You can pretty much find them anywhere. Try using special attacks with your hammer and level it up. The higher the level the more jewels you get. Also try placing Rune Stones in the pedestal (sp?) on Whale Island Cave Depths right before you enter the Fin.
I have a Silver Hammer. I have mined a Ruby once, but I sold it. The Chickenhawk also dropped a Sapphire, but again, I sold that. Thanks for the help, btw!
NP. Aww that stinks. What level is your Silver hammer? You should use scrap iron to level it up (Good for leveling up Forge). I have a lvl10 The Hammer and almost every special attack gets me a highish lvl jewel. Oh and a good mining spot is the first level (B1) of Green Ruins.