Most gems are downright cheap!  The only exceptions in my opinion are Diamonds and Tanzanite.  The supply in Tanzanite and Diamonds is extraordinary yet the price remains high. That’s not the case for nearly every other precious and semi-precious gem in the market.  We spend so much time concerned about getting finished gems for the lowest cost, we often forget about what it takes to bring these beauties to your shop or home.  Take a little trip with me down the path of the average faceted gem and you’ll be shocked they aren’t way more expensive.

Last time we talked about the cost of discovery, retrieval, separation, sorting and grading of the raw material.  These costs can be astronomical and it often takes decades before a miner can recover these costs.  Since US buyers are rarely willing to pay for this, mining companies are some of the riskiest investments.  And with all the additional regulation and environmental costs in the US, it’s no wonder US mines are rarely profitable. We’re lucky most of the gem rich countries have cheap labor and minimal regulation.

Even if you throw the recovery costs out the window, it’s amazing anyone can provide faceted gems for what we pay for them.  The labor for faceting alone would be staggering if it was done in the US.  Let’s talk about the process a bit and then we’ll compare our US estimate with what the public expects.

OK, we have mine run rough which has already been cleaned and partially sorted for quality.  To get the best recovery, we have to sort this material further to separate facet grade and cabochon grade from the rejects.  Then further sorting by size and shape will help us get the best yield.  This step has a small labor cost but often a significant yield cost.  If we start with a kilogram of Garnet at $1000/kg and lose 20%, after an hour of sorting our rough cost goes up to $1300/kg.

Most people are shocked at the amount of waste when it comes to cutting but it’s not uncommon to lose nearly 80% of the rough weight to the dustbin.  Good cutters will try to saw shape as much as possible and save the cutoffs for smaller gems but ultimately you have to grind away.  A quick trick to get an idea of your cost per carat is to add the cutting cost/ct to the rough cost/gr.  At a 20% yield (1/5th), the conversion of grams to carats (5/1) cancels out.  So our Garnet rough cost $1/gram or $1.30/gram after sorting; that translates to about $1.30/ct after cutting but before cutting costs.

Now if we said a 1 ct gem takes an hour to cut considering performing, dopping, faceting and polishing,  what would a 6mm round Garnet cost if we cut it here in the US?  At minimum wage, the cost would be $9ea with zero profit.  Put a 50% profit on it and you’d expect to pay $14 ea!  $3 is starting to sound awful cheap, isn’t it?  And that’s not considering any shipping costs and only overseas mining costs.

Now, I’m not asking you to expect less for your money, but only to appreciate the time and effort that goes into every gem you own.  It also helps to see the whole picture to understand the role we play in perpetuating third world poverty and environmentally insensitive mining techniques.