Making sense of the discounts
This really got me thinking about the state of the diamond trade here in Canada, especially in light of the much-publicized events of late south of the border and abroad. As it turns out, retailers can and are being sued for selling overgraded diamonds, and as we’ve recently witnessed in the United States, settlements are likely to be costly. (According to National Jeweler, the plaintiffs in the action against a Tennessee retailer were very satisfied with the ruling.) It’s probably only a matter of time before we see a similar lawsuit in Canada.
There’s been a lot of back and forth as to who would be ultimately responsible when it comes to overgraded diamonds. Is it manufacturers, dealers, retailers, or grading laboratories (which, by the way, are the only ones protected by disclaimers) or is it in fact all of them? If these parties have taken the time to earn their credentials, selling these overgraded goods goes against everything they have been taught by the very institutions and associations we all hold in high regard.
Now that EGL International’s printers have all but ceased printing reports, many of these so-called deeply discounted goods seem to have disappeared from the various trading platforms (although some diamond houses still stick to their guns, claiming there is nothing wrong with the stones. They just have to meet the requirements for that grade category).*
It seems most of EGL International’s former clients (e.g. traders, manufacturers, wholesalers, etc.) appear to have switched to a multitude of other laboratories, which in itself is great for the industry in that more accurately graded diamonds will be on the market. Others, however, have elected to simply market, list, and sell these diamonds with overgraded reports as ‘ungraded’ for fear of being blacklisted and banished from various trading communities. The industry standard for grading tolerance is plus or minus one colour and/or clarity grade, but the question is, do these ungraded stones fall within that tolerance? Given the adverse publicity over the last year, one may even ask whether a one-grade difference is still acceptable.
Here’s something to ponder. A search of RapNet on May 7 for one- to 1.05-carat, D to F, SI1 to I1 ideal cuts (we’ll call this ‘Range A’) revealed an average discount of 23.4 per cent. Interestingly, there were only 23 diamonds in this bracket: 21 graded by AGS Laboratories and two listed as ungraded. Upon further refining this search to include all other cut grades, the number remained the same—23.
