The Big Optimistic

When Tiffany & Co. created a retail store with only one product, you’d have been forgiven for thinking the scheme risky. But the store, called Iridesse (www.iridesse.com), has borne out the wisdom of the adage “Timing is everything.” Iridesse sells only pearl jewelry, and there has never been a better time for retailers and consumers to buy pearls. Overall selection, variety, and quality of the world’s cultured pearls are all outstanding.

Pearl production is up, and so is demand. Paspaley auctions reportedly enjoyed its best sales in five years this past April in Hong Kong, selling over 150,000 pearls—including all the baroques, indicating a major new trend—with a value of more than $13 million. But demand, though rising, isn’t keeping pace with skyrocketing production. Unsold pearls numbered close to 33,000, leaving growers with a great deal of old inventory to sell at the next auction, even as pearl production continues to rise, driving down prices.

Quality also is rising, the result, according to producers, of an improving growing environment, especially for South Sea farms in Indonesia, the Philippines, and Australia. In fact, studies in the Philippines show marine diversity increasing 21 percent in pearl-farm sites compared with unprotected areas. The result is higher-quality pearls and better regeneration of the Pinctada maxima.

For reasons that aren’t entirely clear, production numbers for South Seas and Tahitians are expected to decrease over the next year or so, the result of fewer oysters available for grafting. Martin Coeroli, general manager for GIE Perles de Tahiti, says that may push prices up 10 percent to 20 percent, but expect that outcome only for high-luster, clean true-peacock-color 8 mm and 9 mm rounds.

Robert Wan’s Tahiti Perles, the largest grower in the French Polynesian islands, sold over 190,000 pearls at its Tahitian pearls auction in Hong Kong in March. To improve, or at least stabilize, profits without increasing supplies, Wan has chosen to price his goods using the more stable euro instead of the U.S. dollar. This has raised prices in the United States.

EXPECT THE BEST

One indication of the overall high quality of cultured pearls is that more are labeled “metallic luster” than ever before. Another sign is that sizes are big and getting bigger. Akoyas are at 9+ mm, Chinese freshwaters are at 12 mm, and South Sea keshis are at a whopping 15 to 16+ mm. The wide variety of shapes and natural colors allows retail jewelers to carry hundreds of different items using only one gem material.

The recent JA Show in New York produced more good news. Suppliers like Frank Mastoloni & Sons were optimistic about the current market. Mastoloni had a wide selection of akoyas, as well as some large (10 to 12 mm) South Sea keshis.

Lois Berger, G.G., FGA, pearl expert and appraiser with Martin Fuller & Associates, McLean, Va., noticed a lot of old stock at JANY, but liked what she saw at Tara & Sons, including Chinese freshwaters and some baroques. “Large baroque South Sea Australian white pearls were big eye-catchers,” she says. In keeping with recent trends, Tara had quite a few mixed-origin strands, including Indonesian gold with Australian white mixed with natural peach, pink, and the occasional purple Chinese freshwater. This was new—and large—inventory.

Assael, New York, showed large 13 to 16 mm very fine quality white South Sea baroques as well as large 15 to 16 mm Australian golds.

While most everyone watched inventories carefully, Stuller took on more, adding Tahitians to its line of Paspaley Australian whites.

DEMAND BY ORIGIN

Australian whites are as popular as they’ve ever been. According to figures published in Pearl World newsletter, whites from the Pinctada maxima are expected to peak at over 9 tons in 2006. By weight, the increase is 260 percent higher than six years ago. A decade ago, the big round and baroque whites accounted for only 20 percent of the market. Today, at 50 percent of total pearl production, they dominate the market. This means that prices for retailers have either become more affordable, as with the large baroques, or have increased relatively painlessly.

Indonesian and Philippine golds are popular, but the recent revelation that golds can be dyed, even without drilling, has led to more laboratory identifications, adding cost.

Tahiti deserves credit for its quality-control process, which has helped keep cheap, low-quality pearls out of the market. While nacre thickness is somewhat disappointing from a purist’s point of view, nacre of slightly greater than 0.5 mm is acceptable. To qualify as a Tahitian, a pearl’s nacre must be 0.8 mm or thicker, which is more than enough for a bead-nucleated pearl. The Japanese akoya, after all, with 0.5 mm nacre thickness, was praised for over a century.

Chinese rounds and near rounds are plentiful. “Most goods are picked in bulk,” says Marc Freeman, Freeman Gems, Los Angeles. “And they’ll buy in massive quantity. But then the goods get blended in the strand.” Freeman notes that picking to make strands of all-white perfectly round Chinese freshwaters is difficult. “If, in fact, you are working with non-bead-nucleated pearls, the odds of having something perfectly round are slim to none,” he says. “And the only reason that we’re seeing rounds to the degree that we do is the sheer volume of production.”

JAPANESE/CHINESE AKOYAS

Avi Raz, A&Z Pearl, Los Angeles, showed perfectly matched 8 to 8.5 mm round akoyas with beautiful luster at JANY. Note that the phrase “Japanese akoyas” is no longer used, since most strands combine Chinese and Japanese akoyas. The consensus is that it doesn’t matter where they’re from as long as quality is high. But don’t be fooled by tags that say, “Made in Japan.” The strand is made in Japan, but the pearls on it may be Chinese.

NATURAL PEARLS

Although natural pearls don’t constitute a big market for retailers, they shouldn’t be ignored. The auction market for natural pearls is scoring huge points, says Rahul Kadakia, head of the jewelry department for Christie’s Americas.

“Christie’s actually holds the world record for the most important natural pearls sold at auction,” Kadakia notes. The latest sale, a double-strand natural-pearl necklace measuring from 8.5 to 16.3 mm, sold for $3.1 million at Christie’s Geneva on Nov. 18, 2004.

“We also sold on Nov. 16, 1999, the Barbara Hutton/Marie Antoinette single-strand pearl necklace measuring from 8.5 to 16.35 mm for $1.47 million, which at that time was also a world record,” says Kadakia. “On May 17, 2000, we sold two single-strand black-pearl necklaces by Cartier and Janesich measuring from 4.7 to 14.4 mm for $1.04 million.”

Christie’s sold a historical three-strand black-pearl necklace, formally the property of Nina Dyer, at Christie’s Geneva on Nov. 17, 1997, for $913,320. That was a bargain at today’s prices.

“Natural pearls have always been an extremely rare part of the jewelry world and in recent years have become even more sought after,” says Kadakia. “Pollution, oil mining, and overharvesting of the pearl-bearing oysters have all resulted in a drastic decrease in the growth of natural pearls. Most of the natural pearls that are offered for sale at auctions today or that come up on the open market are all part of older jewels or collections that have been put together over many years.”