We have always been fascinated by rutilated quartz, the clear or smoky quartz with inclusions of rutile (titanium dioxide). The rutile needles form lovely patterns like miniature sculptures. Every stone is quite unique -- some have delicate hair-like intersecting needles; others have dense clusters of thicker needles.

We buy large parcels of rutilated quartz whenever we can find them, and we sell them at very attractive prices, typically for less than $2 per carat. So we were interested to read a recent report in Modern Jeweler magazine about the rising worldwide demand for this gemstone and the prices being asked in major markets like New York.

According to Modern Jeweler, the demand for rutilated quartz by jewelry designers is so strong that nice cabochons are selling for as much as $20 or more per carat in the USA. One dealer explained it this way: "When you think of what this gem offers in terms of eye appeal and artistic potential to consumers hungry for things that are new and different, rutilated quartz would still be a bargain at twice the price."

Our first thought in reading this was not, as you might think, that we ought to raise the prices on our rutilated quartz. Our business model is to sell at a fair price based on the prices we pay for our gems. Rather it made us think about how much the supply chain determines the retail prices for gemstones, and how large the difference can be from the prices close to the mining source.

We do our buying in one of the world's main trading centers for colored stones, Chanthaburi in Thailand. Prices here on most gemstones are probably as low as they are anywhere in the world. Most of the gems purchased here by wholesalers will pass through many hands before they are sold to someone who will set them in jewelry. That's how rutilated quartz gets to be $20 a carat in New York.

Our model is different. We buy as close to the source as we can and sell over the internet directly to collectors, jewelry designers and consumers. We know our prices are significantly lower as a result, but we see that as an opportunity to be competitive in the open market, not as an opportunity for price-gouging.

It is important that miners and gem cutters get a fair price for their labor and the value they add to the material. The same holds for the people who design and manufacture jewelry using these gemstones. But all the middlemen in the supply chain who extract profits without adding value are not helping those who do add value; in fact the middlemen inflate prices and reduce the income that should be going to the miners, gem cutters and jewelry designers.

First Published: May-03-2008

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