Tuesday, December 17, 2013

The Emerald Ring Auction Story

                                                 The Emerald Ring Auction Story


                                 I thought I knew auctions were fixed until this happened

                                          Written 2013 rewritten 08/11/2015 unedited

                                                              Howard Yasgar

      This true story took place in the summer of 2000. It was a nice sunny Sunday morning, and my wife Katherine suggested that it would be nice to ask her mother out for breakfast. It sounded like a good idea. I was just having a cup of coffee and reading the Miami Herald.

      While Katherine was calling up her mom, I noticed there was a very large advertisement in the newspaper for a jewelry auction to be held at a Coral Gables hotel, and when I saw the address, I immediately recognized the hotel, it was right across the street from a restaurant we had always wanted to try.

       I suggested to Katherine that we could try the Coral Gables restaurant for breakfast with her mom and then we could attend the jewelry auction that was in the hotel across the street.

       Over the years, I had recalled seeing many similar types of auction company advertisements, they always seemed to hold their jewelry auctions in upper class hotels, and they all seemed to use the same type of misleading advertising. They all made it sound as if the jewelry they were selling was from some ones estate or had been seized by the government from drug dealers, none of which was true.

        When I was younger, living in Connecticut, I had attended so many auctions that I had learned the auction business inside and out. I knew that as soon as people saw the words auction, or anything that intimated something was confiscated from drug dealers, they automatically thought they were going to be able to buy something, really cheap, but nothing could be further from the truth.

        When most people see an auction ad, they automatically think the auctions are still like they used to be years ago, when the auctioneer accepted any bid he received, no matter how low it was. But today, those kind of absolute auctions are few and far between. Now most all auctions are rigged to make a substantial profit for the auction company. If they didn’t make a substantial profit they would soon all be out of business. So an auction company now puts several safeguards in place to assure they make money, but none of these safeguards are good for the buyer.

        When any jewelry store sells a piece of jewelry, the retail price of an item is almost always three times its wholesale cost, this is called “Keystone”, and if the item is second hand, its wholesale price is usually lower. Then as another safeguard, the auction companies usually put a minimum price called a “Reserve Price” and they start the bidding, and if no one meets the reserve price, they stop and go on to the next item. But the ultimate tool the auction companies uses to insure a profit, is called a “Shill”. A shill is an unassuming guy that sits in the back row and always raises the bids. He is usually a pretty sharp guy that knows exactly when to stop bidding and let you get stuck buying the item, and he usually sits somewhere in the back row where no one notices him bidding on so many items.

        At some point in time, I noticed that auction companies started to add on another ten or fifteen percent on an item, after you bought it, this is called a buyer’s premium, which means that the auctioneer automatically make a profit even if they sell an item at their cost.

        Now, that doesn’t mean that you can’t go to an auction and have a good time, I like going to auctions because they are very entertaining, and it also doesn’t mean you won’t find a bargain at an auction, after all any one selling jewelry cheaper that what a jewelry store sells it for, is a good deal, especially if you like the item.  

        So that Sunday, while drinking my coffee, I studied the advertisement in the Miami Herald, in the ad there were several pictures of really beautiful pieces of jewelry with big emeralds and rubies in them, but in very fine print, just as I suspected, it stated that some of the items may come from sources other than drug dealers and estates. Also it also said the items shown in the advertisement my not be available at the advertised auction.

       I suggested to Katherine, that after she invite her mother for breakfast and we could walk across the street later, and be entertained by jewelry auction.

        One of the reasons I personally enjoyed going to jewelry auctions was because I had been involved in going to lots of auctions in the past, and since I pretty well already knew that this type of auction was usually a scam, I already knew that they were not there to give anything away, they were there to make as big a profit as they could off of a unsuspecting audience, and I liked seeing how they did it.

       Another reason I enjoyed going to jewelry auctions was because I was fairly knowledgeable about “Colored Stones”. Colored Stones, which exclude stones like diamonds, is what all the other precious and semi- precious stones that are used in making jewelry are called.  So, Colored stones include emeralds and tanzanite, rubies, opals and hundreds of other rocks and minerals, that all fall into the precious and semi-precious stone category.
       My having some expertise on recognizing colored stones required a bit of study to enable me to evaluate if a stone is worth anything or not, and now with the proliferation of manmade semi- precious stones, that has become an even harder task, but not an impossible one.

        Over the years, I had studied quite a few precious and semi-precious colored stones, so now I was in a fairly good position to look at all kinds of colored stone jewelry and evaluate them. I was by no means a professional but I had studied enough to know the difference in Colombian emeralds and which were filled or which were oiled, also I could tell what countries the emeralds were from. I knew the difference between good opals and worthless opal doublets. So looking at jewelry at auctions was kind of fun for me, picking out the fakes and worthless stones.    

       After breakfast we all walked across the street and followed the auctions signs to a

 Large hotel meeting room, where the auctioneer, had a desk set up as well as long glass jewelry display cases. You signed in and were given a number, then you picked up a catalog where each piece of jewelry in the display case was described. One of the auction company employees said that if we liked something we saw, to tell them and they would put a little colored square of piece of paper next to it. That informed them that someone was interested in it and once the auction started, the auctioneer would pick it up and auction it off. It was a good system as there was no point auctioning off all the items that no one was interested in.

       As we walked along the glass show case, it was obvious that we were early. They had perhaps sixty chairs set up, but I only saw about a half dozen people in the room.

       In the showcase, there were hundreds of pieces of jewelry but  perhaps only eight or ten pieces of jewelry with various sizes  and various colored  emeralds in them, I could see that most of what they had  were small and medium grade emeralds, and they all didn’t have the rich deep green color that is desired in Colombian emeralds.

       I noticed that there was one emerald ring that did have the right color. The ring was just beautiful, I looked in the catalog and saw it was a seven carat emerald cut stone with a ring of diamonds around it, so I asked an attendant if I could look at it. The ring had the right color, it was cut perfectly and stone had the proper “Garden” which refers to the slight cracks inside all emeralds. I showed it to my wife and her mom, telling them that how nice the ring was. I told them the ring would probably bring a lot of money at auction, I felt the retail value in a jewelry store would be about Twenty five thousand dollars. I gave the ring back to the attendant who placed it back in the case.

      The chairs started to fill up with people, there were now about forty of us there. We were still looking at the various jewelry in the show case when I suggested that we find chairs to sit in before the place filled up with people. As we went to sit, I noticed that someone had asked for the emerald ring to be auctioned as there was a small yellow piece of paper sitting next to it. I couldn’t help but wonder how much the ring would bring, and I also wondered who could possibly be the person in the audience that had asked for it to be auctioned.

      We sat in the fifth row, and the auction company was passing out free champagne which I thought was a good way to make the audience more receptive to bidding higher prices.

       As we sat there I saw a very well dressed man with white hair sitting in the last row. I mentioned to my wife and her mom that I thought he was the “Shill”, and to watch him as he was going to raise all the prices. His silvery white hair was perfectly combed, his long sleeve shirt and perfectly creased slacks looked like they came out of some high fashion store, and his loafers looked Italian. I knew for sure he must be the owner of the auction company and was going to act as the shill.

      With about forty participants the auction started and they immediately sold several pieces of jewelry. I didn’t want to turn around and look to see if the shill was jacking up the bids, but I knew he was.

       Then, I was shocked, the auctioneer had the big emerald ring in his hand, I couldn’t wait to see who was going to bid on it, as I knew someone had requested it. I nudged my wife so she also could look to see who raised their hand.

       The auctioneer started off describing the ring. It was seven carats of emerald with two carats of diamonds, and it was mounted in eighteen carat gold. He said let’s start the bidding at twenty five thousand dollars, there was total silence in the room.

        He then said, OK, let’s start the bidding at twenty thousand dollars, again there was total silence. Do I hear fifteen thousand dollars, there was silence. I could see the auctioneer was getting a little frustrated, I was sure that he would stop trying to sell the ring or the shill sitting in the last row would start the bidding, but that didn’t happen. The auctioneer in a frustrated tone of voice said do I hear ten thousand dollars, then he said do I hear five thousand dollars, no one raised their hand.  

      With frustration in his voice he said, do I at least hear two thousand five hundred dollars, he was pleading, so I raised my hand, and that’s how we bought a seven caret emerald ring with diamonds.

      Now, wherever we go, as we pass by jewelry store windows, I always have my eye open for a similar ring and occasionally I see one, they are always in the twenty five thousand dollar range. Who says you can’t find a bargain at an auction.










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