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Rubies: Market Effect of Origin & Treatments, Pricing &Disclosure
By: Richard B. Drucker, GG
Publisher of the GemGuide

Considering the historic and pricing hierarchy of origin, the ruby order is as follows: 1) Burma (Mogok); 2) Burma (Mong Hsu); 3) Thai, Africa, Madagascar, and others. Looking at actual rubies in the market, our research team here at Gemworld found three comparable stones, all in the fine category; all in the one carat weight range; all heat treated. The Thai stone was $1,500 per carat. The Mong Hsu was $2,500 per carat. The Burma-Mogok was $4,000 per carat. Though all were similar in appearance, the gem from Mogok, certed as such, had the greatest price per carat based on origin provenance.

Nearly all Mong Hsu rubies today will have some flux residue trapped in healed fractures as a result of the heating process. The major labs are all recognizing this and listing on reports in similar, yet different ways. For example, the AGTA-GTC uses the following terminology to deal with ruby treatments. NTE: No indications of heating; TE: Indications of heating, no residue; TE1, TE2: Minor residue in fissures; TE3, TE4: Moderate residue in fissures; TE5: Significant residue in fissures. The GIA laboratory uses the quantification terms of minor, moderate, and significant to describe the levels of flux present in a ruby. An unenhanced ruby would be stated as such.

At Gemworld, we see a flaw in the way the industry approaches flux residue. By quantifying the amount of flux, there is an implication that the amount of residue is significant in the improved appearance of the ruby. Actually, the amount of residue is not the factor that changes the overall change in color appearance. It is the heat. So, while the trade may discount the value based on the amount of residue, it is only half the story. However, there is some relationship between amount of residue and “quality” ranking that we do accept. A ruby with more residue internally, probably had more “flaws” that could accept the residue. Therefore, by definition, they would be graded lower on our scale.

The chart that follows represents the effect on price for non-treated rubies, which are becoming very rare. The heated rubies are the standard but note that some residue may be present. Note that this chart has changed dramatically in the past few years. At first, the premiums had been rising due to rarity and increased demand for untreated. Recently, treated ruby prices have decreased slightly but the untreated have not, so the premiums appear to be even greater. Now, a stone that sells for $1,000 heated for example, might sell for $2,000 to $3,000 untreated. Also, since premiums are based on rarity and availability, larger rubies may be higher in premiums and smaller may be lower. This is only a guideline.

The difficulty in using rating systems right now is that most jewelers in our industry do not really understand what these mean. They are unfamiliar with and uncomfortable in describing the residue issue with customers. In the real world, few retailers disclose residue. They might offer heat treated as the extent of disclosure, if any.

Glass-filled rubies are taking the industry by storm. The abundance of these found at the Tucson Gem Show in 2008 was incredible. They are everywhere and often, sadly, not disclosed. (Note: AGTA dealers are required to disclose all treatments. The generalization is due to the many non-AGTA dealers that sell in all the other trade show venues and the sales being made in Thailand to unsuspecting dealers.) The prices of these have come down to as low as $2.00 per carat. The majority of stones are selling for $10-$30 per carat. The highest price seen for larger rubies in better appearing qualities, is $200 per carat. Understand that this material was previously unsalable prior to glass filling. Faceted, cabochon, and star rubies are all available with glass filling.

The labs have struggled with how to fully describe this treatment as some rubies are filled with an exceptional quantity of glass. This is unlike emerald fillers for example that usually have less than a pinhead amount of oil.

The AGTA-GTC describes these as follows:
Species: Natural corundum; Variety: Ruby; Enhancement: Indications of heating, TE (minor, moderate, significant) clarity modification; Comments (paraphrased): A lead glass has been identified as the filler... may be unstable…special care…

When the glass filling is significant, the terminology changes.
Species: Natural corundum; Variety: Ruby with Lead Glass; Enhancement: Indications of heating, TE significant clarity modification; Comments: A lead glass has been identified as the filler and constitutes a significant portion of the gemstone…may be unstable…special care…

Disclosure at the wholesale level mostly comes from the AGTA dealers that adhere to the enhancement code manual. Codes are as follows. “H” is used for heat when no residue is visible under 10X. “F” is used when filler is visible under 10X, including intentional filling with glass. Other codes for ruby are “U” for diffused, “D” for dyed with colored oil, “R” for irradiated. For a complete list of the dealer codes used by the AGTA, you can download a PDF. Go to agta.org/gemstones/agta-gim.pdf.

At the retail level, few disclosures are seen. When disclosure is done, it is usually heat only as this is easy to understand and to explain to a customer. Our concern now is for ongoing consumer confidence. As they learn from the internet, from TV shopping channels, and in discount stores, that they can buy rubies for just a few dollars a carat, how will they believe that rubies are a rare luxury item and expensive, selling for $10,000 per carat or more?

Richard Drucker is President of Gemworld International, Inc. In September, 2008, Gemworld and the AGTA hosted the inaugural World of Gems Conference. Proceedings of the conference contain greater detail on topics such as presented in this article. Historical price charts are also included. For information on the World of Gems Conference book, go to www.worldofgemsconference.com. For information on the GemGuide to wholesale gem pricing, or the GemGuide Appraisal Software, go to www.gemguide.com.

Photo: Martin Fuller