Gems allow you to add stars to your gear. The higher level the gear, the more impact the stars have. Here is a table. I don't know how accurate it is because I did not take the time to read the entire thread because sometimes I am lazy like that... .wait for it...... wait for it....... waiiiit for iiiiit.... BAM! Here it is:
http://bbs.evony.com/showthread.php?t=130932
I would suggest you save all your gems until you have your gear leveled up to 10 and use gems as the final touch to give you that little extra bump.



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