I've been obsessed with rough jade for a few years now. I've been particularly interested in jade slabs and jade blocks, which are roughed-out or semi-finished pieces of jade that are ready to be fashioned into finished goods. And this got me thinking.
Would it be possible to invest in jade slabs as a precious metal alternative? I know this sounds a bit crazy, but bear with me (if you're the adventurous type).
In order to be considered a reasonable bullion alternative, an item must be a good store of value. But what makes something a good store of value?
It might be instructive to look at the premiere tangible asset that is already synonymous with that role: precious metals.
Gold and silver are elements possessing exceedingly fine properties. They are highly resistant to corrosion and oxidation. They are extremely malleable and ductile. They are excellent conductors of heat and electricity. And they are both quite beautiful.
Like the precious metals, jade also has superlative physical properties.
For those who don't know, there are actually two kinds of true jade - nephrite jade and jadeite jade. Even though these stones have completely different chemical compositions, they possess very similar physical properties, which is why they are both classified as true jades.
All jade is exceptionally tough. In fact, jade is tougher than steel! This is one of the reasons that pre-historic people fashioned jade into axes, daggers and other useful tools.
In addition to being tough, jade is also renowned for its hardness. Nephrite sports a Mohs hardness of 6.0 to 6.5, while its near-twin jadeite is slightly harder at 6.5 to 7.0. Although these values don't rival the hardness of rubies (9.0) or diamonds (10.0), jade is still harder than steel and cannot be scratched with a knife blade.
Jade will also take a very fine polish. The very best jades can be burnished to a mirror-like finish that looks eerily glass-like in its perfection. This makes it a superb material for carvings, jewelry and other decorative purposes.
Jade is a rather dense gem as well. Nephrite has a specific gravity of 2.90 to 3.05 gm/cm3, while jadeite ranges from 3.20 to 3.45 gm/cm3. Although it is not nearly as dense as gold or silver, jade is substantially denser than the average rock. This is because most ordinary rocks have a high quartz content, which gives them a specific gravity close to that of quartz - around 2.65 gm/cm3. It is one of those strange laws of the universe that valuable materials are, more often than not, high density materials.
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However, interesting physical properties alone are not enough to endow a material with store of value status.
Durability, for example, is another prerequisite. Being highly corrosion resistant, gold and silver last pretty much forever. And they are more or less indestructible. If you are attempting to destroy precious metals, the best you can do is powder and scatter them, or dissolve them in impractically strong acids.
Jade once again proves itself very similar to gold and silver in terms of its durability. Archeologists regularly recover fully intact ancient Chinese and Meso-American jade artifacts that have been buried for thousands of years. If you were to expose a piece of jade to the elements for a few decades, it would remain curiously untouched (other than perhaps growing a bit of moss). If you were to deposit a specimen of jade in the corner of your basement for a couple centuries, it would fully retain its original appearance and properties.
And the fact that jade is tougher than steel means that the mythical greenstone is nearly impervious to mechanical damage. Prior to the mid 19th century, the native Maori people of New Zealand used jade clubs called "mere" to crack open the skulls of their enemies in tribal warfare. Their jade weapons almost always escaped these conflicts undamaged and can be viewed in museums today, hundreds of years later.
In other words, jade is as close to being eternal as any physical substance on earth can hope to get.
Rarity is another attribute that drives the desirability of jade, making it a compelling store of value and an intriguing bullion alternative. Jade is often found as boulders in alluvial deposits. And it isn't uncommon for these water-worn boulders to weigh hundreds of pounds or even tons.
This might seem like a contradiction. How can anything found in the form of gigantic boulders be rare?
The answer is that most of those boulders are extremely low quality jade that isn't fit for any kind of use. Gem quality jade has an unusual combination of saturated color, fine texture and high translucency that is extraordinarily rare in nature.
For example, a jade prospector may sort through tons of rough jade nodules in order to find a single pound of medium quality material. And that assumes he has been lucky! A Wyoming prospector called USMiner has posted a series of jade prospecting videos on YouTube that detail the challenges faced in looking for high quality jade. I've posted the second video in his informative "Green Gold" series below, which I highly suggest you watch:
But a material must possess other attributes besides durability in order to be considered a legitimate store of value.
For instance, a raw material must be usable. In other words, it must be possible to turn it into a useful or desirable finished good.
Jade fulfills this requirement with flying colors. Jade jewelry is ubiquitous in the modern world, from bracelets to pendants to earrings. Jade carving has grown into a cherished global tradition, with a thriving industry centered in China and Hong Kong joined by a fledgling one in New Zealand, Canada and the United States.
The remarkable stone has been treasured for many centuries - particularly in China, where "The Stone of Heaven" as it is known has long been a national obsession. Today, fine antique jade artifacts from the Chinese Ming (1368 to 1644 AD) and Qing (1644 to 1912 AD) Dynasties, as well as exquisitely carved pieces from the Indian Mughal Empire (1526 to 1857 AD), are avidly collected by wealthy jade enthusiasts worldwide.
Incidentally, historical or cultural significance is another important factor in determining whether an object is a good store of value. Gold and silver score superbly on this metric, having been equated with money for thousands of years in most societies.
While jade cannot compare with the legendary status of gold's monetary cultural dominance, it is rapidly finding its own niche nonetheless. For instance, jade has been associated with high status and prosperity in East Asia for millennia. In China, Korea, Taiwan, Hong Kong and parts of Southeast Asia, jade has no problem standing shoulder to shoulder with gold and silver as a valuable precious material.
Jade's history in the West, however, has been somewhat shorter and more ambivalent. The Spanish conquistadors first encountered the exceptional green stone in Central America in the 16th century when they conquered the Aztec and Mayan civilizations. However, the Spanish were only interested in gold and silver, not jade. As a result, the precious stone lay at the periphery of European thought for another 400 years.
It was not until the late 19th and early 20th century that European jewelers began to experiment with jade - undoubtedly because of the growing influence of Orientalism in Western art. Since that time, jade has gradually been accepted as a bona fide gemstone all over the world.
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Rough jade is typically found in rounded nodules with an opaque rind covering the stone. These nodules are usually formed via hydraulic action when a primary deposit is weathered into a river. However, somewhat coarser jade nodules can also be formed by wind-blown sand or other debris scouring their surfaces. When this happens, the stone is called a "slick" or "wind slick".
Over the course of millions of years, the weathering process tends to erode away any lower quality material, leaving only the hardest, highest quality jade. This makes rough jade nodules from weathered secondary deposits particularly desirable.
While rock hounds have eagerly collected fine jade slicks and boulders for many decades, everyone else in the West largely ignored the precious "Stone of Heaven". But as the Chinese economy boomed over the past 20 years, demand for jade has inexorably risen, driving prices ever higher. Meanwhile, Westerners have gradually become more familiar with jade's many fine qualities. As a result, hard asset investors are beginning to realize that stacking rough jade like they stack gold or silver might be a very profitable, if unconventional, idea.
Unfortunately, the opaque rind on rough jade nodules means that you typically can't see into the stone in order to assess its quality. Because of this quirk of the gemstone, jade is sometimes known in China as "the gambling stone".
This is one of the big reasons why I like jade slabs and jade blocks as investment pieces. With semi-finished jade, the exterior rind has usually been either mostly or completely cut away, revealing the true quality of the material inside. This means that when you purchase rough jade slabs or blocks, you have the advantage of pretty much knowing exactly what you're getting.
Some more traditional precious metal investors might be skeptical of investing in jade. And if you fall into that category, I completely understand your reluctance. Jade isn't for buttoned-down conservative types. Like most alternative investments, the stone is rather illiquid - so you have to be committed for the long-term when you buy.
And yet when we look at its physical properties, jade compares quite favorably to the precious metals. It not only looks amazingly beautiful, but also has an unmatched combination of hardness and tenacity. This renders it one of the most durable substances on earth - easily the equal of gold and silver in this regard.
It is also a very rare gemstone, and getting rarer every day as demand skyrockets. The easy to mine river deposits have been exhausted within the past few decades, leaving nothing but small, remote alluvial deposits and difficult to access, hard-rock primary deposits.
Jade also has a rich history that has endowed the hallowed material with a special place in East Asian culture. The West is definitely playing catch-up here, but I think that Westerners will undoubtedly recognize the prized stone as a compelling store of value in the future. Jade is a luxury raw material par excellence - fit for the very finest jewelry, carvings and objets d'art.
Jade may not be gold or silver, but I believe that jade slabs and jade blocks are an underappreciated bullion alternative for the savvy tangible asset investor. For those who want to learn more about jade, please read my two investment guides titled "An Alluring Enigma - Rough Jade" and "A Jadeite & Nephrite Jade Investor's Buying Guide".
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