Tanzanite has had a meteoric rise in the gem world in the short 30 years since it was first discovered in the East African wild. Named by Tiffany and Company and celebrated by Tiffany’s president as “the most important gemstone discovery in 2000 years”, it has certainly lived up to expectations. It is now one of the most sought after gemstones in the world, most especially in the US market, which is still regarded as the largest gem market in terms of sales. The new, up and coming markets of China and India are growing annually however, as people in those countries move out of poverty and into newly affluent positions in society. Tanzanite is a stone many people are interested in.

Due to Tanzanite’s rarity and popularity it has been touted as an excellent investment gemstone. This article intends to address this issue and explore whether this is indeed the case and why.

Firstly, it is important to examine why Tanzanite may be considered as an investment in terms of its unique position in the gem kingdom. It is one of the world’s rarest gemstones, being found in only one place in the whole world – a place called Merelani, on the foothills of Mount Kilimanjaro, Africa’s highest mountain. It is believed that the eruption of Kilimanjaro created the unique set of conditions for Tanzanite to form and as a result the likelihood of Tanzanite being found elsewhere is limited due to the very rarity of the conditions created by Kilimanjaro’s eruption. Economically, this sets the stage for the main factors that make Tanzanite a viable and potentially excellent investment. The overriding factors driving economics in a free market economy, taught in any Keynsian economic theory is demand and supply.

In the case of Tanzanite, both are in its favour. The demand is growing annually for this gemstone – in the US market due to voracious marketing on the part of Tanzanite One, a Tanzanite marketing firm listed on the London Stock Exchange, seeking to make Tanzanite the stone to buy at the birth of your first child. If successful, this campaign will have a similar effect as De Beers’ “Diamonds are forever” campaign did on Diamond sales in the mid nine hundreds, which had the effect of making Diamonds synonymous with engagements and driving diamond sales through the roof. In developing markets, like China and India, as the newly rich enter the gem market, they are being influenced by trends that exist and hence these countries are growing markets for Tanzanite into the future, further stimulating growth.

On the supply side, supply is becoming increasingly limited as the world’s only source is mined frantically to keep up with this voracious demand. The result is that the stone is becoming increasingly difficult to find, especially in the finer qualities. Latest geological estimates have indicated that the life of the mines may only be 10 more years at present production rate. Hence, with supply shrinking and eventually expected to finish altogether, and demand skyrocketing, simple economic theory dictates that Tanzanite prices will increase substantially. Already there has been a threefold increase in just 6 years. The real increase is expected once the stone is no longer available, when the prices are expected to skyrocket.

There are other gemstones with a similar history from which we can draw parallels. Paraiba Tourmaline, for example, found in the late 1980’s in Brazil, mined out by mid 1990’s now costs US$20,000 per carat. Alexandrite, found in the Ural mountains of Russia a generation ago and extremely rare in fine qualities is a similar price. Both stones traded close to Tanzanite prices do now in the days when they were being mined.

All in all, many factors combine to point to the likelihood of Tanzanite becoming one of the real gem investments of our generation.