Mutual funds & ETFs are the popular investment route for most people. An investment seen as relatively safe and long term. The average investor is happy to set away savings into a mutual fund for 10+ years and make 5-8% on their money annually (if they’re lucky).  There are no guarantees of course, the fund management could potentially make some bad calls or 2008 can happen all over again.  Take for example the first quarter of 2016, funds started off the year -20%! (Ouch.)

What if I told you a shiny little rock could give you a higher return annually than your “professionally” managed mutual fund.  One of these can average higher returns annually than the best performing mutual fund in 2015.  The best part about it, you actually own it.  You can do whatever you want with it and you don’t have to pay annually for it.

The Shiny Little Rock

This magical little gem I speak of is Alexandrite.  It is a color-changing variety of the mineral chrysoberyl.  Its chemical composition, which reacts oppositely to different light sources, is responsible for the stone’s remarkable color-change.  It turns from a blue-green color in daylight to a red-purple at night.  Due to the limited nature of supply, Alexandrite is one of the rarest fine gemstones.

The rare nature of this gemstone contributes to its increase in price.  Since its discovery, Alexandrite has steadily gone up in price. In the last 5 years, Alexandrite has gone up 15% per year! Compare that to the 5 year average total return for large growth equity funds at 13%. Alexandrite has a long history that has made it the secret investment for the world’s billionaires.

The Background Story

This rare gemstone was named after Russian Tsar Alexander II.  It was discovered in the Ural Mountains of Russia.  By virtue of its opulent colors, evocative of those of the Imperial Russian Flag at that time, Alexandrite inevitably came to be the symbolic stone of Tsarist Russia.

After decades of mining the gemstone, the mines in Russia were depleted. Years later, deposits of Alexandrite were found in Sri Lanka and other parts of South East Asia.  But, they were no where near the quality and color of the Russian material.  They were have a brown tint to them, only considered Alexandrite because of the chemical make up.  Not until 1987 were Alexandrite of the Russian quality found, this time in Brazil.

The Hematita Alexandrite mine in Brazil is considered the finest deposit of Alexandrite in the world.  It is the only material close to the original Russian Alexandrite.  Unfortunately, again the mine is slowly running out. It has become increasingly hard to find natural Alexandrite over 3 carats in the finer material.

Gemstone Investment

Average Returns 2006-2015

Alexandrite has long been a gem that has flown under the radar; no record breaking auction prices, no large marketing campaigns, no movies made about it.  Yet, it has gone up steadily in price year after year. When most people think of investing in gemstones, they automatically think diamonds.  But, diamonds are only considered good investments when they are colored. The average diamond that is sold in everyday jewelry stores have seen drops over the past five years.  Just in the first half of 2015, diamond prices dropped 10% (compared to Alexandrite increase of 10%).  Good for consumers, bad for investments.

Diamonds have long been seen as the rarest of them all, but that only holds true for flawless and colored ones. Truly rare gemstones are the likes of Alexandrite, Emerald and Paraiba Tourmaline. The increases in price is due to simple supply and demand. Alexandrite is the birthstone of June and is coveted by collectors and gemstone enthusiast around the world, the production coming out of the mine simply cannot keep up. As a matter of fact, production out of Brazil is virtually non-existent

The Takeaway

Gemstone investments are unlike any standard investment. It’s something that is tangible, it can fit in your pocket, and holds value anywhere in the world. Investment grade Alexandrite is something that will no longer be around in 50 years.  Investments have long been synonymous with Wall Street.  We’ve been taught there are only a few ways to invest our money, and all of them are through Wall Street.  Yet, there is a shiny, little, color-changing gem they call Alexandrite that has outperformed the smartest and brightest fund managers.



Disclaimer: ABC Gem’s is a distributor of Natural Brazilian Alexandrite and is not providing investment advice. Data is purely for comparison. One should always consult a professional when pursuing investments.