Gemstone Buying for Profit: Budget and Basis

Marathon or Sprint?

Having a small amount of money to invest can limit your profits. First, if you don’t have enough cash, you can’t buy the good deals when they cross your desk. Second, if you’re cash constrained, you’ll be tempted to turn your gems into cash by selling to other dealers. You’ll make some profit, but if you could have waited for the optimal purchaser to come along, you would have made more. That’s why investing in gems is more like a marathon than a sprint. (But you also need to seize the right opportunities quickly).

However, you can still make a profit even if you only have a small amount of money to invest.

Controlling Your Basis

The key to any gemstone investment is controlling your basis — the amount of money you’ve paid to purchase a stone. This means you have to buy right.

It’s possible to make money investing in gems with a small investment budget, but your cost basis (or purchase price) for each gem you purchase has to allow for a built-in profit the day you acquire the stone. This means building in a margin of safety — in this case, a profit margin….