diff --git a/index.html b/index.html
index 84275fb..219c5ee 100644
--- a/index.html
+++ b/index.html
@@ -109,6 +109,7 @@
     <script src="src/systems/MountSystem.js"></script>
     <script src="src/systems/SteamIntegrationSystem.js"></script>
     <script src="src/systems/StarterChestSystem.js"></script>
+    <script src="src/systems/GemDropSystem.js"></script>
 
     <!-- Multiplayer -->
     <!-- <script src="https://cdn.socket.io/4.7.2/socket.io.min.js"></script> -->
diff --git a/src/systems/GemDropSystem.js b/src/systems/GemDropSystem.js
new file mode 100644
index 0000000..3e07bd8
--- /dev/null
+++ b/src/systems/GemDropSystem.js
@@ -0,0 +1,187 @@
+/**
+ * GEM DROP SYSTEM
+ * Handles rare gem drops from enemies, mining, etc.
+ * Gems: Diamond, Emerald, Ruby (high value items for selling)
+ */
+
+class GemDropSystem {
+    constructor(scene) {
+        this.scene = scene;
+
+        // Gem definitions with rarity and value
+        this.gems = {
+            'diamond': {
+                name: 'Diamond',
+                rarity: 'legendary', // 0.5% drop
+                value: 500, // Sell price in gold
+                icon: '💎'
+            },
+            'emerald': {
+                name: 'Emerald',
+                rarity: 'epic', // 2% drop
+                value: 200,
+                icon: '💚'
+            },
+            'ruby': {
+                name: 'Ruby',
+                rarity: 'rare', // 5% drop
+                value: 100,
+                icon: '❤️'
+            },
+            'sapphire': {
+                name: 'Sapphire',
+                rarity: 'uncommon', // 10% drop
+                value: 50,
+                icon: '💙'
+            }
+        };
+
+        // Drop chance by rarity
+        this.rarityChances = {
+            'legendary': 0.005,  // 0.5%
+            'epic': 0.02,       // 2%
+            'rare': 0.05,       // 5%
+            'uncommon': 0.10    // 10%
+        };
+    }
+
+    /**
+     * Roll for gem drop from enemy/resource
+     * @param {string} source - 'zombie', 'elite', 'stone_ore', 'iron_ore'
+     * @param {number} x - Grid X
+     * @param {number} y - Grid Y
+     * @param {number} luckBonus - Player luck modifier (0-1)
+     */
+    rollGemDrop(source, x, y, luckBonus = 0) {
+        const dropTable = this.getDropTableForSource(source);
+        if (!dropTable || dropTable.length === 0) return;
+
+        // Roll for each possible gem
+        for (const gemEntry of dropTable) {
+            const gemType = gemEntry.gem;
+            const gem = this.gems[gemType];
+            if (!gem) continue;
+
+            const baseChance = this.rarityChances[gem.rarity];
+            const finalChance = baseChance * (1 + luckBonus);
+
+            if (Math.random() < finalChance) {
+                // GEM DROPPED!
+                console.log(`💎 RARE DROP: ${gem.name} from ${source}!`);
+                this.spawnGem(gemType, x, y);
+
+                // Play special sound/effect
+                if (this.scene.particleEffects) {
+                    this.scene.particleEffects.gemSparkle(x, y, gem.icon);
+                }
+                if (this.scene.soundManager) {
+                    this.scene.soundManager.playRareDrop();
+                }
+
+                // Only drop 1 gem per source
+                break;
+            }
+        }
+    }
+
+    /**
+     * Get drop table based on source
+     */
+    getDropTableForSource(source) {
+        const tables = {
+            'zombie': [
+                { gem: 'sapphire', weight: 1 }
+            ],
+            'elite_zombie': [
+                { gem: 'ruby', weight: 2 },
+                { gem: 'emerald', weight: 1 }
+            ],
+            'troll': [
+                { gem: 'emerald', weight: 2 },
+                { gem: 'diamond', weight: 0.5 }
+            ],
+            'stone_ore': [
+                { gem: 'sapphire', weight: 1 }
+            ],
+            'iron_ore': [
+                { gem: 'ruby', weight: 1 }
+            ],
+            'gold_ore': [
+                { gem: 'emerald', weight: 1.5 },
+                { gem: 'diamond', weight: 0.3 }
+            ],
+            'boss': [
+                { gem: 'diamond', weight: 5 } // Guaranteed almost!
+            ]
+        };
+
+        return tables[source] || [];
+    }
+
+    /**
+     * Spawn gem as loot item
+     */
+    spawnGem(gemType, gridX, gridY) {
+        if (this.scene.lootSystem) {
+            this.scene.lootSystem.spawnLoot(gridX, gridY, gemType, 1);
+        } else {
+            console.warn('⚠️ LootSystem not found - gem cannot spawn!');
+        }
+
+        // Show floating text
+        const gem = this.gems[gemType];
+        if (this.scene.events) {
+            const screenPos = this.scene.terrainSystem.iso.toScreen(gridX, gridY);
+            this.scene.events.emit('show-floating-text', {
+                x: screenPos.x,
+                y: screenPos.y - 50,
+                text: `${gem.icon} ${gem.name}!`,
+                color: '#ff00ff', // Purple for rare
+                size: '20px'
+            });
+        }
+    }
+
+    /**
+     * Get gem sell value
+     */
+    getGemValue(gemType) {
+        const gem = this.gems[gemType];
+        return gem ? gem.value : 0;
+    }
+
+    /**
+     * Sell gem to merchant
+     */
+    sellGem(gemType, amount, playerInventory) {
+        const gem = this.gems[gemType];
+        if (!gem) {
+            console.warn('⚠️ Unknown gem type:', gemType);
+            return 0;
+        }
+
+        // Check if player has gem
+        const hasAmount = playerInventory.getItemCount(gemType);
+        if (hasAmount < amount) {
+            console.warn(`⚠️ Not enough ${gem.name} to sell!`);
+            return 0;
+        }
+
+        // Calculate total value
+        const totalValue = gem.value * amount;
+
+        // Remove from inventory
+        playerInventory.removeItem(gemType, amount);
+
+        // Add gold
+        playerInventory.addItem('gold_coin', totalValue);
+
+        console.log(`💰 Sold ${amount}x ${gem.name} for ${totalValue} gold`);
+        return totalValue;
+    }
+}
+
+// Export
+if (typeof module !== 'undefined' && module.exports) {
+    module.exports = GemDropSystem;
+}
diff --git a/src/systems/LootSystem.js b/src/systems/LootSystem.js
index 5cc6dcf..a1e1bb3 100644
--- a/src/systems/LootSystem.js
+++ b/src/systems/LootSystem.js
@@ -24,7 +24,9 @@ class LootSystem {
         const symbols = {
             'wood': '🪵', 'stone': '🪨', 'seeds': '🌱', 'wheat': '🌾',
             'axe': '🪓', 'pickaxe': '⛏️', 'sword': '⚔️', 'hoe': '🚜',
-            'item_bone': '🦴', 'flower': '🌸'
+            'item_bone': '🦴', 'flower': '🌸',
+            'diamond': '💎', 'emerald': '💚', 'ruby': '❤️', // GEMS!
+            'gold_coin': '🪙', 'iron': '⚙️'
         };
         if (symbols[type]) symbol = symbols[type];