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The Future of the Turquoise Market

Recently Philip and I had signing events at Indian Market in Santa Fe.I would like to share a few personal observations regarding the turquoise I saw during Market. First of all there were fewer vendors. While this is no doubt due in part to the pandemic, I believe it also reflects on the current condition of the turquoise market which is that it is getting harder and more expensive to mine turquoise. This leads to the second observation; prices are up. In a conversation with a long time turquoise trader he marveled at the increase in price, with high mid grade natural Royston selling for as much as $10 a carat. "I am going to raise all of my prices."

In todays market the economics of turquoise production is problematic. Most natural turquoise that is available has come from old hoards. Except for a few exceptions there is little new turquoise coming to market. Kingman Turquoise operated by Marty and Josh Colbaugh remains the largest full-time turquoise mine. Lone Mountain continues production but work has been shut down during the pandemic. In Nevada Lee Loudin has mined Carico Lake and New Lander for Ernie Montoya but with less recent production. The Ottesons continue to mine several properties but on a small scale which is the case with Helen and Richard Shull and their partner Philip Chambless. The Ottesons have recently reintroduced pay digs on some of their Royston properties indicating they may consider the tourist and entertainment trade to be more profitable than turquoise. Bruce and Jeri Woods continue to mine regularly at Godber Burnham. In all of these cases production is limited. Lucy and Dennis Cordova own the King Manassa but are only working the dumps. China continues to provide much stabilized turquoise to the US market as well as some natural. Mexico has produced chalk turquoise for stabilization. In general, while there is supply of stabilized and other forms of treated turquoise for the popular jewelry market there is little higher grade natural and the highest gem grade is seldom to be found at any price. Assuming constant demand as supply necessarily diminishes prices will rise.

The pricing of turquoise is affected by a two-tier market. As much as 95% of all turquoise mined requires some form of treatment in order to be commercially used in jewelry. This treatment primarily involves the injection of plastic into the turquoise in order to stabilize the stone for hardness, color or both. Recently, in order to avoid what is perceived as the stigma of the term stabilized turquoise dealers have begun using descriptions such as cultured or infused in order to obtain higher prices. This has been the case for some time with enhanced turquoise using the Zachery method of treatment. In addition there is surface treatment ranging from a thin surface coating, to filling pits, to backing. In general surface treatment may be removed retaining the natural stone.

Natural turquoise, that has not been treated is exceedingly rare and commands a price far above the dominant stabilized. Since the cost to the miner for the extraction is independent of grade it is very hard to develop a realistic cost accounting for turquoise and most miners do not try and merely sell whatever turquoise they find, at whatever grade, as they mine it. This cash flow model tends to distort pricing by suppressing the price, relative to the cost of production, both for material that requires treatment but especially for the rare high grade. Gem grade turquoise, comprising at best 0.1% of all turquoise is extremely rare and undervalued relative to the cost of extraction.

Let’s look at a miner’s costs. In order to legally extract the turquoise from their claims they must prepare a Plan of Operation demonstrating that they will implement safe procedures and have provisions for reclamation after mining. Since environmental regulations are one size fits all these miners must meet the same standards as a large company extracting metals with extreme environmental impact. Before beginning mining a turquoise miner may spend up to $100,000.

Operating in remote areas is costly. Rental on a bull dozer and extractor may cost up to $40,000 each a month. Provisions for water, food and other equipment may add an additional $5,000 a month. Labor cost may add another $5000 per month. Those are the costs of extraction. Processing including drying, sorting, and treatment add additional cost. The turquoise mining window on most claims is about three-four months. A miner may have accrued costs of as much as $400,000 per year if they plan to do mining on a production basis, much more if extensive reclamation has been required. There are a handful of miners who are capitalized to operate at this level. Most limit their operation to limited use of heavy equipment and reliance on hand work. This greatly increases the labor costs.

You have to move a lot of dirt to find a little turquoise. Currently the price of turquoise rough may range from $250 a pound for the lowest grade to $2500 or more for higher grades. This is for treated material and mid grade natural. The elusive high grade may receive much higher prices but it is so exceedingly rare that it can not be factored into a pricing model. If we assume an average price per pound of $500 in order to meet expenses plus an assumed profit margin of 25% the miner must extract a minimum of 900 pounds of turquoise to be sustainable during the mining window. Few will achieve this. The one exception to this is Kingman turquoise that is able to operate year-round. 900 pounds is a lot of turquoise to extract in three months and in practice most small-scale miners try not to sell rough but process the better material themselves in order to earn higher prices for cut stones. If we assume, of the total hypothetical yield, that as little as 10% would be natural and not require treatment then, assuming a 50% waste from cutting, a miner may have as much as 100,000 cut carats selling at maybe $2 a carat wholesale. Cost of cutting may be $.50-$1 per carat reducing profit to maybe $100,000. This would apply to mines that produce a lot of chalk. In Nevada many of the mines produce little chalk but while the stone is natural it may vary greatly by grade and yield are generally much lower.

In practice there are only a very few mines that follow this model with most miners operating on a very small-scale basis with limited heavy equipment and much reduced production. The reality of turquoise production in the US is that most producers operate at a loss and sustain operations only due to subsidy from other income or reliance on cash flow financing which reduces prices by presenting excess product to the market regardless of the impact on price.

Using our example if a miner may expect to extract 900 pounds of stone to break even, gem grade may represent as little as under one pound with a cut yield of perhaps 1000 carats. Currently the highest price for gem grade from producing mines is perhaps $60. While this may provide a windfall of as much as $60,000 or more to the miner it as likely as not that no gem grade would be found. Gem grade from producing mines is selling at a 50% discount from value and the prices for gem grade from mines that will never again be in production are selling for as much as a quarter of their true value.

In my opinion the economics of turquoise mining under the present pricing structure is unsustainable and if the current level of demand remains prices must necessarily rise unless huge amounts of hoarded material is brought to market. Even so this would comprise mostly lower grade rock and high grade and gem grade would remain as scarce on the market as it is now. Gem grade turquoise remains extremely undervalued relative to its scant presence in the market and it’s cost of production.

Unless the economics of turquoise adapt to provide the economic incentive to increase production by increasing price, assuming constant demand, we may expect less and less turquoise in the market with the only examples coming from existing product entering from hoarded material. Analyzing the turquoise market is a challenge. There is little reported information and much of that is unreliable. The market varies from China to Indonesia to Egypt to Mexico to the US. Traditional distribution for low price jewelry like the cable networks is in transition with China making a major effort to dominate that market. Since the market is so dominated by stabilized turquoise it is difficult to impossible to make assumptions regarding natural turquoise since it is such a minuscule part of the trade. The elusive gem grade remains the most rare and should be acquired when available. Whatever the future for turquoise may be we can be sure of one thing. This love affair with this beautiful blue stone will continue.

Mike Ryan II

August 2021

Sunset over the Jemez Mountains. Photo Mike Ryan II.


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Rebecca Sowell
Rebecca Sowell
Aug 24, 2021

appreciate this interesting info!


Good synopsis of the current market, Mike. There are several new turquoise producing mines out there but as has happened in the past, the mining of turquoise may be abruptly discontinued because of the focus on other, larger commodities being mined such as copper.

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Thanks. It is difficult to make generalizations about the turquoise trade because it is so diverse. Kind of like a blind man describing an elephant; depends on what end you get.

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