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Why Are Auction Diamond Sales Breaking Records?

We publish courtesy of JCK online

Author: Russell Shor, GIA senior industry analyst

Provided by the Gemological Institute of America.

The upcoming 2011 jewelry auction season promises more record-breaking large diamonds and top fancy colored diamonds.  Even as the world economy is still recovering from the economic crisis of 2008-9, it seems the wealthy cannot get enough of these stones. They helped Christie’s and Sotheby’s—which together account for nearly 90 percent of the top jewelry auction market—achieve record sales last year.

Christie’s reported its jewelry sales at $429 million in 2010, easily topping the previous record of $395 million set in 2007. Sotheby’s 2010 jewelry sales totaled $405 million, also a record. And the reach of this success was worldwide: Christie’s reported that North America ($130.5 million), Hong Kong ($163 million) and Europe ($135.5 million) were all records, as well.

The 2011 season began in earnest and details of several major stones coming up for sale are circulating. For example, a GIA-graded 10.09 carat Fancy Vivid purple pink diamond is estimated to bring $15 million— nearly $1.5 million per carat. And, an unmounted, 56.15-carat heart-shaped D color, Internally Flawless diamond, also graded by GIA, is expected to fetch between $9 million and $12 million.

When the financial crisis struck the world economy in the fall of 2008, the major auction houses, like every other business, pulled back to assess. As the crisis deepened in December 2008, however, the Wittelsbach Blue, then a 35.56 carat Fancy Deep grayish blue diamond,sold for $23.4 million at Christie’s—the highest price ever paid for a diamond at auction.

After that sale, Christie’s and Sotheby’s have achieved near-record and record prices for top fancy colored and colorless diamonds at numerous sales around the world.

Examples of record-breaking diamonds include:

  • 24.78-carat Fancy Intense pink diamond that doubled the all-time record set by the Wittelsbach (November 2010)
  • A five-carat Fancy Vivid pink diamond that set a per carat record price of $2.1 million (October 2009)
  • A square-cut 32.01 carat D Internally flawless that established a record per-carat price of $240,000 for a colorless diamond (October 2009)

Auction house executives and industry observers agree on a number of reasons why such diamonds can achieve record prices during a period of economic hardship: the international reach of the auction houses; the rarity of top gems and the greater number of private buyers going to auction.

On the first point, whether conducted in the main centers of Geneva, New York or Hong Kong, auctions now attract a worldwide clientele.

Indeed, Hong Kong, a niche venue a decade ago that specialized in jade and Chinese art, was Christie’s leading jewelry sales location in 2009 and 2010. In addition to the above-mentioned five-carat Vivid pink, a 5.16 carat Fancy Vivid blue, internally flawless diamond sold for $6.14 million. Many of the top lot buyers were Chinese business people venturing internationally for the first time.

The Geneva and New York sales also turned in record numbers. Sotheby’s Nov. 16, 2010 Geneva auction, which featured that $46 million pink diamond, was the first jewelry auction ever to top $100 million total. The renowned London jeweler Laurence Graff bought that legendary pink, but other lots went to buyers from 30 countries.

The Bulgari Blue, which included a triangular-cut 10.95 carat Fancy Vivid blue diamond, went to an Asian buyer for $15.7 million after a spirited battle between several bidders at Christie’s Oct. 20, 2010 New York sale.

And Sotheby’s New York sale in December 2010 sold 100 percent and brought in $53.2 million. All of its top 10 lots, which were diamonds, sold for more than $1 million each.

A second reason for the auction houses’ success is the perceived rarity of these top diamonds, especially fancy colored blues and pinks. Of the millions of diamonds mined each year, only .001 percent can qualify as fancy colors and only a handful can achieve the top grades of Intense and Vivid. An even smaller percent are larger than one carat, let alone five carats. So the auction houses deal in true rarities, whether newly mined diamonds or historical stones like the Wittelsbach, which was owned by Bavarian royalty and traced back almost 400 years to Moghul India.

A third reason is the rise of the individual buyer. In the past, dealers were the majority of top-lot buyers at jewelry auctions. Today, individuals account for more than half of such sales. Auction house executives say these buyers range from collector-connoisseurs who seek the very best stones, to investors who believe their extreme rarity, coupled with rising demand, will continue to push up the value.

“In this new climate, large colored and colorless diamonds, rare gemstones, and signed jewels are attracting an ever-expanding community of collectors and investors from around the world,” François Curiel, international head of Christie’s jewelry department, noted recently.

There is a chance the Wittelsbach diamond may have another go at the record books. Graff, who also purchased that $46 million pink diamond (mentioned above), had the Wittelsbach recut down to 31.06 carats to improve its color, clarity and symmetry. He sent it back to GIA for grading nearly a year after he purchased it. The diamond, renamed the Wittelsbach-Graff, is now graded Fancy Deep blue and the clarity was improved to internally flawless. It is unlikely that Graff will sell the famed diamond at auction, preferring instead to meet his clients in the privacy of his New Bond Street salon.


Industry Analysis: Holiday Sales Off to a Strong Start

We publish courtesy of Gems & Gemology GIA Insider

Author: Russell Shor, Senior Industry Analyst


This 27.19 ct D-IF dimaond sold for $3.66 million at Sotheby's Dec. 9 Magnificent Jewels auction in New York. Photo courtesy Sotheby's.




This GIA-graded Fancy Intense pink diamond brokle two records: the most ever paid for a gemstone at auction and the highest price per carat ($1.86 million). Photo courtesy Sotheby's





The biggest development of this final month of 2010 is the spate of good news. Top jewelry auctions continue to break price records around the world, while the U.S. holiday shopping season indicates that jewelry is high on the buying list for everyday consumers.
One retail analyst group, IBIS World Inc., estimates that jewelry demand will rise 6% over the 2009 season. Earlier in the year, analysts were forecasting increases of around 2-3%, based largely on predictions of increased spending among the wealthiest buyers. Retail jewelers report, however, that sales have risen higher than expected across the board since mid-November.
Press reports and anecdotal evidence indicate that both the volume of sales and the average ticket price will be up significantly over the same period last year, even adjusting for gold price inflation, as consumers feel more comfortable spending. The Centurion newsletter survey reported that some 60% of luxury jewelers have posted double-digit sales increases thus far, while an additional 14.8% were up between 6% and 10%. Tiffany & Co. and Blue Nile have had seasonal gains of 10% and 12%, respectively.
Independent retailers are also optimistic about the season. Traditionally, as much as one-third of their holiday sales take place during the final 10 days before Christmas.
One reason for the better-than-expected retail sales is that most economists are no longer warning about a “double dip” recession. The consensus is that while a struggling job market will remain a drag on recovery, the economy will continue a slow growth through 2011. In addition, U.S. corporate profits have been quite strong the past two quarters, which suggests that those who have jobs may no longer fear losing them or being subjected to cuts in wages and hours.
In Europe, the fiscal troubles of Ireland and possibly Spain have unsettled the European Union. But while the European recovery remains slower, there is no talk of these problems pushing the world back into recession, as was the case last summer when Greece’s problems came to light.
The ultra-wealthy continue to flock to very large colorless and top fancy-color diamonds and extremely fine-colored stones. The Nov. 16 Sotheby’s auction in Geneva was a record-breaker on a number of fronts. It was the first $100 million-plus jewelry auction ever. Nearly half of that total, $46.1 million, went to a 24.78 ct GIA-graded Fancy Intense pink diamond that broke two records: the most ever paid for a gemstone at auction and the highest price per carat ($1.86 million).
The following day, at Christie’s Geneva, two Colombian emeralds sold for extremely high prices: A 25.83 ct octagon-shaped stone went for $1.04 million, while a 9.27 ct Muzo stone drew a winning bid of $824,720.
Sotheby’s Dec. 9 Magnificent Jewels auction in New York broke a sales record for that venue: $53.2 million, with 10 lots selling for more than $1 million. The top lot was a 27.19 ct D-IF diamond that sold for $3.66 million, or nearly $135,000 per carat.
Meanwhile, preliminary reports from the Dec. 13-17 Diamond Trading Company sight put it at about $450-$475 million. Diamond manufacturers hope the encouraging U.S. holiday season, coupled with continued strong demand from India and China, will break the impasse over polished prices that has lasted for six months.
Rough prices have increased far ahead of polished, as cautious retailers and jewelry manufacturers still refuse to pay higher rates. A number of manufacturers, particularly in India, stopped polishing certain sizes, preferring to hold them until prices improve, instead selling from inventory or stones sourced from the secondary market.
Russell Shor
Senior Industry Analyst



From Gems & Gemology: Smartphone Photomicrography

We publish courtesy of Gems & Gemology GIA Insider

G&G managing editor Thomas W. Overton prepared the following entry for the journal’s Gem News International section.

Figure 1. This inexpensive microscope accessory clips over a smartphone camera lens. Illumination is provided by LEDs. Photo by Robert Weldon.

Figure 2. Taken with an Apple iPhone and the clip-on microscope in figure 1, this image shows a “lilypad” inclusion in peridot. Photomicrograph by T. Overton; field of view approximately 4.0 mm.

Smartphones such as the Apple iPhone, Motorola Droid, and Nokia N8 have become increasingly popular in recent years. Top-end models typically feature good-quality digital cameras that rival some “point-and-shoot” cameras, in addition to having basic photo editing software.
The popularity of smartphones has also spawned the development of numerous accessories that can expand their functionality even further. One such accessory is a low-power microscope that clips onto the phone over the camera lens. This contributor was interested in seeing if this device could have gemological applications.
The microscope accessory in figure 1 was ordered on the Internet for less than US$20. Its sliding housing offers varying levels of magnification, and illumination is provided by two white LEDs. The lighting assembly can be rotated about 45° to change the angle of illumination.
Although this device is clearly not optimized for gemological use, with some practice it was possible to produce serviceable photomicrographs. The images in figure 2 was taken with an Apple iPhone 4 using the ProCamera photography application, which allows manual adjustment of focus and white balance. As with any photography, the biggest challenge was the lighting. The LEDs proved too bright in most situations, and better results were achieved by partially shielding them or turning them off and relying on ambient light. Although the microscope’s packaging promised magnification up to 60x, in practice it was impossible to obtain good focus beyond medium power (approximately 20x). The best results were produced with a combination of the phone’s digital zoom, careful adjustment of the autofocus, and a steady hand.
This device clearly will not replace a standard gemological microscope or even a loupe, but it appears to provide a useful field tool in the gemologist’s arsenal.
To subscribe to G&G, visit the GIA Store, contact circulation coordinator Martha Rivera or call toll-free (800) 421-7250, ext. 7142. From outside the U.S. and Canada, call (760) 603-4000, ext. 7142. To purchase PDF versions of articles or sections, visit Gems & Gemology Online.
You can find the device here. Please note that the Gemma News Service does NOT guarantee the reliability of the dealer. We just found it on the web.

GIA Lab Sees More 5 to 10+ ct HPHT-Treated Diamonds

We publish courtesy of GIA’s G&G eBrief

Author: Wuyi Wang GIA Laboratory, New York


The New York lab has been examining a greater number of large HPHT-treated type IIa diamonds, such as this 18.12 ct round brilliant (top; photo by Jian Xin Liao). The hexagonal graphite inclusion it contained (bottom; image by Wuyi Wang, magnified 112x) is a good indication of this treatment.


Gem laboratories frequently see colorless to near-colorless HPHT-treated type IIa diamonds, most of them smaller than 5 ct. In recent weeks, however, GIA’s New York lab has examined an increasing number of relatively large HPHT-treated type IIa diamonds, many weighing more than 5 ct and some 10+ ct.
One example is the 18.12 ct diamond at right, which was color graded F. While many HPHT-treated diamonds have no observable internal features except for some graining, this stone contained a tiny hexagonal graphite inclusion surrounded by a tension fracture. The inclusion, which very likely formed due to graphitization of the host diamond, and the tension fracture are good indications that this stone was HPHT treated. Careful spectroscopic analysis provided confirmation.
HPHT annealing involves a higher risk of damaging the diamond than other treatment techniques, so it is somewhat unusual to see it applied to such large stones. It is not clear if this surge in submission of large treated diamonds is a short-term phenomenon or the beginning of a trend. One possible explanation is that more suitable starting materials have become available in the market.

GIA Gem Project – Edward J. Gübelin Collection

We publish courtesy of GIA


About the Dr. Edward J. Gübelin Gem Collection
Dr. Edward Gübelin’s study of gemstones and their inclusions extended over a professional career of more than six decades, and his work revolutionized the science of gemology. From his home laboratory in Lucerne, Switzerland, he traveled to gem localities on five continents to collect samples that he then meticulously documented. After his death in March 2005, his comprehensive collection was acquired by the GIA. The collection consists of approximately 2,800 gems representing 225 different minerals. It now forms part of the GIA Gem Collection, where it is being used for research, education, and display. For more on Dr. Gübelin and his life’s accomplishments, please see the Winter 2005 Gems & Gemology article, “A Gemological Pioneer: Dr. Edward J. Gübelin.”

GIA’s Gem Database Project
GIA has undertaken a systematic study of the Edward J. Gübelin Gem Collection and to date has compiled photographic images, gemological data and data acquired by advanced scientific instrumentation on over 200 of the important gemstones. GIA is committed to sharing this repository of gemological information and is making it publicly accessible via our website. We hope that the database will be of practical benefit to GIA students, educators, gemologists, and researchers worldwide.


Luxury Market to Grow by Double Digits

We publish courtesy of Gems & Gemology eBrief

Authors: Russell Shor


Recovery from the economic downtown has been a painfully slow process for retail jewelers in the U.S. and Europe. The top end, however, is rallying much more quickly, according to a Bain & Co. market study on luxury goods.

The consulting firm predicted that worldwide jewelry sales would rise 13% this year, with the fastest growth (20%) coming from online sales. The report noted that luxury sales in general rose 5% in the first quarter and climbed to 16% by mid-year before slowing a bit in the third quarter. The strongest growth, as expected, is forecast for Asia, but U.S. luxury consumers have returned to the stores and are likely to boost their spending about 12% this year over last.

As if to prove the Bain report, the Oct. 20 jewelry auction at Christie’s New York brought in $52.5 million — 90% by lot and 95% by value — numbers rarely reached even in prosperous times. The top lot, a Bulgari ring featuring a 10.95 ct Fancy Vivid blue diamond and a 9.87 ct G-VS1 diamond, sold for more than $15.7 million. Several pieces with large D-Flawless diamonds broke the $100,000 per carat level. While private Asian buyers took several top lots, most of the jewelry was purchased by Americans.

These auction results underscore a key advantage of the luxury market: it tends to be more international and thus far less dependent on local economic conditions.

Russell Shor
Senior Industry Analyst, GIA Carlsbad