Thoughts on the Tom Lantos Block Burmese Jade Act of 2008

October 20th, 2008 by James L. Sweaney, CGA, FGA. GG

I just had a very interesting conversation this morning with Paul Levin, one of my best gem dealers, just returned from a buying trip to the Orient.  He’s always willing to talk freely and really knows the colored gem market. Paul was in Bangkok where he saw a vast scarcity of material, in particular fine ruby and sapphire (which is all he buys).   Many jewelry and gem firms have closed their doors, their workers returning to the countryside and farms, mainly because the worldwide business slowdown has created a severe drop-off in the market for lower quality gemstones.  The whole key to gem mining is being able to sell the lower quality—when that market dries up, the miners just can’t afford to mine anything.  The high grade is always a small percentage of the overall production, so the normal shortage for fine material is exacerbated.  As a result, prices for fine material are substantially higher for the small quantity of goods available.  1 ct.+ rubies I saw from Paul last year at $3700 per carat are now $4500 per carat.   More and more dollars are chasing fewer and fewer goods.

The Burma embargo recently enacted by our Congress and signed by President Bush, the Tom Lantos Block Burmese Jade Act of 2008, has had the exact opposite effect intended—which was to create pressure on the military governors of Burma/Myanmar to become good guys.  Gem dealers who invested in goods over the last few months are now stuck in limbo, not able to export what they’ve purchased.  They are all exploring ways to smuggle their goods out of the country, which in fact is the traditional way much Burma material has always come to market.  By putting these draconian limits on an already stressed market, the embargo is really just hurting the little guys who struggle to eke out a living from this tough economic environment, the miners, the gem cutters, the jewelers, and all who create the chain from mine to consumer.  Do we really think these military dictators who are raping their country for all they can grab are really going to suffer from this embargo?  Personally, I think the embargo is just political chest beating by our government.  The motives may be noble, but the act will immediately have strongly negative effects on ordinary persons.  Whether the junta will modify its behavior as a result remains to be seen.  Any bets?

On a happier note, Paul told me about a new and exciting source for fine ruby, Winza, Tanzania.  He spoke of a 10 ct. unheated gem ruby that created a real stir at the Gubelin lab in Switzerland, where they penned a letter saying this stone was the finest ruby ever to go thru their lab.  Keep in mind that the Gubelin lab is the source of choice for documentation of fine and uber-fine ruby and sapphire, so this event was truly significant.

Paul first saw some of this material uncut earlier this year at the Tucson show in February.  He described it as having the finest “crystal” of any ruby he has seen—Paul has been a specialist in top end Burma ruby for years, and is one of the best judges of ruby that I know.  He says the color of this material is very slightly off the best Burma, toward a top “spinel” red, but that’s more than offset by the wonderful transparency (crystal) of the material.  Can’t wait to see some!

By the way, the asking price for the 10 ct. stone– $6,000,000!  A $5,000,000 offer based on the Gubelin cert alone, sight unseen, was declined.

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