard Law School in 1965. He is an executive of the Precious Stones Company (rubies, sapphires and emeralds), in New York City. In addition to traveling throughout the world as a gem importer, he lectures on the history of illuminated manuscripts as well as Renaissance and post-Renaissance jewelry. Copyright Bernard Zucker 1974.


[1] Claude Fregnac, JEWELRY FROM THE RENAISSANCE TO ART NOUVEAU (Octopus Books 1923).
[2] George Fredric Kunz, RINGS FOR THE FINGER (Dover 1973).
[3] Claude Fregnac, supra note 1.
[4] Miriam Beard, A HISTORY OF BUSINESS (Ann Arbor 1963).
[5] Andre Maurois, A HISTORY OF FRANCE (Dover 1973).
[6] George R. Havens, THE AGE OF IDEAS (Holt, Reinhart & Winston 1955).


• Paul E. Desautels, GEMS IN THE SMITHSONIAN (Smithsonian Institution Press 1972).
• Dr. Godchard Lenten, PRODUCTION AND THE DIAMOND TRADE (Barie & Jonking 1970).
• John Sinkankas, VAN NOSTRAND STANDARD CATALOGUE OF GEMS (Van Nostrand 1968).
• NATIONAL JEWELER, May 1973 (Gralla Publications).