December 1, 2014
By Mark T. Cartwright
Looking back on the last five or six years could cause someone in our industry to react in a number of ways, perhaps several simultaneously! The sweeping changes and rate of technological development over the last half-decade or so can only be described as astounding. There have been major shifts in markets, marketing, and selling. Treatments that can significantly alter the appearance of coloured gemstones and diamonds have become more prevalent. Synthetic diamonds have made their way into the marketplace in quantities and qualities never seen before. And of course, along with these ‘new’ kinds of stones are more ways for crooks and con artists to make a quick dollar. For the independent gemmologist/appraiser, there are new opportunities to be of service and new dangers to guard against.
In the first decade of the 21st century, many people in the industry denounced the ‘commoditization’ of diamonds and feared the increased presence of the Internet diamond market would cause the downfall of the retail jeweller. One of the unforeseen results of the increased demand for diamonds with ‘certs’ was greater competition among the various trade laboratories and what was perceived by some as the ‘loosening’ of standards to meet the rise in demand for the more saleable diamond qualities. The various labs each defined their grades differently, while continuing to use the nomenclature developed and promulgated by Gemological Institute of America (GIA).
While some in the jewellery trade decried the situation, many others were making a very handsome profit from it. Meanwhile, consumers were oblivious or at least befuddled by what I like to call the ‘cert circus,’ although some were happy to buy diamonds that appeared to be amazing bargains. The worst offenders in the grading laboratory industry seemed to have standards that bore virtually no resemblance to the GIA grade designations the public believed they were buying. It was the trade’s dirty little secret for many years, as thousands of certs were printed for a market that increasingly focused on paper, rather than the actual stones. Traditional and Internet retailers played along with the game that brought increased profits for everyone willing to turn a blind eye.
Maybe this will change now that the secret has been exposed, or maybe it won’t. A series of lawsuits filed against a U.S. jewellery retailer appears to have forced a reaction within the trade. Martin Rapaport announced dealers using his trading network to buy and sell diamonds would not be allowed to list stones from certain laboratories that have been shown to have loose standards. Another large trade-only online trading platform made a similar announcement, although it focused its sanction on diamonds graded by specific labs. These are positive steps, but it remains to be seen whether it will make any difference in either the practice of ‘optimistic’ grading or the demand for cheaper diamonds with ‘wishful-thinking paperwork.’
For the appraiser, it will be even more imperative to track the markets to see if values for diamonds with certain paperwork will be affected. It will continue to be important that we disclose any differences of opinion when faced with ‘generously graded’ diamonds, keeping in mind minor differences of opinion can be expected with stones near grade boundaries. It should be noted the initial lawsuit against the retailer was settled out of court. Other suits against the same store are pending, but if there appears to be sufficient blood in the water, we can be sure more legal action against others in the trade will follow. While the current court settlement may diminish the amount of publicity, it doesn’t reduce the need for concrete changes in the way the labs, and those who have been complicit, behave. Perhaps some of the labs would be more comfortable returning to pre-GIA grading terminology, such as ‘Wesselton,’ ‘River,’ ‘Top Silver Cape,’ etc., as a means of marketing their reports with a more romantic flair.
On a different, but similar note, the potential impact of synthetic and treated diamonds on the market seems to be increasing exponentially. Discoveries of large quantities of synthetic melee salted into parcels of natural diamonds have been making trade headlines for the last few years. Likewise, the recently exposed practice of altering/forging natural diamond grading reports to match large, high pressure/high temperature- (HPHT-) treated diamonds—complete with matching, forged laser inscriptions—is also causing uproar. As appraisers, we should be aware of our potential liability as this type of fraud becomes more common. Our reports represent our warranty that we’ve done due diligence and the facts we report are accurate. Failure to detect treated or synthetic diamonds and/or bogus grading reports could have serious consequences, both to our reputation and our bank account. If we don’t have the ability to test (i.e. authenticate), we need to advise our clients that such authentication is necessary to avoid the declaration of an extraordinary assumption in the appraisal. There’s nothing inherently wrong with an extraordinary assumption, but the client needs to be advised and presented with alternatives. At the very least, we should always verify the lab report and inspect it for alterations before relying on it in our valuation.
Before we assume we don’t have the ability to authenticate diamonds anymore, perhaps it would be good to mention a few telltale signs of a diamond’s origin. Based on the current state of the art, if a diamond fluoresces blue to long-wave ultraviolet light, it’s natural. If there are crystal inclusions (without associated halo fractures), the stone is natural. If it’s colourless, near colourless, and NOT a Type II diamond, it’s natural. If the stone fluoresces orangey-pink, orange, green, or yellowish-green, or if the fluorescence is stronger in short-wave than in long-wave, you should be suspicious and consider advanced testing. If the diamond is colourless or near-colourless, very high clarity, and a Type II diamond, you should also consider advanced testing (especially if no fluorescence is apparent or it is patchy). A small proprietary device costing less than $300 can help one identify Type II diamonds in most cases, although simple polarizing filters may do the same if one learns to use them properly.
Diamond melee presents a different challenge, although the same general guidelines apply. If the melee represents a significant value element of the property, and there is sufficient value to warrant testing, it might be worthwhile; otherwise, an assumption is probably necessary. I generally use long-wave ultraviolet light as a quick indicator. One of the ironies of undisclosed synthetic diamond melee in jewellery is that, at the moment, there’s no discernable difference in value within the market (since it is undisclosed). The situation is currently similar to the way the market deals with synthetic amethyst; the cost of detection usually exceeds the difference in value and so we pretend it’s not there. Once the public knows what they’re buying, a tiered pricing structure may arise.
Five or six years ago, the trade was wrestling with names for corundum treatments involving beryllium diffusion and flux ‘healing’ of rubies, as well as whether such treatments were ‘acceptable.’ The gemstone-manipulation industry in Thailand quickly made those previously ‘extreme’ techniques seem mild by comparison. The flood of so-called ‘rubies’ into the market composed primarily of glass quickly overshadowed concerns the trade may have had about extreme high-temperature treatments involving various chemicals to alter the colour and clarity of otherwise ‘natural’ stones. Today, it’s not unusual to find high-end jewellery with ‘flux-healed’ rubies, while the composites have flooded the lower end of the market. For what it’s worth, at least laboratories have quickly agreed that ‘lead-glass-filled rubies’ aren’t actually rubies at all and shouldn’t have ruby associated with their name.
What hasn’t changed in the last half-decade is the lack of public awareness and trade transparency in regard to the manipulation of gems in the corundum family. Apparently, there is still no consensus on what the word ‘natural’ actually means when it comes to absurdly altered stones. As appraisers, we’re on the frontline of public disclosure and consumer education whether we like it or not. To that end, I’ll once again repeat my mantra that I’m sure readers are tired of reading: education is the most important investment we can make in ourselves and our businesses. We learn what we previously didn’t know and discover how much else there is to understand.
For the independent gemmologist/appraiser, these ‘advances’ can present challenges that may initially seem insurmountable. I prefer to view them as ‘growth opportunities.’ The truth, however, is some of them actually are insurmountable for the average gemmologist without access to advanced equipment. The good news is there is increased access to affordable advanced testing. Equipment that was once only available to institutions with huge budgets can be purchased for a few thousand dollars. Scientists are constantly working to develop easy and inexpensive tests and equipment to combat the thieves and con men in the industry. As consumers come to rely upon us more and more to help them navigate the mysterious waters of the jewellery industry, we need to be certain we’re staying vigilant.
On a personal note, this is my last Valuer’s Notebook column for Jewellery Business magazine. After six years, I felt it was time readers were treated to a different perspective, although I’m sure some of you may have felt that way a while ago! It’s been my honour and great privilege to have had this opportunity to share what little I may have learned over the years with readers and to force you to listen to my opinions (sorry about that). I know you’ll enjoy and find great value in the wisdom provided by my friend and colleague who will be writing the column beginning with the February issue. Please feel free to keep in touch if you wish, and thank you very much for your patience and perseverance. And in case I haven’t mentioned it before, keep learning and growing your skill at the best job in the industry.
Mark T. Cartwright is an accredited senior appraiser, master gemmologist appraiser (American Society of Appraisers), independent certified gemmologist appraiser (American Gem Society), and GIA graduate gemmologist, who has provided gemmological and jewellery appraisal services since 1983. He can be contacted via e-mail at email@example.com.
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