Category Archives: collecting gems

Getting an Appraisal; Part II; The games jewelers play

by Richard W. Wise, G.G.

©2006

Jewelers sometimes use appraisals as sales documents. “I’ll sell it to you for $1,000.00 but I’ll give you an appraisal for $5,000.00.” The IRS defines value as what the willing buyer pays the willing seller. In this case we know the seller is more than willing and to entice the buyer he provides an appraisal document that inflates the value of the item sold. The replacement value is the price the buyer paid. It is difficult to believe that anyone would fall for this but they do. Not only is this practice unethical but over the long run the buyer pays through the nose.

Insurance premiums are based upon the replacement price stated in the appraisal document. Insurance companies are well aware of the practice of inflating value, a practice they could eliminate it with the stroke of a pen. They purposely choose not to do so. In fact they are more than willing participants in a defacto fraud that makes them huge profits.

Most insurance policies contain a clause that allows the company to replace a lost item with “like kind and quality.” Insurance companies maintain ongoing relationships with certain jewelers and manufacturers that allow them to buy at wholesale. You insure at retail, they replace at wholesale or in the case of the example sited above they collect a premium based on five times the retail price year after year and if a claim is filed they replace at their cost which may be a fraction of the insured value.

I have personally seen instances where insurance companies will try to replace fine handmade originals with generic pieces of production jewelry. In one instance one of our clients lost a one of a kind handmade ring set with a rare fine quality Malaya garnet. It was only the client’s stubborn refusal and willingness to sue coupled with the fact that I had written an article on this garnet that prevented the insurance company from trying to force the client to except a cheesy commercial substitute worth less than ten percent of the original. The company’s position was that a ring is a ring and one is much like another. That’s like saying that a painting is a painting and a Picasso might be legitimately replaced with Elvis on velvet.

Not all insurance companies engage in this sleazy slight of hand. I have worked with Chubb and it is one example of a company that will pay the full insured value when an item is lost with no questions asked. My understanding is that Chubb charges higher premium but you get what you pay for.

There are obviously some cases where the replacement cost will be higher than the selling price. The obvious example is an appraisal done years after the purchase. Another example is the ruby sighted in the previous post. After my trip to Hong Kong it was obvious that I could not replace that stone for the price the client paid. In these sorts of cases both should be included in the appraisal and then it is up to the client, in consultation with the insurance company to decide what level of risk he or she is willing to assume.

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Getting an Appraisal; Some Do’s and Don’ts

Gems: Grading the Crème de la Crème, Part IV

By Richard W. Wise, G.G.

©2006

In the last three posts on this subject I discussed some of the rare characteristics that make certain gemstones so valuable. Value is naturally of great interest to the gem connoisseur/collector. How does a collector determine if he is paying the right price? In other words how does one go about establishing the value of one of a kind, ultra-fine gems?

First let’s establish what you don’t do. Don’t take the stone to your local jeweler even if he is a graduate gemologist unless he stocks comparable qualities of the gem in question. Most local jewelers know colorless diamonds but few have a working knowledge of colored gemstones. As with any sort of appraisal, the prospective appraiser should have a thorough day-to-day familiarity with the gem to be appraised.

Familiarity is easy enough to establish. If ruby is the gem at issue, go to the jeweler and ask to see his rubies. If he stutters and stammers and suggests he can have anything you want in the store in a matter of days, move on. If he doesn’t stock the stone, he doesn’t know the stone.

Watch out for the low-ball…

If the potential appraiser’s first statement, after you show him the gem and tell him what you paid is, “you paid way to much for that stone.” Run like hell! Why, because I guarantee that the next words out of his mouth will be: “I could have gotten you a similar stone much cheaper.” These are not statements made by a disinterested professional they are what they sound like, the words of a jealous competitor. The practice is so common it even has a name; low-balling. Some jewelers low-ball because they believe if they can discredit the competition, they will get the business. What actually happens is that the client becomes distrustful and the whole profession is discredited. If a low-ball raises a question in your mind; call the person’s bluff: “Ok, show me a better one, cheaper!.” Usually that will end it. Recently a client of mine went one better, he asked to be shown a comparable stone and agreed to buy it if the dealer came up with one. He still has my stone and is yet to see a match.

The next possibility is a professional appraiser. Over the past two decades gem and jewelry appraisal has become professionalized. There are three major appraisal organizations: The National Association of Jewelry Appraisers (NAJA) http://najaappraisers.com/ , The International Society of Appraisers (NSA) http://isa-appraisers.org/ and The American Society of Appraisers (ASA): http://appraisers.org/. These organizations have standards of education and codes of ethics to protect the client. In addition they use methodologies that provide some assurance of accuracy. However, I think the same standard applies. Does the appraiser have experience with the gem in question?

How often have I been asked for a: “Just off the top of your head, I won’t hold you to it” appraisal? An appraisal is worth what you pay for it. A good appraisal takes time and time is money. Jewelers who give out this sort of verbal appraisal are doing neither their client nor their profession any good. Courts in some jurisdictions have held that a free appraisal is worth just what you paid for it…nothing! And, by the way if you are a professional you may be “held to it” in a court of law. Jewelers are not the only ones who do this sort of thing, professionals do not always act professionally. May I offer a cautionary tale?

Take me out to the ballpark…

About two months ago I sold an extraordinary 3.30 carat Burma Ruby (pictured) The client, rightly concerned with value, wanted the gem appraised. He asked me if I could recommend and appraiser and aside from the ethical problem of the seller making such a recommendation I had a tough time thinking of anyone other than a wholesale dealer specializing in rubies with experience enough to do it and wholesalers do not know the retail market. To aid the client I obtained an American Gemological Laboratory full quality report. The AGL report graded all aspects of the gem and issued an overall quality grade. I highly recommend this report for important gems. It provides one objective basis to begin the valuing process. (see the report at www.rwwise.com, click gallery, gemstones, ruby)

The client then contacted a professional member of one of the organizations listed above and asked the appraiser for a ballpark estimate and faxed the AGL report to the appraiser. Without ever seeing the gemstone, this appraiser gave the client a “ballpark” price that was so ridiculously low that the client, who had been looking for a ruby for several months realized the price was absurd and decided he needed another appraiser.

How could any professional appraise a gemstone without examining it? You’ve got me! In the case of this so-called professional, he hit a foul ball. Luckily, the client knew more than the appraiser otherwise I might have lost the sale.

The client then asked two well known gemologists, Richard Drucker and Stuart Robertson of Gem World International publisher of The Guide, a wholesale gemstone price guide, to do an appraisal. In a subsequent article in Gem Market News written on appraising this ruby here is what Mssrs. Drucker and Robertson said this stone:

“Pricing this ruby was a challenge…The color was at the top of the spectrum…”

“we looked for comparables…Rubies of this caliber cannot be priced by the cost method and only market data will suffice…”

“…This becomes a gem for the collector’s category and that is an important lesson in pricing. The stone is an example of a gem that grades above The Guide’s extra fine category.”

Gem Market News, Vol. 25, No. 5, September, October 2006, p. 12

Evaluating an ultra-fine gem is difficult because, as Drucker says, you must find comparable stones and if you can’t find comparables you are like a tight rope walker dressed in his underwear balanced on a high wire working without a net. In the end, Drucker & Robertson, after consulting a number of dealers, appraised the stone for substantially more than the client paid and several times the price suggested by Mr.ballpark the professional appraiser.

To sum up, if you want a gem, any gem, appraised. Find a professional with demonstrated familiarity with the gemstone. Check the credentials of local jewelers by checking what they have in their inventory. If they don’t stock the stone, they don’t know the stone. Choose a disinterested professional and pay the price. Don’t expect something for nothing, get a signed document and watch out for foul balls and low inside drives.


Interested in reading more about real life adventures and secrets of the gem trade? Follow me on gem buying adventures in the exotic entrepots of Burma and East Africa. Visit the gem fields of Austrailia and Brazil’s famous Capao mine. 120 photographs including some of the world’s most famous gems. Consider my book: Secrets Of The Gem Trade, The Connoisseur’s Guide To Precious Gemstones.

“Wise is a renowned author… He’s
done a marvelous job of this first book, monumental work, a tour de force…My recommendation: Buy this book”.

Charles Lewton-Brain, Orchid

Only $39.95. You can read a couple of chapters online: www.secretsofthegemtrade.com.

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Choosing The Perfect Pearl

Ten, make that eleven tips to help you choose the perfect pearl


by Richard W. Wise, G.G.

© 2006


1. There are two types of pearl, natural and cultured. In today’s market just about every pearl you see will be cultured meaning that the hand of man had something to do with the creation of the pearl. (pictured above a necklace of mixed South Seas white and golden pearls)

2. We are experiencing a pearl Renaissance. There are more types of pearls on the market today than ever before. Twenty years ago the Japanese Akoya stood virtually alone. Today you can choose from: Freshwater pearls, South Seas white, Tahitian black and South Seas golden pearls.

3. What’s the best buy in pearls? Probably the Chinese Freshwater, (pictured left 8.5mm round natural color Chinese f/w pearls) There are two ways to create a cultured pearl, bead nucleation and tissue activation. Pearls that are bead nucleated have a large bead made from shell and thin covering of nacre depending upon how long they are left in the mollusk. Chinese freshwater pearls are tissue activated, have no bead and are pure pearl. They are available in natural pastel or white and in their finest qualities have some of the characteristics of natural pearls. Be careful, over 90% of Chinese freshwater pearls are of marginal quality. The best will stand toe to toe with any pearl in the world and can be purchased for a third of the price. To help you in selection, pay careful attention to the following guidelines:

4. Pearls are often treated, usually to change or improve the color. Pearls are routinely dyed and irradiated. Natural colors are, by far, the most beautiful. Japanese Akoya, the pearl that is seen most in the market is routinely bleached white then dyed to give it a pinkish overtone. If the color looks too good to be true it probably isn’t.

5. A fine pearl has what experts call “life”. This is a combination of high surface luster and overtone and occasionally orient. All pearls exhibit luster, those with thick nacre will usually show excellent luster. Observe the pearl(s) on a white background under a light bulb, if you can distinctly see the outline of the bulb the pearl has high luster.

6. Some pearls exhibit an ephemeral misty glow that seems to hover over the surface of the pearl. This is called overtone. Not all pearls exhibit overtone, for example, it is very rare in South Sea white pearls. If present in white pearls, the overtone is usually pink, in Tahitian black pearls, green, red or blue or some combination (pictured right). Orient is rare in round and semi-round cultured pearls. Orient may be defined as a rainbow affect that changes as the pearl is rotated in the light. Orient is chromatic, meaning it will show all the colors of the spectrum whereas overtone is normally monochromatic exhibiting one color such as pink. A ball bearing can have wonderful luster but the addition of overtone or orient adds dimensionality and life to the pearl (pictured right: orient in Chinese f/w baroque pearls. Below (right) distinct orient in a pearl shell).

7. To judge if all the pearls in a strand are round, hold the strand taught between your hands and rotate the strand between your fingers. In a round strand you should see no movement but if some of the pearls jump about like the cams on a cam shaft, the strand is not completely round.

8. Odd shaped pearls, called baroques, are not to be disparaged. If they have good luster, no scratches or cracks they have a younger hipper look than the more expensive rounds. You can wear them with jeans and they are available at a substantially lower price.

9. Pearls have flaws just like other gem. These may be dimples, scratches or cracks. A dimple here or there should not be of much concern however, one that looks like it has a bad case of chicken pox should be highly discounted. A pearl with a deep scratch or crack is unacceptable.

10. Beware lower priced Japanese Akoya pearl, if your grandmother has a strand of white round pearls they are likely Akoya. These are formed by placing a shell bead in the oyster. In the last few years, Japanese farmers have dramatically reduced the time the pearl is allowed to develop in the shell resulting in pearls that are little more than nacre plated beads with less than ¼ millimeter of pearl essence or nacre over the shell bead. These pearls are often bleached then dyed pink to simulate overtone. These pearls lack luster and are prone to flaking.

11. Pearls come in many nuances of color but color is not the issue. It doesn’t matter how good the pearls look in the jeweler’s case, the real question is how the pearl looks against your (the wearers) skin. Pearls come alive when placed against skin of an appropriate color and texture. This is a characteristic I dubbed simpatico in my book: Secrets Of The Gem Trade, The Connoisseur’s Guide To Precious Gemstones. Don’t prejudge, test the simpatico of each strand by placing it against the skin on the inside of the wrist. The skin in this area is the same color and texture as the skin around the ears and neck. The result may surprise you.






Need more information on pearls?

Follow me on gem buying adventures in the pearl farms of Tahiti. Visit the gem fields of Australia and Brazil. 120 carefully selected photographs showing examples of the highest quality gems to educate the eye, including the Rockefeller Sapphire and many more of the world’s most famous gems. Consider my book: Secrets Of The Gem Trade, The Connoisseur’s Guide To Precious Gemstones.


“Wise is a renowned author… He’s
done a marvelous job of this first book, monumental work, a tour de force…My recommendation: Buy this book”.

Charles Lewton-Brain, Orchid

whether you like to know what the best colour is in Tanzanite, or how to grade a Diamond, you will find it in this book. No other book I read before dealt with this topic is such detail as Richard Wise’s masterpiece.”

A. Van Acker, FGA
Amazon June 2005

“Secrets Of The Gem Trade: The Connoisseurs Guide To Precious Gemstones by Richard W. Wise is an impressive new reference for dedicated dealers and collectors of gems, gemstones, and … pearls. Introducing and descriptively exploring each and every gem covered in the easy-to-use reference, Secrets Of The Gem Trade contains an illustrated summary of each stone inclusive of its history and general information, hue and tone, saturation, which may be noticed as the finest, an understanding of the particular gems rarity, and the caution for synthetics and how to depict them, however depending upon the stone there may be description of clarity, color fading, multi-color effect, etc. Secrets Of The Gem Trade is very highly recommended to anyone interested in gemology as a superbly organized, authoritative, comprehensive, and easy-to-follow reference.”

Midwest Book Review
April 2006

Only $37.95. Read a couple of chapters online: www.secretsofthegemtrade.com.

Buy it on Amazon: www.amazon.com

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posted by Richard W. Wise @ 12:16 PM