Where to Buy Fine Gemstones: Dealer, Auction, or Jeweller

A fine ruby can be bought in an auction room in Geneva, in a jeweller’s salon on a famous street, or across a desk from a dealer who has no shop at all. It is the same stone in all three rooms. The price, the paper and the risk are not the same, and most of the mistakes I am asked to repair were made by a buyer who did not notice which room he was in. Here is what each one sells, what it charges for, and when it is the right place to be.

The auction house

Auction is the only channel with public price discovery, and that is its gift. The catalogue tells you what the laboratory said, the estimate tells you what the specialist thinks, and the hammer tells you what the room was prepared to pay. The reports are usually from Gübelin, SSEF or GIA, because the houses know their buyers read them. The record prices are set here and nowhere else.

What it charges for is the room. A buyer’s premium of roughly a fifth to a quarter goes on top of the hammer. There is no return if the stone looks different in your own daylight from how it looked in the viewing. You bid against the trade, who know the stone’s history, and against collectors who have decided not to lose. And the calendar is theirs: two seasons a year, the lots they have, not the stone you want. Auction is right for the famous stone with a name, for price discovery on a stone you are selling, and for the patient buyer who can view in person and walk away.

The jeweller

A retail jeweller sells a finished object: design, craftsmanship, a brand, a guarantee, a box, and somewhere inside it a stone. Most of the price is for the first five. That is not a criticism; it is what the room is for, and the great houses are worth what they charge for what they make. But a coloured stone bought inside a piece is bought at the house’s margin and sold, one day, at the stone’s value, because the next buyer pays for the stone and discounts the rest. The paper, if it exists, is often a house certificate rather than a laboratory report, and the treatment line is sometimes a footnote.

The jeweller is right when you are buying the piece and not the stone, when the name on the box is part of the pleasure, and when you want a guarantee from a house that will still exist in thirty years. It is the wrong room for a collector building a holding of loose stones with paper in his own name.

The private dealer, or the hunter

The third room has no sign. A dealer holds stones he has bought from the trade and sells them at a margin above his cost. A gem hunter holds almost nothing and buys against a written brief, at origin, on the client’s behalf. In both cases the money goes to the stone rather than to a salon, the stone is loose and can be examined in any light, and the report can be in your own name before you pay. How the hunt works is set out elsewhere; the point here is what the room asks of you.

It asks for trust, and trust in this trade is not a feeling. It is a set of behaviours you can observe in the first hour. Does he judge in daylight and let you do the same. Does he name the laboratory before you ask. Will he let the stone go to a house of your choosing before money moves. Does he accept escrow without a speech. Does he say no to stones, including his own, and tell you when the stone you asked for does not exist this season. A dealer who has a stone for every brief has a shop, not a search. The due diligence sequence protects you from the rest.

The same stone, three prices

Take one unheated Burmese ruby of three carats with a Swiss report. At auction it carries a hammer, a premium and an evening’s competition, and the headline is the highest of the three. In a salon it carries a mount, a name and a margin, and the invoice is the highest of the three. Across a desk it carries the dealer’s cost and his margin, and the price is closest to what the stone is; the risk is that the desk belongs to the wrong man, which is the risk the checks above are for. The stone did not change. The room did.

When to use which

Buy at auction when the stone has a name or you have a stone to sell. Buy from a jeweller when you are buying the piece. Buy from a dealer, or commission a hunter, when you are buying the stone: loose, unheated, with paper in your own name and the money in the mineral rather than the marble of the shop floor. Most serious collections were built in the third room, by people who learned to read the first two.

Know which room you are in before you look at the stone. The stone is the easy part.

Questions collectors ask

Are gemstones cheaper at auction?

Sometimes. A stone can hammer below its trade value on a quiet evening, and the catalogue reports are usually from serious laboratories. Against that, a buyer's premium of roughly a fifth to a quarter is added to the hammer, there is no return if the stone disappoints in daylight, and on a famous lot you are bidding against the trade and two collectors who have decided not to lose.

Should I buy a gemstone from a jeweller or from a dealer?

From a jeweller if you are buying a finished piece and value the design, the brand and the guarantee that comes with it, and you accept that part of the price is for those things. From a dealer or a gem hunter if you are buying the stone itself, want it loose with paper in your own name, and want the money to go to the stone rather than to the shop.

How do I know a private gem dealer is honest?

Watch what he does with light and paper. An honest dealer judges in daylight and lets you do the same, names the laboratory before you ask, lets the stone go to a house of your choosing before money moves, accepts escrow without argument, and says no to stones. The one who has a stone for every brief and a reason why the laboratory is unnecessary has answered the question.