When people think about investing in gemstones, the first one that often comes to mind is diamonds.
But the diamond market is suffering from questionable ethics and, more importantly lab diamonds, which have led to unprecedented price drops.
Meanwhile, the colored gemstone market is making a comeback, with one gem in particular breaking away from the pack. It has high growth, scarcity, and a timeless style that overcomes the initial “grandma vibes.”
I’m talking about pearls.
Today, I’ll break down this ancient yet misunderstood gemstone; exploring its rich history and present state of the market.
Note: Since you have the All-Access Pass, you get a massive bonus section exploring five creative ways to invest in pearls. ✅
Let’s go!
Chrissy Kapralos is a Toronto-based freelance writer who loves jewelry, even when it depreciates like mad. When she isn’t writing, she’s eating Greek food and hanging out with doggies.
Note: This issue was originally published Dec 2024.
Table of Contents
The colored gemstone market
It may surprise you to learn that pearls are a major player in the gemstone market.
And that’s just the loose ones. Pearl jewelry is a whole other beast — a $20 billion market. That’s comparable to the market size for silk, headphones, and toothpaste (remember that for later).
Sure, pearls aren’t as large as the diamond market ($100 billion) and nowhere close to gold ($272 billion). But loose pearls are still a substantial industry, which boasted a 20% CAGR during the Covid years (second only to Tourmaline)
Pearl jewelry is equal parts timeless and trendy. Demand ebbs and flows in waves over decades. And right now it’s back on the upswing.
Over the past five years, “pearl jewelry” was searched on Google 2-3x more than emerald, ruby, sapphire, and zircon jewelry.
Recently, pearls were also a new engagement ring trend thanks largely to Netflix drama Bridgerton, where Penelope famously receives a four-pearl ring:
Since Covid, growth in the pearl market has slowed considerably. 4.9% CAGR is the new normal.
Over the next few years, price stabilization is expected, making the pearl market an alternative to consider.
Pearls’ shiny history
Abu Dhabi archaeologists recently discovered a pearl dating back to 5,800 BCE — 8,000 years ago.
This means pearls were being used 1,800 years before diamonds, and 2,300 years before rubies.
Pearls were like the Rolex watches of Ancient Greece; the ultimate status symbol.
Royal families incorporated pearls into jewelry and decor to peacock their wealth. Egyptian pharaohs were buried wearing their pearl jewelry and accessories.
Cleopatra dissolved pearls into vinegar and drank them. The drink was believed to be a healing tonic an aphrodisiac (lucky Anthony!)
In fact, pearls were so exclusive in Ancient Rome that they were illegal to purchase unless you came from an affluent heritage (not that commoners could afford them anyways). Unmarried women weren’t allowed to wear them either.
In 69 AD, Ancient Roman general Vitellius financed an entire army by selling just one of his pearls.
Fast-forward 1,500 years, and saltwater pearl imports from the Americas fueled Renaissance England’s love for pearl jewelry. Henry VII had them sewn into his clothes, while his daughter Elizabeth used them to convey strength and power to her enemies.
In 1800s France, a pearl supply shortage inspired jewelers to get creative and develop fakes — thin glass spheres filled with blended fish scales.
But the thing was, people didn’t really care! Even royals were happy to adorn their clothes with “mock pearls” alongside real ones.
These synthetic pearls made pearl fashion more accessible during the roaring 1920s (flappers lovingly embraced faux pearl necklaces)
Later on, humans would take “pearl engineering” to the next level, creating pearl farms and an entire cultured pearl market. More on that in a bit.
Where do pearls come from?
Interestingly, most pearls come from the Eastern Hemisphere, where the warmth, salinity, low pollution, and healthy coral reefs create the conditions for high pearl production.
Japan, Australia, Indonesia, and French Polynesia are the world’s biggest pearl exporters:
- 🇯🇵 Japan: 36% ($459m)
- 🇦🇺 Australia: 12% ($160m)
- 🇮🇩 Indonesia: 11% ($136m)
- 🇵🇫 French Polynesia: 10% ($123m)
- 🇨🇳 China: 8% ($99m)
- 🇭🇰 Hong Kong: 5% ($59m)
- 🇵🇭 Philippines: 4% ($49m)
The Philippines is an especially abundant location for rare, natural white pearls. Filipino divers go 30+ meters deep to snag them:
However, as we outlined in our issue on Investing in the Philippines, the nation has (sadly) the most polluted waters in the world.
This means pearl survival rates (from oyster/mollusk survival rates) are declining, which makes them that much more rare & desirable.
Interestingly, America isn’t a major player on the export side. The Tennessee River Freshwater Pearl Farm has the distinct luxury of selling pearls to Tiffany & Co., who has a long-standing tradition of incorporating pearls into their jewelry.
How pearls are formed (and farmed)
Natural pearls
Natural pearls are found organically in nature. These pearls are the rarest, most desirable, and most expensive on the market — found only in oysters, mussels, and other mollusks. No human intervention required.
Natural pearls are made up of calcium carbonate — similar to chalk, marble, and limestone. It’s the same stuff that mollusk shells are made of.
But when particles and parasites enter the mollusk, the creature exercises a defense mechanism that coats the particle in something called nacre.
Nacre is more commonly known as Mother Of Pearl — the luminous, shiny inner layer of a mollusk.
Cultured pearls
Cultured pearls aren’t exactly man-made. Rather, think of them as man-influenced.
Cultured pearls are still birthed within the mollusk. But it turns out that if you inject an irritant (usually a small piece of tissue or bead), the mollusk secretes nacre layers around the item and grows a pearl much quicker than it would naturally.
The process of culturing pearls was first discovered by Japanese jeweler/entrepreneur Kokichi Mikimoto back in 1905.
After 12 years of experimenting, Kokichi discovered that the best irritant to use was not a piece of tissue, nor a bead, but a piece of mother of pearl itself.
This sparked the birth of the pearl farm industry.
Pearl farming
After Mikimoto’s discovery, pearl farming became organized and scaled up. By the 1950s, a whopping 90% of the world’s cultured pearls came from farms.
Across much of Asia, pearl farming companies catch thousands of oysters and other mollusks to inject them with mother of pearl and stimulate massive pearl production.
The only snag? This process still takes up to four years. (After all, you can only do so much to speed up nature). Meanwhile, these pearl farms are vulnerable to typhoons that affect the health of the mollusks.
Many pearl farms are backed by private investors like Korean PE firm MBK Partners. Until 2023, the group had $500 million in shares of Tasaki, a Japanese jeweler involved in Myanmar’s pearl harvesting.
(Note: MBK later exited their position, as Tasaki was facing scrutiny for its dealings with the Myanmar military junta, who is infamously fraught with human rights issues.)
How to value pearls
A pearl’s value is based on type, color, size, source, shade, and lustre. A quality grade is given from AA to AAAA.
We’ve already talked about the type (natural vs cultured). Let’s look at the other attributes.
Color
Natural, white pearls are actually the rarest — especially if they’re round, and have a reflective lustre.
For example, this natural 16-mm round, white Australian South Sea pearl from Australia is worth about $5,000.
But similar to the staying power of colored diamonds (see this discussion from Alts community expert Viral Kothari) colored pearls spark intrigue and high prices.
Size
Larger pearls are tougher to culture, and thus rarer and more expensive.
Most pearls weigh 2-3 carats, and are 2-8mm wide. However, South Sea pearls from the waters surrounding Australia and Indonesia are the largest on average. They typically weigh 5-6 carats, 9-20mm wide, and thus command higher prices.
Lustre
Lustre gives pearls their unique, luminous sheen, especially when exposed to light. Pearls with more layers of nacre (mother of pearl) tend to have a stronger luster.
Even if a pearl has unique coloring, perfect roundness, and natural sourcing, it can lose value if it has low lustre.
How to invest in pearls
1) Buy & hold loose pearls for the long-term
The first thing you need to know about investing in this market is to stay away from jewelry.
While sentimental value is high, jewelry can lose up to 30% of its value immediately after purchase, and continue to depreciate at 5% per year for 20 years.
Loose pearls, on the other hand, have a stable appreciation over time, and are a better way to invest.
The market is expected have a 4.9% CAGR over the next 7 years — not exactly rapid growth, but better than government bonds.
However, environmental factors like pollution have hurt the health of the oceans and in turn, mollusks and oysters. That, along with a loss of production time during the pandemic, has resulted in a recent drop in pearl supply.
Pearl prices are still elevated, so experts recommend waiting for a slight price fall before investing — potentially a couple of years.
“Pearl prices are very high now because they lost entire seasons of production [during the pandemic] in most of the main categories—Tahitian, South Sea, and Akoya.” – Stuart Robertson, president of Gemworld International Inc.
While the CAGRs of other gemstones (opals, rubies, and sapphires) are comparable to pearls right now (between 5-6%), they don’t have the same demand that pearls do. In particular, interest from Chinese buyers has continued to fuel demand.
Joshua Israileff, Operations VP for his family pearl business, ASBA USAelaborates:
“It’s definitely between 50 – 100% more expensive [to buy pearls]. What you really can’t find anymore is the gem-[quality] goods. The super-nice stuff, that’s the stuff that’s getting harder.”
2) Stay away from pawn shops
Pawn shops are always a risk, since they usually don’t possess the technology to test a pearl’s authenticity.
Some swear by the tooth test, where you rub a pearl against your tooth to see if it’s gritty or smooth (gritty being a natural or cultured pearl, and smooth being a synthetic one).
But a lab test is the only foolproof way to test a pearl’s authenticity. Most reputable pearl sellers will offer certificates from the Gemological Institute of America (GIA) to demonstrate a pearl’s authenticity and sourcing.
Always ask for a certificate with any purchase.
3) Pearl traders
Here are some reputable places to buy loose pearls and jewelry pieces:
Gem Rock Auctions
Gem Rock Auctions is an Australian company that functions as a global marketplace for all sorts of loose gems, including pearls.
They have strict guidelines for sellers and regularly monitor their listings to ensure accuracy and quality.
Make sure you inquire with each seller about any missing details surrounding quality so that you have a written record to help with any potential disputes.
Atlas Pearl Trade
Atlas Pearl Trade is an Australian pearl harvester that breeds and hatches oysters across their farms in the South Sea.
They employ over 900 people for the specific purpose of pearl harvesting, and specialize in producing highly desirable white and silvery pearls.
In 2021, they harvested over 560,000 pearls, which they auctioned in a number of online events — and they continue to harvest around the same amount each year.
Their next auction will take place in April in Japan, though their members can access all auctions online as well.
PearlsOnly
In business for over 20 years, PearlsOnly offers some of the most competitive pricing in the pearl industry due to its large network, technological advances, and diverse pearl purchase centers across Asia.
Here, you’ll find a wide variety of Japanese Akoya pearls, renowned for their perfectly round shape:
Marilyn Monroe brought more fame to Akoya pearls when her husband gifted her a necklace from Mikimoto, the first person to culture a pearl back in 1905.
Mikimoto Pearl Jewelry
Another way to buy jewelry that maintains or appreciates in value is to choose pieces from high-end, reputable jewelers.
Named after the man who first cultured a pearl, Mikimoto is a respected name in the industry with pearl jewelry pieces created with phenomenal craftsmanship that retain their value.
4) Invest in pearl farm operations
You probably don’t have the right waterfront or experience, to run your own pearl farm. But you can invest in companies that do.
One example is Glitterati Pearl Farms in India. The company has been around since 2009, and the founder, Achal Singh, is known for his innovative culturing practices, like bringing mollusks to various ponds across India for culturing, and experiments with various irritants. Glitterati has supported over 100 peal farm projects across India.
Gliterrati’s Dehpa 2.0 (launched after a successful 1.0) has a minimum investment threshold (you’ll need to contact them for more details), that covers each investor’s number of mollusks in the farming project.
Once there, Glitterati disperses those mollusks across its network of culturing ponds across India. Profits are divided depending on the size of your investment, and there’s no maximum investment limit.
5) Pearl powder
Remember Cleopatra’s pearl tonic? Turns out there’s still a market for pearl consumption and application.
Pearl powder is a niche market within the beauty, cosmetics, and alternative medicine spaces, and currently has a market value of $700 million!
In the age of natural beauty, “pearl powder benefits” saw a 160% increase in search volume in 2024 from American web users.
Skincare giant Nivea recently released a new cream that features pearl extract as an ingredient.
While it’s been used in TCM since ancient times, recent studies indicate potential health benefits of pearl powder like:
- Anti-aging properties
- Skin clarity
- Relaxation and stress relief
- Reduced palpitations
- Epilepsy treatment
- Immune system support
Let’s look at a few companies that make it possible for you to hop on this novel wellness trend.
Atkinz Group
You won’t find too many private equity firms investing in such a niche wellness ingredient. But the Atkinz Group, a London- and UAE-based industrial holding company, does.
They’re a key investor in Swident, a luxury Swiss oral care provider who sells a novel gold- and pearl-powder infused toothpaste:
Learn more about investing with the Atkinz Group.
Moon Juice
Moon Juice is an American wellness brand that sells supplements, powders, creams, and other products infused with natural ingredients and adaptogens.
One famous product is their pearl powder supplements, marketed for improving skin appearance, boosting collagen, and improving hair strength.
Crunchbase notes that Moon Juice secured about $7 million in funding in 2022, and highlights a high likelihood that they’re open to acquisition.
Unilever X Tatcha
Tatcha is a luxury Japanese skincare brand that features pearl powder in a few of their products. While the company was bootstrapped for the first ten years of its lifetime, British consumer goods company Unilever acquired it in 2019.
Unilever has diverse consumer goods holdings, with a beauty portfolio worth over $1 billion. Since 2019, Unilever has doubled Tactha’s business value.
Learn more about investing with Unilever.
—
That’s it for today!
Come find me in the Alts community.
See you there, Chrissy
Disclosures
- This issue was written and researched by Chrissy Kapralos and edited by Stefan von Imhof.
- This issue was sponsored by Boxabl.
- This is a paid issue. To read the full thing you need the All-Access Pass 🎟️
- Neither Alts nor Altea has any current holdings in any companies mentioned in this issue
- After editing this issue, Stefan has a newfound appreciation for pearls.
