Since tanzanite’s discovery in 1967, its prices have been a roller-coaster ride of ups and downs. Although that can make holding large stocks of the gem an adrenaline rush for dealers, it offers opportunities to buyers, who can take advantage of price dips to replenish stocks.
With the gemstone’s prices softening dramatically over the past year and a half, thanks to the pressures of the recession, tanzanite dealers say that the attractive pricing is bringing new customers into the market. “The price decrease is not necessarily a negative because tanzanite has a history of bouncing back,” says Stuart Robertson, director of research for The Gem Guide. “That means it’s a good buy at today’s prices.”
Pale colors have seen the largest drop in prices. “Lighter calibrated went down a lot, maybe 50 percent. Darker calibrated went down maybe 25 to 30 percent,” explains Benjamin Hakimi of Colorline in New York City. “Because darker colors haven’t depreciated as much, there’s more of a distinction in price for better color, which is as it should be. Because of the lower prices, there’s more activity. When people see value, they buy.”
Tanzanite’s status as a one-source gem — it is found only in the Merelani Hills of Tanzania — means that, in the long term, prices will rise, suppliers say. Known reserves are finite and supplies will eventually run out.
“Seventy percent of all tanzanite has been mined, most in the past 18 years,” says Dana Schorr of Schorr Marketing & Sales in Santa Barbara, California. “Sometime in the future, tanzanite will have nowhere to go but up. In the past few years, I’ve seen a dramatic drop in the availability of top-end goods.”
Hakimi agrees: “Long term, tanzanite will be $500 to $600 a carat for better goods. All these price fluctuations are temporary. There’s only one source for the stuff.”
“We wish we could say we have reduced supply to accommodate the economic downturn, but the truth is that TanzaniteOne is in full production,” says Hayley Henning, director of the Tanzanite Foundation. TanzaniteOne is the world’s largest tanzanite mining company. “It’s just that top-quality material is extremely hard to come by, and hasn’t been mined in excess in the past couple of months — the intense and dark-colored material is harder to come by than ever before.” The darker material is also scarcer than in the past, adds Henning, “and prices for this material are, as always, at a premium.”
With the start of the annual resort season in the Caribbean, where tourists represent a big market for tanzanite, prices are already beginning to climb. “Prices hit bottom about six months ago and since then, they’ve been increasing gradually, although they are not back up to what they were a year ago,” says Benjamin “B.J.” Hackman, chairman of Intercolor in New York City. “Demand for rough is very strong in Tanzania now. I was in Arusha last week and it was flooded with buyers for smaller rough for calibrated sizes. I think within three to four months, we may be back up to the old prices.”
New OptionsThe tanzanite market has more variety than when the price slide began a year and a half ago and that has created new niche markets. One of them is natural-color tanzanite, which can now be marketed with a new natural-color report from American Gemological Laboratories (AGL). The report grew out of a trip by AGL President Christopher P. Smith to the mining area in Tanzania. “When I visited the TanzaniteOne facility in Merelani and looked at the mine-run production, I was surprised by the percentage of material that was coming out of the ground already blue,” Smith says. “I had always heard that it was less than 1 percent but that’s not what I saw when I was there.”
Smith began studying the natural-blue material and developed a way to distinguish it from heat-enhanced color through a combination of features and characteristics. “Not all natural-color material can be positively identified, so this will remain a specialty market,” says Smith. “But we’re now having clients submit stones for this service.”
Jewelry manufacturer Le Vian has gone even further to create a market for natural tanzanite, marketing unheated brown zoisite as trademarked “Chocolate Tanzanite,” along with its “Chocolate Diamonds.” Le Vian was a major importer of tanzanite in the 1980s and 1990s. By 2000, the gem accounted for one-third of the company’s sales. But sales of the blue gem declined during the past decade to only 5 percent of sales. Now, in addition to the Chocolate Tanzanite collection, the company is marketing large, fine blue tanzanite set in pink gold in its Le Vian Couture collection.
“We see the more affordable prices as a big plus, making these dazzling gems more appealing to our collectors again,” says Le Vian Chief Executive Officer (CEO) Eddie LeVian. “As a result of seeing the demand for better-quality and larger gems, we have begun exciting new product development in better tanzanite, including chocolate tanzanite, and these new products have been selling out.”
The lower prices for lighter-colored tanzanite rough have also increased innovation in cutting the gem. “We are seeing new cutting styles and technical cuts that bring out the beauty and sparkle of the light to mid-colors, which are being picked up by designers and retailers,” says Gavin Pearce, a partner in TanzaniteOne. “Some of these new products are commanding the high valuations typically seen in the deeper colors, which is a very interesting new dynamic in the market.”
Article from the Rapaport Magazine - January 2010. To subscribe click here.