How to Start a Successful Online Precious Gem Business

Have you been shopping around for a great investment solution? If so, chances are you totally overlooked the possibilities that lie in gems. Believe it or not, there are quite a few people out there who have received a nice return on their money investing in low to moderately priced gems. And if your investment dollar is longer than most, you can also find great returns investing in high-end, rare, or unusual gems as well.

Understand Industry Terminology

If you happened to do some research before finding this article, you may have read other authors using terms such as “investment grade,” “precious,” or “semiprecious.” In actuality, these are considered “dirty terms” when discussing gems for investment. Furthermore, while not illegal to use such terms, the US Federal Trade Commission (FTC) does not like when people use these terms in the gem market.

First of all, the term “investment grade” has no meaning in the world of gems. Second of all, besides having no clear cut meaning, this term has been overused and abused by fraudulent salespeople who want to make what they are selling seem more valuable than it really is. Those who know better will cringe at the mere mention of a gem being “investment grade,” and the dealer is in threat of ruining his or her reputation. So if you hear people using such terms, disregard them and move on.

Mostly, dealers who do use these terms are referring to high-end gems and jewelry. But high-end gems and jewelry are not always the best choice when it comes to investment. As a matter of fact, low to moderately priced gems appreciate in value more often and are easier to resell than expensive gems. Well-educated investors know this and invest in gems such as spinels, tourmaline, beryl, zircon, and peridot.

Now that we have that out of the way, let us cover a few tips to help you get started investing in gems.

Buy Smart

You can definitely make money investing in gemstones, but the cost-basis in those stones must have profit already built in from the moment you buy them. The margin of safety in your investment lies in paying a good price for the gems of your choice. This rule will be the basis of your success. Like any investment, you need to be knowledgeable and cautious about your purchase.

Pardon the pun, but you need to keep your eye out for stones in the rough. These are stones that at first glance do not look like much but, once polished, they come out looking stunning. 

Recovering From a Bad Buy is Almost Impossible

Gems increase or decrease in value depending on the rate of inflation or deflation. This is only a general rule and cannot be applied to all circumstances. If you make a bad buy, count your losses, sell the gem as quickly as possible, and move on to the next one. The longer you let the stone sit around, the more money you will lose in the long run.

Diversify Your Gem Investments

Just like with any line of investment options, diversity is the key to creating a buffer. As the old saying goes, “Don’t place all your eggs in one basket.” In other words, invest in a wide array of gems that range from low-priced to higher-priced gems. The gem market is controlled by trends set by what consumers see in the media and other influences. This means that what is hot today may be replaced by a new hot trend tomorrow. Nonetheless, what went out of style for a little while may come thundering back later on down the line.

In addition to the above, it is a wonderful idea to invest in lab created gems. You might be thinking, “What? Invest in fake gems?” For one, lab created gems are far from fake; lab created gems are 100 percent real. Though gems created and found in nature are still priced higher, there are a lot of benefits to purchasing lab created gems for certain reasons.

  • Lab created gems are identical physically, chemically, and optically to a mined gem.
  • Lab created gems are NOT treated like most mined gems.
  • Lab created gems are cheaper than their mined counterparts.
  • Lab created gems are created in a controlled laboratory environment, which means they are more colorful and shiny.
  • Lab created gemstones do not have inclusions.

While some people prefer all that comes with gems mined from mother earth, lab created gems have their own uses. Since they are cheaper, costume jewelry makers can create affordable, beautiful costume jewelry using real gems. This fact is a great selling point for them.   

Be Cautious of Where You Get High-End Gems

Most, if not all, high-priced gems have documentation as to where they came from, their authenticity, as well as their value; so, you will want to steer clear of questionable sellers. This means not taking people’s word for it; do your homework and be sure they are legit.

Furthermore, the market for stolen and smuggled gemstones has moved to the internet, specifically the dark web. What used to be a market where you would have to have certain contacts, the blood diamond market, and conflict minerals market, in general, are only a click away. And as tempting as it may seem due to the low prices and ease of access, the consequences to your investment and reputation will be irreparable.     

Another thing to get informed about is what high-end gems are known to be “conflict gemstones.” A lot of people think of diamond when they hear the phrase “conflict stones,” but the truth of the matter is, there is a long list of conflict-related stones. Some of these stones include the following:

  • Emeralds
  • Quartz
  • Red Beryl
  • Alexandrite
  • Sapphire
  • Musgravite
  • Zircon
  • Tsavorite Garnet
  • Rhodolite Garnet

Get Your Gems Appraised and Documented

You would be highly advised not to go to just any person or company to have valuable or rare gems appraised. This holds especially true for resale jewelry stores. As a matter of fact, there are only a few authoritative institutions that qualify to appraise gems and issue documentation for them. Below is a list of these institutions.

  • Gemological Institute of America (GIA)
  • Gubelin Laboratories
  • American Gem Society (AGS)

Invest in a Good Marketing Strategy

Gems will not sell themselves. One thing to understand going in is that this is a saturated market. There are literally thousands of individuals and companies from around the globe trying to sell gems, mostly online. We are talking from one person with a very small selection of stones for sale on eBay or Etsy to large resale companies such as Acrylic Gemstone Suppliers and RSA Gems.

With this in mind, you are going to have to actively market your gemstone business. Influencers are a great place to start. Though some are kind of pricey, there are many “local” influencers with under 10,000 followers who are reasonably priced. And studies show that influencers with a smaller number of followers are more successful at selling the products they share on social media.

One such influencer who specializes in the gem business is Paul Gian. Paul provides a blog that gives advice to consumers about purchasing gemstones. What makes these kinds of influencers powerful is how genuine and down-to-earth they are. You want to stay away from influencers that sound too salesy because the whole point of an influencer is to genuinely share their experience and enjoyment of a product.

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