FINE jewellery prices are skyrocketing, and the recent volatility in stock markets hasn't taken the shine off flawless diamonds and brilliant gemstones either.

'Prices for blue-chip, flawless and coloured diamonds have gone through the roof all of a sudden. That's the way the market is moving for the top range of jewellery these days,' says Quek Chin Yeow, deputy chairman for Sotheby's Asia, and head of the jewellery department.

Auction prices this year have broken previous years' records, dating back as long as 1987 and 1995, as seen by the results of the Christie's and Sotheby's auctions in Geneva just a couple of weeks ago.

Christie's sold a rare red diamond, weighing 2.26 carats, for a record US$2.6 million. That's US$1,180,340 per carat, the highest ever for a red diamond at an auction. The record was previously held by a 0.95-carat gem called the Hancock Red, bought in 1987 for the equivalent of US$926,316 per carat.

The previous day, rival Sotheby's sold a flawless white 84.37 carat diamond for US$16.2 million, the second-highest auction price for a jewel. At US$191,980 a carat, it's the highest price per carat ever paid for a white diamond at auction. It was bought by Guess Jeans founder Georges Marciano, who has since named it the 'Chloe diamond' after his 12-year-old daughter.

'That's the top investment rate for diamonds at the moment, which is based on rarity of the gemstone, and then supply and demand,' says Mr Quek. 'New record prices say something about the market ... the prices have been very strong, with very competitive bidding,' he adds. 'It's a big deal because top auction prices haven't been broken for over a decade now.'

Indeed, it's a bull market in jewellery sales, boosted by monied collectors from Russia, Asia and the Middle East. But what does that mean for the jewellery buyer who may not have tens of millions to spend, but would still like to invest in haute jewellery and quality stones?

'You should buy quality gems, always. People also can invest in coloured stones, and signed jewellery by the major jewellery houses, for instance,' advises Mr Quek.

'If you love emeralds, it's a good time to buy them because prices have bottomed out and are coming back up.' More specialised stones like Alexandrite are worth looking at, while Kashmir sapphires have also gone up in value, he adds.

Ultimately, one should buy what one likes, says Christie's Adrian Tan, head of jewellery at Christie's Hong Kong. 'A good jewellery portfolio is one that makes the owner's heart smile each time she opens her vault. It should reflect her true sentiment as well as taste. It need not be the most expensive. However, it should flatter the wearer for her utilitarian purposes,' says Mr Tan.

One could pick up pieces for as low as US$2,000 at a Christie's auction, he says, so auctions aren't necessarily for jewellery fans with seemingly bottomless purses.

That said, quality will always have a place and enjoy long-lasting value. As Mr Tan notes, there is a consistent appreciation for quality jewels in every generation. 'This is measured in the 4Cs for diamonds - colour, clarity, cut and carat weight. And it is measured in colour, saturation, hue, tone and certification for natural colour in the category of coloured stones,' he explains.

If you're aiming for jewellery that could be auctioned in future, auctioneers look also at the 'make' - how a jewel is mounted, and its proportions, beauty and finish.

There is a consistency in market value for genuine items representative of each style period, ie, antique, period and contemporary, says Mr Tan. 'These hold their value if they are good representations of their category,' he adds, citing the example of the La Regent Pearl, which was once a part of the French crown jewels. 'This had value both in provenance as well as singular beauty as the largest droped shaped natural pearl in the world. Items like these are one of a kind and rare.'

He adds: 'At Christie's, we select genuine items based on the merit of each piece - be it exquisite workmanship, signed pieces that utilise special techniques in craftsmanship and originality in design, or the sheer rarity of a jewel.'

Period jewellery of the early 20th century is sought after now, says Sotheby's Mr Quek, while pieces right up to the '50s have been enjoying a revival. Signed jewellery is also strong, as pieces by the traditional jewellery houses have the assurance of quality, design and workmanship. 'We had a client who bought a special piece from Cartier during the millennium, and it was resold in 2004, with returns,' he says.

That said, the unique piece of jewellery, especially if it has provenance, will also be a good buy.

Asia is definitely one of the three pillars of jewellery, alongside Geneva and New York, he says. The market has been picking up, particularly in the last 10 years.

Consumer tastes have now turned to flawless diamonds. 'Asians, however, look at quality over size, which is more suited to the Asian size sensibilities,' notes Mr Quek. 'Buy with an eye for design, quality and fine craftsmanship. Those are perennial values - whether it's a house, a car, or a necklace,' he concludes.

SOTHEBY'S

On December 4, 2007, Sotheby's will offer for sale three lots of natural pearl and diamond jewels from the collection of Kelly and Calvin Klein. Of historic importance, the Single-Strand Natural Pearl and Diamond Necklace, a Natural Pearl and Diamond Pendant, and the Pair of Black and White Natural Pearl and Diamond Earclips, were purchased by the Kleins in 1987 at Sotheby's legendary auction of 'The Jewels of the Duchess of Windsor' in Geneva. The necklace, pendant and earclips carry a combined estimate of US$2.2-3.1m