There are five categories of gems:
Chipped
Flawed
Standard
Flawless
Perfect

Note that once you stick a gem into something, it is stuck there. Normally gems have weapon, shield, and helm impacts. They are usually in the same general category of effect but vary slightly.

Sapphire:
Weapon: Cold Damage
Shield: Cold Resistance
Helm: Increase Maximum Mana

Ruby:
Weapon: Fire Damage
Shield: Fire Resistance
Helm: Increase Maximum Health

Emerald:
Weapon: Poison Damage
Shield: Poison Resistance
Helm: Adds to dexterity

Topaz:
Weapon: Lightning Damange
Shield: Lightning Resistance
Helm: Increase chance of finding magic items

Amethyst:
Weapon: Increases bonus to hit
Shield: Improved defense
Helm: Bonus to strength

Diamond:
Weapon: Increases damage to undead
Shield: All Resistances
Helm: Increases bonus to hit

Skull:
Weapon: Mana & Life Stealing
Shield: Attacker takes damage when hitting
Helm: Mana & Life Regeneration

Diablo 2 Walkthrough
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