Gems

Gems are a valuable material that can be found in veins underground, embedded in Stone blocks or in clusters on the sides of Stone blocks, which will drop the gem when mined. As of 1.2, all gems can be placed after being mined.

Each gem type except for Amber can be used to create a Phaseblade of the matching color, though each color Phaseblade has identical attributes. Gems can also be combined with torches to create a colored torch. Topaz can also be used to craft the Sandgun, and Rubies can be used for the Gold Crown. With the 1.2 update, 15 of any gem may be crafted into a colored grappling hook at an anvil. This can be used to avoid farming skeletons and piranhas for hooks.

From the 1.2 update, gems can be crafted into staffs, which deal magic damage depending on the rarity of the stone (from amethyst to diamond), reaching to 28 from the diamond staff. Each higher-level gem requires a higher-tier metal. The spell travels at a medium speed, can pierce multiple enemies and glows brightly, making the staff into a handy cave exploring tool. The speed of the projectiles is not affected by water. The attack button can be held down for rapid fire. With such stats, staffs lie between the Space Gun and the Lazer Rifle, making them a powerful pre-hardmode magic wearpon.

Gem rarity is not affected by depth; you will find as many gems near the surface as right above the Underworld. However, gems are far more common in the Underground Jungle. Some gems are less common than others; refer to the list below for each gem's rarity, in descending order.

Gemstone Cave
With the 1.2 update, it is possible to find a Gemstone Cave in which greater quantities are found. It is filled with up to 3 or 4 different types of gems, although sometimes it's only filled with one type of gem. It also features a unique background (a gemstone wall) that is speckled with gems of the same color found in the Gemstone Cave. Unfortunately the gemstone wall is destroyed if you try to claim it with the hammer.

Types
In order of rarity and value (rarest at the top):

History
Gemme Gem Gem Драгоценные камни