Is it Time to Update Your Jewellery Insurance Valuation?

Posted on June 27, 2020August 19, 2024 by James Lowe

A pair of platinum and diamond ‘Victoria’ ear studs

We have chosen four items of jewellery from four of the top manufacturing brands – items that have been in production virtually unchanged for nearly 20 years – unchanged that is except for the price to demonstrate how important a regular jewellery insurance valuation is!

The price of gold in 2003 was about $450 per ounce and it’s about $1510 per ounce today having peaked around 2012 at $1750 per ounce – so the roughly 350% rise in bullion price over the period in question is a price increase factor but a surprisingly small one in gem set pieces like these. The Cartier ring is quite a chunky piece, but its basic bullion value today is probably about £400 as opposed to approximately £125 in 2003. OK, the VAT rate has risen from 17.5% to 20% in the same period but again that’s had a pretty small effect on the retail price, so that leaves gem stone prices, manufacturing costs and retail profit mark ups as the main ‘culprits’ for the 2.5/3 times price increases.

Van Cleef and Arpels.

An 18 carat yellow gold and mother o’pearl 20 motif Vintage Alhambra necklace.
2004 £6,210
2012 £10,800
2021 £13,700

Diamond prices for good commercial grade stones which these top manufacturing brands would use have largely stalled over the past few years; it’s only the highest quality and rare coloured stones which hit the headlines with their huge prices. And we’re all waiting to see what the effect on retail prices will be when the full impact of the introduction of synthetic diamonds is felt. Also to be taken into account is the effect that internet has had on diamond prices. There are numerous well-established and reliable web sites making available to all millions of unmounted stones at basically ‘trade prices’ (plus VAT) and most with recognised laboratory certificates. The ‘closed shop’ trade only which has prevailed in the jewellery business for centuries is breaking down. The coloured stone market is swamped with cheap, very heavily treated and colour enhanced rubies, sapphires and emeralds that come mainly from the Far East. Another factor is the huge increase in the use of coloured stones that 20 years ago would have been classified as ‘semi-precious’ but are now appearing at serious stone prices. The stones that have shown a huge increase in price over the past 10 or so years have been natural untreated sapphires, rubies and emeralds – but the stones have to have an independent laboratory certificate stating they are natural colour and untreated to come in to this category. A few exceptional stones of this type – mainly in pretty 1920/1940’s period pieces – have fetched more per carat than decent comparable size commercial grade diamonds.

Cartier.

An 18 carat white gold, diamond and emerald Panthere ring
2003 £26,000
2010 £42,100
2021 £73,500

Manufacturing and jewellery workshop costs in Europe have certainly risen sharply over the past 20 years – as anyone who has had to have jewellery items repaired will know. Nearly all items are still hand made or finished so the cost of making up of jewellery is a big factor in the resulting retail price. The exception to this being the type of items available from online sites and lower grade retailers that are mass produced in the Far and Middle East – usually pretty poor-quality workmanship and poor-coloured stones. The second-hand and auction market for jewellery of this type is very weak – so don’t expect to cover the cost of your Far Eastern travels if you try to sell your purchases back in the UK.

Chopard.

A pair of 18 carat white gold and diamond ‘Happy Diamond’ drop earrings.
2003 £1,875
2011 £3,120
2021 £4,290

Profit marks up are a big variable – about 30 years ago when I was first involved with jewellery the tacitly accepted mark-up was to double the cost price and add VAT. Now, for a retail shop mark-up can be a whopping 300% to 350% plus VAT. But don’t be too harsh on the retailer – he has frightening fixed overheads and outgoings, and jewellery can be slow moving stock. Also, some jewellery and watch manufacturers do dictate a fixed retail price to the shop for their products. But it’s always worth a little haggle!!

Tiffany.

A pair of platinum and diamond ‘Victoria’ ear studs
2003 £3,100
2010 £4,925
2021 £8,775

If you had bought any of the four illustrated items back in the very early 2000’s at these prices and had applied an across the board annual percentage increase to cover insurance you might well have ended up in trouble in the event of a claim due to the variable cost factor increases. We recommend a review of a jewellery insurance valuation every 3 years. A desktop revaluation is fully acceptable within this timeframe, but a complete revaluation at 5 years especially as the valuation would include a close examination of the condition of claws, clasps and links, is something more and more insurers and brokers now insist on.

I’m afraid I must end on a cautionary few lines. Most of the big brand names like the ones above suffer from faking and copying. Allegedly more Van Cleef and Arpels Alhambra jewellery has been made in the Middle and Far East than in France!!. All the brands we have illustrated are meticulous in their marking and all their products will have a brand name and in most cases also reference and individual serial numbers, so if you’re shopping for some big name goodies on your Eastern travels be sure to take a good magnifying glass with you!

Emeralds

Posted on June 27, 2020August 16, 2024 by James Lowe

These luscious green stones are first mentioned around 3500 BC – and were treasured for their beauty and have over the years been attributed with bringing good health, love and romance and were considered the gem most close to the Deities. An early believer and emerald hoarder was Cleopatra who started two emerald mines in her native Egypt on the slopes of Mount Smaragous (from which we eventually get the word ‘emerald’). The Romans preferred them to diamonds and in the 17th century the Indian Moguls carved prayers and blessings on large flat cut emeralds.

A fine emerald exhibiting all the required qualities, and is in addition, over 12 carat

After the Egyptian mines were exhausted smaller deposits were exploited in India and Austria, but it was in the mid 1500’s when Spain started colonising South America and Columbia in particular, that they became far more readily available and they were and still are considered to be the best real gem quality stones. Columbia alone supplies about 60% of the world’s supply but since the 1950’s small quantity of good quality stones has been coming from Brazil, Zambia and the very sought after Sandawana emeralds from Zimbabwe. Pakistan, Afghanistan, and Madagascar also have reasonable reserves but supply from all these countries is spasmodic due to political grief and wars.

Emerald of a poor colour and heavily flawed stone

Their comparative rarity has maintained their popularity over the years and in 2011 Elizabeth Taylor’s emerald collection was sold for about $25 million and more recently an 18 carat emerald and diamond ring belonging to Angelina Jolie sold for over $5.5 million – setting a record of over $300,000 per carat.

So what are emeralds? They are members of the Beryl family which includes the pale blue Aquamarine and the pale pink Morganite amongst others. They are a relatively ‘soft’ stone measuring 7.5 on the gem hardness scale as opposed to a diamond at 10, so they fracture, chip and scratch quite readily. With a diamond it is both good colour and clarity that enhance value – with emerald it is mostly about colour as it is virtually unheard of to find a totally ‘flawless’ stone. The most prized emeralds are those with a rich dark to medium green tone and preferably with good even ‘saturation’ of colour and translucence throughout the stone.

The palest green that would still be classified as emerald

The first photograph shows a fine emerald exhibiting all the required qualities and is in addition a whopper at over 12 carat. The second photograph shows a poor colour and heavily flawed stone, and the third photograph shows the palest green that would still be classified as emerald.

In the fourth photograph the stone on the left is about 3 carats and good colour and decent clarity, the one on the right is over 4 carats and pretty pale and noticeably flawed. The ring on the left fetched twice as much as the other one at auction recently. That’s the difference, both visually and value wise between a ‘good un’ and a ‘bad un’.

Left: about 3 carats and good colour and decent clarity
Right: over 4 carats and pretty pale and noticeably flawed.

Pale green stones do not achieve the title of emerald and are called green beryls and are of relatively small value. For centuries, surface scratches and fissures which nearly all emeralds suffer have been ‘oiled’ which fills the cracks and because the oil is colourless it ‘evens up’ the colour. More recently polymers and resin have been used instead of oils and because they are often coloured green they are considered to represent unfair and unethical enhancement. This is described as ‘modern’ treatment and should be avoided. The long established methods are described as ‘traditional’ and as long as it is not excessive, is nowadays acceptable. Because of this, any proposed purchase of a serious emerald should only be considered if the stone has a laboratory certificate grading the extent and type of enhancement. There are generally four grades of enhancement – none (very rare), insignificant (desirable), minor (acceptable) and moderate )just about ok)) and significant (to be avoided).

Internal inclusions, called ‘jardins’ in the trade, are expected and accepted as normal. They range from feathery/mossy looking gas or liquid filled ones to internal fractures and fissures. The range and type of inclusion can be interpreted by a laboratory test and they can ascertain from which area and country the stone originates. The techniques now available to remove or reduce inclusions in a diamond involving laser beams and high temperature treatments cannot be used on an emerald due to its comparative softness and different crystal structure, so whatever defects get moulded in to the emerald at the time of formation remain with it.

A fine quality and colour emerald of decent size – say 3 carats and over – is far rarer than a quality diamond of the same size, so, in my opinion, should be of higher value. That’s not the case, however, and although Angelina Jolie’s stone fetch over $300,000 per carat, there are plenty of diamonds around priced at over $500,000 per carat. £5000 per carat would buy you on the retail front a very presentable emerald but the same carat price would get you a diamond pretty far down the scale in colour and clarity.

So with that in mind, could an emerald be a good investment? As with most categories of speculative investment always go for the best you can afford – go for colour firstly, clarity secondly and size thirdly, and bearing in mind its comparative fragility, treat it gently and have the stone and its mount checked by a jeweller regularly.

Cufflinks and Gentlemen’s Accessories

Posted on June 8, 2020August 15, 2024 by Jenny Knott

A pair of Lalique green glass cufflinks with three accompanying dress studs sold in 2017 for £2,900

When considering insurance valuations in general, and jewellery valuations specifically, cufflinks, dress sets, perhaps even hip flasks and pockets watches can easily be over-looked. This is not helped by the fact they so often dwell in a down-at-heel stud box or the dark recesses of the sock drawer! They are not usually at the forefront when considering jewellery valuation; but they should be. In the current more casual world of workplace attire, where ties are often discarded it may be counter-intuitive to learn that the popularity of cufflinks remains as solid as ever.

American Art Deco rock crystal enamel and seed pearl – circa 1930 – £1500 (Current retail value)

Gold prices are at a year high and up over 30% on this time last year. Whilst the increased price of gold may not directly affect much lady’s gem-set jewellery, this is not the case with gentlemen’s accessories where the gold content is significant. Clients are often surprised to learn that although the price of the pocket watch they have inherited may have remained relatively stable, the accompanying watch chain has increased in value significantly over the last year or two. In large part due to the increased gold price. The watch chain is often the more valuable item.

Carved rock crystal and diamond cufflinks

Early 20th century carved rock crystal and diamond – circa 1920 – £2000 (Current retail value)

This strong demand for cufflinks is especially fierce with vintage, high end brands such as Cartier, Boucheron, Van Clef and Arples and Tiffany. A search of auction results will show that branded cufflinks and dress sets often significantly exceed pre-sale estimates, even where the materials involved are not of intrinsically high value. A pair of Lalique green glass cufflinks with three accompanying dress studs sold in 2017 for £2,900 against a pre-sale estimate of £200-£300, even given that all three of the dress studs were cracked. These sort of auction results suggest that many people may be significantly under-insured if they own vintage or antique pieces or indeed gold cufflinks bought when the gold price was lower and the market less volatile than it is currently.
It is also important to consider the value of unbranded cufflinks where gold is not the principle material. Although gem-set cufflinks and dress sets more readily suggest that insurance is needed, rock crystal, enamels in both gold and silver, crystal intaglios, onyx, jade, even semi-precious stones such as agates and amethyst all need to be considered as appropriate for insurance. It is possible that one might not replace certain items of jewellery on a like for like basis, but most men would want to replace cufflinks in the event of loss, so an accurate and up to date insurance valuation is crucial.

Rediscovering the Allure of the Cultured Pearl

Posted on July 23, 2019August 15, 2024 by Mary Waterfall

Ancient cultures considered natural pearls to be ‘tears of the Gods’. They were believed to bestow mythical powers and wisdom to whoever possessed them. In today’s society the cultured pearl is considered the ‘stone of sincerity’ and represents purity. It symbolises the birthstone for June and the third and thirtieth wedding anniversary. Jackie Kennedy once said ‘Pearls are always appropriate’.

A set of cultured pearls gifted to Marilyn Monroe in 1954 by Joe Dimaggio

Yet for many years pearls have fallen out of fashion, with people associating them with their grandmothers and the older generation. However, as with the cyclical nature of all things, pearls are now enjoying a renaissance. Iconic women such as Michelle Obama can be seen wearing both a classic cultured pearl necklace as well as more contemporary cultured pearl set jewellery. The Duchess of Cambridge often sports a pair of cultured pearl earrings.

Cultured pearls are making a comeback but not just in the traditional sense of the simple necklace and stud earring set. The classic string of cultured pearls, such as the set gifted to Marilyn Monroe in 1954 by Joe Dimaggio (pictured), will always have a place in our hearts, however we appear to be moving away from the need for a string of perfectly round pearls and contemporary designers are embracing the irregular shapes of baroque pearls to make innovative and unique pieces. Freshwater cultured pearls such as the fireball are being combined with diamonds and gems to make beautiful, abstract creations.

The production of pearls is a fascinating business. Whether the end product is perfectly round or completely irregular in shape the process is the same.

When it happens naturally a ‘foreign body’ invades the mollusc and as a way of protecting itself the mollusc secretes nacre. Gradually layer upon layer of this lustreous substance containing microscopic crystals of calcium carbonate, covers the ‘foreign body’ and a natural pearl is formed. When it happens artificially and a piece of mantel tissue or bead nucleus is inserted into the mollusc the pearl is cultured.

It’s of little wonder that before Mikimoto commercialised the cultured pearl industry in the late nineteenth century, pearls were only accessible to royalty and the very rich. This is because of the many mollusc varieties known to us only a small number can produce pearls. Of the pearls that they produce only a small number will be of a desirable shape, colour and quality, and only a fraction of these will actually be discovered by man. Consequently natural pearls are extremely rare and very expensive.

So how can you tell the difference between natural and cultured pearls? If you take a look at the drill hole you may be able to see the bead nucleus of a cultured pearl. A factor in the value of natural pearls is weight, so the drill hole tends to be a lot smaller compared to cultured pearls. Also a string of naturally formed pearls will tend to be slightly mismatched and irregular in shape, they will be smaller and almost always graduated. However to be absolutely sure the pearls need to be sent to a laboratory for certification, where they will be x-rayed.

In 1937 the Yaguruma, a sash clip with interchangeable settings in 12 different forms, attracts crowds at the Paris Expo. Its unique design is a breakthrough in multi-functional jewellery. Sold in Paris, it disappears from public view, then reappears at an auction in New York in 1989. It is purchased by Mikimoto Pearl Island where it remains today.

There are many different types of cultured pearl but they fall into two categories and are either saltwater or freshwater.
Freshwater cultured pearls are cultivated in mussels, in lakes and rivers. Mantle tissue from another mussel is often used to start the process and this is why they are often irregular in shape. However bead nucleation is becoming more and more common in order to cultivate larger more rounded pearls. Up to forty freshwater cultured pearls can form within a single mussel, making them more readily available on the market.
To cultivate saltwater cultured pearls is a slightly more labour intensive process. They are grown in a variety of oysters. Often just one pearl per oyster, using both mantle tissue and a bead nucleus to produce a more round pearl.
There are three main types of saltwater cultured pearls: Akoya, South Sea and Tahitian. Akoya cultured pearls are farmed in Japan, China and Vietnam. They are usually white and cream in colour and measure from 2mm to 11mm.
South Sea cultured pearls are grown in Australia, Indonesia and the Philippines. They come in shades of white, silver and gold and typically measure from 8mm to 20mm.
The Tahitian cultured pearl are cultivated in French Polynesia and The Cook Islands. They are much darker in colour, blacks, greys and browns and measure from 8mm to 18mm.

This natural pearl and diamond necklace was recently valued for the purpose of insurance at £10,000.

Pearl jewellery is often passed down through generations and many people are unsure if it is natural, cultured or imitation.
When we consider that cultured pearls have gone up in value by approximately 10% over the last 5 years, and South Sea cultured pearls have gone up even more significantly, the question is, does your inherited pearl necklace have an accurate, up to date valuation and is it properly insured?

Millions of Years Old or 5 Week Petri Dish Diamonds – Can You Tell The Difference?

Posted on July 23, 2019August 15, 2024 by James Lowe

Laboratory-grown diamonds have been around for about 20 years but they have always been more expensive than the natural product and some have appeared in very unnatural colours. Techniques have improved and will continue to do so and prices have therefore dropped considerably.

De Beers have just launched their own brand of laboratory diamonds called their ‘Lightbox’ range – and are building a new factory in Oregon with a production target of 500,000 carats a year. They have indicated a retail price of $200 for a ¼ carat and $800 for a 1 carat stone which, despite sounding low, will still provide them with a larger profit margin than for their natural products. A reasonable ¼ carat natural stone would retail for £500 + today in the UK and a reasonable 1 carat natural stone from about £3500.

There are 2 very ‘high tec’ processes which can grow the diamond from a pure carbon ‘seed’ to over a carat in weight in about 5 weeks as opposed to the natural product which takes millions of years deep in the bowels of the earth. Man-made stones are not all totally flawless; internal flaws in natural stones are normally specks of uncrystallised carbon, whereas in man-made stones the flaws are caused by slight production glitches and variations in conditions can influence the colour and clarity qualities.

Laboratory grown diamonds

De Beers have said that they will laser mark every stone they produce, then ticket and retail it accordingly. The question is, will all producers and retailers be as honest and transparent? Another consideration is the practice of ‘diamond sights’, which take place during the early stages of the production of a piece of diamond jewellery. This is where a few very select bulk diamond buyers are offered large quantities of stones in huge ‘lots’, by the big diamond suppliers. Recently in India, a ‘sight’ was found to include only 10% natural against 90% man-made stones – with no indication from the supplier that this was the case.

Will these laboratory-grown stones drag the price of natural stones down or will it be an opportunity to promote their natural qualities and increase prices? Despite advertising to the contrary, diamonds are not that rare and although some new mines have opened in Middle Africa there have been no major new diamond field discoveries since the ones in Canada nearly 20 years ago. De Beers calculate that there are only about 50 established legitimate diamond mines operating throughout the world. They predict that the effect of relatively cheap man-made diamonds on stone prices in general could mean the number of producing mines could drop by half in the next twenty years.

Currently a first-time engagement ring buyer looking for a 2-carat diamond ring will see a sparkling man-made single stone at £1500 and a visually identical natural stone at £7500. Most will buy on price in my opinion, but I sincerely hope I’m wrong. The problem for retailers, manufacturers and of course valuers is that these man-made stones are real diamonds – ie pure carbon – and will test as such when examined by hand held diamond testing machines.

So, with this size of price gap, for both the insured and the insurer, it is going to be very important to be as sure as possible about the stone’s origins. The type of inclusions (flaws) in a natural stone do look different from those in a man-made specimen so that will help when making a judgement. However, the age of the piece and its ‘family’ history will also prove helpful guidance factors. When appraising client’s new jewellery, the need to see a certificate and receipt from the supplier stating the stones’ origins or even better an independent laboratory certificate for the principal stones, is becoming increasingly more important to both valuers and insurers.

Colorless gem cut from diamond grown by chemical vapor deposition

Currently, the GIA (Gemmological Institute of America) which is the most recognised laboratory worldwide is saying that it will carry out stone inspections and will state if a stone is natural or man-made. In the case of a man-made piece they will state the carat weight, but they will not – at this stage – classify its colour or clarity. The other main laboratories like HRD and IGI have not yet made their positions clear but I would think they would follow GIA’s position. It is to be noted that there have been quite a few new ones emerging in the Middle and Far East, out of which have come some rather disturbing stories about the accuracy of their classifications.

Our recommendation is to stick to the well known and established laboratories. It is claimed that, say a 1 carat stone, E colour and VS1 clarity with a GIA certificate could be worth 10% more than an almost identical stone with a less high-profile laboratory certificate. However, unfortunately GIA do not have a UK laboratory currently.

The diamond trading market has changed enormously over the past 20 years with De Beers no longer in virtual ‘sole control’ and the Canadians and the Russians going their own way in marketing their diamonds. The monthly diamond Rapaport and Index reports, which list the average trade prices in US dollars of millions of loose diamonds of all sizes and qualities on offer throughout the world, are still used by the trade as their base point.

Making synthetic diamonds through high pressure

I think it’s too early to be certain which way the market will go. There are obviously wider and more general factors such as the economy and politics which may also have an impact, but for sure there’s uncertainty and nervousness in some areas of the market. The fact that De Beers have committed to their own production of stones, together with their prediction that the relative ‘cheapness’ of the man-made stones could halve mining and production of natural stones in the next 20 years, gives an indication of where they foresee the market heading. The other side of the coin is that in that situation natural mined stones will become rarer and rarer therefore the prices will rise.
In conclusion, the need for regular valuations of your diamonds is becoming increasingly more important.