The Unseen Factors in Gemstone Value | The Diamond Reserve

The Unseen Factors in Gemstone Value

A well established measurement of value in the industry is the 4 C’s: Color, Carat Weight, Cut and Clarity. We discuss these in detail on our Diamond Education page and, truthfully, they are the main factors in determining the value of any gemstone and the only ones a buyer truly needs to worry about. However, there are some factors behind the scenes that affect gemstones and other markets:

Collector’s Gemstones

Sometimes gemstones are so fabulous that they enter the ‘collector’s range,’ where owning them is more about a bump in social status than a sharing a gift with a loved one. These collectors typically are looking for very specific shades of Emerald or rare colors/gemstone combinations such as blue diamonds. When a demographic such as that enters a market, a lot of dealers will naturally adjust to try and accommodate the unexpected bump in profits.

Some of these gemstones end up going for much more than their determined ‘worth,’ but the market sets the prices and ultra rare gemstones can shake things up quite a bit.

Overall Supply

Recent estimates say that, if we don’t uncover new mining areas for diamonds, we could run out of them as soon as 2030. That’s recently been shaken up by new techniques such as sweeping the ocean floors for diamonds around Africa, but it is a reminder that these gemstones do not come in infinite quantities. The closer we get to running out of a specific gemstone, the higher the price will be. This hasn’t yet had a noticeably huge effect on any of the major gemstones such as sapphires, rubies, topaz, diamonds or emeralds.

Price Fixing

While the countries do a good job of controlling prices via trade agreements and several other tactics, a lot of these gemstones mostly come from 1 or 2 countries. Additionally, Africa boasts a huge number of gemstone exports that fuel an enormous chunk of its economy.

Albeit outdated, an economic study in 2005 showed that Africa was mining 73% of the world’s diamonds. Though that’s spread across 4 countries (Botswana, Congo, South Africa and Angola), platinum shows an even more skewed spread, with around 90% of the earth’s supply coming from South Africa alone during the same time period.

The climate is much different now, but Africa still lies in the middle of 4 enormous fault lines and is prime ground for gemstones. If a government were to take full control of the industry and start fixing prices or attempting any sort of market exploitation, it could shake up the market.

While all of these factors are possibilities, however, it’s extremely unlikely that you’ll have to worry about them.