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【 Tucson Blog 】Ep 3: The Magic Number, “P”

Prior to our Tucson business trip, I was already mentally preparing for something inevitable to happen — the rising cost of gemstones.

The price of gemstones in the market would seem considerably higher due to the soaring prices of raw materials and the recent exchange rate situation.

Note: International trade in gemstones is often based using the US dollar, with the conversion being $XX per carat.

So if a gemstone cost $500 per carat five years ago and weighs three carats in size, the price in Japanese yen would be

500 x 3 x 107.01 (exchange rate as of February 23, 2019) = 160,515 yen

Thoughts: What if the price rose to $600 per carat this year (for the same size and similar quality)?

600 x 3 x 134.90 (exchange rate as of February 23, 2023) = 242,820 yen

In dollar terms ($500→$600), the price increase would be approximately 20%, but when multiplied by the exchange rate (160,000→240,000), the price increase is estimated to be more than 50%.

It’s been widely deduced that factors causing raw material prices to soar include the shortage of raw stones, and the rising costs in mining, polishing, and transportation costs, all of which are happening worldwide.

However, the US dollar-yen exchange rate, combined with the aforementioned factors, has placed Japanese companies at a significant disadvantage when it comes to purchasing gemstones in Japanese yen terms.

"Wow, that's expensive." becomes the first thing that comes to mind when thinking about the gemstone price.

If you were to multiply the price quoted by 130 yen, you will get a price that is 10-20% higher than what you had in mind initially. Furthermore, during the purchasing process, you have to consider numerous factors when contemplating whether to make a purchase or not.

The following are some of the most common factors considered when purchasing:

1 Colour

2 Quality

3 Shape & Size

4 Inclusions

P Price

At Fujimori Kajita, we never compromise on our gemstones’ colour and quality. Thus, filtering is the first step of our purchasing process. As we wandered around the spacious floor at the Tucson Gem Show, we glanced for gems that ‘fit our eyes' based on the first two criteria; thereafter, looking out for unique shapes, sizes, and inclusions.

The second step would be to visualise what these gems will look like when made into jewellery.

Often, we select unique and versatile gemstone shapes and sizes that will fit rings, earrings and/or necklaces, all while imagining how these jewellery will look when made and worn.

Lastly, comes the price. Some would say that price is the only variable factor that can only be determined by the person at the point of purchase.

As buyers, we are happy when we get to purchase these stones at a lower price, for it becomes a source of profit. It also gives us the means to offer our customers reasonable pricing, allowing them to make an informed purchase decision. Nevertheless, price should never be compromised when considering the four factors mentioned above.

It is not uncommon for sellers and buyers to negotiate and find a mutual settlement point. As long as the seller does not offer an unreasonably high price to those of us/buyers who have been purchasing from them for a long time, as buyers, we will still continue our business. There’s always a right time and price to settle and I feel that is the most important part of the transaction.

After all, we will only know whether the gemstones we bought at the gem show are priced fairly and reasonably after some time.

The only thing I can say with confidence is that we always select the best of the best in a bunch based on the abovementioned factors. We have never given up on any of the four elements just because they are priced competitively cheaper.

When buyers look at the previously purchased gemstones, they often have recollections of their encounter. "Oh, that's the tourmaline I bought from that Brazilian guy in Tucson two years ago.”

Then again, this is not the case with diamonds or pearls. To date, I still feel the thrill of buying unique coloured gemstones, and I can’t wait to show them to you soon.

- K.K.

We'll host our Annual Designer & Gemologist to showcase the gemstones bought from this year's Tucson Trip. Please stay tuned for more information.


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