When desperate Europeans flocked to this country during the first half of the 20th century, driven by their native continent’s nightmarish holocausts to pursue the American Dream, those who could afford to, sewed diamonds into the lining of their clothes as the only source of security against very uncertain futures. The values of their national currencies were erratic at best, nonexistent at worst; but high-quality gemstones or diamonds furnished both ready liquidity on the international market and sustainable long-term value.
 Rare gems and diamonds remain the objet de valeur of choice for those fleeing tyranny, terror, and taxes, being compact, easily converted, and prone to appreciate. An exceptional natural precious gem or diamond still commands top dollar, especially since decades of demand have exhausted many important gem resources, such as certain ruby mines in Burma and sapphire deposits in Kashmir.
Even so, no seasoned gem appraiser is likely to suggest buying gemstones as an investment. "A jewelry investment is
not income-producing like real estate or stocks," notes Lisa Hubbard, execu
tive director of International Jewelry at Sotheby’s. "Diamonds tend to go up and down with the value of the stock market. Still, they retain an intrinsic value and enjoy a worldwide demand. While a high-quality diamond or gem might not make money, it’s not likely to lose its value either."
The private jewelry portfolio has the added advantage over securities investments of being informed not by yield curves, interest sensitivity, or rates of return, but by beauty, a sense of romance, and old-fashioned sentimentality. A parure of perfect diamonds, after all, adorns the ears and neck of one’s beloved so much more attractively than a matching set of convertible bonds.
When sourcing investment-grade tokens of affection, important collectors generally turn to the auction houses, through which the rarest and most extraordinary pieces pass. Certain gemstones and jewelry designs are more likely than others to maintain or increase their value over time. Gem appraisers and auction specialists agree that the best investments are very high-quality, unusual gems, fancy-colored diamonds, and exceptional signed period pieces from noteworthy companies or designers. An important jewelry sale at a large auction house such as Christie’s, Sotheby’s, or Phillips, de Pury & Luxembourg is likely to present the greatest variety of period designs and jewelry from most of the famous houses—including Tiffany’s, Van Cleef & Arpels, and Paul Flato—under one roof.
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