There are 50 Red Jewels to be found in the game. Many of them can be found in chests, but quite a few others are only in very odd locations. About half of them can't be gotten again once you've had your chance! If you're at the end of the game and found out that you're missing some Red Jewels, check out the Downloads section for a save state.
Once you pick up a Red Jewel, you should go into the menu, select it, and use it immediately. It will fly to the Jeweler Gem. Gem looks different in every town. You must talk to him to claim the prizes for collecting the Jewels. Click on a town name to see a screenshot of Gem in each town.
South Cape | Freejia | Angel Village | Watermia | Euro | Dao
Here are the prizes for the Red Jewels:
3 Jewels: Get a herb.
5 Jewels: Your defense is raised by 1.
8 Jewels: Your HP goes up by 1.
12 Jewels: Your strength is raised by 1.
20 Jewels: The power of Will's Psycho Slider attack is raised.
30 Jewels: Freedan's Dark Friar attack gains the ability to split into 4. (If you've drank the Dark Potion in Euro, this will have no effect.)
50 Jewels: Enter Gem's Mansion.
Red Jewel Locations
Consult the walkthrough for full directions for getting each Red Jewel.
1: SOUTH CAPE: School bell tower
2: SOUTH CAPE: Jar in the basement of Lance's house
3: SOUTH CAPE: Pot that fisherman pulls up
4: EDWARD CASTLE: Person hidden behind a pillar
5: EDWARD CASTLE: Chest in the dungeon, behind the doorway opened by hitting the rusty switch
6: EDWARD CASTLE: Chest in the dungeon
7: EDWARD CASTLE: In one of the barrels in the room where you first meet Lilly
8: ITORY VILLAGE: In a log pile
9: INCA RUINS: Treasure chest
10: INCAN GOLD SHIP: Talk to Seth before Riverson eats him
11: DIAMOND COAST: In a jar outside the building you wake up in.
12: FREEJIA: Pot in the Inn
13: FREEJIA: Hidden labor trader
14: FREEJIA: Reveal location of the hiding laborer
15-17: DIAMOND MINE: Trapped laborer sends them to the Jeweler
18: SKY GARDEN: Treasure chest
19: SKY GARDEN: Treasure chest
20: SEASIDE PALACE: Treasure chest
21: SEASIDE PALACE: Treasure chest
22: SEASIDE PALACE: Treasure chest
23: MU: Treasure chest
24: ANGEL VILLAGE: Dance hall fountain
25: ANGEL VILLAGE: Treasure chest
26: ANGEL VILLAGE: Red pot on the left in the door right to the left of Ishtar's studio
27: ANGEL VILLAGE: Chest in second half one of Ishtar's puzzles
28: WATERMIA: Pot in lower-left portion of town
29: WATERMIA: Pot in the Gambling Hall
30: CHINA'S GREAT WALL: Treasure chest
31: EURO: Near Rofsky's
32: EURO: Give Ann 3 apples from the market
33: EURO: Barrel in lower-right corner of the labor camp hidden under the Shrine
34: WATERMIA: Return to Watermia, and talk to Lilly, then Lance
35: MOUNTAIN TEMPLE: Treasure chest
36: NATIVES' VILLAGE: Jar in the room with 3 maidens
37: ANKOR WAT: Treasure chest
38: ANKOR WAT: Treasure chest
39: ANKOR WAT: Treasure chest
40: ANKOR WAT: Treasure chest
41: NATIVES' VILLAGE: Talk to the middle maiden when she's revived.
42: DAO: In the bushes above the Kruks
43-44: DAO: Get a good score in Snake Panic
45: PYRAMID: First room, use Aura at the top of the right staircase, then search the upper-left pillar.
46: PYRAMID: Treasure chest
47: PYRAMID: Treasure chest
48: PYRAMID: Treasure chest
49: PYRAMID: Treasure chest
50: TOWER OF BABEL: On the altar where you found the flute.
Originally listed by SiegfriedH