RapNet BlogIndustry experts predict that colored gemstones will take center stage in 2025, driven by the growing trend towards more color in jewelry designs. The American Gem Trade Association (AGTA) supports this outlook, citing key market factors such as consistently high prices for top-tier rubies, sapphires and fluctuating lab-grown diamond prices. As the outlook for natural diamond prices remains uncertain, some diamantaires and established firms have diversified into colored gemstones to meet the rising demand for these vivid alternatives.
We spoke to industry experts who have successfully expanded from the diamond sector into colored gemstones. They share practical insights into the challenges, potential pitfalls, and emerging opportunities for diversification in today's rapidly evolving market.
The Case for Diversification
Randy Poli of Poli Trading, a diamantaire from Los Angeles, expanded into colored gemstones 10 years ago. He was already offering a mix of diamonds and vintage-antique jewelry featuring colored gemstones, so sourcing equally distinctive colored gems became a natural extension of his portfolio. “It was a natural progression,” says Poli. “Many of the pieces being offered to me had colored gemstones, which forced me to learn about pricing and how to invest in them intelligently.”
Bonas Group, known for its diamond tenders and long-standing collaborations with De Beers sight holders, expanded into colored gems in 2019 with their first gemstone tender in Bangkok. Tim Denning of Bonas Group, reflecting on the transition, notes that the Bonas family had prior experience in colored gemstones through their ownership of Backes & Strauss, which had a dedicated gemstone division. Having spent nearly 15 years tendering rough diamonds for junior miners, Bonas saw colored gemstone tendering as a natural progression, leveraging its existing infrastructure and expertise. Denning acknowledges that the shift required developing new skills and adapting to the nuances of the gemstone market. He says, “There were many new skills we had to learn and continue to hone.”
House of Diamonds, a prominent natural diamond wholesaler originally focused on colored gemstones 100 years ago. However, for the past 20 years, the company specialized solely in diamonds. Ari Jain, chief financial officer of House of Diamonds explains, “In the last 3 years, the company has returned to focusing on gemstones, recognizing that this shift offers significant value to the American market. We see that newer generations are more focused on individuality and prefer expressing love through unique, vibrant colors." This strategic expansion allowed the company to cater to a broader clientele seeking both high-quality diamonds and fine colored gems, thereby enhancing its market presence and meeting diverse consumer preferences.
For dealers like Poli, diversification isn’t just a trend—it’s a strategic move to maintain client loyalty and expand business opportunities. “My niche diamond inventory keeps my clients coming back, but adding colored gemstones allows me to fulfil more of their needs in-house, rather than losing that business to another supplier,” he explains. “Retailers and jewelers appreciate being able to source both diamonds and colored stones from a single trusted contact.”
KGK Group, renowned for its expertise in diamonds, also started in the colored gemstone sector before expanding into diamonds and becoming a De Beers Sightholder. Sanjay Kothari, Vice Chairman of KGK Group, emphasizes that a diversified portfolio of both diamonds and colored gemstones offers a strategic balance between stability and opportunity. “Diamonds serve as a secure benchmark that many traders rely on, thanks to their established market structure and liquidity,” explains Kothari. “At the same time, colored gemstones bring diversity, rarity, and the potential for premium returns, especially when exceptional quality and provenance are involved.” This approach, he notes, mitigates risk while allowing the company to capitalize on shifting market cycles and evolving consumer preferences.
Differing Economics
The diamond and colored gemstone markets operate on fundamentally different principles, with the latter offering lower liquidity and greater pricing variability. Industry players must navigate these distinctions through continuous research and adaptability.
Kothari explains, “Diamonds benefit from standardized pricing, higher liquidity, and well-established certification systems, making them a more predictable asset. Colored gemstones, however, are priced based on rarity, origin, and quality, resulting in greater variability and a boutique market feel.” While gemstones can yield higher margins, they come with increased volatility and longer sales cycles.
Denning emphasizes the lack of commoditization in colored gemstones. “The diamond trade benefits from substantial bank financing due to its scale and liquidity. The colored gemstone market is less liquid and far less commoditized,” he says. Unlike diamonds, whose value is determined by a universally recognized grading system, colored gemstones are subject to individual color preferences and subjective valuation. Additionally, the fragmented nature of gemstone mining restricts supply, further differentiating it from the diamond market.
Jain likens high-end colored gemstones to fine art; pricing is subjective and often dictated by the owner’s valuation rather than a standardized index. “Sellers aren’t in a rush to offload premium pieces unless they achieve their desired price. In contrast, lower and mid-range gemstones trade more actively,” he notes.
Poli describes the colored stone market as “more ‘blind,’” with less clearly defined manufacturing and distribution channels compared to diamonds. This creates both challenges and opportunities in pricing and sourcing. The lack of commoditization means dealers can’t rely on platforms like RapNet for accurate valuation. “Two sapphires with identical certificates can look completely different and be priced differently,” says Poli. “Applying diamond pricing principles can lead to financial missteps.” Unlike diamonds, which have RapNet as a valuation benchmark, gemstone pricing remains highly experience-driven.
Liquidity is another key differentiator. “Traditional diamond trading volume doesn’t happen in gemstones. If you try to sell a gemstone to another dealer, you’ll often get offers near or below cost,” says Poli. “With gemstones, you’re typically waiting for the right [buyer] to move it along the product chain.”
For diamantaires accustomed to faster stock turnover, diversifying into colored gemstones can present challenges. Denning believes there’s little advantage in carrying both diamonds and colored stones in one portfolio. “Major brands and retail chains usually have separate divisions for each,” he notes.
Despite slower liquidity, wholesale margins for colored gemstones tend to be higher than those for diamonds, owing to the more opaque and nuanced pricing structure. Factors such as saturation, tone, cutting, origin, and treatments significantly impact value, and without a universal grading system, pricing expertise comes from experience.
Jain, however, doesn’t see slower liquidity as a problem. “Gemstone prices rise over time, so even if you don’t sell, you still make money on the asset,” he says.
Challenges & Tips
Navigating both the diamond and colored gemstone markets presents unique challenges. Diamond dealers entering the colored gemstone sector must adapt to less standardized quality assessments and more volatile pricing, while those specializing in colored stones must meet the stringent standards and liquidity demands of the diamond trade.
Poli advises, “Any expansion into colored gemstones (or diamonds) must align with your current market.” Denning echoes this, noting that without an established clientele, transitioning might not be the right move. “Each industry has its own nuances, skill sets, and customer base,” he says. “The grass isn’t necessarily greener on either side.”
The colored gemstone market is more complex and influenced by nuances in shade, origin, and cutting, which can significantly impact pricing and desirability. Poli suggests, “Start slowly or rely on trusted sources. There are countless pathways in the gemstone business,” Poli adds. “You may start in one segment and shift to another as your market and clients evolve.” Unlike diamonds, where GIA certification provides clear grading, colored gemstones are often subject to personal taste and market trends. He advises experimenting with a small investment before scaling up.
Kothari views transitioning between markets as an opportunity to expand expertise. He emphasises the importance of understanding the diamond industry’s rigorous grading and certification standards when entering the sector. Conversely, diamond traders must understand the unique qualities and market dynamics of colored gemstones. “At KGK, our broad research allows us to bridge these segments effectively,” he explains.
Certain high-quality colored gemstones, such as the ‘Big Three’ — sapphires, rubies, and emeralds, offer appealing opportunities for diamond traders seeking diversification due to their enduring market demand and rarity. Jain believes that focusing on these "big three" remains the best strategy, as they attract the highest consumer demand, making them easier to sell compared to niche stones. However, he warns diamantaires about longer memo times and slower sales, which can extend to 1-2 months with reputable retailers.
Poli advises that dealers seeking steady demand should focus on classic gemstones like the ‘Big Three.’ Meanwhile, those looking to avoid heavy competition may find opportunities in niche stones such as topaz, tourmaline, and spinel. However, he notes that success in these markets requires a specialized approach, as sales volume tends to be lower. Dealers in these markets should expect longer sales cycles and a more niche customer base. He believes emeralds and sapphires offer the most accessible entry points for U.S. diamond dealers, noting their wide range of price points and qualities. Rubies, however, can be more challenging due to their rarity and high prices. “Rubies are often priced higher than what many consumers expect or are willing to pay,” he explains.
Denning also notes that while rubies share some similarities with diamonds, they are not necessarily a straightforward investment. “Each gemstone has its unique challenges,” he says.
Poli advises integrating colored gemstones in a way that complements an existing niche. “Success comes from curating a collection that aligns with your business strengths,” he says. He recommends testing demand with loyal clients before expanding, emphasizing focus over over-diversification. “Choose a colored stone that fits your business, start small, and let success pave the way for future growth,” he concludes.
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