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Back to Basics: Why Collect Gems?

(Gemstone Forecaster)

"Back to Basics: Why Collect Gems?
by Robert Genis

Sometimes we can lose sight of why we are gem collectors. It's easy to get overly involved in the minutia of the gem business and lose focus. Here is a piece I wrote over 30 years ago to review the rationale for collecting gems.

The fascination with possessing gems is ancient and universal. Gems have intrigued and mystified us for thousands of years. They have been the gifts and ransoms of kings and queens, the reason for crimes of violence and the overthrow of rulers. Due to the indestructibility of gemstones, they can be passed from one generation to another. Collecting gems is analogous to owning other rare and beautiful objects such as art, antiques, exotic cars or collectibles: They should be purchased for their beauty, rarity and the enjoyment they give. If they retain value or appreciate, that is strictly a bonus.

Gemstone Collecting Is Fun
Unlike buying stocks or bonds, gems are enjoyable assets to accumulate. Although gemstones do not provide income in the classical sense, they provide a "psychic" income unparalleled in the collector market. When you collect top gemstones, you are buying a tangible asset that took eons to create. When you hold a fine gem in your hands, you may not be able to put it down - its captivating radiance glows and pulsates! Once you start collecting world class gemstones, you will never again look at gems on television or in a jewelry store in quite the same manner.

Gems are Rare, Geological Miracles Mined in Politically Unstable Regions
Gemstones are finite and new finds are becoming exceedingly rare. With the exception of diamonds, most gem sources are ancient and the best gems are probably long gone. The combination of geological factors necessary to produce gemstones is so precise that deposits are limited and widely scattered. Most extensive colored gemstone mining is accomplished with primitive methods, by which production cannot be accelerated to meet demand. Most deposits are too small to exploit economically with heavy equipment. The major sources of the world's finest gems are troubled third world countries. Burma, Colombia, and Africa are politically unstable regions where supply could easily be interrupted. A simple rule of economics is when the supply of any commodity decreases, prices tend to increase.

A Centuries Old Historical Appreciation/Gems May Preserve Capital
To Americans, the collecting of fine gems is a relatively new phenomenon. However, throughout history gems have saved people in times of political and economic crises, most recently in Nazi Germany, Vietnam, Iran, and Hong Kong. As a result of decades of political instability, currency devaluation and excessive taxation, Europeans, Asians and South Americans have long been aware of the important role gemstones play in preserving capital. Based upon historical price data, quality diamonds and colored stones have proven themselves to be excellent long-term hedges against economic uncertainty and currency depreciation. The key to successfully buying gemstones is to collect when the markets are quiet and sell when the markets are hot. Remember, only use funds that you don't need to be instantly liquid. Gemstones may represent an ideal store-of-value if inflation accelerates.

Gems are Supremely Portable, Easily Concealed and Stored
Gemstones are the most concentrated form of wealth known to man. A gem worth $100,000 fits in the palm of your hand, yet weighs less than a penny! One ounce of the fine unheated Mogok Burma rubies could be worth over $170 million at current price levels. These facts make gemstones the ultimate crisis hedge. If you need a private, portable, non-detectable asset, gems are an excellent vehicle.

Gems are Anonymous and Private
Currently, gemstone and diamond transactions are not individually reported to governmental agencies. You can store your gems secretly in a bank vault or other secure location. With gemstones, there is a confidentiality of ownership..."