Jewelry Industry Sees Big Turnaround in Sales : Gems: As economy improves, consumers find its politically correct once again to wear fine stones.

The sparkle has returned to the jewelry industry after years of lackluster sales.

An improved economy, repeal of the luxury tax and new marketing options, such as home shopping on television, are behind the turnaround, which began a year ago.

“I think the confidence in wearing jewelry is coming back,” said Simon Teakle, who heads the U.S. jewelry division of Christie’s auction house, where 1993 sales rose 25% over the previous year.

“In recessionary times, it wasn’t socially correct to wear a tremendous amount of jewelry,” he said.

Teakle says consumers are not only buying more baubles and bangles, but have become more savvy about what’s available. Many may know, for instance, that the finest red rubies come from Burma, that Mexican opals are fiery orange and that diamonds occur naturally in nearly every color of the rainbow.

Yet distinguishing a ruby from a red spinel, an emerald from a garnet, or even 10-karat gold from 14-karat gold can be extremely difficult.

This lack of expertise--along with the availability of lab-grown synthetics and imitations resembling the real thing--can leave the average buyer vulnerable to unscrupulous dealers and suppliers.

“For every color you like, there are probably five or six gemstones in that color,” said Antoinette L. Matlins, co-author of “Jewelry & Gems, The Buying Guide.” “What you see with the naked eye may not be reality when you buy gems and jewelry.”

Also making jewelry buying difficult is that such purchases often are anchored by emotions, particularly during holidays like Valentine’s Day.

Madison Avenue is largely responsible. Advertising campaigns portray diamonds and other gems as the ultimate gift of eternal love.

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The most successful of these campaigns comes from the De Beers’ cartel, which markets 80% of the world’s diamonds. De Beers has successfully perpetuated the illusion of the diamond as a rare and valuable stone. In reality, diamonds are plentiful but tightly distributed.

“There’s a tremendous exploitation of consumers based on the allure of gemstones and the mythology of them,” Matlins said.

“Someone on the TV shopping network may mention diamonds or rubies or sapphires or emeralds and a certain image instantly comes to mind . . . of a highly valuable jewel. But in fact, it doesn’t escape the fact that it could be garbage.”

Steffan Aletti, president of the Jewelry Industry Council in New York, said he has received few complaints about the discounted jewelry sold on home-shopping programs. But he acknowledges that some dealers do misrepresent what they sell.

“There are some emeralds that are more appropriate to grace the bottom of a fishbowl than a ring,” he said. “The more desperate people are in looking for a deal, the most likely they are to get stung.”

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One way to avoid getting stung is to shop reputable dealers who have trade group affiliations and experts on their payroll.

“You don’t need to be a gemologist to buy a ring,” Aletti said, “just as you don’t need to study a schematic to buy a Sony or a Panasonic” television set.

Still, there are some basic rules to keep in mind when buying jewelry.

For diamonds, size is not the most important factor. Diamonds are graded and priced based on the cut, color, clarity and carat weight, with a flawless, colorless stone considered the most valuable.

A half-carat, round-cut diamond that is nearly flawless and with excellent color can cost far more than a three-carat diamond of poor color and with noticeable imperfections--about $13,400 versus $7,200, Matlins’ book says. Fancy shapes usually sell for 5% to 15% less.

Matlins says the four rules for gemstones are “color, color, color and color!”

If a gemstone’s color is good, she says, the presence of flaws usually won’t detract from its value as significantly as with diamonds. Keep in mind, however, that many stones are treated with heat or oils to enhance their color, a process that is legal as long as the dealer discloses that to the customer.

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The availability of the stone also is crucial. A chrome tourmaline may have a color similar to a green zircon, but because there’s less supply, the tourmaline costs more--about $300 to $1,400 for one to three carats versus $240 to $680 for the zircon, says “Jewelry & Gems.”

Precious metals vary in price based on their purity. Sterling silver costs more than silver plate. An 18-karat gold setting is more valuable than 14-karat or 10-karat because it contains more gold--75%, vs. 58% and 41%. Platinum is costlier still because it is rarer and heavier than the others.

The standard markup for retail jewelers is about 100% above the wholesale price, said Aletti, though it can go higher.

“Some are willing to sell more and make less. . . . Some want more per sale. It depends on the overhead the jeweler has,” Aletti said.

“Tiffany and Cartier have a higher markup because of their enormous overhead. But they sell only the very best of materials.”

Because of the huge markups, along with the difficulty most individuals have in reselling pieces, jewelry should not be thought of as an investment.

“The material from which it’s made has to go up a great deal for you to realize any kind of profit,” Aletti said.

That’s especially true of diamonds.

“There are thousands of categories of diamonds. Some are more easily sold than others,” said Lloyd Jaffe, chairman of the American Diamond Industry Assn. “(And) no stone will have the same emotional value for one person as the next.”

Buyer Beware

Some tips for buying jewelry:

* Select a reputable dealer. Suggestions from family or friends may be helpful. Otherwise, visit several stores and compare the quality of products, prices and services. Is there a gemologist on staff? Have there been any complaints to the Better Business Bureau?

* Beware of bogus sales. Some dealers constantly hold “70% off” sales, but you don’t know what they’re discounting from if the promotions don’t end. A sale is a true sale if the merchandise is discounted for a period of time, then returned to the higher, regular price.

* Put it in writing. A purchase should be described in a bill of sale just as it was explained by the salesperson. For diamonds, the carat weight, color and flaw grades should be noted. For colored gemstones, it should be stated whether the stone is genuine or synthetic, among other things. Some dealers may make a sale contingent on verification by a gem-testing lab.

* Get an independent appraisal. Besides verifying facts about the piece, an appraisal is needed for insurance. Trade groups such as the American Gem Society in Los Angeles can provide lists of appraisers. Auction houses such as Christie’s in New York also offer free verbal appraisals.

* Get insurance. Since standard homeowners’ policies cover only a portion of jewelry losses, additional coverage is needed. But not all policies are equal. For instance, many companies won’t reimburse the “full value” of the item but rather exercise a “replacement” option.

* Beware of telemarketers. Gemstone investments can be profitable, but millions of dollars have been lost in sophisticated telemarketing schemes. The pitch may seem legitimate: Gems offered at “wholesale prices” and shipped in sealed containers with convincing reports from gem-testing labs.