Tanzanite Prices - A Brief Analysis

by Lapigems Gem Company 6. March 2013 21:28
A brief analysis of Tanzanite prices through history and forecast for 2013 and beyond.

 

When Tanzanite was first discovered in the late 1960’s it was controlled by Tiffany & Company who gave it its name and were the first true marketers of the gemstone. Prices were high as Tiffany commanded a monopoly and supply out of the fledgling mines was low and sporadic. This continued through to the late 1980’s. Although Tiffany no longer controlled the market, the sporadic and unreliable supply from the mines kept prices high as demand increased with consumers in the US and other markets began to learn about and appreciate this wonderful gem. Tanzania, at that time, was a communist/socialist country under president Julius Nyerere and as such all mineral wealth officially belonged to the state. This led to lack of investment in the mining of the stone and very shaky production.

In the late 1990’s and early 2000’s as Tanzania adopted a capitalist economy, production stabilized and rose leading to a drop in prices further compounded in 2001 when the stone was implicated as a funding source to Al Qaeda in the aftermath of the 9/11 tragedy. Large retailers like Zales announced they were no longer going to sell Tanzanite and others followed suit leading to a catastrophic decline in prices. Fortunately this state of affairs did not last long as a full State Department / CIA report released in early 2002 cleared the industry of any links to Al Qaeda and Tanzanite rose again.

 

 

From 2002 to 2007 prices surged. From lows of $200 per carat for medium to medium/fine goods they rose to the heady heights of $600+ per carat before dropping back by 20-30% in the ravages of the recession in 2008/2009. The recession did not affect the prices of the very finest grades but medium/fine material and lower grades were severely affected. The finest grades were bolstered by ongoing demand from the relatively unaffected highest income brackets in the developed markets coupled with extremely low supply due to their rarity. Lower grades by contrast, lost up to 50% of their price value through 2009.

Through 2010 into 2013 prices have stabilized and returned to their pre recession levels and prices for the very finest stones are edging upwards again. China’s recent foray into the market and growing demand for Tanzanite in that country is another wild card that could affect the price trajectory in coming years. A lot will depend on the recovery of the largest market, the US and the buying power of the middle class consumer there. This will be the propeller for Tanzanite sales in the medium to medium/fine grades. The finest grades will likely see continued price inflation through prevailing low supply due to their rarity and high demand from high income brackets in the US and China markets in line with that of other gems such as ruby and emerald which have seen record prices reached for fine select stones at auction in 2012.

Our view on this is backed up by a recent article in National Jeweler which talks about how the impact of the rise of the Chinese and other emerging markets is affecting colored stone prices, Tanzanite being one of the main stones affected. Our view remains that the more ubiquitous qualities of Tanzanite, the medium and medium/fine grade colors will always be more susceptible to the vagaries of the market but the very finest stones will always hold their value and experience steady price inflation due to their rarity and burgeoning demand.  

 

Further Reading on this Subject

Tanzanite as an investment - how economics favors the gem type. 

Lapigems Gem Company

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General

Tanzanite Prices Rise

by Lapigems Gem Company 22. March 2011 21:48
Tanzanite Prices rise following a successful Tucson show.

Following a very successful Tucson show this February, Tanzanite prices have surged by 15 – 20%. Demand was very high at the show, especially for fine pieces and supply was very low. Being based at the source, we have experienced first hand how few fine Tanzanites are being mined as a proportion of the total production in recent months. We have been predicting a large price rise for 6 months now and have been resisting price pressures but the tide is now overwhelming and prices are rising across the board.   

 Reasons for the Rise

As the western world hauls itself out of the depths of the recession, pent up demand from consumers has gathered pace. People who have been yearning to buy Tanzanite, but have been paying down credit card debt or simply exercising restraint, find themselves in 2011 in a better position to make the purchases they have been wanting to make for 2 years. This demand has unleashed itself upon an unprepared market. Jewelers have been buying very cautiously throughout the recession and find themselves entering 2011 with low stocks. Suddenly they are presented with a surge in demand and they are struggling to increase inventories to service their customers. However, they are finding fine Tanzanite harder than ever to come by and the resulting rush to buy has forced prices up quickly and ferociously as they chase the few stones there are in the market.   

How does this affect your Collection?

Clearly, this is good news for those holding Tanzanite collections, especially for those who purchased during the recessionary period. We predict prices to continue rising hereon out, barring of course any return of recessionary sentiment. We will continue to buy diligently the very finest 1% and we will not compromise despite the difficulty in obtaining the quality we are known for. We will continue to hold our prices as they are for the near future for the benefit of our members, as we absorb more expensive rough into our vault. However, the mitigating effects of older stock will decline in the next few months and we may be forced to follow the market trend in coming months.  

Lapigems Gem Company

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