In the context of gemstones, the word 'fire' is used to describe the breaking up of white light into its constituent colours, an effect that can be demonstrated well by shining light into a prism and witnessing the resultant rainbow of colours that exit on the other side. Fire in gemstones is also known by the term 'dispersion', and the most famous gemstone to exhibit this is Diamond.
The white light that we see all around us, from either the sun or indoor lighting, is actually made up of different colours, all of which have different wavelengths. As they pass from air into a denser material, such as glass, each of these wavelengths bend (refract) at different angles. When denser material such as a gemstone (or a glass prism) demonstrates this effect, the light bounces off its inclined surfaces, and the split becomes visible to the eye. Not all gems show dispersion, and the effect is dependent on their refractive index and their density, plus of course how well the gemstone is cut.

Zircon, Demantoid Garnet and Diamond are three of the most well-known gems that offer beautiful dispersion, but top of the class are the lesser known gemstones of Sphene and Sphalerite. Other names often used to describe dispersion are fire and scintillation. However, scintillation should really only be used to describe the surface lustre of a gemstone. Diamonds that show the best dispersion are those that are colourless. The best way to understand this is to imagine how tinted glass acts as a filter, through which very few colours are seen. Therefore colourless Diamonds will tend to have more excellent dispersion.

One of the reasons that fire looks so spectacular in gemstones is the way specific facets appear to have taken on a different hue, because of the way the different colours are reflected out of the stone at slightly different angles. At the same time, other facets appear to show two or more colours, as demonstrated in the Sphene ring shown above. Even if a gemstone is ordinarily high in dispersion, the more included the stone is, the less likely it is to show this rainbow of colours. This is simply because the inclusions are blocking the path of the light through the gemstone, which can also have the overall effect of making the stone look duller. This is why Diamonds (and other stones) with more clarity, perfect colour and the best cut show the most exceptional fire.
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