In “Sweet Home Alabama,” when Jake proposes to Melanie with a ring made from a meteorite, it’s a symbol of timeless love. Every day, thousands of couples around the world get engaged, with nearly 2.5 million weddings occurring annually in the United States alone. This constant stream of proposals and weddings drives a substantial demand for gemstones. But behind every glittering jewel lies a complex and often obfuscated journey from the depths of the Earth to the hands of consumers. In this article, I want to explore the hidden facets of the gemstone industry, shedding light on the key players and the market dynamics that bring these precious symbols of love to life.
The content of this blog will be organized as follows:
I. Born of Fire
- Geological Processes that Create Gemstones
- Major Mining Regions and Their Unique Gemstones
- Empire of Blood
II. Gatekeepers of The World
- How Rough Gemstones Make Their Way to Global Markets
- Traders, Brokers, and Wholesalers in the Supply Chain
- Auction Houses
- The Economics of Gemstone Trading and Pricing
III. A Fragmented Unity
- The Centralization of Gemstone Trade Network
- Competitive Retail Market
- The Lab-Grown Revolution
- Strategic Positions
IV. Platforms of Tomorrow
V. Closing Thoughts.
Born of Fire
Geological Processes that Create Gemstones
Gemstones are children of the earth. They are born under extreme conditions of immense pressure, intense heat, and unique mineral compositions, forging them over millions of years. For instance, diamonds are formed at depths of over 140 kilometers under high-pressure conditions, while sapphire stones are crystallized slowly far below the surface when aluminum and oxygen atoms combine under high heat and pressure.
Within the corundum family, the presence of chromium creates the deep red hue that distinguishes rubies as jewel-quality red corundum, while all other colors of jewel-quality corundum are classified as sapphires. Similarly, emeralds, which belong to the beryl family, owe their vivid green color to the presence of chromium.
Common gemstones like sapphires, rubies, and emeralds have distinct geological origins. Sapphires, found in various colors, are primarily formed in metamorphic rocks, whereas rubies are typically found in marble deposits. Understanding these geological processes provides a glimpse into the wonders that produce such captivating beauty.
Major Mining Regions and Their Unique Gemstones
The journey of a gemstone begins in some of the most remote and geologically diverse regions of the world. Countries like Myanmar, Colombia, and Zambia are renowned for their unique gemstones, each region offering stones with distinct characteristics. Myanmar is famous for its exquisite rubies, known for their rich, vibrant red color, often referred to as “pigeon blood” rubies. (Although gems have struggled to find outlets out of the country since the embargo imposed in 2021 on the military junta.) In Colombia, emeralds with an unmatched green hue are extracted from the rugged Andean mountains.
“There are many Burmese legends about where these rich red rubies got their name. Some believe it comes from an ancient legend referencing the first two drops of a killed pigeon’s blood to be “ko-twe” red. Others believe the name of the deep red is the same as the center of a pigeon’s eye.” — Sotheby’s.
Mining firms like Gemfields and Alrosa play a crucial role in the extraction and global distribution of these gemstones. Gemfields, operating in Mozambique and Zambia, focuses on ethically sourced emeralds and rubies, ensuring sustainable mining practices. Alrosa, based in Russia, is one of the world’s largest diamond producers, providing a significant portion of the global diamond supply.
Gemfields also owns Fabergé, one of the world’s best-known jewellery brands, with a history dating back to 1842. It was acquired by the private equity firm The Pallinghurst Group through a GBP 201 million public-to-private LBO on August 31, 2017, valuing the company at an estimated GBP 379.89 million.
Alrosa is one of the three major natural diamond suppliers, along with Rio Tinto and De Beers. However, since Alrosa is a Russian company, they have been sanctioned and excluded from many responsible industry groups like the Responsible Jewellery Council, following Russia’s invasion of Ukraine. This means many brands and manufacturers can no longer use Alrosa diamonds.
Empire of Blood
The extraction of gemstones is often fraught with significant challenges and risks. Miners frequently work in harsh and undignified conditions, where child labor and illegal exports are unfortunately common. In Madagascar, children are used to search for sapphires in small, perilous holes, risking falling rocks, collapsing pits, and underground fires. These children, often referred to as “snakes,” may crawl through narrow tunnels in unregulated tanzanite mines to position explosives and mining equipment.
Once extracted from the depths of the earth, the gemstones are usually bound for a central hub, such as Sri Lanka. Here, they undergo initial processing to remove impurities and assess their quality. They are washed, sorted, cut, and, in the case of those of lesser quality, heated to more than 1500 degrees in order to make their color more vivid or to dissolve their inclusions and increase their clarity. Their journey then continues as these rough, unpolished stones are handed over to the brokers, traders, and dedicated wholesalers — the gatekeepers to the global market.
Gatekeepers of The World
How Rough Gemstones Make Their Way to Global Markets
The stones change hands from the miner to brokers, whose jobs are to sell them. But what often happens is they will sell the stones for a much higher price than they report to the miner, giving the miner only a tiny portion of the selling price. The broker then sells the gemstone to a rough gemstone dealer, who sends it to a cutter, frequently located in another country like Thailand (e.g., in the Chanthaburi region), where labor is cheap. After a gemstone is expertly cut, it changes hands to the polished gem dealers, who then sell it to traders in Bangkok — unknown to many, almost all rough gemstones pass through Bangkok at some point in their journey. The city has become a world center for the trade of colored gems, just as New York and Antwerp are for diamonds.
From Bangkok, they are bought by other trading intermediaries who take them to their final destinations. For example, the most beautiful pieces will be exhibited at international fairs, such as the GemGenève trade fair or the ones in Hong Kong, Las Vegas, or Tucson, before ending up in the possession of the major jewellery and watch brands. Others can be passed to another broker, who facilitates its transition to a nearby export hub, typically in Shenzhen, from where it is shipped to an overseas wholesale importer, usually in the destination country. The importer then sells the gemstone to domestic dealers, who in turn sell it to a jeweler or designer. Finally, the jeweler or designer sets the gemstone into a piece of exquisite jewelry. If the gemstone is destined for a large retailer, additional steps involving multiple manufacturers and distributors may be required before it reaches the end consumers.
Once in possession by end customers or retailers, the logistics of transporting rough gemstones are sometimes complex and require specialized handling to prevent damage. Key logistics companies like Brinks and Malca-Amit, which count luxury goods giants, high-net-worth individuals (HWNIs), and international banks among their clients, provide secure transport solutions to ensure these valuable commodities reach their destinations safely. Their role is crucial in maintaining the integrity and value of the gemstones during transit.
“Most HWNIs have connections with Brinks for their security needs. Brinks either provides these services directly or their security advisors collaborate with Brinks when necessary. When these individuals need to move their valuable items, such as jewelry, from one location to another, Brinks is contacted to discuss the job and provide a quote. This business model is high-touch, non-scalable, and highly profitable. The segment is growing because there is an increasing number of people with significant wealth and non-cash assets, like paintings and jewelry.
Although it is not a large segment, it is fast-growing and high-margin, with Brinks being the leading provider. Given Brinks’ market position, it is hard to imagine high-net-worth individuals calling anyone else for these services. It’s akin to Amazon’s dominance in e-commerce — there are other options, but Brinks is the go-to provider.” — Former Consultant at Brinks.
Traders, Brokers, and Wholesalers in the Supply Chain
Traders, brokers, and wholesalers are the intermediaries who facilitate the movement of gemstones from mines to the broader market. They negotiate deals, assess gemstone quality, and determine pricing based on market demand, gemstone characteristics, and their prediction of the stone’s worth once cut and polished. Firms like the Rapaport Group, Bonas Group, I. Hennig & Co., Gemfields, Intergem, KGK Group, Muzo, Dharmanandan, or Lydia Courteille are prominent players in this space, providing essential services that connect miners with buyers.
The Rapaport Group, often referred to as the “Bloomberg of the diamond industry,” is a family-owned business that offers a comprehensive diamond and jewelry trading network and valuable industry information. Their Rapaport Price List serves as a benchmark and international standard, used by dealers worldwide to establish diamond prices across all major markets. Rapaport Group also owns RapNet, one of the largest online marketplaces for diamonds and jewelry.
Bonas Group is a renowned international diamond brokerage and consultancy firm. Established in 1876, the company has a long-standing history and extensive expertise in the diamond and gemstone industry, providing services such as gemstone brokerage through auctions and tenders, market analysis and strategic consultancy, and diamond valuation and certification of gemstones.
Auction Houses
Influential auction houses are key players in the gemstone market. Their expertise and reputation help shape market trends and determine gemstone value. Notable examples are Sotheby’s, Christie’s, Phillips, and Poly Auction; they conduct high-profile sales that often set new benchmarks for prices and attract media attention, reflecting the market’s dynamic nature. These major players contribute significantly to the global gemstone market, leveraging their networks and knowledge to connect buyers with high-quality gemstones. Their role in hosting auctions and private sales ensures a steady flow of gemstones from producers to collectors and investors.
“Well, my understanding is really that a lot of these organizations are several hundred years old. They all have the heritage of 18th and 19th century England, where a lot of them are coming from. Traditionally, their business models relied heavily on high-touch relationships and meticulous record-keeping through physical auction catalogs. Over the past two decades, however, there has been a notable shift towards incorporating ERP (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems. This trend is not confined to auction houses alone but spans the entire fine art sector, except for museums, which were early adopters of dynamic websites and robust CRM-driven marketing strategies.” — Project Management Lead and Business Analyst at Phillips.
“I think because of COVID, it’s really driven all three of the big auction houses in the industry, in general, to figure out the online space. Historically, these institutions focused on drawing clients into their physical spaces through high-profile events and in-person auctions. Now, you have online-only auction houses, for fine art, jewelry, and things like that, or they experiment with new sales models like regular digital drops or monthly sales in complement with their traditional business practices.
They’re really becoming a global marketplace, I think. So there’s this realization that this localization of the auction experience is no longer a requirement and that they’re looking at the 24-hour auction space, how does that work, and how do they shift their business from even just a back office being in London or New York and shipping and all of that to what happens when you’ve got buyers in Asia.
And they just happen to buy something that happens to be in New York. They don’t care where it is. They don’t want to go New York or anywhere. So this is part of what everyone’s examining is, a, what are the systems that enable their business to be global in 24 hours and act more in an e-commerce fashion that by and large, these global e-commerce houses have figured this out a long time ago.” — Vice President of Acquisitions & Consignments at Collectable.
The Economics of Gemstone Trading and Pricing
The pricing of rough gemstones is influenced by various factors, including rarity, size, and quality. Economic principles and market dynamics play significant roles in determining their value. For example, the four Cs — Cut, Clarity, Color, and Carat weight — are fundamental criteria used to assess and price gemstones. Additionally, other factors such as shape, fluorescence, depth, stone table, polish, symmetry, and length-to-width ratio can also impact a gemstone’s price.
Get Dung Le’s stories in your inbox
Join Medium for free to get updates from this writer.
Notable gemstone trades often highlight the volatility and potential profitability of the market. For instance, the sale of exceptionally rare stones, such as the Williamson Pink Diamond, belonging to Her late Majesty Queen Elizabeth II, which fetched a record $57.7 million at auction, underscores the significant economic impact and high stakes involved in gemstone trading.
Market fluctuations are also driven by supply and demand dynamics. For instance, the discovery of a new mine can temporarily increase the supply of certain gemstones, leading to price adjustments. Conversely, the depletion of mines or political instability in key mining regions can reduce supply, driving up prices. Additionally, consumer trends and preferences, such as the growing popularity of ethically sourced and lab-grown gemstones, can shift demand and impact pricing structures.
A Fragmented Unity
The Centralization of Gemstone Trade Network
The global gemstone trade network is a vast and interconnected system that spans continents, but centralizes around major trading hubs like Antwerp, Hong Kong, New York and Bangkok. These hubs are pivotal in the network, each playing a unique role in the international market.
Antwerp, known as the “Diamond Capital of the World,” is a renowned global trading hub located in Belgium. The city’s Diamond District, situated near Antwerp Central Station, is the epicenter of the international diamond trade. With a history dating back to the 15th century, Antwerp boasts a dense concentration of diamond businesses, including approximately 1,500 traders, cutters, and polishers. The Antwerp World Diamond Centre (AWDC) anchors this bustling industry, providing a secure and efficient marketplace where an estimated 80% of the world’s rough diamonds and 50% of polished diamonds pass through.
In Hong Kong, the gemstone trade benefits from the region’s status as a major financial center and gateway to the Chinese market. The Hong Kong International Diamond, Gem & Pearl Show attracts thousands of traders and buyers from around the world, making it a critical hub for the distribution of gemstones, including diamonds, rubies, sapphires, and jade.
New York’s Diamond District on 47th Street is another crucial node in the global network. Renowned for its bustling marketplace, New York serves as a key destination for both wholesale and retail transactions. The city is also home to many prestigious jewelry houses and auction events, making it a central point for high-value gemstone trade.
Recently, the Diamond District is experiencing a significant transformation. Once the epicenter of diamond trading and cutting, the district now resembles more of a tourist attraction, akin to Little Italy, rather than a vibrant commercial hub:
“Look, the Diamond District in New York is not really a dimond district anymore. It’s more like Little Italy. It’s become a show. I’ve never been there. I’ve been there in the past, but I never went there as a CEO of Blue Nile.” — Former President and CEO at Blue Nile.
Bangkok is celebrated today as the colored gemstone capital and trading hub. The city’s vibrant gemstone district, particularly around Silom Road, is a bustling marketplace where traders, cutters, and dealers converge. Bangkok is renowned for its expertise in cutting and treating a variety of colored gemstones, including sapphires, rubies, and emeralds, often sourced from across Asia and beyond. The city’s status as a gemstone hub is bolstered by its skilled craftsmanship, competitive pricing, and robust infrastructure, making it a pivotal center for the global colored gemstone trade.
Other significant trading hubs include Dubai, which has emerged as a major center due to its strategic location and tax-free policies, encouraging trade and investment in the gemstone sector. Tel Aviv, known for its expertise in diamond cutting and polishing, is also an important player, particularly in the diamond segment. Meanwhile, Mumbai plays a crucial role in both the cutting and trading of diamonds and other gemstones, leveraging its vast pool of skilled labor and longstanding trade connections.
Dubai’s trading hub for diamonds and other commodities is located in the Dubai Multi Commodities Centre (DMCC) Free Zone, specifically in the Jumeirah Lakes Towers (JLT) district. The Almas Tower, situated within the DMCC, houses the Dubai Diamond Exchange (DDE), which facilitates the trading of rough and polished diamonds.
Tel Aviv’s diamond cutting and polishing hub is located in the city of Ramat Gan, which is part of the Tel Aviv District. This area is home to the Israel Diamond Exchange complex, one of the world’s leading diamond trading centers & a major hub for diamond cutting, polishing, and trading.
Bharat Diamond Bourse (BDB) in the Bandra-Kurla Complex (BKC), Mumbai is one of the largest and most modern diamond exchanges in the world, serving as a central point for the trading, cutting, and polishing of diamonds in India. This state-of-the-art facility houses 2500+ diamond offices, trading halls, and services catering to the diamond industry, making it a critical center for global diamond trade.
Certification and grading are another essential components of the trade network. Entities like the Gemological Institute of America (GIA) and the International Gemological Institute (IGI) provide standardized assessments of gemstone quality. These certifications enhance consumer confidence and ensure transparency of the trades in all markets.
These interconnected yet distinct hubs form a fragmented system, each contributing to the dynamic and complex nature of the global gemstone market. Their unique strengths and specializations ensure a continuous flow of gemstones across borders, shaping the economic and cultural landscape of the industry.
Competitive Retail Market
In the world of gemstones and jewelry retail, the market is as diverse and multifaceted as the gems themselves. From the affordable allure of low-end pieces to the timeless elegance of fine jewelry, understanding this fragmented market is key to appreciating its dynamic nature. Additionally, we’ll examine the rise of lab-grown gemstones in further reshaping the landscape, influencing consumer behavior and market trends across all segments.
The Allure of Low-End Jewelry
For many, the journey into the world of jewelry and gemstones begins with low-end pieces. These items, often crafted from base metals and adorned with synthetic stones or lower-quality natural gems, offer a touch of glamour at an accessible price point. Brands like Mejuri and Monica Vinader excel in this segment, delivering trendy and affordable options that appeal to budget-conscious consumers and fashion enthusiasts alike. The competitive nature of this market ensures a constant influx of new designs and styles, keeping consumers engaged and eager for the next affordable yet viral trend.
“Mejuri is the Canadian brand, but they’re pretty big in the U.K. now as well. They pioneered this trend of self-gifting, I would say, in the mid-2010 when the direct consumer players like Mejuri, Missoma, et cetera, really started advertising to women. That’s something was not doing before. So I was not in the industry before, but from what I know, it wasn’t really done.” — Chief Operating Officer at Fenton.
“I think one of the few brands that have driven self-purchase like Pandora is Mejuri. They take this approach that they are all about female empowerment and just buy it for yourself, you don’t need a man to gift it to you, et cetera.
And obviously, you’re kind of distancing yourself from the gifting, saying that you don’t want to play in that field. But on the other hand, you obviously have a very strong position then with the self-purchaser.” — Former President at Brilliant Earth.
Rising Expectations for Semi-Fine Jewelry
As consumers seek higher quality without breaking the bank, the semi-fine jewelry market has emerged as a bridge between affordability and luxury. Brands like Blue Nile, James Allen, and Ritani excel in this space, offering pieces made from precious metals like sterling silver and gold vermeil, often set with natural or high-quality synthetic gemstones. The semi-fine segment appeals to young professionals and gift shoppers looking for lasting value. The emphasis on ethical sourcing and unique designs further enhances its appeal, positioning brands in this segment as not just purveyors of beauty but also of values.
Blue Nile, a notable player in this market, exemplifies the strengths and challenges of an online-first approach. As part of Signet Jewelers Limited, the world’s largest retailer of diamond jewellery, Blue Nile stands out by attracting younger, tech-savvy consumers who prefer the convenience and trust of online shopping.
The jewelry industry has seen significant consolidation, with major players like Signet Jewelers leading the charge. Signet, the largest retailer of diamond jewelry globally, has strategically acquired James Allen, Blue Nile, and Diamonds Direct, previously owned by Blackstone. These strategic acquisitions enable Signet to leverage its size and buying power, creating significant competitive advantages and presenting challenges for smaller players in the industry, who struggle to compete with Signet’s extensive resources and market reach to secure inventory for both mined and lab-grown diamonds.
“Signet is a sightholder, which means they get first dibs on the actual box of rough diamonds. They have a buying office in India, and they have a cutting and polishing facility in Botswana.
So Signet is never going to have a hard time getting any diamond, whether it’s a mined diamond or a lab-grown diamond, they set themselves up and teed themselves up for that probably almost 10 years ago quite frankly.
I think the small players out there are going to be hurt a little because they don’t have the access of a Signet. Signet owns everybody. And now that they’ve got James Allen as a part of their group, which they are at Blue Nile.” — Former Vice President for North America at Signet Jewelers.
Alongside Blue Nile, Diamonds Direct captures customers who might not feel an affinity towards traditional jewelry stores like Kay or Jared. While Kay and Jared boast long histories and strong brand recognition, their appeal has waned among younger consumers. This demographic sees them as their parents’ jewelry stores, with marketing campaigns like “Every Kiss Begins with Kay” now feeling dated.
In its continued efforts to appeal to younger customers, Signet has made significant strides through Banter (formerly Piercing Pagoda). Banter successfully attracts this demographic in mall kiosks with trendy and accessible jewelry options. However, Signet faces the challenge of transitioning these customers to its other brands. The lack of integration between Banter, Kay, and Jared means these brands often compete with each other rather than cooperate, missing opportunities to guide customers through their brand journey.
The Timeless Prestige of Fine Jewelry
The fine jewelry market, characterized by the use of high-quality precious metals and natural gemstones, represents the pinnacle of luxury and craftsmanship.
Harry Winston, often dubbed the “King of Diamonds,” has a storied history of adorning royalty and Hollywood stars. Known for its exceptional diamonds and exquisite designs, Harry Winston’s pieces are synonymous with prestige and elegance. The brand’s commitment to sourcing the finest gemstones and crafting timeless pieces makes it a favorite among the elite.
Bucherer, a Swiss heritage brand owned by Rolex, is celebrated for its meticulous craftsmanship and innovative designs. With over a century of expertise, Bucherer combines traditional techniques with contemporary aesthetics, creating jewelry that appeals to both classic and modern tastes. The brand’s collaboration with Rolex further underscores its status in the luxury market.
Gübelin, owned by The Gübelin Group, is renowned for its deep-rooted expertise in gemology and its focus on transparency and provenance. Each Gübelin piece comes with a detailed gemstone analysis, providing customers with a profound understanding of the gem’s origin and journey.
Cartier, known as the “Jeweler of Kings and the King of Jewelers,” owned by Richemont of the Rupert family, has an illustrious history dating back to 1847. Cartier’s iconic designs, such as the Love Bracelet and the Panthère collection, have become symbols of enduring luxury. The brand’s ability to blend innovation with tradition ensures its continual relevance and desirability.
