Published: 27/12/2023

The rarity of gemstones

In the world of investments, diversification is the key to building a robust portfolio. While stocks and bonds are commonly embraced, an often overlooked but dazzling avenue is gemstone investments. Beyond their aesthetic appeal, gemstones have proven to be valuable assets that can enhance the stability and growth of an investment portfolio. In this blog post, we will delve into the quantitative aspects of investing in gemstones, exploring key facts and figures that highlight their unique position in the investment landscape. 

As per data by Future Market Insights (FMI), the gemstone market is currently estimated at USD 32.38 billion in 2023 and is likely to reach USD 55.96 billion by 2033. The market is expected to exhibit a CAGR of 5.6% from 2023 to 2033. The gemstone market holds 50% of the share in the overall gems and jewelry market.

Historical Performance: 

Gemstones have exhibited impressive historical performance. According to industry reports, the value of high-quality diamonds has shown a consistent upward trend, outperforming inflation over the past few decades. The rarity and increasing global demand for these precious stones contribute to their enduring value. 

April Newsletter (62)Period shown: 2006-2022. View more data here.

Gemval Aggregate index (GVA) has become a trusted benchmark for gemstone industry over years. It is calculated as a total value of 26 standard specimens of gemstone and represents the overall pricing trend in the jewellery market. 

Unlike gold or stocks, gemstones have low volatility and are considered to retain their value. Gemstones are small, light, stable in value and are traded internationally.

Rarity and Scarcity: 

A report by the Gemological Institute of America (GIA) indicates that certain gemstones, such as natural colored diamonds and rare colored gemstones like red spinel or blue sapphire, are exceptionally rare. This scarcity enhances their investment allure, as rarity often translates to increased value over time.

In recent years, colored gemstones such as ruby and sapphire have experienced an increase in value of around 6-8% per year. 

The largest sapphire aggregate is 503.2 kg (1109 lbs and 5.86 oz) and was achieved by Ashan Pavithra Gamage (Sri Lanka) in Zurich, Switzerland on 11 February 2022. The aggregate has been named "Serendipity Sapphire" and was found by Ashan in a village south of the major gemstone trading center of Ratnapura in Sri Lanka. Ratnapura, means "city of gems" in Sinhalese and is widely known as the gem capital of Sri Lanka. Many other valuable stones have been found there in the past. Due to the sheer proportions of the aggregate, Ashan decided to apply for a Guinness World Records title to showcase nature’s creation. 

Our currently available Sapphire at Splint Invest is also from Sri Lanka; see certification below. Untitled Design (19) Tangible Assets and Market Demand: 

Unlike stocks or bonds, gemstones are tangible assets with inherent beauty and cultural significance. This quality makes them resilient in times of economic uncertainty. Additionally, the growing global middle class has spurred an increase in demand for luxury goods, including gemstones, creating a favorable market environment for investors. 

Investment Indices: 

Emerging investment indices specific to gemstones provide quantitative insights into their performance. The Rapaport Diamond Index, for instance, tracks the price movements of different categories of diamonds, offering a benchmark for investors to gauge the market trends and make informed decisions. 

Gemstone Certifications and Grading: 

Quantifying the quality of gemstones is essential for evaluating their investment potential. Reputable gemstone certification organizations, such as GIA, DSEF, and International Gemological Institute (IGI) for example, provide standardized grading criteria. These certifications not only authenticate the gemstone's quality but also contribute to its marketability, adding a quantitative dimension to the investment process. 

Auction Results: 

The auction market serves as a quantifiable barometer for the demand and value of gemstones. Notable auction houses showcase exceptional gemstones, with record-breaking prices highlighting the investment appeal of these precious assets. Tracking auction results can provide investors with valuable insights into market dynamics and potential opportunities. 

World record: Blue Belle of Asia

The world's fourth-largest Sapphire in size and first in price, the Blue Belle of Asia, has been mined from Ratnapura, Sri Lanka in 1926. The 400-carat peacock blue sapphire mounted on a necklace of diamonds and platinum fetched USD 17 million at auction in Geneva, Switzerland by Christie's in 2014, which is the highest ever price set on a sapphire at auction.

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Investing in gemstones offers a unique opportunity to diversify and enhance the resilience of an investment portfolio. By examining historical performance, rarity, tangible asset attributes, investment indices, certifications, and auction results, investors can make informed and quantitative decisions. While the glittering allure of gemstones has long been recognised, their quantifiable aspects further reinforce their standing as a captivating and valuable investment option in today's dynamic financial landscape.

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