The diamond is a gemstone which has its value determined in a different way than most or even all other gemstones. Traditionally the diamond was valued mostly for its physical properties such as hardness and brilliance, not unlike any other (colored) gemstone, and since a diamond was not particularly rare, other (colored) gemstones such as a sapphire or a ruby were valued higher than a diamond for a long time. Although the large diamond finds in South Africa created an even larger supply of diamonds, its trade in the 20th century also became strongly regulated by a single organization: De Beers. Both their monopoly of the market and their continuous marketing campaign in the last 50-75 years have greatly influenced the perceived value of a diamond, unlike that of any other (colored) gemstone.

The remainder of this article deals with colored gemstones, see the diamonds article for information on diamonds.

A colored gemstone is prized especially for its great beauty, rarity or aesthetics. Although color plays a very important role in determining the value of a gemstone, many other factors influence its price as well such as market supply, rarity (Red Beryl), popularity of a stone and market mechanisms.

Physical characteristics that make a colored stone valuable are color, clarity to a lesser extent (emeralds will always have a number of inclusions), cut, unusual optical phenomena within the stone such as color zoning, and asteria (star effects). The Greeks for example greatly valued asteria in gemstones, which were regarded as a powerful love charm, and Hellen of Troy was known to have worn star-corundum.

A factor in determining the value of a gemstone is called water. Water is an archaic term that refers to the combination of color and transparency in gemstones; used hierarchically: first water (gem of the finest water), second water, third water, byewater.

Historically gemstones were classified into precious stones and semi-precious stones. Because such a definition can change over time and vary with culture, it has always been a difficult matter to determine what constitutes precious stones.

Aside from the diamond, the ruby, sapphire, emerald, pearl (strictly speaking not a gemstone) and opal [6] have also been considered to be precious. Up to the discoveries of bulk amethyst in Brazil in the 19th century, amethyst was considered a precious stone as well, going back to ancient Greece. Even in the last century certain stones such as aquamarine, peridot and cat's eye have been popular and hence been regarded as precious.

Nowadays such a distinction is no longer made by the trade. Many gemstones are used in even the most expensive jewelry, depending on the brand name of the designer, fashion trends, market supply, treatments etc. Nevertheless, diamonds, rubies, sapphires and emeralds still have a reputation that exceeds those of other gemstones.

Rare or unusual gemstones, generally meant to include those gemstones which occur so infrequently in gem quality that they are scarcely known except to connoisseurs, include andalusite, axinite, cassiterite, clinohumite and bixbite.

Gems prices can fluctuate heavily (such as those of tanzanite over the years) or can be quite stable (such as those of diamonds). In general per carat prices of larger stones are higher than those of smaller stones, but popularity of certain sizes of stone can affect prices. Typically prices can range from 5USD/carat for a normal amethyst to 20,000-50,000USD for a collector's three carat pidgeon-blood almost "perfect" ruby.