Lone Mountain from the Charles Loloma Collection (white is camera flash).
A discussion about the economics of turquoise is difficult because there are two distinct markets with very different characteristics. Turquoise is a secondary mineral formed from the elements of other minerals. It takes a long time for turquoise to form and the conditions necessary are generally in arid areas. Turquoise is rare and is relatively soft. Eighty percent or more of all turquoise requires some form of treatment to harden the stone and deepen the color before it may be used in jewelry, the only commercial application. This creates a two-tier market with most turquoise being treated while a small amount is available as natural with no treatment. Treated turquoise sells for a fraction of the price of natural turquoise especially at the higher grades. Of the 20% or less of natural about 15% will be mid-grade and high mid-grade. The top 5% is high grade with very high-grade comprising maybe 1% of all turquoise and gem grade, among the rarest of all gem stones, consisting of as little as 0,1%. For the purposes of this article I will be discussing the market for high grade and above.
Any market, be it for goods or services, exists as an interaction of supply and demand. Price will be determined by the exchange between willing buyers (demand) and willing sellers (supply). Pricing function will be correlated to these two. When demand exceeds supply prices will rise. When supply exceeds demand prices will fall. Recognizing this business owners have long sought to control the supply function since they may have less control over demand. They do this by creating moats to competition and by pricing cartels. When a product is successful in the market competition will quickly develop often selling at lower price. Setting up barriers to competition, a moat, will limit this influence. Branding is another way to limit the challenge of competition with consumers willing to prefer and often pay a premium for an established brand. There are many cola soft drinks but only one Coca Cola. Pricing cartels, controlling the level of supply to the market may be effective but are difficult to establish and control. The diamond cartel is an example of a successful cartel which, with the aid of successful branding, has made a relatively available gem stone into the highest priced. In the 1890’s there were attempts to create a turquoise cartel but these were unsuccessful. This story is told in Turquoise in America Part One, 1890-1910.
In the market for high grade turquoise there is very limited supply both from new product being mined and brought to market and from existing collected material. Turquoise mining is difficult and costly primarily because it is difficult to predict reserves and depends largely on mining by hand. Very little high grade is extracted. Existing collectors may be hesitant to bring their stone to market in expectation of higher prices. This creates a market with small float, or material available at any time. In this situation relatively small increases in demand may create large price increase.
Under these conditions the brand of the seller, the trust and dependability of the provenance of the product becomes a prime determinant of price. For example, Lander Blue is the most expensive turquoise. There was only 110 pounds mined but most of that was high grade. At any given time, there may be more Lander Blue being offered for sale than was mined. Since the price for the highest grade is in excess of $400 a carat no buyer wants to pay that price for faux Lander which is most likely Chinese which sells for ten times less for the same grade.
Turquoise should be purchased for the enjoyment of its beauty and healing energy. Native people have long recognized the true value of the sky stone. Yet, over time, the price has steadily increased over the past three decades. In relation to historical pricing the highest grades turquoise is a relative value. In 1905 the average price for high grade was $15 a carat which, in today’s dollars would be in excess of $300 a carat.
In my experience I have found that the average price appreciation for the higher grades has been about 7% per year with some mines higher, some lower. While there are other assets which may offer much higher return and greater marketability, they all come with much higher risk and do not provide the same beauty dividend.
In conclusion buy high grade turquoise because you love the stone and appreciate the rare essence of high grade, the elusive Zat. Unless the interchange between supply and demand ends it is likely that higher grade turquoise will continue to appreciate in price.
Mike Ryan II
Santa Fe
October 2024.
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