Investing may seem like something only wealthy people do, but the reality is that anyone can begin investing. This doesn’t have to be in stocks and bonds!
As long as they can afford to, people can invest in everything from art to property. Another one of these different categories is gemstones. These precious rocks not only look amazing, but some of them may also be very valuable. But are gemstones a good investment?
The answer depends on you! If you have enough time to spend on it, gemstones could be a good investment. Gemstones are always needed, look beautiful, and usually maintain their value. Before you begin buying and selling, there are a few things you need to know before investing in gemstones.
Should I Invest In Gemstones?
No matter who you are, it’s important to remain cautious and be patient when you invest. Anyone can invest, but this is a good option for those who are looking for a long-term investment. Gemstones are valuable and can be left to future generations without paying any taxes or cost.
Precious stones are always wanted all over the world. Their cost has always risen, even during times of economic crisis. Whether it be for jewelry, art, or investment purposes, people will always want to buy gemstones. As long as you have sufficient funds, gemstones could be a good investment for you.
Things To Know
Rate of Return
Your average rate of return is normally the rate of inflation.There are circumstances where the rate of return on gemstones increases fast, but these are generally due to that piece’s history. For example, a person of historical interest may have previously owned it.
Nevertheless, these scenarios aren’t common. Your net gain (or loss) will tend to mimic the inflation rate of your gemstone. Gemstones may drop in value, but this won’t be for a long time. Precious stones are always valuable and in need, so their price will start climbing once more.
Liquid vs Illiquid Assets
Gemstones aren’t liquid. Liquid assets are things that can be converted into cash easily. These include shares or cash investments.
Gemstones are illiquid as they differ from materials like gold. You can easily find out the going rate of gold, but the value of gemstones depends on several things. These include the quality of the stone and how much money your buyer is willing to part with.
Profits
You make your profits on the buying side. The value of gemstones only increases along with the inflation rate. This means it can be difficult to receive a return on your investment that’s equivalent to the risk you’re taking.
Doing this involves purchasing your stone for a price below retail, so you’re making a profit when you sell it again. You may need to own the gems for a long time before you receive a good profit.
To do this, you’ll need to research and find certain wholesalers. Primary wholesalers sell stones that they’ve mined themselves. Secondary wholesalers sell stones that they’ve bought from primary ones. You may also find good prices at pawn shops, flea markets, and estate sales.
Professional Help
Before you start buying, it’s best to have as much knowledge as possible about the stone you want to buy. Beginner buyers may run into problems such as determining fake stones over real ones, or higher quality over low-quality ones.
Different stones vary in value, but this can be tricky to determine without experience. Hiring an appraiser can help you along the way, but this will add to your initial buying cost.
Similarly, it’s best to either start learning about stones or hire a gemologist to look at the ones you want to buy. Colors can easily get mixed up.
For example, some sapphires can look green instead of blue. Emeralds may be yellow rather than green. If you can’t distinguish between stones, you may make a lower profit or lose your actual investment.
Fraudsters
Gemstone investment is a highly specialized industry, leaving room for plenty of fraudsters. Watch out for pushy people and terms like ‘investment grade’. Fraudsters use these words to exploit buyers who have heard that gemstones are a good investment.
Try to find salespeople that use terms about the actual stone, like clarity, cut or color. These tend to be verified dealers, but you should always keep your wits about you.
Selling Assets
Selling is as difficult as buying. Upon selling, unless you have a store of your own, you won’t receive a retail price for your stones. In most cases, you’ll have to sell your goods to auction houses, buyers, or stores. You’ll have to do the work to find a buyer, deal with the negotiations, then deliver the actual stones.
Taxes
Gemstones aren’t exempt from capital gains tax. Always note down your expenses and other financial information. Make sure that you hire an accountant to ensure that you’re financially sound.
How To Begin Gemstone Investing
If you’ve decided that you want to begin investing in gemstones, you can do so in one of two methods which each have different levels of participation.
Hands-on Approach
As the name suggests, the hands-on approach involves doing most of the work yourself. With gemstones, the investor buys and stores the stone themselves, then sells it later for a profit.
The advantage is that you control who you sell the asset to, the amount of profit you make, and the type of gemstones you invest in. However, the hands-on approach requires a lot of time, effort, and cost.
Hands-off Approach
The hands-off approach involves investing through a proxy. You can do this with several other investments. With gemstones, you can put money into mining stocks, receive the profits, all without touching a stone.
This method also makes investing in different types of gems easier. It’s a nice method for those with busy lives who don’t have the time for the hands-on approach.
Gemstones That Make Good Investments
Generally speaking, most gemstones can be classed as valuable objects, but some are more prized than others. Here are 10 of the most valuable gemstones.
Blue Sapphire
These are known as the second most popular colored stones to invest in. Blue remains the most desired sapphire, but other colors, like pink and yellow, are becoming more popular. They were previously found in Kashmir, but are now seen in Ceylon, Burma, and Madagascar. In most cases, sapphires should bring in decent returns.
Ruby
Thanks to their pure red hues and rarity, rubies are the most desired investment gem. These are seen in Burma, Madagascar, Tanzania, and Mozambique. Rubies that haven’t been affected by heat should bring in nice profits.
Tsavorite Garnet
This green East African gemstone has greater refraction than emeralds, so light passes back out through it at a greater rate. This makes it sparkle and shine, so naturally, it’s desired by many. The green varies from deeper shades to lighter mint ones. Tsavorite Garnet is always untreated and it’s very rare, so it’s a good investment.
Alexandrite
This stone is found in Russia, Tanzania, and Brazil. Its desirability comes from its ability to change colors under different light sources. Alexandrite tends to look green in the daylight, then deeper red in incandescent light, though this depends on the chromium within the stone.
Emerald
Emeralds are known for their beautiful green shades. Look out for untreated ones that haven’t been polished or enhanced. Ones from Zambia, Columbia, or Brazil are good to put money into.
Spessartite Garnet
These stones come in gorgeous bright shades that make them very rare. For example, the Mandarin Garnet is coveted around the world because of its vivid orange hue. These tend to be seen in Namibia and Nigeria.
Imperial Topaz
Imperial topaz is the rarest type of topaz gemstone. These are from Minas Gerais in Brazil and come in several different shades. These range from pink, red, violet, and orange.
Ones which haven’t been affected by heat are valuable, especially if they have pink or red shades in them. A pure red natural topaz stone is extremely rare and therefore the most valuable.
Spinel
Spinel isn’t heard of much compared to other gems, but several noteworthy rubies are classed as spinels, including some within the British Crown Jewels. The best investment spinels are ones that are vivid red, orange, or pink. Examples include bright pink Tanzanian spinels or the red Burmese spinel.
Paraiba Tourmaline
This stone was first found in Paraiba, Brazil, but it’s now seen in Nigeria and Mozambique. It’s coveted for its vivid brilliance and shine. Ones from Brazil tend to be decent investment choices.
Tanzanite
As the name suggests, this stone was first discovered in Tanzania. It’s desired for its unique deep color – a shade that crosses into purple, violet, and blue. The only known source is Tanzania, so this gemstone is rarer than diamonds.
Gemstone Storage
Gemstones are valuable pieces that require tender care. Storing them incorrectly can affect their color and clarity, which can decrease their value. It’s best to place each gem into a box or compartment that has a soft lining. You can also purchase suitable materials to line your box yourself.
Gemstones have different hardness levels, so they shouldn’t be stored together. Doing so can cause softer stones to be scratched by softer ones, lowering your gemstone’s value.
In Summary
Investing in gemstones has the potential to give you a nice return. However, it isn’t without its risks. If you’re interested in a long-term investment opportunity, gemstones could be the route for you. Learning as much as you can about the gemstone in question can help you get the most profit. If you’re unsure about anything, seek professional advice, but this will add to your buying costs. There are several precious gemstones to choose from, but choose one that you like. You may have to hold on to it for a long time before you can get the most profit.
Hi, my name is Matt Roberts, and I have been a financial analyst and advisor for the past 7 years.
While my job is based within the money industry, in my spare time I enjoy looking into potential new investment opportunities. From cryptocurrencies, to purchasing vintage cars, everything has the potential to gain you money if you are wise and make the correct investment decisions.
Through this site, I hope to educate others on investing in general, and hope to provide others with useful information that can benefit them and the opportunities they have. If you are not confident with finances, investing money can be a daunting step, however, it is a lot easier than many people are led to believe.
