Sandeep Rawat | Heritage Gems

Sandeep Rawat is a 14th-generation jeweler whose ancestral business originates in India. His company manufactures, wholesales, and exports antique, vintage cut stones and fine jewelry to clients around the world, in addition to servicing larger jewelry houses.

What’s your background in jewelry?

My family is from Jaipur, India, which is a gemstone city founded in the mid-1700s. Jaipur is important for jewelry because it’s one of the first places in the world that confirmed jewelry as a trade. We are jewelers for the Maharajas of Jaipur, and my family has been their jeweler for many years and generations. 

Formerly known as the mountain city of Amer, Jaipur was born when the Maharaja king at the time decided to build a new city from scratch. In the 1700s, he built the city on a plane, and Jaipur was one of the first cities to have 90-degree angles. All the streets are square, all the avenues are square, and the city was meticulously planned.

At the time that the city was built, the king invited people to live there from all walks of life because it was a barren city. My family was invited to conduct jewelry work in the new city, but my forefathers were reluctant to come. As an enticement, the king gave our family a temple to take charge of in the mint, where the coins were made. The paperwork we have for the initiation of our duties with the mint indicates that even at that time, we were jewelers.

My parents immigrated to the United States in 1970, and we’ve been here for 50 years. I started working in the industry in 2000 and have been in it ever since. We deal in super high-end gemstones - rubies, emeralds, sapphires, diamonds, and natural pearls, and we supply to all the major brands. We have our choice of the mine stones and the unique stones. Today, a different category of stones, called alternative investment or investment-class stones, also exists. These gems are of high value and appreciate over time due to their rarity. We also deal in antique jewelry, signed jewelry, and important pieces, even modern ones. We are basically wholesalers, and we buy and sell at auctions, including Christie’s and Sotheby’s.

What’s your specialty?

We seek out and curate really unusual, high-end stones. We are in the market of supplying and selling to clients who have everything, so we need to find the unique, one-of-a-kind stones that they desire - for example, unusually cut or unusually fine stones - at the high-end level.

My family has also been the supplier, working out of India, for a big jewelry house for the last 25 years. We make pieces, build pieces, procure the cuts, cut the goods, and fulfill the specifications for this client, so that’s a special job in and of itself. The jewelry house is very demanding in their quality.

What do you look for in a gem?

Some people have specific lines, so they might feature 1 to 2-carat diamonds, a brown diamond, and one color, but we work in many aspects of the trade and with all different styles, so we’re not married to any one type of item. If a nice sapphire, pearl, or ruby came along, I’d buy that because our business is about investing in quality rather than taking an interest in one type of stone or line. What is presented to us is what we present to our clients, and because we deal in unique items, there is no set parameter for what we present.

We often buy and discern by feeling, which is very unusual. Gems evoke emotion in people, and sometimes we buy items because they evoke some emotion in us. Your reaction might be, “Wow, that’s interesting or beautiful or unique,” or “I love the color or the luster or the shape of the stone,” and that tells you something. It’s difficult to quantify what makes a stone unique. You either understand the innate beauty of a stone or have an experienced eye for identifying the unusual.

What was growing up in the industry like?

When I was growing up, while other kids were playing football over the summer, I spent time in my grandfather’s office in India. Growing up around gems gave me a certain level of experience and awareness of different stones. I moved to the United States when I was 4, so from the ages of about 5 to 15 years old, I spent my summers in India.

Nowadays everybody’s offices and homes are separate, but in the old days, our family owned a building in which the ground floor housed the offices, safe, cutting factory, and where the dealer’s used to do business, and our family lived on the floor above. Rather than traveling to an office, dealers and consumers would come to us. It was an exciting place to be as a kid, with people coming in and out and conducting different deals.

I learned a lot from that experience, specifically how to trade and do business. In the old days, a certain morality and implicit trust lived within the trade, especially amongst the high-end dealers in the business. People would leave million-dollar items without any paperwork or memo. They’d just leave the bag. Of course, there were also bad dealers in the business, but my grandfather cultivated the right crowd and dealt with the right people. He was a very honorable and trustworthy businessman.

One time, when I was maybe 10 years old and sitting in a chair, a gentleman came in with a 10-carat emerald. He wanted $5,000 for it. My grandfather said he would buy it for $50,000. The guy who came in made the deal, walked away, and then came back. He said, “I’m sorry, I thought you were a good businessman, but you don’t know how to do good business. I would’ve sold it to you for $40,000, so why did you pay me $50,000?” My grandfather replied, “If you had asked me for $100,000, I would’ve paid you $100,000.” 

What are some significant lessons you’ve learned?

Deal with the right people. Deal ethically. Stolen goods and misrepresented goods find their way into the trade around the world, and we don’t deal with any of those goods. Some people think the one deal they’re making in the present moment is the first and last deal they’ll ever make. If I’m dealing with a friend of mine, we always believe in give and take, but some people are much pettier. They are willing to aggravate you for one good deal, and they don’t realize that tomorrow they’re going to have to come back and do business with you again.

Building relationships and trust with groups of people who are like-minded is important. Having partners when buying stones is hugely beneficial because you share the risk of the investment as well as the responsibility of selling the item. Today’s trade is global, so I could buy a piece in New York but sell it in Hong Kong, Geneva, or London. Having your own team or your own group that you can trust to perform that work cultivates a well-rounded business. It’s like building your own club, and teamwork is required to build a great company and reputation.

I will pay more for an item from someone I trust and like, than pay less for an item from someone I don’t trust. If you’re dealing with someone on a regular basis, that relationship includes a sentiment of give and take. That’s how you grow a business. There are few people I trust in this business, but I trust those few blindly.

How has the industry changed over the years, and what is the future of the trade?

The trade was a small and highly specialized industry 50, 70, and 100 years ago, with fewer people working in it. In the ‘70s and ‘80s, throngs of people who were not jewelers came into the business, and also at that time, the demand for diamonds, gemstones, and jewelry skyrocketed. The amount of people in the business increased tremendously as a result. The prices just kept going up, so for people who were not in tune with the business, even if they bought something that was a little bit more expensive or they made a poor business deal, the industry was very forgiving.

Around 2000, approximately 1,100 diamond offices lined the streets of New York City, and maybe 10 people worked in each office, so every day, around 10,000 people were conducting business in the New York City diamond industry. The, as the business and financing grew on the mass merchandising side of the industry, that side of the trade began solidifying into a few large hands, and many people went out of the business, especially after the 2008 financial crisis.

Today, the business continues to consolidate into fewer hands, and more people are leaving the business. It’s difficult for independent entities to survive, and I don’t know if that’s a good thing. Having more people and more businesses in the trade is always better than having a few players.

What are some of the tools and skills you use on a regular basis? 

Our experience and our aesthetic. We’re always building our variables for buying stones, updating our aesthetic and design profile. Sometimes unique items present a challenge for how to use them. We don’t just have to procure the stone, but we also have to create ideas for how it can be incorporated into an exquisite design. 

Suppose the stone is mango-shaped. It’s important to know how to create a design for a mango and how to sell a mango-shaped stone to somebody who doesn’t know what to do with it. That’s always a challenge. You have to build a package, which includes the qualities of the stone and the ideas for the future of the stone, in order to sell the item.

What are the different stages in bringing a project start to finish?

Awareness, especially with regard to our clientele. We receive feedback from clients about what they’re looking for, and we also give input to our clients, manufacturers and retailers, about what their clients should be looking for and what types of pieces to invest in. 

It’s difficult to quantify the stages of a specific project because we’re a very mature business, and we’re also a reactive and dynamic business, meaning we’re not mired into one production line or one way of operating. We don’t fly by the seat of our pants, per say, but every case is unique, so it’s very difficult to put a form or a structure to our business.

On a day-to-day basis, because we work in the high-end sector, we don’t execute that many transactions, maybe 5 per day, as opposed to other people who are overseeing thousands to hundreds of thousands of transactions per day.

We communicate with our suppliers and dealers to get those exceptional items in at the right price. The biggest problem we face is that we might find the right item but not necessarily at the right price. For example, to purchase an item for a million dollars and make $10,000 is not a smart business investment and offers a slim profit margin. Making a certain return on one’s investment is a key consideration for purchasing a stone.

It’s very difficult, however, to align all of the moving parts, which includes finding a stone that is available for purchase, that meets a certain standard of quality, and that doesn’t have issues. Treated stones and people trying to sell pieces that are not what they tell you they are cause many of the problems in the industry.

The labs are also problematic nowadays because suppose I buy a 10-carat Kashmir sapphire from a dealer for $300,000. If a lab calls that stone a Ceylon (sometimes there’s a fine line, or they change their minds), that stone is now worth $30,000. At that point, I’ve bought the stone, polished it, given it back to the lab, and now they want to call it Ceylon. I have done nothing wrong, but all of a sudden, my stone has gone from a $200,000 to a $30,000 stone. That’s a big problem for us because even with the knowledge we have, factors that we have no control over negatively impact us, and I wish the labs offered more transparency and consistency.

Do you have any vivid memories or stories from your time in the trade? 

This story will tell you about how the gems we buy really have no value. It’s so funny. You’ll understand what I mean when I tell you this story. Like I told you, our family is the buyer for a big jewelry house, and this company makes a lot of watches. They sometimes use very fine emeralds for their watch styles, stones that are almost like a piece of glass or a coin.

I went to a show in Tucson, and on the first day, a guy brought me a 20-carat emerald that was flat, like a slice, and it was perfect for what I wanted. I paid $40,000 for the stone, and then an hour later, somebody came over to me, and he offered me $90,000 for the stone, so I’d be making $50,000 on the first day of the show. I said, “You know what? We need to cover expenses,” so I sold it.

Then 30 minutes later, a friend of mine came over to me and said, “I just bought this stone for $100,000. I want you to partner up with me and sell it to a jewelry house.” I politely rejected the offer because I didn’t want to say that I’d just sold it for $90,000, so I said, “It’s not for me, and I don’t have money.”

Then 20 minutes later, another friend of mine came over to me and said, “I bought this stone for $115,000. I want you to partner with me for the sale.” Of course, I didn’t buy it from him either, and over the course of those 3 hours, 6 people came to me with that exact same stone. Each had bought the previous one out for a profit.

At the end, the stone came to me for $210,000. I told the dealer I wouldn’t buy it, and I, again, gave other reasons that wouldn’t destroy the dealer’s image of the stone and that wouldn’t reveal what was happening because how could I buy a stone for $210,000 that I’d sold earlier for $90,000? This dealer finally convinced me that we had to buy the stone because we had a diamond that matched perfectly with the emerald, and we could make an amazing pair of earrings. I ended up buying the stone back for $210,000 and ultimately sold that stone for $400,000 with the idea that we had.

Sometimes we judge the value of a single item, but we don’t think of it as a package and therefore underestimate the value. Sometimes it’s not necessarily the stone itself that carries the bulk of the value, but instead it’s what is unique about the stone or what the future of the stone is that offers value as well. I think part of what makes us successful is understanding that aspect of gemstones.

Who are some of the types of people you work with?

Other dealers like us. At this range, there are around 50-70 dealers who do what we do in the world, at our level. Out of all of those 50-70, 40-60 are not necessarily a group, but we work together, and the other 20 or so are just trouble. You get to know, over time, who is whom. As they say, fool me once, shame on you, but fool me twice, shame on me. We work with like-minded people, together as a group, because everything has become so expensive over the years. Rather than $10,000, everything is $100,000, $200,000, a million, 5 million, and so on, for stones of importance, and the risk increases as prices go up.

All of the people we deal with are well-to-do and have similar resources or clientele that we have because if you are one of those 50 dealers I described, you’ve done well in your life, accumulating solid inventory and wealth and establishing a good name in the trade.

How is diamond dealing different from other types of gem dealing?

The margins are smaller in diamond dealing because diamonds are more of a commodity. Dealing diamonds is riskier for that reason. For example, if I see a million-dollar sapphire, the seller might not know what it’s worth, but a 20-carat diamond is a 20-carat diamond. The seller knows what it’s worth because the prices are publicly published and established by the markets. 

Diamonds are often traded by those who have bank financing. My business overhead, on the other hand, is pretty substantial, and we have to work hard to achieve the proper margins for our business. Nothing about our company is automatic or mechanical, and our individual efforts and curated knowledge are what determine how well we do.

Another funny thing about the diamond business is that the rough is more expensive than the cut diamond. I once received a very important order from one of the big houses for 3,000 carats of one carat-size diamond. The order was for their whole collection. To give you an idea of the volume, there were 300 carats available on the market in the world at the time, so I bought all of the rough from the sight holders for 8 months. At the same time, the manufacturers in India, who were cutting the rough, were also conducting their own productions. 

When I used to buy the rough, the goods cost me $1,100 per carat, for example. In the process of cutting the rough, 20-25% of the goods don’t eventuate correctly. They’re too included, or the colors are not correct, or the sizes are off. I used to buy the cuts for $800 per carat, finished. We bid on tenders that, in the best case scenario, would yield 8-carat D flawless diamonds for $500,000, but the rough would sell for $800,000. The highest quality stone is worth $500,000, so even in best case scenario, there’s no way it can result in an $800,000 stone.

We’ve worked in almost every aspect of the gemstone business, from diamond manufacturing to supplying rough sapphires and rubies to making special pieces for clients. Despite all of this, we never understood, if you don’t own the mine or you don’t have the contract for a country, how some diamond dealers make money from the rough. The rough market is disjointed from the wholesale. It seems as if the two sides of the diamond business should be linked because the rough should set the price for the cut stone, but it doesn’t.

Do any memorable client stories come to mind?

A client of mine was turning 50, and his wife requested that we curate a unique gift for his birthday. The couple liked sapphires, but we couldn’t find a 50-carat sapphire, so we cut one. We found a 55-carat sapphire, and we cut it to 50 carats for his birthday. That story also demonstrates that many times, the way we find certain stones is through a very specific request from the client.

How does different geography change your work?

I have one office in New York, but we are a global business. We work with people who are located all over the world, and we receive a global demand. If someone wants a ruby ring in Beijing, we get the call. If a collection is coming up for sale privately, a big parcel in Europe, for instance, we can get information about that. We have friends who buy and share the costs, so often times, items will already be vetted and appraised. The world is small these days, and our business is dynamic because of this.

What makes gems so valuable?

Their aesthetic, rarity, and collectability. I also think human nature and our brains are hard-wired for gemstones, gold, and jewelry in some way. Throughout history, humans have cultivated a relationship with rare items such as gems. The Egyptians had them, the Mesopotamians had them, and many other cultures throughout time had them. The attraction to gemstones is not a new concept or trend, and you don’t have to teach someone to be drawn to their charm and shine. Perception, how other people look at an item, is what determines its value and worth.

Gems also have some intrinsic value. People like them, and rare stones and jewelry bring happiness and comfort. Fine pieces always evoke an emotion, just as art does. The value is more transient, yet the idea of it has been around forever.

What are some historical pieces you’ve worked on?

Those items don’t come in every day, but over the years, we’ve bought several pieces of historical significance. We call it provenance. On one occasion, a wealthy collector had died, and we bought a pearl tiara from his lot. After conducting some research, we later found out that the tiara originated from the French Crown Jewels, and the piece was linked to Napoleon. When we auctioned it off, we received a return of 4 times the original value because of the history of the piece.

As part of our research, we traced the history, we knew and contacted the family, and we looked for the piece in books. We looked for the pearl tiara in The Book of Pearls and found references to the jewel. We also found references to it in the archives of the signed house that designed the piece.

The details tend to multiply once you start looking, and the research process becomes a matter of piecing information together. Sometimes we buy items that already have the provenance and history, but sometimes we discover something new about the pieces we’ve bought, and that’s always exciting.

What are some of the issues the trade faces today? 

Synthetics is one, and treatment is another. We give full disclosure, but some clients are misled, misinformed, or not given full disclosure. Clients should be told when a stone has been treated, what it means for a stone to be treated, and the significant difference between a treated and untreated stone. We most often find clients who unknowingly have treated stones when the stones come up for resale.

In one instance, a client thought his stone was an untreated emerald with no inherent issues, but we discovered that it had been treated with resin and hardened. That type of discovery can spurn difficult conversations with clients because they look at you like you’re telling them bad news, but you didn’t do anything wrong. Someone else wronged them. 

People misrepresent stones, jewels, and value in general, and that’s why we try to deal with good people we trust. No one can say they’ve never made a mistake in their lives, but you go back and try to fix it. It’s how you handle a problem that’s what counts. To avoid problems is not possible.

What are some topics that you want the public to know more about? 

Some seedy people are present in the business, including con-men, liars, and cheaters, but good and honorable people also work in our business, and the general public unfortunately doesn’t hear about them. I can enter a colleague’s office, sign for an item, and walk away with a valuable item for a simple signature, with no other recourse, but that’s what people don’t understand. Very good, honorable, and trustworthy people make their livelihoods in this business, and people forget about or don’t see that part of our industry. People hear about scandalous or corrupt dealers, but they rarely hear about the positive, honest culture some of us have cultivated.

Another topic of misconception is colored stones versus diamonds. People buy diamonds because they believe them to be a good investment, but from my side of the business, unusual colored stones - sapphires, rubies, emeralds - are much better investment points for a client. If somebody wants to invest in gemstones, colored stones appreciate more in value and possess a store of wealth. Even today, diamonds have decreased in price, but sapphires, rubies, and unusual emeralds are still increasing in price. Demand for colored stones has surged.

People can be afraid to deal with colored gemstones because of a gap in knowledge. The knowledge is not that difficult to obtain, it just takes a little bit of time and energy. Well-cut sapphires and emeralds actually have more value and character than diamonds, but you can’t just buy a Monet, you have to know what you’re buying before you spend that kind of money.

People can educate themselves by starting with an invested interest in learning more about colored stones and developing a passion. Even for collectors and buyers, passion and desire accompany their business interests, and the knowledge naturally follows suit.