Stocks may be grabbing headlines amid a market frenzy, but another asset is finding favor among wealthy investors: colored gemstones.
Prices of high-end jewelry featuring colored gemstones have surged while the prices of traditional investor favorites — gold and diamonds — have lost momentum. Colored jewels, some no larger than a fingernail, are valued at tens of billions of won, with many investors likening them to “fingernail-sized real estate.”
Growing interest in high-end jewelry is supported by investors seeking alternatives to gold. The price of gold reached a record high earlier this year, but lost momentum amid the U.S. Federal Reserve's hawkish monetary stance and a stronger dollar. Gold tends to become less attractive during periods of rising interest rates because it does not generate yield.
Gold futures were trading at $4,194.20 per troy ounce as of 11 p.m. on June 18, down about 10 percent from three months earlier.
Demand for high-end jewelry also comes as the long-held belief that “diamonds are forever” begins to crack. Diamond prices have fallen sharply in recent years as lab-grown diamonds become more widespread and demand weakens in key consumer markets including China.
The diamond index stood at 84.67 as of June 19, down 8.3 percent from 92.39 a year earlier, according to the International Diamond Exchange. The index has fallen 46.5 percent from its all-time high of 158.39 in March 2022.
Unlike diamonds, natural colored gemstones have continued to appreciate because supplies are becoming increasingly scarce.
Rubies have become significantly more scarce as supplies from Myanmar, which accounts for about 90 percent of global production, have been effectively cut off by civil war. Ethical concerns have also emerged over allegations that Myanmar rubies help fund the country's military government, prompting major jewelry brands to halt new sourcing.
“Prices of the jewelry vary widely, but a ruby ring sold for around 7 billion won in 2021 but recently traded for more than 30 billion won even though the stone was smaller,” a source within the jewelry industry said. "Investors are looking not only at gemstones such as rubies that have already risen sharply in value but also at other gems they believe will appreciate further."
Myanmar's newly discovered ruby is displayed at the president office in Naypyitaw, in a photo provided by the Myanmar Military True News Information Team on May 7.AP/YONHAP
The perception that prices will only continue to rise is fueling investment demand.
Luxury brands Bulgari and Cartier raised prices in April and May, while Rolex and Chaumet are expected to increase prices this month.
Demand has continued to climb despite the steep increases. Jewelry sales at Shinsegae Department Store rose 55.6 percent in the first quarter from a year earlier, while overall luxury goods saw a 29.8 percent increase during the same period.
Analysts say the market is displaying the so-called Veblen effect, in which demand for a luxury good increases as its price rises because the higher price enhances its perceived status. There's also the fear of missing out, or FOMO, which has steadily encouraged purchases.
Among high-net-worth individuals, demand is growing for high jewelry as a tool for inheritance and wealth transfers in place of real estate.
“High jewelry requires less storage and maintenance than real estate or artwork and is easier to transport across borders,” said Yoon Sung-won, a professor teaching advanced gemology at Hanyang University's Graduate School of Engineering. “Demand is increasing among people seeking to add it to their asset portfolios as a hedge against weakening currency and financial market volatility.”
Still, experts caution against entering the market solely for short-term gains.
“Colored gemstones are not assets that can be immediately converted into cash like stocks or gold,” Yoon said. “Transactions depend on buyer demand. Since gemstone reserves inevitably diminish over time, investors should approach them with the mindset of holding them for more than 70 years and passing them on across generations.”
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
