Gemstone Appraisals

It requires an expert to identify gemstones, since different gem varieties can look quite similar. It is not always easy to tell a sapphire from a tanzanite, or an aquamarine from a blue topaz. It takes even more skill to separate natural from synthetic gems, and treated stones from untreated.

The gemstone trade depends on gemological laboratories with sophisticated equipment for gemstone identification. But you might be surprised to know that even the best gem labs can't tell you how much a gemstone is worth.

GRS gem certificate
 Gemstone Certifcate from the GRS Gem Lab

The reason is that gemology is the scientific study of gemstones: their chemical composition, optical properties and history of formation. Gemological knowledge is essential for identifying gems. But while gemology can tell you reliably that a particular gemtone is a natural ruby, it can't tell you whether it's a fine ruby or merely mediocre. Gemology is a quantitative science, while judgements about value are qualitative.

To find out about the quality of a gemstone you need to turn to the people who make their living trading in loose gemstones -- gem dealers. A gem dealer's livelihood depends on making sound judgements about about both the quality and value of gemstones. If a gems dealer is not very good at making these judgements, he won't survive long in the gems business.

When a gem dealer prices the gems he offers for sale, he makes an appraisal of his stones. If he asks too high a price, it will be difficult for him to sell anything; if the price is too low, he won't make a profit. Getting the quality/price equation right is critical for his business. He makes his decision and the market tells him if he is right.

The financial value of a gem of course depends on who is doing the buying and the selling. A gem dealer who is buying rough stone from the mine naturally pays a different price than the consumer who buys a cut and polished stone set in jewelry from a retail jeweler. The price of an unset cut and polished stone in Bangkok tends to be significantly lower than the same gem sold in New York, since Bangkok is where many colored gems are cut.

If you've purchased a gem and want an appraisal on it, be clear what you're looking for. If you want to know how much you could sell the stone for, that depends on the market conditions at the time you want to sell it. You can check the prices for comparable gems by looking at online gem dealers. But gemstones are a bit like real estate -- prices increase over time, but you might not get the price you want when you want to sell.

In many cases gem buyers want an appraisal for insurance purposes, so they know that their valuable gem can be replaced if stolen or damaged. Appraisals done for this purpose often assume a replacement cost based on prices in the retail channel at some point in the future. Since the value of gemstones tend to rise over time, this replacement value could easily be twice the price you paid for your gem if you bought closer to the source. Just don't assume you could sell your gem today for the replacement cost.

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