Fourteen months ago, jewelers Hachik Madilian and Kirkor Suri, Armenian cousins from Turkey, invested $200,000 and established one of downtown Los Angeles's first jewelry exchanges - a showroom in which 20 wholesalers and retailers, each sitting in separate booths, offered their wares, displayed in glass cases, to the public.

Today some 500 jewlery firms conduct their businesses out of such exchanges. Madillian, Suri and three other general partners now own the 12-story Western Jewelry Mart (valued at $10 million). They recently purchased two downtown lots for $4.2 million on which they plan to erect a $25 million, 25-story jewelry building, and they have invested $500,000 more in another exchange containing 120 booths and scheduled to open in west Los Angeles in November.

The financial success story of Madilian, Suri and their Armenian partners - all recent immigrants - is a reflection of the rapid growth in the Los Angeles jewelry trade, a boom in which this area has emerged as an international jewelry center as well as a contender for the top position in the industry now held by New York City.

Jewelers commonly play their cards close to their vests when it comes to discussing sales figures, and estimates of gross income in the L.A. jewelry markes range from $500 million to $1 billion annually. However, no one disputes that the industry is in a period of sizable expansion.

John Shurtz, vice president and manager of a downtown L.A branch of the Bank of America which caters to the jewelry trade, estimated that, within the last two years, the industry has accounted for a 60 percent rise in the bank's business.

Trade organizations such as the Manufacturing Jewelers and Silversmiths Association of America, the Jewelers Board of Trade and the California Jewelers Association report that their Los Angeles membership has quadrupled in the last three to four years.

Eastern firms are opening up branch offices in Los Angeles, and some international companies have established their United States headquarters here.

Merv Malamed, president of the U.S. Division of Tikvagem, a manufacturing firm based in Cape Town, South Africa, which opened its U.S. headquarters in Los Angeles two years ago, predicted that, "Within 10 years, L.A. will be the center of this country's jewelry industry."

To Henry Sahin, an Armenian whose Switzerland-based manufacturing and wholesale firm, Garen Jewelers, set up shop in Los Angeles 18 months ago, the move to L.A. from New York where he worked as a salesman has meant a doubling of revenues.He said he commonly sees clients who come from New York to buy here.

Questioned about the reasons for the boom in Los Angeles, jewelers provided uniform responses.

One important factor has been the attractiveness of a new, growing the flexible market. Richard Liddicoat, president of the Santa Monica-based Gemological Institute of America, said newcomers "feel they're a little more in ground-floor territory. The New York scene is so well established."

Tikvagem's Malamed agreed, saying that the New York market is "pretty well near saturation.

"If you haven't been around for 50 years in New York, it's difficult to break through," he stated, adding that the established companies there would rather deal with the old-timers, and are less willing to take risks with innovative design and business practices.

Another reason for the growth of the L.A. jewelry market is the proximity of this region to the Orient and the Pacific corridor from which many raw materials such as jade, pearls, rubies and sapphires are imported, according to a local precious-stone cutter and imprter, George Houston.

The climate and lifestyle of Southern California also have contributed to the jewelry boom. Bernie Katz, the West Coast sales representative for Jewels A1-Italia Letd., with offices in New York and Los Angeles, took note of the proclivity of L.A. males to expose their chests.

"There has been an explosion in the gold chain busines," he said. "L.A. is a little bit more ostentatious. Men are not afraid to wear gold flamboyantly. Their shirts are always open."

The L.A. climate also has meant less down time due to inclement weather, and has proven attractive to the influx of immigrants from similar climates.

Commented Armenian Jack Sukyas, a jeweler/developer in partnership with Madilian and Suri, "There is good sunshine. My country - the same."

Sukyas estimated that two-thirds of the recent immigrants to the L.A. jewelry market are Armenians escaping political instability and uncertainty in the Middle East.

Others leaving shaky political situations are arrivals from South Korea, Israel, Iran, Latin America and South Africa. Some enter the jewelry business stocked with gold and diamonds - the traditional currency for immigrants. Most are trained jewelers.

Arthur Rae, Los Angeles representative for the Jewelers Board of Trade, told of a diamond dealer he knew in Johannesburg who kept a private plane gassed up and ready to leave if things became too volatile.

This modern-day version of the Gold Rush, concentrated in downtown Los Angeles, has produced what one jeweler described as a "landlord's delight."

The burgeoning industry has produced a revival in a section of the downtown area that other businesses had left for newer and more luxurious accommodations.

Prime jewelry locations are now at a premium, and it is not uncommon for tenants with desirable premises to be paid as much as $20,000 "key money" for their leases.

Vacant downtown lots on Hill Street (a jewelry-dominated thoroughfare, the equivalent of 47th Street in New York or Hatton Garden in London) which sold for up to $55 a square foot two and three years ago now sell for more than $250 a square foot.

A one-time movie theater on Hill Street is now the Theater Jewelry Center. Its marquee reads, "The Jewelry Showplace of the World," and the building - an exchange - houses some 170 booths.

Within the last three years, a general partnership, SRS Associates, has paid nearly $10 million to purchase and refurbish three downtown buildings devoted to the jewelry industry.

Other local developers recently received Lost Angeles City Council approval to erect a $35 million, 20-story, twin-tower Jewelry Mart as part of the dowtonw revitalization plan. The project is being built with a $4.8 million seed grant from the U.S. Department of Housing and Urban Development with the participation of real estate developers Cabot, Cabot & Forbes.

Michael D. Roman, chairman of the New York-based Retail Jewelers of America, an organization with more than 12,000 members nationwide, emphasized that New York is still the center of the industry, but he noted that as the cost of travel has increased, Souther California has become an important regional market. There has been a tremendous growth in the suburgan retail business as jewelers have located in malls and shopping centers, he said.

Not all segments of the trade have welcomed the rapid expansion of the jewelry industry. Oscar Fuss, business manager for the local Jewelers Union, said he is sympathetic to complaints by many manufacturers that, because competition has intensified, they are unable to pay the$8-an-hour to $12-an-hour craftsman wages that the union has demanded.

"Five years ago, I could have told you that the industry was about 80 percent unionized," Fuss stated. "Now I don't think we've got 20 percent."

He said union organizing has been hampered by the large number of illegal immigrants from all over the world working in the industry. "It's like a United Nations...there's no way of communicating with them," Fuss said.

Established local jewelry entrepreneurs also resent the exponential growth in the number of jewelry exchanges whose tenants, because of their low overhead, are able to sell to the public as well as to retailers at highly competitive prices.

Elva Pascoe, executive secretary of the 2,100-member California Jewelers Association, complained that jewelers in exchanges are wearing two hats: those of retailers and wholesalers. "Our members would like to throw them out," she said.

Developer Jack Sukyas doesn't share her concern. "The whole world's coming here," he said, pointing out the window of his office on the top floor of his recently renovated Western Jewelry Mart.

Viewing the bustle of Hill Street 12 stores below, he smiled and turned to his visitor. "It's booming," he proclaimed. CAPTION: Picture, Jewelers Kirkor Suri (left) and Hachik Madilian: Their success reflects the jewelry boom in Los Angeles. AP