In the view of the International Coloured Gemstone Association, it is clear that “Colombia will continue to be at the top of the list in terms of the countries in which fine emeralds are found. It has about 150 known deposits.” “The best known names are Muzo and Chivor, where emeralds were mined by the Incas in pre-Colombian times.” “Many of the best emeralds are undisputedly of Colombian origin.” With some fine emeralds exceeding the auction prices of diamonds, the differential between truly ‘fine’ stones and the rest will become increasingly noticeable. “Colombian emeralds differ from emeralds from other deposits in that they have an especially fine, shining emerald green unimpaired by any kind of bluish tint.” (International Coloured Gemstone Association, 2015).
A deep underground shaft in the Muzo mine
Gemfields, the World’s largest emerald producer, is now looking to diversify its production beyond the lower quality central African mines by purchasing shares in Colombian mining operations. They are aiming to corner the emerald market in the way that De Beers cornered the diamond market in the nineteenth and twentieth century’s, during which time international diamond prices rose significantly. They are now heavily marketing emeralds and for the first time in history the coloured stone market is being organised on a large scale. Zambian stones fetch 25-35% of the price of Colombian stones (mainly due to their lower clarity) so this demonstrates that they are shifting their business model towards the upper echelons of the market. Each new area of mining operations opened by Gemfields have resulted in local prices increasing and the prices of the stones mined by Gemfields have also risen after their market entry. Can you imagine buying a diamond in the early days of De Beers, and what it’s value would be today?
Emeralds are 20 times rarer than diamonds but 50% of jewellery containing precious stones included diamonds by 1900 and by 2000 this had risen to 95%. However this trend is set to reverse and this can be clearly evidenced by the view taken by Bonhams on the development of the coloured gem market. Indeed the scarcity of fine emeralds is really brought into sharp focus when you consider the fact that only 5-10% of rough emeralds mined are worth cutting and polishing and of these only 5-10% will produce stones that can sell with ‘minor’ or ‘insignificant’ oiling. Colombian emeralds fetch a premium due to their colour, this colour is unique to Colombia, due to its geography and the formation of iron pirates (‘fool’s gold’). This absorbs the iron from the emeralds and does not occur anywhere else in the world
Luxury goods purchases in China still account for less than luxury goods purchases in New York alone and fewer than 20% of Chinese women own at least one diamond, compared to over 80% women in the USA. At some point the Chinese market will reach maturity, leading to future demand for approximately 300 million additional gems (from this you can extrapolate that demand will increase for other luxury goods and precious stones).
Psychologists believe green is the most pleasing colour to the eye. It is interesting to note that the allure of emeralds has often been attributed to their colour ever since the first Conquistadores arrived in South America. The Spanish quickly discovered that the royal courts of the Mogul rulers in pre-colonial India revered the unique deep green hue of the Latin American stones and they began to trade them for Asian diamonds as early as the sixteenth century.
The value of emeralds has more than doubled in the past 3 years and prices have grown by 8% in the last 12 months. When one assesses the price movement for these stones over the past 10 years, it becomes evident that they have almost tripled in value (www.gemval.com, 2016). Potential for supply disruption in the Muzo and Chivor regions, due to political instability and regional tensions, is a ever present possibility. These factors combined suggest that 2016 will indeed be the year of the coloured gemstone!