Insights: Indulgence

Once the soul domain of local jewelers, precious stones can now be purchased wholesale online
| By Matt Kramer | From Dennis Hopper, Jan/Feb 01

Sooner or later, most men have to buy precious stones. Almost invariably, the first such experience is a diamond ring for you-know-what. You're young, you're poor (soon to be much poorer) and you're baffled. Actually, bamboozled would be a better word.

Now for the good news: you don't have to take it anymore. Sure, now you've got a lot more money. But equally as important, you know more.

I know a bit about this, as I've been buying precious stones for years. And I'm here to tell you that you'll never have to pay retail again. The whole world of buying precious stones -- diamonds, rubies, sapphires, you name it -- has turned upside down. Access to wholesale prices is no longer a matter of who you know. Today, it's a matter of a mouse click.

What changed? For starters, a not-so-minor thing called eBay. This vast Internet flea market has not just created a conduit for you to reach gem dealers, but for them to find you as well.

Take John Drummond, for example. He's a gem dealer in Virginia who freely admits, "My storefront is the Internet. I don't have rent to pay. I don't pay high insurance fees for security. I don't have any of the overhead of a conventional jewelry store. And guess what? I don't have to charge anything like conventional store owners, either."

Drummond, who sells both on eBay and through his Web site,, acknowledges that buying precious stones on the Internet can seem daunting. "I understand that a certain measure of trust is involved. And, sure, I've read the same stories about scam artists that you have. Hell, I've been scammed. So believe me, I know what some people might think.

"But I've got to tell you, this is really the way for people to buy the best precious stones you'll ever see at effectively the same prices your jeweler pays. And I -- and a lot of other dealers like me -- go out of our way to make sure you're satisfied. If you don't like what you've bought or it's just not what you thought it would be, I take it right back. Everyone who's good does that."

Drummond is right about the pricing. I ask Cal Brockman, owner of Goldmark Jewelers in Portland, Oregon, whom I've worked with for years, about his actual prices. Because I've known Cal so long, I knew he'd give me the skinny on his real costs.

"You know, the traditional jeweler's markup used to be as much as 300 percent over our cost," he confesses. "That's gone now, but even so, most jewelers still charge at least 50 percent over cost and often more. I can tell you frankly that my diamond business is down dramatically. People are buying their diamonds direct. It's so easy, what with the grading system used for diamonds. Colored stones, inevitably, are trickier, but it's not that hard to spot good ones."

I suggest tanzanite as a colored stone you ought to consider. The best versions are a deep, saturated royal blue, especially when the stones are large. A violet or neon cast adds dimension to the mesmerizing blue of the best jewels. The stone was first discovered in 1967 in what is now Tanzania.

Tanzanite became a specialty of Tiffany's, which gave the stone its name. Good examples are getting rarer, as the source is just one spot in the Merelani Hills of Tanzania. Prices reached as high as $1,000 a carat in 1984, then plunged to $480 in 1993.

"Right now, I'm paying about $630 a carat for tanzanite. That's my wholesale cost," says Brockman. "But keep in mind, I'm talking about a really good stone of multiple carats. Remember, an investment stone, so-called, is anything over five carats for something like tanzanite. Also, the price per carat increases with bigger stones of the highest quality."

I contact Judi Borenstein in Miami. She's probably the archetype of how precious stones are bought and sold by savvy private buyers. Borenstein is a collector who sells to other collectors. "I started collecting tanzanites and other precious stones more than a decade ago," she says. "I really got swept up in their beauty, especially tanzanites. My late husband and I would go to gem shows, wholesale dealers -- anywhere we could get really fine stones.

"A few years ago, we decided to start selling some of what we bought. And, oh, we'd bought a lot!" she says with a laugh. "But at good prices, you should know." Borenstein specializes in tanzanites, which she sells on eBay under the name Her stock seems exceptional. And she's frank about pricing.

"Although I don't say so on the individual listings, if I'm selling one of my big tanzanites, say something between 5 and 10 carats, the price works out to about $550 a carat," she says. When I tell her that a jeweler friend of mine says the going price is almost $100 a carat above that, Borenstein says, "That's right. But I didn't pay that much 10 years ago. So I can sell for less now."

So what should a precious stone lover/collector look for today? The range is greater than you might imagine, but among the best picks are tsavorites, a stone that in color resembles fine emeralds but lacks their inclusions, or flaws. Big stones are very rare and command $3,000 a carat for exceptional top-quality tsavorites.

Another top pick would be the vast category called fancy sapphires, which covers everything in the sapphire family other than the classic blue sapphire. It's a good choice because sapphires are extremely hard stones, second only to diamonds in hardness. Because of this, they are ideal for rings. And the colors are phenomenal, ranging from the famous classic blue to a dazzling yellow to electric pinks and violets in the fancy class. Prices vary depending on size and color, but a five-carat stone in, say, a rare pink might cost $2,000 a carat.

And what about the Big Three: diamonds, rubies and emeralds? Of these, white diamonds are the easiest to buy, if only because the grading system has become so specific and universally accepted. White diamonds, more than any other precious stone, have become an easily quantifiable commodity.

Insiders know one thing that's rarely mentioned: the diamond grading system has more grades than are needed. So minute are the differences that separate color grades and clarity, that on any given day a grader's judgment might add or subtract thousands of dollars of value to any stone. For example, a diamond deemed to have a color grade of "D" (the highest) and IF (internally flawless) clarity one day -- might be color graded "E" (the second highest) with VVS1 (very, very small inclusions) clarity the next day.

How can this happen? It's simple. Even though there are reference stones against which to compare, grading is still done by eye (rather than machine), and thus relies on human judgment. And every grader has good as well as bad days. Above all, it's because the gradations themselves are overly fine, especially at the highest end of the scale. "It is usually easy enough to tell which is the worse of two bad wines," the late British wine authority Andre Simon once said, "but it is extremely difficult to tell which is the better of two good wines." So it is with diamonds.

If you're interested in purchasing top-level diamonds, it can pay to get a second opinion. You can wind up paying a premium for what one grader generously deemed a "D" color that another might tell you is really a (less expensive) "E."

All of which underscores that your best protection is knowledge. This is especially true with colored stones, including colored diamonds. The best way to learn about precious stones is to see them. Visit a few top jewelers and look at their stock. Ask to see their best stones, so that you can create a reference. It won't take more than a few looks to see what makes a particular stone outstanding.

When it comes time to buy, take your time. If you're buying on eBay and you're spending thousands, make sure to use a credit card for your own protection. Also, consider using an escrow service. Above all, check the seller's feedback reports. Make sure to e-mail the seller all sorts of questions. Learn the lingo.

But when the time comes to set a precious stone, that's when you head to the best jeweler you can find. Settings are to stones what frames are to paintings. They focus the eye on beauty. A great jeweler really earns his money by his craftsmanship. You want something designed just for your stone, and discovering how a top jeweler can fashion a setting for your particular jewel is deeply satisfying.

With these precautions, the rewards are great. You'll own stunning precious stones bought at wholesale prices. Seeing your jeweler's craftsmanship in setting the stone, all the while knowing how savvy you've been, makes for a personal thrill. It's like hearing an orchestra play something you composed -- which is exactly the case here.

Matt Kramer is a columnist for Wine Spectator, Cigar Aficionado's sister publication.