With investors seeking diversity away from conventional assets such as gold and real estate, coloured gemstones like rubies, sapphires, and emeralds are coming into the limelight as a niche but viable choice. Previously limited to heirloom pieces or special occasion jewellery, these coloured gems are gaining popularity because of their scarcity, long-term value appreciation, and uniqueness.
However, investing in gemstones is not as straightforward as buying gold. With no universal pricing index, and significant value differences based on origin, treatment, and certification, gemstone investing calls for specialised knowledge and strong trust in the seller.
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High Returns, but High Complexity
Over the last decade, the value of coloured gemstones has grown faster than many traditional investment options. According to Ankur Daga, founder and CEO of the fine jewellery brand Angara, rubies have increased in value by 5.4 times over the past 10 years, translating to an average annual return of 19 per cent. Sapphires have appreciated by 4.1 times with a 15 per cent annual return, and emeralds by 2.4 times at around 9 per cent per year.
In comparison, gold prices rose 3.7 times over the same period with a 14 per cent annual return. The Sensex grew 2.9 times at 11 per cent per year. Diamonds, on the other hand, saw their value decline to 0.8 times, with an average annual loss of 2 per cent.
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But these gains are not easy to unlock. "Gemstones are far more intricate than gold or real estate," says Daga. "You're not just looking at carat weight or appearance; you need to evaluate whether the stone is natural, understand what treatments it has undergone, and consider its origin. Each of these factors can significantly impact both value and authenticity."
Certification and Trust Matter Most
As opposed to gold, which follows global price benchmarks, gemstones have a less standardised mechanism. Prices are influenced by high-profile Sotheby's or Christie's auctions and by in-house sourcing patterns of gemstone dealers. Vertically integrated jewellers, for example, tend to monitor their past purchase prices for heirloom-quality stones in order to measure appreciation.
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Due to the opacity, certification is necessary. The Gemological Institute of America (GIA) and International Gemological Institute (IGI) are the most accepted labs. Their certificates confirm whether a gemstone is natural, free from any treatment, and include major quality parameters. "Certification gives the sort of transparency and assurance that any serious investor or buyer should seek," states Daga.
Lab-Grown Coloured Gemstones
Though lab-grown coloured gemstones, like man-made sapphires or emeralds, have become more prominent in the jewellery industry because of their prices, appearance, and resemblance to natural gemstones, they have not yet replaced natural gems on the investment front.
Natural stones continue to possess the premium because they are rare, valued in the past, and have traceable origins. Lab-grown ones are usually considered affordable options for ornamentation but do not possess the rarity that forms the basis of investment-grade appreciation.
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Why Origin and Type Matter
The worth of a gemstone can change considerably depending on its provenance. Colombian emeralds, for example, generally sell for more than Mozambican stones that are similar in appearance. Rubies from older Burmese mines have also long commanded a premium.
This origin data is typically contained in third-party certification reports and assists investors to better understand valuation beyond looks. "Origin can have a big impact on value, but it is not one-size-fits-all. It is specific to the type of stone," explains Daga.
Legal and Tax Considerations in India
In India, cut and polished gemstones are subject to 3 per cent GST, whereas uncut gemstones are charged at merely 0.25 per cent. Custom duties and a 3 per cent IGST are charged on imported gems, but this is normally claimable by businesses. If bought from an unregistered supplier, the customer would need to pay GST upfront under reverse charge rules.
Although certification is not obligatory under law, it is highly recommended, particularly for higher-ticket sales, to help foster trust and prevent reseller disputes.
Demand Increasing, Supply Decreasing
Over the last few years, there has been increased demand for coloured gemstones across the world. According to Daga and their in-house reserach, in the US, coloured gemstone engagement rings have increased from 5 per cent to 15 per cent of the market and are expected to reach 30 per cent shortly. India is also seeing the same trend, driven by celebrity weddings and increased consumer demand for customised, symbolic jewellery.
At the same time, supply shortages are pushing prices higher. Mines in places such as Kashmir, Burma, and Madagascar are experiencing lower output, particularly of high-quality material. This shortage is another factor drawing investors to heirloom-grade natural gemstones. "It's not only about demand these days, lack of supply is a very significant factor determining investment value," Daga says.
A High-Potential but Expert-Led Asset Class
Investment in coloured gemstones is not a mass-market strategy. It calls for greater knowledge of certification, treatment disclosure, and international price references. The absence of a central index and the heavy reliance on seller credibility make it a market best left to educated buyers.
Liquidity is also an issue; gemstones are not as liquid as gold or shares. Resale commonly goes through auction houses, specialist jewellers, or individual collectors and can take time subject to market demand and stone quality.
There are also dangers: inexperienced buyers might overpay, confuse treated stones for natural ones, or have difficulty reselling if certification or provenance is ambiguous.
For those who are willing to do the homework and hold the gemstone for the long term, coloured gemstones have the potential to provide great appreciation as well as the aesthetic and emotional attraction that few investments can match.
