[Jewelry making - Article 00167] - Re: [Orchid] Sapphires buying

[GGGemsWCR]

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    Daniel and All, My first reaction to your post was total
    disagreement, but then I thought about your post from a jewelry
    marketers view point and you are correct.  The value of sapphires
    below $5,000 US is not affected by heat treatments.  I agree.  Why
    is that so?  It has been estimated by gemstone experts that over 99%
    of all sapphires mined are heat treated.  Even stone that have been
    identified as showing no identifying signs of heat treatment have
    probably been heated.  How much does heat treatment change the value
    of sapphire below $5,000?  I can buy kilo parcels of rough for about
    $5,000 - $10,000 per kilo. That is $1 - $2 per carat.  This is
    unheated rough.  After sorting for flaws and the ability to cut a
    stone I normally end up with about 75% cuttable stone.  My price is
    now $1.25 - $2.50 a carat.  What is normally done at this point is
    the stones are shipped to a cutting center in SriLanka or Thailand. 
    There I pay for preforming and initial heating.  The cost is
    variable.  Probably about an additional $1.00 per carat.  $2.25 -
    $3.50 per carat. After heating a certain percentage of stone will
    treat to a salable color other will require more treatment.  Stones
    that are salable I send to a cutting house, ones that require more
    treatment are added to new stones and heated again.  Cost of cutting
    is between $.50 and $3.00 per carat.  $5.25 - $6.50 is now my cost. 
    At this point I have sapphires that retail in the US for $50 - $ 600
    per carat.  You do the math.  Heat treating affect the value that
    much. Why this is down played by jewelry marketers is because this is
    where they make their tremendous markups.  Jewelry marketers also
    know that no one is going to instigate a law suit over $5,000 in
    stones, not when cost of litigation can cost millions.  So the
    market for sapphires under $5,000 has become the place where the
    most misrepresentation of value takes place.  The market below
    $5,000 is also where most jewelry marketers play because it is very
    lucrative and safe. In the old business world you could fairly well
    trust most jewelry marketers to have sapphires for sale that were
    what they say they are.  Now that has changed.  Most jewelry
    marketers are buying from the best priced source they can find and
    do no further investigation into the stones.  These best priced
    sources are traveling sales representatives for non US companies or
    first generation US citizens representing family cutting ooperatoins
    in China, Thailand, Brazil, Africa, and Sri Lanka. Most of the
    stones sold by these people are not properly identified.  Their
    success in marketing has been price and price alone.  In the new
    business world gemstone dealers and cutters like myself have to sell
    at these prices or below to stay in business selling to the jewelry
    marketers.  Price is driving sales to jewelry marketers, quality is
    a distant second.  Our sales have dropped consistently over the last
    5 years.  Now instead of lowering our prices to the point that we
    are working for slave wages we are no longer marketing to the
    jewelry marketers.  Gemstone dealers and cutters are selling at or
    below prices that we sold to jewelry marketers. We are selling
    directly to the public at these prices.  Our stone have the
    guarantees of quality cutting, identification, disclosure, and the
    best possible price and value.  Therefore, tell all your friends
    that the best deals are now to be made directly with gemstone
    dealers and cutters, not with jewelry marketers.  My new website
    will be custom gemstones at wholesale or below directly to retail
    customers.  New game. 

Gerry Galarneau
www.galarneausgems.com  

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