Appraising parcels
A. Take a random fraction from a parcel. Note its size.
B. Sort the gems into groups by stone type, size, and quality.
C. Appraise each group (from B) per carat.
D. Weigh each group (from B) in carats.
E. Multiply the per carat value of each group (from C) by the carat
weight of that group (from D).
F. Add the total values of each group (from E) together.
G. Multiply this sum (from F) by the number of similar sized fractions you
could have found in the parcel (from A). This is the value of the
whole parcel.
Appraising Rough And Native Cut Gems
A. Hints for appraising rough:
-Even the best dealers can be off on their profit estimation by 30%.
Judging rough is very difficult.
-Fiber optic light and immersion liquid will help find inclusions.
-Material other than precious usually is sold as "mine run". This is unsorted
products of a mine or medium to low grade material from a mine.
-If buying mine runs, check for tailings and already cut stones. Avoid them.
-Concentrating on a particular grade helps give accuracy.
-Try to buy sample first and have it cut. Go to several cutters. When buying
the whole lot, make sure it's the original lot.
-Handle with care. Use soft surfaces to prevent breaking stones.
B. Calculating profits:
-Calculate the carat weight of the stones after they have been cut. This yeild
is usually 15% to 25% for rough stones and 60% for native cut stones.
-Appraise the quality of each grade as for parcels above by imagining the
stones have been cut.
-Estimate the cutting costs.
-Assuming there were expenses while traveling to the buying site, people
usually estimate these as 30% of cost.
-To estimate profit, take the appraised value of stones after cutting and
subtract (price + cutting) x (1 + expenses)
Scenario # 3
2 kilos rough spinel for sale at $10000 per kilo. Sort and grade a 200 gram sample as follows:
Quality A
50 grams
Quality B
50 grams
Quality C
100 grams
Estimated sell price after cutting:
A
$80/carat
B
$40/carat
C
useless
Cutting charges: $2/carat
Yield: 10%
Overhead: 20% of cost after cutting
Calculations:
2000 grams (2 kilos)/200 gram sample = 10 (the coefficient)
50 grams x 10 = 500 grams
50 grams x 10 = 500 grams
A
5 (one fifth of a gram = 1 carat) x 500 grams = 2500 carats
B
5 (one fifth of gram = 1 carat) x 500 grams = 2500 carats
Multiply by .10 for yield, so:
A
250 carats
B
250 carats
A
250 carats x $80 = $20000
B
250 carats x $40 = $10000
Cutting charges at $2/ carat:
250 carats + 250 carats = $500 carats
500 carats x 2/carat = $1000
Selling price: $30000 ($20000 + 10000)
Total cost : $20000 (2 kilos x $10000) + $1000 (cutting charges) x 1.20 (overhead)
= $25200
Profit : $30000 - $25200 = $4800
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