On Reusing Gemstones and Diamonds

It seems that not a day goes by that I'm not getting questions about people reselling their jewelry. Obviously the economy has forced people into financial situations where they are often looking for any way to generate income, but it also seems to have a lot to do with the current high price of gold and the publicity associated with it. Some of the people who make inquiries about it tell me that they don't actually need the money but have heard so much about the increase in prices that they just think it's a good time to sell. For gold and platinum (as metal), this happens to be true. It is a good time to recoup some money on jewelry that isn't being worn anymore. On heavier gold pieces that were bought more than a few years ago, it's quite possible you could get more back than you paid for it because of how expensive gold has gotten.

But the problem now is that people think the same thing has happened with their gemstones and diamonds and, unfortunately, the prices have not gone up in the same way. There are also more problems involved with the reselling of gem materials. First of all quality is always an issue. Unfortunately so many people have bought so much low quality material over time (often told that it wasn't by the jeweler they bought it from) that there is somewhat of a glut on the market now. (By the way I was just this minute interrupted by another caller asking if I bought old jewelry--the second of the day). Also quality is a somewhat subjective thing. While a diamond with a recognizable certificate accompanying it is usually a pretty much known factor, it isn't always the case. Sometimes stones get damaged from normal wear and tear. That will immediately reduce the value. In the case of stones without certificates, the decision about the quality level is left up to the person doing the actual buying. Unfortunately far too many people either don't have the right credentials to do this, or they will simply make things up so that they can buy a piece for the lowest possible price. Plus, most consumers don't really know what the quality of their diamonds actually are. Many appraisals written by jewelers are inaccurate at best, and often downright misleading.

(An example of this is any store where they advertise that the jewelry you buy is guaranteed to appraise for more than you paid for it. Any legitimate appraiser knows that if the piece was sold for $1000 and the piece was stolen that same day that the next day the jeweler would sell you another piece just like it for the same price. The ONLY exceptions to this are when someone is having a true sale---not an ongoing year round markdown "sale" but one in which it truly is only an annual or one time event.)

But now let's assume you have found a legitimate diamond/gemstone buyer who actually knows what they are doing. Here is your next problem. They are NOT going to pay you what you paid for the stone (unless you got it a REALLY long time ago and it's in good shape), nor are they even going to pay you wholesale prices for it. Why not? First of all because everyone in the business has to make some money on what they sell so by the time you buy something at retail, the pieces have been marked up a number of times. (Incidentally this is ABSOLUTELY NOT limited to the jewelry business. All businesses need to make money on what they sell. Actually the markups on clothing and quite a few other things are far higher than that on jewelry.) Additionally you are paying for labor costs somewhere along the way---the labor to make the piece (and all of the associated labor costs---making the machinery to make the pieces, managers involved in the production, accounting costs, etc.), the labor to locate and purchase the pieces (assuming you are dealing with a traditional buy/sell type of jeweler, not someone like me who actually makes all of the pieces) and the labor to sell the pieces.

Secondly, they can go to their normal suppliers and buy the same product wholesale (and usually they have some time to pay for it too) that you are trying to sell them. Why should they pay you as much for your product as they pay their suppliers? There is no benefit to them.

Thirdly, they need to have a market to resell the pieces. If their usual stock in trade is H-J color, SI clarity goods and you are trying to sell them a D color, Flawless diamond, they may have to hold the stone for months, or even years, before they can find a buyer. The longer a jeweler holds onto inventory, the more it costs them. If they didn't have the money tied up in your diamond, they could take it and buy something else that they could sell much more quickly.

Fourth, there is the overall market to look at right now. The economy is, shall we say, struggling. There are a huge number of people out of work. There are, consequently, a huge number of people trying to sell their possessions for desperately needed money. This all means that jewelers have an opportunity to buy pretty much whatever they want (assuming they buy used pieces) and they simply don't need to pay as much as they might have five or six years ago.

This all leads to the overall point of my posting today, which is that you retain the most amount of value in your gemstones by holding onto them. In most pieces that have center stones, the bulk of the value is in the stone itself. Perhaps in another 50 years when there are no more truly fine diamonds or sapphires being found and mined, your heirs will have a good opportunity to cash in on your purchases. But for now, it's far better to hang onto them. And if you are going to hang onto them, then the best thing to do, in my humble opinion, is get them reset into something that you will wear and enjoy. So take all of that old gold jewelry lying around that you haven't worn in years and sell it for scrap value. Then take the money from that and the stones that were in the pieces and make something new, fun, and exciting up to wear.

My next posting will be on what to expect if you reuse your stones in my jewelry. The piece pictured above is a pendant I made using a customer's tanzanite and her diamonds.