Accompanying the growing interest in American mined sapphires is a growing list of questions about them. One frequently asked question concerns value. The question usually takes the form, Do Montana sapphires have value? Full disclosure compels me to acknowledge that I have a personal interest in the question. My company, Americut Gems, has a large inventory of Montana sapphire which I use to supply my independent retail jeweler customers located throughout the United States. I consider the question of value to be a very important one deserving a very thoughtful answer. That is the purpose of this article.
What is value?
Value is a broad term that could mean many things. I think what is meant by value in this context is most likely one of two things. It could be both. If value is equated with beauty, the question would be, Are Montana sapphires beautiful? This is the aesthetic sense. If value is understood in an economic sense, the question would be, Are Montana sapphires expensive?
My experience has been that some consumers are primarily interested in aesthetic value, others are more interested in monetary value. Most have some measure of concern about both. Obviously, the two concerns are interrelated. Despite the adage that beauty is in the eye of the beholder, it is generally true that the greater the beauty, the more expensive the sapphire.
Are Montana sapphires expensive?
Sapphires, like most commodities, acquire and hold value because of their scarcity. Generally speaking, the greater the scarcity, the greater the value. I explored this scarcity=value theme in an earlier post where I compared the volume of Montana mined production with total worldwide production. The comparison was based on a ten year study conducted by the United States Geological Survey. In 2008, the last year of the study, total worldwide sapphire production was approximately 25,000 kilograms. In the same year, Montana’s contribution to that total was 70 kiligrams, or 0.002%.
It is hard for me, and maybe others, to visualize 0.002%, and so I suggested imagining an assortment of 350-400 sapphires. The assortment would represent all of the sapphires mined everywhere in the world in any given year of the recent past. Then, based on the production statistics just cited, we would recognize that only 1 of the 350-400 sapphires in the assortment could be called a “Montana” sapphire. Visualized in this way, one can begin to appreciate just how rare American sourced sapphire is.
It is one of the reasons the Survey identified Montana sapphire, together with Burmese and Kashmir sapphires as being the most expensive in terms of average polished prices. Scarcity creates value. Scarcity also means that consumers generally cannot walk into most jewelry stores and see a nice selection of Montana sapphires, at least in finer qualities and larger sizes. They will need to ask for them, in which case such inquiries are best placed with independent jewelers who have the resources to accommodate their requests.
When people buy fine sapphires it is often in connection with life changing events like engagement and marriage or recurring special occasions like special anniversaries. They expect to keep, enjoy and wear them for a lifetime. They are often passed down to future generations. This very common life history of precious sapphire helps to explain buyer’s concern with not only value but durable or lasting value as well.
Because of these concerns, I know there are many people who would like to know more about this “scarcity=value/lasting value” theme. An informative, meaningful sequel to this theme must include a discussion about the sizes and qualities that could be expected from a given volume of mined Montana rough. The size I am most concerned with is 1 carat + polished because that is where most of the demand is at the present time.
Very little has been published about the size distribution and qualities of Montana mined sapphire. The most comprehensive survey I am aware of dates back more than a century. Although the results of a similar survey today may not be the same, the parameters are such that I think sharing a brief summary of the report would be useful.
The survey was based on ten years ( within a 1906 to 1923 timeframe) of production records of sapphire mining operations in Granite county, Montana. It was a large enterprise that managed to produce a total of 38 tons of sapphire rough, all of which was sold to be used in high precision industrial applications. The mine ceased operating in the 1940’s after synthetic sapphire came into wider use. The companies records suggest that approximately 18% of total production of mined crystals were of sufficient size to create faceted gemstones that would have weighed one carat or better.
A more recent survey conducted in the 1970’s, in the same area by a different mining company was based on the extraction of 35 kilograms. The purpose of the survey was to determine whether sapphire mining would be profitable. Apart from size considerations, they concluded it would not be profitable because of the large number of unmarketable pale stones uncovered. It was estimated that only 8% had sufficient color saturation to be sellable, a figure that seems very high based on my own buying experience. Because I am not aware of similar more recent studies that are in the public domain, my best resource available to explore these matters in more detail is my own buying and cutting experience.
My company, Americut Gems, has a large inventory of alluvial sourced Montana sapphire. I acquired this inventory by purchasing large volumes of rough material over a number of years and presided over all the processes required to transform this rough into a vast inventory of beautiful gemstones. However, I do not imagine that because of this experience all of my conclusions must be spot on to the last digit. On the other hand, because of my experience, I am confident that I can describe the scarcity of Montana sapphire in such a way that interested persons can acquire a confident sense of, and appreciation for, its lasting value.
Production of Montana mined, rough sapphire fluctuates from year to year. For the purposes of this article, I am going to assume a yearly production of 500,000 carats. I think that given this volume of rough, we can assume that approximately 6-7000, mostly brilliant marketable gemstones will be cut weighing one carat or more. They likely would have an aggregate weight of approximately 8400 carats, or slightly less than 2% of the total weight of the rough mined. A large majority of this 8400 carats would be made up of stones weighing 1.00-1.25. A minority would weigh 1.25-1.75, and relatively few, perhaps 5-7% of the total (500-600) would weigh 2 carats +.
Given the worldwide demand for American sourced sapphire, these numbers on their face imply extreme scarcity and this implies lasting value. But again, as in an earlier article, it is hard for me to visualize the statistics. But like before, I can use my imagination. I know, based on the numbers, that if every billionaire in the United States wanted a 2 carat Montana sapphire, they would need to wait for two or three years of production to get all of their orders filled. I know that if every American who bought a Jaguar last year wanted a Montana sapphire one carat or larger they would have to wait 3-4 years to have their orders filled. The same would be true of every American who bought a Mercedes Benz last year, except they would have to wait a half a century to have all their orders filled, to say nothing of all Mercedes Benz buyers in future years who would have virtually no hope of buying a 2 carat sapphire in their lifetimes.
I could go on. But enough of that. I am sure everyone gets the idea by now that Montana sapphire as described is quite rare, and that this level of scarcity should provide for a comfortable level of lasting value. Hopefully this article will help put to rest those concerns people have who are buying fine sapphires they hope to enjoy for a lifetime.