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Welcome to NDRDiamond – Blog!

Welcome to the NDRDiamond Blog.

The postings on this sight are intended for retail jewelers who I hope will read my “thoughts” and “concerns” about diamonds, diamond grading reports, internet diamond sales and other random subjects affecting the jewelry trade.  It is my hope that you may find some of these posts to be useful when dealing with retail consumers and that you might share some of these blog posts with such consumers.

If you happen to be a retail consumer who has somehow come across this Blog, I welcome you to read my posts in the hope that you will gain some knowledge and advice that you will find interesting and helpful.  To these readers, the best advice that I have is that you purchase a diamond or diamond jewelry from a trusted “bricks and mortar” jeweler.  As a third generation jewelry professional, this advice is given based on my understanding that a diamond or diamond jewelry is something that must be seen and aprreciated by human eyes much like a painting or other works of art – for it is not possible to visualize  a diamond based on a diamond grading report.

Whether you are a jewelry retailer or consumer, I welcome you and hope that you will find some useful information on the posts that follow. Please feel free to comment as you feel appropriate.

 

Neil D. Reiff

 

Featured post

The most important thing in buying a diamond engagement ring -TRUST.

In everything in life, whether it be a visit to the Doctor or Dentist, or a significant purchase of one thing or another, we often face the dilemma of whether the service provider or seller is looking out for himself/herself or for the patient/customer in making their recommendation(s) for the fulfillment of the patient’s/customer’s needs or desires. This is only natural in that the seller is most often concerned with getting well compensated for his/her services while the patient/consumer is motivated by the quality of the provided service or product and receiving such service/product at a “fair” price.

I recently had an experience with regard to a needed plaster repair in my beautiful older home. The fast talking great salesman who came to me through an internet referral service quoted me $1750.00 for a job that I knew he was not going to correctly repair – since he really had no idea how to do it right! In the end, a trustworthy old timer with lots of experience in plaster repair did a remarkable job on the repair for the cost of $360.00!!

So . . . you ask, “What the heck does any of this have to do with the purchase of a diamond engagement ring?” The answer should be somewhat obvious. You need to deal with someone who has the required experience and understanding of your needs as well as of the industry and the product – in this case, a diamond.

You also need to navigate through the minefield of fast talking salespeople (Beware of the Internet!!) and find someone who you feel comfortable dealing with in terms of their personality and their knowledge and their reputation for trust and integrity. Granted, this is not an easy task!

But there are many jewelry professionals whose mission in their work is to provide you with the necessary information, and more importantly, the right advice – to assist you in making the right educated choice in your selection of the “right” engagement diamond and/or diamond engagement ring. The most important thing to remember during this process is that you should not be looking for the best price. Price is not the same as “value” – and those who think otherwise will almost always buy an inferior (read: ugly!) diamond!

When you find such a person, I urge you to give him the level of respect and trust that he deserves. In the end, that trust and respect will serve you well.

The end result should be an experience that is mutually beneficial to both sides of the transaction. The buyer will be grateful for the knowledge and advice that has been obtained. The seller, or jewelry professional, will be happy that he has provided you with something that will be worn and appreciated and admired for many years to come!!

* * * * * * * * * * *

This above comment – “the “right” diamond engagement ring” – is even more important than one might initially think!!

A diamond is just a diamond – beautiful as it may be. A diamond engagement ring, on the other hand, is a very significant piece of jewelry that is, in addition to symbolizing that the wearer is “engaged” or “married”, a very personal statement of one’s style and/or taste and personality. It is a work of jewelry art that will be worn for many years and will be appreciated by the wearer as well as many friends, family members, associates and many others.

Just as in the process of purchasing a loose diamond, it is essential to deal with a knowledgeable and experienced and trustworthy jewelry professional in turning a diamond into the finished engagement ring.

Some diamond shapes or qualities work well in certain styles of settings and not so much in other styles. While you may have a general idea of where you would like to end up in terms of an engagement ring style, I urge you – as in the diamond buying process itself – to find that trusted jewelry professional whose knowledge of materials, diamond shapes and qualities and cuts, and sense of style will assist you in ending up with something that will be beautiful to you as well as to everyone else!

Find someone who you can and will trust. Sometimes it takes a leap of faith. But it is the most aspect of getting to where you want to be. This is true regardless of the fact that you may be purchasing a $1,000.00 or a $50,000.00 diamond ring!!

FOLLOW UP . . .

In the course of my daily business I am sometimes the buyer of diamonds from one who has previously purchased a diamond.

Today I was presented with such a diamond. The owner/seller had acquired this diamond from a retailer in Philadelphia where my office is located. The owner/seller provided me with the opportunity to look at the diamond as well as the grading report that they were given at the time of purchase.

According to the paperwork, I assume that the purchaser thought that they were getting a good deal at the time of purchase. Upon looking at the diamond and grading it to “fair” and “proper” standards, the diamond was actually six grades lower than what the buyer/seller/owner thought she had acquired. The diamond was not a GIA certified diamond and was graded by a “fraudulent” grading lab.  The diamond was, in fact, worth only 32% of the value of what they thought they were buying!!

This true story is stated here just to reiterate the subject matter of the above post. Obviously, as should be learned from this brief story, there are those in the world who think that low price is all that matters – and who later ind out that they have been cheated.  More importantly, this brief story should reiterate the necessity of dealing with someone with a reputation for trust and integrity.

Channel 6 ABC in Philadelphia discusses Diamond Prices.

Channel 6 ABC in Philadelphia discusses Diamond Prices.

It seems to be a time honored tradition that TV news does a story about diamonds every year or two before Valentine’s Day.

Nydia Han, the Consumer Reporter for 6ABC, did such a segment yesterday. In this story, she discussed diamond pricing among various diamond retail stores in the Philadelphia area.

Though I agree with her conclusion that consumers receive much better “value” in independent jewelry stores as opposed to mall type jewelry stores (e.g., Zale’s, Jared or Kay), I found this entire segment to be fallacious and misguided on many levels.

I have been involved in the wholesale diamond business for more than 40 years. In addition, my business dates back nearly 90 years. I understand diamonds as much as anyone in the world. I have been published in both US and international trade publications.

The Channel 6/ABC report on diamonds focused on retail diamond prices. There is perhaps no other product in the world like a diamond. A diamond is a unique and beautiful natural creation that is valued for its intrinsic beauty. No two diamonds are exactly alike. To base the news story on the “best” price for a diamond entirely ignores the concept of “value” which is a measure of quality in reference to its price.

In my wholesale business I buy and sell many diamonds. I look at many thousands of diamonds a year. I choose to reject approximately 98% of the diamonds that I evaluate because they fail to me the criteria that I have adopted in determining the beauty and value standards that I adhere to.

The 6 ABC diamond segments discussed the 4Cs of a diamond. The 4Cs refer to Cut, Carat (size), Color and Clarity. What the report failed to acknowledge is that within the universe of diamonds that may be similar with regard to the 4Cs, one diamond may be valued at more than 100% more than another.

In my wholesale business, I regularly discard cheap low price diamonds when selecting inventory. Though the price is low, these diamonds are not beautiful and, in my professional opinion, not worthy of the qualities that make a diamond valued. It is my professional duty to provide the retail jeweler/retail consumer not with the “best” or “lowest” price but to provide a beautiful diamond that will be admired and cherished and valued when it is worn in a ring or other jewelry for a lifetime.

The Channel 6/ ABC report was insufficiently researched, erroneous and misleading to the public.   The most important advice that I can give the retail diamond consumer is to avoid buying the “cheapest” or “best” price diamonds.   Buying a diamond for its low price fails to take into consideration the concept of beauty and value. Most importantly, the consumer must understand that a diamond is supposed to be about something that is spectacular and beautiful.

Neil Reiff

Best Price Diamonds. Diamond Customers are Cheating Themselves.

Best Price Diamonds.  Diamond Customers are Cheating Themselves.

As a diamond wholesaler with 40+ years of experience in addition to two generations who preceded myself, there is nothing that upsets me more than seeing the ruination of the engagement ring buying process as a result of the Internet.

No, I am not referring to the loss of the “romance” that is inherent in the process of selecting a diamond engagement ring. I understand that getting engaged is a time honored tradition that I hope is filled with excitement and romance and promise despite changes in the way that one goes about in the selection process.

My frustration stems from the fact that, to many consumers, the search for an engagement diamond has evolved from the acquisition of a something that is supposed to be beautiful to something that is not beautiful at all.

Internet searches for anything – whether a TV, an appliance, or personal items – are often motivated by finding the ”BEST” price. To many consumers, the “BEST” price is the lowest price. This customer ignores the basic concept of “Value”.

When this motivation is applied to a diamond engagement ring, the customer is often the loser in that while the price may be low, the diamond is most likely not what it is supposed to be – something that is truly beautiful and spectacular!

I speak from experience. In my wholesale business I sell beautiful engagement diamonds and beautiful diamond engagement rings priced from $1,000.00 (or less) to $100,000.00+! I have sold many $1,000.00 rings that I know are truly beautiful and which I am certain that the buyer will look at and will admire.

I have also sold $10,000.00 and $20,000.00+ diamonds that are “Price Point” diamonds. These diamonds may be 20% to 50% cheaper than a “nice” diamond of the same Gemological grade. These are diamonds that were purchased by a buyer who only understands low price. In this case, the buyer got the “deal” he/she was looking for but sacrificed the overall attribute of a diamond – something that is spectacular and precious.

Unlike the professional pride I feel when I have sold a beautiful $1,000.00 ring and the knowledge that I have truly served the client with the “right” diamond, I gave the “Price Point” customer what they wanted – lowest price!  This is not the diamond that I want to sell but unfortunately there are consumers who are cheating themselves out of one of Nature’s most beautiful creations as they chase only the lowest or best price.

When set into a diamond engagement ring, the difference between the low priced diamond and a more expensive diamond is the difference between something that is truly beautiful and something not beautiful at all unless the buyer thinks that lowest price is beautiful!

I admit that I have fallen victim to the low price Internet search game myself on purchases that I have made. I have bought several items over a period of years that were not up to my quality expectations. Sometimes I just live with my mistake. Sometimes I ended up spending much more money because I ended up replacing the original item with a better quality item. In this case I ended up paying significantly more that I would have paid in the first place if I had just bought the better quality product.

(For those who need specifics, I urge you to buy a Breville ($144.99) toaster oven instead of the Black & Decker ($32.99) toaster oven that is 1/4 of the price!  Yes, both are toaster ovens! However, the extra money spent is the difference between a cheap toaster that sounds like a ticking time bomb and which doesn’t make good toast and one that does it right and will continue to do so everyday – for many years!)

In my wholesale diamond business, I have seen a significant increase in the number of ugly diamonds in the market. This is in response to increased market demand for lower quality “price- point” diamonds that are being marketed on many of the leading Internet diamond websites.

Additionally, I often see diamonds that one has bought previously and now want to trade-in or just simply sell – often because the buyer has come to understand that their diamond is not beautiful and the customer now wants to acquire a “nice” diamond.  Unfortunately this same buyer will come to understand that a nice diamond will always have “value” and a price-point diamond isn’t worth much – when you are buying it or trying to sell it!

A diamond engagement ring is something that you do not want to make a mistake on. It is something that you / your wife will wear every day for many years. Hopefully, a lifetime!

This is not to say that a diamond engagement ring has to be expensive. Beautiful diamonds come in all sizes and all budgets.  If you pay attention only to the lowest price, you are cheating yourself out of acquiring something that is beautiful. And cheating yourself out of something that you will cherish and appreciate every day of your life!

I have a sign on my office wall that reads:

To the customer who insists on finding the “best” price, this quote will be meaningless, as he/she believes that he/she has found a way to beat the system. Trust me, they haven’t!  To others, I urge you to understand the difference between “low price” and “value” when going about the diamond buying process.

As I have stated in my previous posts, the best way to buy a diamond is to put your “trust” in someone who is “knowledgeable” of diamonds. You may want to believe that you have all the knowledge that you need because you have “learned” from the Internet.  I assure that that knowledge of diamonds is something that cannot be learned from the Internet.

Most importantly, buy a diamond with your eyes!!  While a diamond grading report may be critical in buying a DEF color / VVS clarity diamond, a diamond grading report is only a small part of the buying process when buying the typical engagement diamond.  That is why there are such pricing differentials even among similarly graded diamonds.

I urge you to find a GIA credentialed Gemologist or professional jeweler in your community and to look at a diamond with your eyes. I believe that when you do this, you will benefit by the professional expertise that will be shared and you will benefit by acquiring a diamond that you will be proud to own for a lifetime.

*************************

For those who are disbelievers of what I have stated above, here I will attempt to illustrate the differences between a “nice” diamond and a price point diamond.

The photos below are four actual photos of four diamonds each of the same carat size and same grade.  Each of the four diamonds are graded as “H” color /”SI2″ clarity.

I have listed with each photo the exact diamond weight, color/clarity ratings, proportion grades and the “wholesale” price for these diamonds.

1.00 Round Diamond, H/SI2, IGI Certified, IDEAL CUT, EX EX EX
Wholesale Cost: $3,050.00

Note the two major white flaws on the left side of the diamond. In addition, note the major black carbon inclusion located in the center. These flaws are visible to the naked eye (without magnification). This diamond is lacking brilliancy and fire.

This is not a nice diamond. This is a Price Point diamond. When set into an engagement ring, one will easily see obvious flaws.

1.01 Round Diamond, H/SI2, IGI Certified, IDEAL CUT, EX EX EX
Wholesale Cost: 3,750.00

Note the many black inclusions in this diamond.  These flaws are visible to the naked eye (without magnification) and the diamond is lacking brilliancy and fire.  Additionally, this diamond has an overall grayish tone because of the nature of the inclusions.

This is not a nice diamond. This is a Price Point diamond. When set into an engagement ring, one will easily see obvious flaws.

 

1.01 Round Diamond, H/SI2, GIA Certified, IDEAL CUT, EX EX EX
Wholesale Cost: $4,200.00

Note the  black inclusions in this diamond located in the table area (Center) as well as on the left side of the photo.  Though better than the diamond above, these flaws will be visible to the naked eye (without magnification).

This diamond is a good example of the majority of diamonds sold on leading internet sites. This diamond, though better than the two diamonds above, will still have visible inclusions when set into an engagement ring and will tend to have a more grayish tone than a “nice” diamond.

1.01 Round Diamond, H/SI2, GIA Certified, IDEAL CUT, EX EX EX
Wholesale Cost: $5,200.00

This is the “right” diamond.

Although it is priced at 68% more than the cheapest diamond (top photo), this is what a beautiful SI2 grade diamond should look like. It has no inclusions or flaws that are visible to the naked eye and will sparkle with brilliance and fire.

This diamond will be an absolutely beautiful in an engagement ring.

 

I have written about his subject before, as this is a subject of frustration. See: www.ndrdiamond.com/blog/lowest-price-gia-diamonds

 

How to Buy an Engagement Diamond In 10 Steps

How to Buy An Engagement Diamond in 10 Steps

  1. Do I have to/want to/need to get engaged/married?
  2. Do I have to/want to/need too get an engagement ring?
  3. Do I have to/want to/need to purchase a diamond engagement ring? Or perhaps a different precious stone (Ruby, Sapphire, Emerald)? Or perhaps a synthetic diamond?
  4. What shape diamond do I prefer? Round? Cushion? Princess? Radiant? Emerald Cut? Marquise? Pear?
  5. How big of a diamond do I want to/have to/need to purchase?
  6. Do I need a certified diamond? If so, GIA? AGS? ForeverMark? EGl? IGI? Or some other certification?
  7. What color and clarity diamond should I buy? Or need to buy?
  8. What about Polish and Symmetry and Cut Grade and all this other stuff?
  9. How much money will this cost?

You are most probably like everyone else in the same situation.

You know you love this woman and want to make a commitment to spend your lives together. But like everyone else you are at the WTF moment!

You do some research. You do more research. And more.

The more you think you begin to know, you realize that you don’t know much. And then, when you think that you do, I promise you that you don’t.

Perhaps you have shopped the Internet.

There are many Internet sites. On just one such site, after determining you want to buy a 1.00 carat round diamond, your search results produce 10,515 round diamonds between 1.00 carat to 1.10 carats. The prices for these diamonds range from $28,037.00 down to $3,045.00.

The lowest quality – J/SI2 – is still a good quality compared to the I2 clarity that you saw at the mall!

You do some more research. And more.

You determine (perhaps rightly so) that you should buy a 1.00 carat round diamond that is GIA certified – “H” color, “VS” clarity.

Within your newly refined criteria, the same Internet seller lists nearly 500 1.00 carat round diamonds graded  “H/VS”.  The prices range from $8,895.00 down to $4,112.00. (At this point I must add that the typical Internet shopper, unlike me, sees the prices range from $4,112.00 up to $8,895.00 – but chooses only to remember the $4,112.00 price!)

It turns out that the same Internet seller has a 1.00 carat “H/VS2” diamond for $7,692.00 and a 1.00 carat “H/VS1” for $5,633.00. A better grade – a “VS1” compared to a “VS2” for 27% less!!

Isn’t a VS1 supposed to be more expensive than a VS2?  Perhaps it is the difference in make – or the cut?  But NO, both diamonds are Ideal cut!

You say “WTF? I am really confused!”

Why is one identically graded diamond with the same certification twice as expensive as another diamond of the same grades?

How is it possible that a diamond with a lower certification grade from the same laboratory can be more expensive than a higher or better graded diamond?  Conversely, the “better” diamond is “cheaper”!

YOU SHOULD BE CONFUSED!

Do you know what a crown angle is?
Do you know the difference that a 32% crown angle makes compared to 36.5%?
Do you understand the difference between 58% depth and 63.5% depth?
Do you know the difference in appearance between a 56% table and a 62% table?
Do you know the millimeter diameter of the diamond with a 58% depth may be considerably larger in size than a 62.5% depth – even though both are excellent cut grade?
Is the inclusion minor or major?
Are there multiple inclusions?
Are the inclusions black carbon or white? Pinpoints? Or Feathers? Or Crystals?
Are the inclusions in the Table? Or the Crown facets? Or the Star facets? Or visible only through the Pavilion facets?
Are the inclusions visible to the naked eyes or only under magnification?
Is that 10X or 20X magnification?
Is it back light magnification or top light magnification?
Is the diamond fluorescent? Strong, Very Strong, Medium, Faint or No fluorescence? Blue? Yellow? White?
Is fluorescence a good thing or is it bad? GIA studies say it is good. The Internet says it is bad.
How can a diamond have a cavity?
What is a natural?
Are there any color tinges? Gray? Brown? Green? Pink?
How is it that a SI grade inclusion can be nicer than a VS grade inclusion?
How is it that a SI clarity grade can be more expensive than a VS grade diamond of the same color?

There are perhaps a hundred of these elements that make up a diamond.

These are just a few of the things that determine the overall beauty and value and price of a diamond.

And then you ask yourself, “Am I sure she wants a Round diamond?

“Perhaps I should look at Pear Shapes or Ovals or Cushions or Emerald Cuts.”

And “Maybe I need a better color in a fancy shape because fancy shape diamonds show color differently than a round diamond?”.

And “Maybe I need a better clarity because a VS inclusion can be more easily seen in an Emerald Cut or some other shape than in a round diamond?”.

And then you get to a whole other element.  A Squarish Cushion Cut or a Rectangular Cushion Cut?  A Modified Cushion Brilliant or a Cushion Brilliant?

Or perhaps it is an Emerald Cut in which case you are asking, 1.40:1.00 ratio or 1.25:1.00 Ratio? Or perhaps 1.55:1.00?

By this time I hope that you realize that you can research all you want. The more you know the more you should understand that you really don’t know much.

Like you, I have played doctor for myself. You look up your symptoms on the Internet when you think maybe you are ill. I’ve been there and done that! I have also learned that after not healing for two or three weeks that I felt healthier in just one day after going to the doctor and getting a prescription.

The same is true with your local professional jeweler. Chances are that he or she has been at this a good bit longer than you have. Chances are that he understands that a diamond is about something special and something beautiful that cannot be accurately described and detailed on a gemological grading report.

He or she understands that a diamond is about something visual – something that must be seen with one’s eyes. It is not about a piece of paper.

When you are ready to admit that you really have no idea what this is all about, remember that if it was just about the lowest price, this would have been an easy mission – but it is about the diamond!

There are a multitude of reasons why two diamonds of seemingly the same grading characteristics are vastly different in price – sometimes by 50% to 100% even from the same seller.

I can assure you that the more expensive diamond is more expensive because it is a more beautiful diamond. Conversely, the lower priced diamond is likely to be less beautiful – even though the piece of paper says they are similar.

Put your trust in someone who has knowledge. Let this person be your guide.

Chances are that the jeweler will also be able to give you advice with regard to the next step. After all, a diamond is just the diamond!

What about the mounting?

Halo mounting? Traditional solitaire? Baguettes? Trillions? Trapezoids? Three-stone?
Platinum? White gold? Yellow Gold? 14K? 18K?

What about the ring sizing? The future safety checks? The future repairs?  The updated insurance valuation and appraisal?

I have made mistakes buying things online. I have fallen for the bad advertised deal. I have gone for the lowest price only to find out that I have been ripped-off with inferior substandard quality.

A diamond engagement ring should not be a mistake.

 

STEP 10.  Go to your local jewelry professional.  Ask for his or her advice.  And remember, he is not more expensive than the internet. Unlike the “Chat” person or the voice at the other end of the Internet who has no real “visual” knowledge of any of the diamonds you are referring to, the jeweler knows that a diamond must be seen and selected with your eyes and not a keypad.  He is just trying to provide you with a beautiful diamond – and that is something more than the lowest price.  

 

Insanity of the Diamond Industry

Op-Ed: Insanity of the Diamond Industry
By Neil Reiff  

Published:  “RapNet – The Diamond Market” –  August, 2015
Published:  “World Diamond Magazine” –  January, 2016

RAPAPORT… Veteran Philadelphia, Pennsylvania jeweler Neil Reiff last month published the following commentary on LinkedIn. With “Insanity of the Diamond Industry”, the president of N.D. Reiff Company Ltd. raises a number of compelling concerns and questions for our industry. The article is reposted here with Reiff’s permission.

It has been stated repeatedly that the cost of rough diamonds is too high with the result being lack of profitability in the diamond industry. It is my position, as one who has spent a lifetime in the trade, that it is the retail pricing of diamonds that is too low.

Diamonds are not an “elastic commodity” of which demand increases with increased supply or lower price. Diamonds are not a disposable or consumable product that someone needs to buy repeatedly. The purchase of a diamond is, to many, a once-in-a -lifetime event. A lower price will not stimulate more diamond sales. At best, a lower price simply saves the consumer money or increases the carat weight of his purchase.

As a former business student at a well-regarded University, I learned that the purpose of a business enterprise is the creation of profits. Profit is essential to the success of any business enterprise for without it and the positive cash flow that it creates, a business model is not sustainable. Profit is the excess of revenues minus the cost of goods sold and the many other expenses that are incurred in operating the business enterprise.

Gross profit is the measure of revenues in excess of cost of goods sold. It is from this excess of revenue minus CGS that profit flows to the bottom line. It has been said by many astute business people that gross profit margin is the key to assessing the financial health and future of any business. With few exceptions (ie, Amazon.com), revenue growth is meaningless if the business model does not generate positive cash flows. Such a business is not sustainable over time.

I had a recent encounter in business that led me to author this discussion. The situation was this:

A wholesale customer was attempting to sell a 3-carat PSH diamond to a long-time valued retail client with whom he has established a professional and trusting relationship. He quoted a fair retail price to the client who was excited at the prospect of having a beautiful new diamond for his wife of many years. The wholesale customer/retailer was astounded when his customer telephoned him to tell him that he could buy the same diamond for less money on the Internet.

I cannot say how much less because I do not know the retail price that my customer quoted. I do know that the Internet seller was quoting a price of $24,996.00 for the same diamond that I own and am wholesaling for $24,575.00! This represents a gross profit of $421.00 on a $25,000.00 diamond – a gross profit margin of less than 1.7%!

To this, my customer and I both said, “This is Insanity! . . What is the point?”. There is no point and no purpose in selling anything at a profit margin of 1.7% over cost. No matter how efficiently one may run a business. No matter how much one may grow revenues.

There are a multitude of possible outcomes to this story. Perhaps the customer will now abandon his desire to purchase a diamond for his wife as his perceived value of a diamond has been destroyed as well as the trust he had placed in the seller. Perhaps he just walks away from the transaction because he has a bad taste about the whole thing and it’s best to just turn away from it.

Or perhaps he ultimately buys it for the price of $24,996.00. In this case, the buyer has purchased a valuable diamond for 1.7% above the wholesale cost! In this case, it is the industry that has lost. No one has made a profit, as 1.7% cannot be considered to be a profit. More significantly, no additional sales have been made that would not have otherwise been made. In the end, thousands of dollars have been lost – in profits and in value to the industry and to the consumer public – for the perceived value of the billions of dollars of diamonds held by the public and by the industry has been greatly diminished.

With regard to the issue of profitability of the industry and the effect of “high” rough prices, the above story demonstrates that there are players in our industry that are willing to negate profitability within the industry at any price level. If the price of rough was to drop and, subsequently the price of polished diamonds was to drop as well, these industry players would still find it necessary to make diamonds available to the public at the same ridiculous and unsustainable gross margin levels. Lower wholesale diamond prices will simply lead to lower retail prices – in essence, a Catch-22 situation.

Tiffany and Co. and Signet Corporation are two examples of success within our industry. They both sell several billions of dollars of diamonds and jewelry to the consuming public. Both of these companies understand that profits are essential to their ongoing enterprises. Both of these companies are extremely successful. Their revenues and gross profits continue to rise despite the fact that others seem to believe that the only way to conduct business is by selling diamonds at cost – or perhaps 1% or 2% above!

Tiffany and Co. recorded annual sales for 2014 of $4.249,913,000 – a 5% increase over the prior year. Tiffany achieved this sales figure with a gross margin of 64.3%! Tiffany’s markup on cost was 280 percent! To put this into perspective, Tiffany realized a sale price of $28,000.00 on $10,000.00 of cost whereas the Internet retailer above would have realized a sale price of $10,170.00 on the same hypothetical item!

Signet Corporation, the parent of Kay, Jared and Zales, reported 2015 annual sales of $5,736,300,000 in their last fiscal year. Sales at Signet increased by 36%.1 Signet amassed this revenue figure with a gross margin of 36.2% – a markup over cost of more than 156 percent!

It is interesting to note that in Signet’s 2015 Annual Report, there is this quote that is highlighted: “Our research consistently tells us the main reason people buy jewelry where they do is NOT PRICE . . . but TRUST” (caps added for emphasis).

This affirms what a friend once told me about why her family purchases jewelry from Tiffany. She explained that she knows she is getting quality and, though the price may be high, she is getting the same price that everyone else receives. Again, a matter of trust!

I made reference to Amazon.com earlier in this discussion. I assume that many of the Internet diamond sellers attempt to rationalize their non-profitable selling by giving themselves too much credit and comparing their endeavor with that of Amazon.com. These Internet sellers have the mistaken belief that someday they will achieve enough revenue growth to become profitable.

This is a fallacy. To begin with, Amazon achieved sales revenues of $88,988,000,000 in 2014. Amazon’s sales are more than the entire jewelry industry. Amazon does more business in two days than Blue Nile in one year! More significantly, Amazon continues to grow at 20% per year whereas Blue Nile had sales growth of 5% in their latest fiscal year.

Amazon, unlike the online diamond retailer, sells consumable products that people buy repeatedly. Many Amazon shoppers make hundreds of purchases – every year. Unlike Amazon’s customers who will continue to purchase it’s products for many years, Internet diamond customers will never become multiple-repeat customers.

More significantly, Amazon had a gross profit of $26,236,000,000 – a gross margin of 29.5%! This equates to a mark-up of nearly 40 percent compared to the Internet diamond company at 1.7 %! To put it simply, Amazon’s markup is more than 23 1/2 times that of the Internet diamond retailer who wants to flatter himself in thinking he is following the Amazon model.

So where does this bring us.

There is no doubt that our industry is in a state of disarray. Many, myself included, might say we are in a state of destruction. We are. I would say it’s going to get worse but I cannot imagine getting worse than where we are – except for the prospect of retailing diamonds below their wholesale cost. We, as an industry, have destroyed profitability. More significantly, we have destroyed the perceived value of a diamond.

An artist understands that his work is more valuable than simply the price of the canvas and the cost of paint. A doctor understands that his services cannot be given away to the patient for free if he is to support himself and his family. An appliance dealer would never consider selling $10,000.00 of home appliances for $10,170.00. A home builder understands that he cannot build houses and sell them at cost. A diamond retailer who thinks he is succeeding when selling diamonds at a 1.7% markup to the consuming public is only fooling himself as he surely heads into future bankruptcy!

There is little doubt that the Rapaport Price list was the first step in the downward spiral of our industry. I wrote of this in 1998. (See JCK- July 1998 “Martin Rapaport – One Man’s Destruction of an Industry”). Today, it is not the wholesale price list that is the problem but the ability of desperate and senseless Internet sellers to upload wholesale diamond database information to consumers at wholesale pricing.

It is the mistaken belief among those in our industry that price is all that matters that will destroy our industry. Increasing one’s revenues without making a profit is a pointless endeavor that leads nowhere. Selling diamonds to the consumer public at wholesale pricing accomplishes nothing except lowering the value of diamonds. The end result of this price-cutting actually diminishes the revenues of the industry as a whole.

An old timer in our industry told me of the advice he received from his earlier generations upon coming into the diamond business. The advice was: “Protect the Inventory”. Rolex, – unlike Seiko, which has been discounted into oblivion – understands this premise and has been masterful at upholding value by restricting Internet pricing and discounting.

As a result of my recent encounter with the 3-carat PSH diamond discussed above, I have changed my business practices. No longer will I permit my diamond listings to be indiscriminately downloaded to anyone who wishes to post my diamonds on their website. I am willing to give up these sales by unscrupulous and unprincipled Internet retailers. I believe that my diamonds have value. I believe it is necessary to forego sales to those who want to destroy this value.

I urge other wholesalers to do the same. Forbid others from indiscriminately uploading your diamonds to their retail websites at senseless retail prices – for their senseless prices affects the survival of your well-intentioned customers and the industry. This is necessary in order to stop the race to the bottom and the extinction of the diamond industry. It is simply a matter of one check box in your Rapnet account settings.2

Protect your diamonds. Do business the old fashioned way. Care about whom you choose to do business with. Utilize your relationships. Re-establish trust and value in diamonds.

Notes:
1. Signet Corp sales revenues for fiscal 2015 includes results of Zales acquisition. Sales growth was 6% in fiscal 2013 and 5% in fiscal 2014.
2. It is also possible to allow or deny specific companies within Listings Policy. To manage Listings Policy, Rapnet> Home> My Account> Listings Policy.

Fraud and Deception in Internet Jewelry Stores

The idea of fraud and deception within the retail jewelry business is not a topic that I am comfortable discussing.  After all, I have spent a lifetime within the wholesale diamond trade. There comes a time, however, when at the potential expense of harming the industry as a whole, it is necessary to speak about such fraud and deception in the hope that I can protect a consumer from being duped and deceived by unscrupulous diamond sellers.

As for me personally, this post is about my personal frustrations.  In business or whatever we are doing in life, the one principle that we wish for is that we are all playing on a level playing field.  Certainly one may sometimes attempt to gain an edge in one way or another (perhaps by deflating a football below regulation pressure!), but when you see things that make you realize that the playing fields are not even on the same planet, it is necessary to speak out.  These are the times that you wish there was some sort of “Internet Police” or at least the “Jewelry Police”. Unfortunately there is no one in the universe who regulates unscrupulous jewelry practices whether in bricks-and-mortar or online internet jewelry stores!

A few years ago, a local diamond seller here in my city was successfully sued by Tiffany & Co.   In a suit that was eventually settled for $600,000.00 in damages paid to Tiffany and Co in addition to hundreds of thousands of dollars in legal fees, the suit correctly alleged that the seller was selling counterfeit Tiffany jewelry on Ebay as well as on the seller’s website. Quite simply, this jeweler was making diamond engagement rings in a mounting very similar to that used by Tiffany & Co. and was supplying his own diamond and stamping the ring with the Tiffany & Co. trademark.

It is interesting to note, in this case, Tiffany successfully sued the seller on the basis that ‘It’s reputation and name were infringed upon by the defendant’s sale of counterfeit jewelry”.  The buyers, however, were not a party to this lawsuit although they were the party that was truly damaged.  The counterfeit “Tiffany & Co.” engagement ring was worth significantly less than the “real” Tiffany & Co. engagement ring.  In addition to the item not being authentic, you can be sure that the quality standards of the diamond ring was significantly inferior to what they “thought” they were getting!

The Tiffany story that I have just told is unique in that, whereas the jewelry buyer was duped and deceived, it was the legal department at Tiffany & Co. that successfully pursued the deceptive and fraudulent diamond seller.  In most cases, innocent diamond dealers like myself must stand by and watch as deceptions and frauds occur and consumers are misled and cheated.  As previously stated, there is no one who polices or otherwise enforces ethical and honest standards. And no one who protects the consumer!

I must admit that I do sometimes waste my time looking at jewelry on the internet.  Often I see deals that are too good to be true. This is because these deals usually show photos that do not accurately represent the actual item and make claims with regard to quality standards that are greatly exaggerated. It is like seeing an advertisement for a new Mercedes Benz for the price of a used 1990 Hyundai.  As one who is familiar with the diamond industry, “I know it ain’t so” and understand that there is inherent fraud and deception in the promoted product.  Unfortunately, the buyer who purchases the promoted item is either very much uninformed or just doesn’t care about the falsified information because he otherwise cannot afford the desired item.  In the end, the buyer is buying an item that is often significantly different from the advertised jewelry item.

Throughout time there has been the expression of “Caveat Emptor” or “Buyer Beware”. Quite simply, this expression states that the buyer’s responsibility to do due diligence and to decipher fact from fiction when making a purchase. This is especially true when purchasing a diamond or diamond jewelry. Sometimes it is important to know that it is just simply not possible to buy a dollar bill for10 cents or 25 cents!  Again, I repeat  – It is just not possible!

An illustration of such a deal is shown in the image below.  This image is that of a screenshot that I took on my computer yesterday of an actual item promoted on a jewelry website. The headline reads “Diamond 3.50CT Engagement Ring – Round Brilliant Cut 6 Prong 14K White Gold”  The purchase price for this item is the unbelievable low price of $2,699.99!  Even more amazing than the low price was the fact that this vendor has concluded thousands of transactions!

Pompei Eng Ring

I can understand how an uninformed buyer may think he has discovered Internet Nirvana with this product offering and the thousands of other jewelry items offered by this seller.  After all, in my wholesale world where I buy and sell diamonds to reputable retail jewelers, a 3.50 carat round brilliant diamond sells on the wholesale trading market for between $25,000.00 to upwards of $100,000.00 or more.  Yes, there are “garbage” quality diamonds that have no beauty and little value that sell for less money.  There are also boarded-up houses that are inexpensive in neighborhoods where you dare not enter!

pompeiActualPhoto

The photo to the right is a photo of the actual ring.

Without going into the details of the many levels of fraud within the context of this particular item, all I can say is this:  Imagine you have somehow managed to get a date with Margo Robbie on an Internet dating site and when you show up at your romantic dinner to meet your internet date, Margo Robbie turns out to be Rosie O’Donnell!

I understand that a diamond engagement ring may be the desired object of the buyer. There are many beautiful engagement rings that can be purchased for $2,700.00 or less.  But, trust me that you do not want this advertised diamond ring even if you could get it for $2,699.99!

The Federal Trade Commission sets forth guidelines for jewelry advertising:

16 CFR 23.2 – Misleading illustrations.
It is unfair or deceptive to use, as part of any advertisement, packaging material, label, or other sales promotion matter, any visual representation, picture, televised or computer image, illustration, diagram, or other depiction which, either alone or in conjunction with any accompanying words or phrases, misrepresents the type, kind, grade, quality, quantity, metallic content, size, weight, cut, color, character, treatment, substance, durability, serviceability, origin, preparation, production, manufacture, distribution, or any other material aspect of an industry product.

As for the details of this fraud, the advertised photo appears to be a nice ring.  The actual photograph is of a lifeless, worthless, brownish color diamond that is very highly included (I3 clarity) and, most importantly, UGLY!

The terms of the website advertisement states that the ring is 3.50 carat.  The actual center diamond is a 2.00 carat diamond – worth considerably less than the promoted 3.50 carat size in the ad’s headline description.  Furthermore, the diamond is promoted (in the small print) as HI color and I2-I3 clarity..  The diamond is certainly I3 clarity as seen in the photograph.  The “I3” clarity grade is the absolute worst clarity grade for a diamond and is rarely used in jewelry.  As for the color, though the promised color grade of “H/I” is very common and very acceptable, the diamond in the photo (which I requested from the online merchant and had to make several attempts to obtain!) is of a brownish color that is not within the GIA color grading scale.

The bottom line is this: Yes, it is possible for someone to sell this ring for the low price of 2,699.99.  This ring is made from worthless diamonds that have no value and, more importantly, no beauty. None!

NDR-3.00 RBCThis is what a diamond engagement ring is supposed to look like. It should be something beautiful.  It should be a magnificent work of nature that is filled with brilliant color and scintillation and “fire”. It is these qualities that make a diamond desirable and valued.

The internet seller of the ring pictured above has many thousands of items for sale on the company’s website as well as EBAY and other websites.

Additionally, there are hundreds of other internet websites offering similar worthless diamonds and diamond jewelry at otherwise appealing price points.

I believe in the beauty of diamonds and diamond jewelry.  Unfortunately, I also have come to believe that the internet can be a dangerous place for consumers who want to believe that they have found their Internet Nirvana!

Caveat Emptor!

 

 

Follow Up:   Fraud and Deception in Internet Jewelry Stores; Caveat Emptor- Part II 

 

Fraud and Deception in Internet Jewelry Stores: Caveat Emptor – Part II

Recently I wrote of fraud and deception in Internet Jewelry stores.  In that post I discussed misrepresentations in advertising and photography on internet jewelry storefronts.

Today I evalauted a pair of diamond stud earrings that were purchased on the internet from a “reputable seller” who has more than 40,000+ of reviews on multiple platforms – EBAY and ETSY as well as his own website.

The earrings were advertised as “1.00 CT Natural Diamond Studs 14k White Gold”.  The price of $399.99 was incredibly inexpensive for 1.00 carat TW diamond studs.pompeii3 Studs ad

Honestly, the diamonds in the studs were not as bad as I expected.  Surprisingly, the diamond quality was within the color and clarity ranges as stated in the online web advertisement.  The mountings were very light and not of the best quality – but this was to be expected.

The earrings came with a free appraisal from an “independent” authority  located in Chicago, Illinois.  This appraisal reflected the exact information as stated on the selPampeii Appraisaller’s website advertisement.  The Appraisal letterhead stated the Appraisal company’s name and city but had no street address or telephone number.  An internet search for this company found no such company – nor did my research into the directory of the jewelry industry.

Federal Trade Commission guidelines state:

§ 23.17 Misrepresentation of weight and “total weight.”
(a) It is unfair or deceptive to misrepresent the weight of a diamond.
(b)  . . .
(c) If diamond weight is stated as decimal parts of a carat (e.g., .47 carat), the stated figure should be accurate to the last decimal place. If diamond weight is stated to only one decimal place (e.g., .5 carat), the stated figure should be accurate to the second decimal place (e.g., “.5 carat” could represent a diamond weight between .495-.504).

In accordance with the terms set forth by the Federal Trade Commission, a pair 1.00 carat total weight earrings must weigh a minimum of .995 carats or more.  The purchased earrings weighed 0.932 carats -nearly 7% less than the advertised weight.Pompeii Scale Image

To the non-jewelry minded novice, this is the equivalent of paying for a 1 Lb New York strip steak and  getting cheated by more than one ounce on the price.  This may not sound like much but it is dishonest, deceptive and fraudulent!  Unlike a  supermarket steak, the price of a diamond is usually in the hundreds or thousands of dollars per carat.

The difference in value is much more significant when dealing in diamonds.

Because diamond pricing is based on an escalating price-per-carat basis, two diamonds which weigh .465 carats each are worth significant less than the value of two diamonds that each weigh .50 carats.

Using a standard diamond wholesale pricing guide utilized by the diamond industry, the purchased earrings are worth 32% less than the advertised pair of earrings!

i have no doubt than the world has changed in significant ways.  Consumers who once bought at exclusive stores now routinely purchase consumables and fashion at Walmart or Target or Costco. At the same time, many items that were acquired from bricks-and-mortar stores are now purchased from Amazon and millions of other internet sellers.

Yes, there may be differences in quality standards in a $1000.00 suit purchased in a high end specially store as opposed to Target.  I do not believe that Target or Amazon engage in deceptive and fraudulent practices in their item descriptions or their marketing promotions.

As an industry participant, it is my opinion that fraud and deception in internet jewelry storefronts – or anywhere – should not be tolerated. This is in the best interests of the consumer as well as to the  integrity of the jewelry industry.

Neil Reiff

 

 

Diamonds: Quality vs. Price – The 50% question??

Today, more than ever before, there is a significant difference in diamond pricing between GIA graded diamonds of similar GIA grades. Within the diamond trade, this is often referred to as the difference between a “good” GIA report and a “bad” GIA report. Though two diamonds may be graded as “H/SI1”, one may be an exceptionally beautiful diamond and the other may contain a big black carbon inclusion located in the center of the table.

I evaluate several hundred diamonds with GIA grading reports every week. Some are priced at 45%, and 50% discounts.  On the other hand, the “nicer” diamonds are priced at 20% – 30% discounts. On a 1.00 carat Round diamond, GIA H/SI1, the difference in actual dollars is $4875.00 (wholesale) for the nice diamond as opposed to $3250.00 (wholesale) for the “cheaper” diamond. Quite simply, the nicer diamond is 50% more expensive than the other.

These are diamonds with the same GIA grade with a 50% pricing differential!!

This pricing differential among diamonds of the same GIA grade is even more extreme when dealing with fancy shape diamonds – Emerald Cut, Cushion Cut, Ovals, Radiant Cut and others. Some fancy shapes may trade at discounts of 50% to 60% or more. Other well-made fancy shapes may trade at a discount of 20% or less. In the case of a beautiful Oval or an ugly Oval of the same GIA grade, the difference in actual dollars can be significantly more than 50%!

I recently  viewed a parcel of 1.00 carat round diamonds costing $600.00 (wholesale) per carat. On the other hand, a 1.00 carat Round D/Flawless diamond trades for $17,000.00 (wholesale). In this instance, one 1.00 carat Round diamond is 2800% more expensive than another!! Obviously, the $600.00 1.00 carat diamond is 1000% ugly junk. It has no beauty other than a “cheap” price which may be beautiful to someone. The 1.00 carat D / Flawless diamond is something that is spectacular – a magnificent work of nature!

As a wholesale diamond dealer, I, as well as the diamond industry as a whole, am faced with a dilemma. We are living in an internet world where everything is being reduced to the lowest common denominator – that of price. There are many who only understand “price” and do not understand “value”. The Internet is wonderful for these buyers who care nothing about the beauty of a diamond..

On the other hand, as a professional within our industry, it is my belief that it should be our mission to provide expertise and knowledge – and, most importantly, to assist a fine jewelry buyer in purchasing a beautiful diamond.

I understand that a D / Flawless diamond is extraordinarily  expensive – and much finer than what a typical consumer should purchase. I also know that price point diamonds are nothing more than price-point garbage that have no real beauty or value.

There are many beautiful diamonds that fall within the spectrum in between low price garbage and exceptionally fine.

A reputable diamond merchant and/or a fine jeweler understands this. His mission should be to guide a prospective buyer to understanding and appreciateing the value of a beautiful diamond or fine diamond jewelry. It should also be his purpose to assist a prospective buyer in acquiring something that will always be valued and appreciated for its beauty and magnificence.

I have a quotation on my wall above my desk in my office that says it all:

LettingYourCustomersQuote

 

 

Lowest price – GIA certified diamonds.

Lowest Price – GIA Diamonds.

Many internet shoppers are under the mistaken belief that buying a GIA certified diamond on the internet is similar to purchasing a flat screen TV. Simple,  You just find the model number that you want. Then you go to the internet and you buy it for less.

In the case of a diamond, one might figure out the size, the shape and the GIA parameters that they want.  Let’s say in this case, a 2.00 carat round diamond, GIA “H” color, “SI1” clarity.  Simple. We go to the internet and buy it at the lowest price.

Stop right there.

A diamond is not a flat screen TV.  The GIA diamond certification report is not the same as a model number.  The specifications of a TV are identical.  There are thousands if not millions of the same TV made to factory specifications.  Diamonds are different.  A diamond is a creation of nature.  Each one is unique.  A GIA grading report attempts to describe a diamond like I may attempt to describe a beautiful woman.  It is very hard to do without seeing the woman – or the diamond.

Pictured below are six diamonds listed for sale on a leading internet diamond site. Each of the six diamonds weighs approximately 2.00 carats (Actual weights range from 2.01 to 2.09 carats).  Each of the diamonds is graded by GIA as “H” color, “SI1” clarity.  The prices for these diamonds ranges from $13,247.00 to $26,131.00.  YES!  One diamond is 50% “cheaper” than another.  Inversely, one diamond is 100% more than the other!

And you are on the internet in search of the best price.   Or is it the lowest price?  Best price for what?  Lowest price for what?

As a diamond merchant with more than 40 years of experience  (and two generations before me!),  I understand what a diamond is.  It is about something beautiful.  Beauty is about the brilliance and sparkle and scintillation.  Low price is about a price point.

In recent years there has been a divergence within the diamond industry – sort of a “fork in the road”.  There are many diamond companies that are marketing diamonds specifically for the internet. The diamonds that they sell via the internet are inferior to those that are sold in the traditional manner – to be sold via retail jewelry stores.  It is the difference between the beautiful GIA H/SI1 diamond and that of the diamond that is marketed solely based on “price-point” for the internet buyer who believes he has figured out the world.

The difference is, in the “old” days, people looked at diamonds in a jewelry store with their eyes and a jewelers magnifying loupe.  They were truly buying a diamond and not just a diamond grading report!.

Take a look at the info for the six diamonds featured below.  These are just a random sample of different price ranges that I found.

                                                                                         .    .    .    .    continued below

Document (1)

 

Document (2)

Document (2A)

Document (3)

 

Document (4)

Document (5)

If I was buying a diamond for my wholesale business it would most likely be one of the three more expensive diamonds.  I believe that a diamond is supposed to be something beautiful.  These diamonds seem to be beautiful – although, even with the info provided on the GIA report, it is still necessary to SEE the diamond.

But one thing that I do know is that there are reasons why the cheap diamonds are cheap.  It may be the make. It may be the type and location of the inclusion. It all affects the overall sparkle and scintillation that makes a diamond special!

Low price is just that. It is low price.  It is not a factor of value.  Value, on the other hand, is a reasonable price for a Renoir – despite the fact that it may be tens of millions of dollars.

 

What diamond quality do I really need to buy?

What quality of diamond do I really need to buy?

If you expected an easy answer to this question I am sorry to have to disappoint you.

In everything in life, whether it is the purchase of an automobile or a house, we all start out with wanting our “dream” car or our “dream home”. In most cases, we make sacrifices when faced with the reality that our dream waterfront or mountainside home is beyond our financial reach. Such is life. And, in most cases, such is the search for the “perfect” diamond.

By this point in your search I assume that the reader is familiar with the Four “Cs” of a diamond: the Carat (weight), the Cut (this applies to shape as well as cut proportions), the Color, and the Clarity. Each of these factors significantly affects the “cost” of a diamond. This is true whether one is, like me, a wholesale dealer or a retail consumer.

The most significant factor of the “Four C’s” is the carat weight. Unlike going to a supermarket where one buys a 16-ounce (1lb) prime steak for $15.00 and a 32-ounce (2lb) prime steak for $30.00, the price of a larger diamond increases exponentially. For instance if a hypothetical 1.00 carat costs $10,000.00 that same diamond would cost approximately $20,000.00 if it weighed 1.50 carats. This diamond would cost approximately $35,000.00 in a 2.00 carat diamond. Conversely, this diamond would cost only about $4500.00 in a 0.75 carat diamond and a 0.50 carat diamond approximately $2500.00. The reason for this is twofold. On one hand, diamonds are priced per carat so the weight differential is part of the reason. On the other hand, each diamond is a rare natural gemstone and larger diamonds are much more rare than a smaller diamond.

As for the “Cut”, this is also a difficult factor to explain. It entails two different things. Firstly, there is the shape of the diamond – Round Brilliant, Oval, Cushion Cut, Princess Cut, Radiant, Emerald Cut, etc. There is also the factor of depth and table measurements and facet angles and other considerations. Because each diamond starts out as a “rough” diamond unearthed in a mine, the final price of a diamond is affected by the “return yield” of the rough diamond compared to the weight of the finished diamond. Because more rough diamond is lost in the cutting of a Round Brilliant diamond as opposed to all other shapes, a Round Brilliant diamond is usually the most expensive shape.

The final two C’s are much more esoteric and difficult to understand. These involve the “color” and “clarity” of a diamond. As previously stated, diamonds are a work of nature and each diamond is a unique creation. This being the case, diamonds can be absolutely colorless or they most likely will have some degree of “less white” or in some cases may have a slight or apparent tinge of yellow. It is believed that a whiter diamond is more beautiful than a diamond that has some tinge of yellow. For this reason, whiter diamonds are more expensive and more sought after than a more yellow diamond.

As for clarity, diamonds being the natural creation that they are, practically every diamond is naturally formed in a “less-than-perfect” molecular structure. If a diamond were a perfect molecular structure it would be a perfectly clear crystal. Although this is just a guess, I would say that this happens less than one-in-a–gazillion times. In practically all diamonds there is some kind of flaw or inclusion or imperfection – as is true with many things in life! Most diamonds are very much included and have many imperfections. It is the diamond that has very few and minor inclusions that become an engagement diamond (as opposed to being used for industrial usage).

In recent years, the Gemological Institute of America has established criteria that has become the cornerstone of diamond grading with relation the color and clarity of a diamond.

GIA-color-chart-copy-copy

GIA-ClarityScale

As you can see from the charts above, GIA grading terminology distinguishes twenty-three (23) grades of diamond color and assigns alphabetical color grades beginning with “D” through “Z”. The color “D” represents absolute white color with each subsequent color being slightly less white. Furthermore, GIA has assigned five general categories to its letter grades.

In its clarity grading system, GIA has distinguishes 10 clarity grades. These clarity grades range from IF (Internally Flawless) and continue though a continuum to “I3” (Imperfect, eye visible inclusions).

I do not mean to be disrespectful of the Gemological Institute of America (GIA) for I am a graduate of this esteemed institution. However if one considers all the possible combinations of GIA color and clarity grades there are two hundred and twenty (220) possible combinations of color and clarity. Diamond grading, in my opinion, is ridiculous and overdone.

As a consumer, one might think that there is a science to all this. One might also think that there are significant differences between each color grade and/or clarity grade. I can tell you as a fact that I have known of several diamonds that have been submitted to GIA and have received different grades on separate GIA reports. I had a recent experience in which the same diamond was submitted twice to GIA and received a grading combination that was three grades different in color and one grade different in clarity on the GIA grading report. The same diamond!! Yes, this is an unusual occurrence but it is true.

Sometimes I think the world made more sense when one purchased a diamond based on the “beauty” of a diamond as determined by one’s own eyes and the trust of the local established jeweler rather than on a piece of paper issued by a grading laboratory!

So, where does that leave us today? We are in a world where the consumer in many cases is not buying a diamond – they are buying a piece of paper. And we are also in a world where we all want the best of everything. So, naturally, when we are buying a diamond we go into this thinking that we must have a “D” color, ‘IF” or “VVS” clarity because that is the best (and we all want the best!).

Yes, a “D”-“Flawless” diamond is the best. And yes, a diamond with a color grade of “M-N-O-P” is going to be somewhat yellower in color than a “D” color diamond. Yes, a flawless diamond will be brighter and more sparkly than a diamond that has a clarity grade of “I2” or “I3”. But there are many grades in between “D”-“FL” and the lower parts of the scales that are exceptionally beautiful diamonds.

If you look again at the GIA grading scales above you will see that there are significant yellow tones in the higher alphabet letters that represent the color grades. You will also see that the difference between “D” color and “I” are, in reality, very subtle and insignificant. Although harder to see on this chart, the difference between a “J” color and an “M” color are much more apparent. And, believe me, I have seen some “M” color diamonds that are very beautiful and look white. In fact, if you knew what most people out there have in their engagement ring you might be shocked!

The same can be said with regard to the GIA clarity-grading scheme. Yes, there is a significant difference between an “IF” and an “I2” or an “I3”, but once again, look at the examples as provided on the GIA grading scale above. The difference between a ‘SI” grade and an “I1” or “I2” grade is much more significant than the difference between “FL” and “VS2”.

It should be remembered that diamond clarity grading deals with degrees of inclusions visible under 10X magnification. Obviously a flawless diamond (which as previously mentioned is a one-in-a gazillion) has no inclusions that can be found under magnification. But the differences, by definition, between “VVS” and “SI” is the difference between an inclusion that is “very, very slightly included and difficult to see” and “somewhat easy to see” under 10x magnification!! Yes, the “I1”,”I2” and “I3” grades are much different. These diamonds usually have inclusions that are seen without magnification and, in many cases (especially “I2” and “I3”), the inclusions affect the overall brilliance and sparkle of the diamond and these diamonds may be lifeless and not beautiful at all.

At this point it is necessary to look at this information in the context of price. A 1.00 carat “D-Flawless” Round Brilliant diamond is priced at approximately $27,500.00 on the wholesale diamond market. A 1.00 carat “F-VS2” Round Brilliant diamond is approximately $10,000.00. The same Round Brilliant 1.00 carat diamond in a “H-SI1” is approximately $7,500.00. FYI, this 1.00 Round Brilliant diamond in a “M-I3” grade is priced at approximately $1200.00!

To put these different prices into further perspective, recall the discussion above about the affect of the diamond size with regard to price. Quite simply, a “H-SI1” grade 1.00 carat Round Brilliant costs approximately $7500.00. The same grade diamond will cost $25,000.00 in a 2.00 carat diamond. To change it up a bit, a 1.00 “F-VS2” Round Brilliant diamond will cost approximately $10,000.00. It would cost approximately $38,000.00 in a 2.00 carat diamond! It should be noted that most diamond buyers tend to lower their quality “standards” as their desired size requirement increases.

Buying a diamond is a matter of balancing. One must balance size, color, clarity and – most importantly – price. I have many times looked at a prospective diamond buyer who comes in with “Pie in the Sky” requirements for what he or she “needs” and I have asked, “Who do you need to impress?”

A diamond is something that you buy for someone that you love. It is often purchased at the beginning of a long-term commitment that one makes as a symbol of one’s love and a commitment to another. Yes, you want to purchase a beautiful diamond. I would hope that you get good honest advice from a knowledgeable jeweler. But keep in mind that there are beautiful diamonds in this world that are not “D-IF”. Also keep in mind that your loved one and family and friends will not be using a magnifying glass when they admire your loved one’s diamond engagement ring.

For what it is worth, I get my diamonds for a wholesale price. My wife has a diamond that is an “I” color and “SI” clarity. When I see it on her hand it is not yellow at all. Under normal circumstances, it has as much fire and brilliance as a “D” color, “Internally Flawless”. With forty-plus years of experience in the diamond and jewelry industry, I know it is a beautiful diamond but most importantly, she thinks it is too!!

Buying a GIA Fancy Shape Diamond – BUYER BEWARE.

BUYING A GIA FANCY SHAPE DIAMOND – BUYER BEWARE.

Buying a Fancy Shape diamond – the term used for an Oval, Cushion Cut, Emerald Cut, Princess Cut, and all other non-Round diamond shapes – based solely on the GIA grading report is not well-advised.   Though there is much information contained within any grading report, none of this information conveys any clues as to what any particular fancy shape diamond looks like.

Today I came across two diamonds of similar GIA specifications – the same carat weight, same GIA color grade, and the same GIA clarity grade.

It has been said that a picture is worth a thousand words. So . . here it is in pictures.

aa3.06 Ivs2 CUSHION

This is a actual un-retouched photo of a 3.02 Carat Cushion Cut diamond, GIA “I” color, GIA “VS2″ clarity.

aa3.02Cushion IVS2

This is an actual un-retouched photo of a 3.06 Carat Cushion Cut diamond, GIA “I” color, GIA “VS2″ clarity.

As you can see, a picture is also worth thousands of dollars! That is the difference between buying something that is beautiful and wasting money on something that is not pretty at all.

In the photos one can easily see that one diamond is beautiful. It is my opinion that the diamond pictured in the above photo is ugly! Live and in person, I assure you that the difference is even more apparent.

From looking at the two certificates, other than the fact that one diamond is more square and the other more rectangular (which has nothing to do with the issue at hand), one would never see the difference in beauty between these two diamonds simply by viewing the GIA certificate.

The simple truth is that one is just a beautiful diamond. The other is not. This is not determinable by looking at the certtificate.

To be honest with the reader, the diamond in the above photo is priced 5% less than the diamond in the lower photo. In my opinion, the nicer diamond is worth a 1000% more than the other.

Some might think that saving 5% on a diamond is important. But when one diamond is 1000% more beautiful than another, think about this . . .

What diamond do you want to look at for the rest of your life?

Sea Shells and Diamonds

ConchShell

As I was packing up my house recently, preparing to move, my daughter came across a beautiful Conch shell that she found on the beach in Captiva, Florida when she was young. Captiva is known for its beautiful shells.

She was admiring her beautiful shell when it occurred to me that finding a beautiful sea shell in a place that is known for its shells is much like finding a beautiful diamond. There are many thousands of them – BUT only a very few that are truly special.

In the world of diamonds, there are thousands of diamonds available on the Internet.  If there is one thing that I know after a lifetime of 40+ years in the wholesale diamond business, it is this: Finding a beautiful diamond is much harder than finding a beautiful Conch shell!

5.00CusionHVS2small

Recently I was evaluating the diamonds that I purchase for my “wholesale diamond stock”. I realized that for every thousand diamonds that I look at –  99% of which are certified by the GIA (Gemological Institute of America),  –  there are perhaps 20 that I purchase.

It is not a question of what the GIA report might say in terms f the diamond quality. It is a question of finding that rare diamond that you just look at and say, “WOW!’

A “WOW!” diamond is something that is truly amazing. You just want to look at it because its facets and its scintillation draw you in.  It is a work of nature and a very talented diamond cutter. It is one of the most spectacular things in the world. It is something incredibly beautiful.

It is very rare – even in a world filled with databases of many thousands of diamonds.

So, you might ask, “What is my point?”  In the sea of many thousands of diamonds (Internet diamond databases), one must understand that there are diamonds that are truly exceptional and the other 99%. Buying a diamond from an internet database – particularly the lowest priced diamond – is cheating yourself of the beauty of what an engagement diamonds supposed to be.

Maybe you think that an engagement diamond is just something that you “have to do” because it is an “expected” part of the engagement process.  This may be true to some extent. But it is something that will look at every day for many years. also be an investment in something that is truly spectacular.

 

 

 

GIA Diamond Grading – SIMPLIFIED

GIA Diamond Grading – SIMPLIFIED.

As I have stated in my previous posts, it is my opinion that the GIA grading system is ridiculous. This opinion is based on the fact that there are nearly 200 possible grade combinations of color and clarity.  To the human eye, under “normal life” conditions, the differentiations within the GIA grading system are like trying to characterize a woman’s beauty into 200 categories.

Most importantly, with regard to the GIA grading system one must recognize several things:

1)  Just because one diamond has a “higher” GIA grade combination than another does not mean that it is a more beautiful diamond.  

2) The difference between one or two grades is almost nothing at all in the overall beauty of a diamond.  Think of it this way . . .there are nearly 200 possible grade combinations; therefore the difference between F/VS1 to G/VS2 is just a slight incremental difference of two grades within a universe of 200!

3) Two diamonds may be of the same grade but one may be significantly more beautiful than the other- even within the same grade!

After more than 40 years in the diamond trade in which I have dealt with many thousands of diamonds and diamond grading reports, I have established my own diamond grading system which I believe makes more sense. This grading chart is seen below:

NDR DiamondGrading Chart REV2

As you can see, this grading chart contains FIVE grade parameters.  They are INVESTMENT, FINE, NICE, COMMERCIAL and GARBAGE.

Any diamond that falls within the top three grades is a diamond that will be very pleasing to look at in terms of a beautiful engagement ring.  It will not look yellow.  It should not look cloudy or imperfect.  It should have beautiful brilliance and scintillation.

The Commercial and Garbage categories are a different story.  Diamonds that fall within these categories are not nearly as beautiful – and, in some cases, are UGLY!

Click here for detailed information with regard to the meanings of the above grading designations,

Is there a difference between a 1.50 carat D/Flawless round diamond that costs $45,000.00 and the 1.50 carat H/SI1 round diamond that costs $15,000.00?  Yes, there is,  But I can assure you that – as far as your eyes can tell when this diamond is set into a mounting, the $15,000.00 diamond should be nearly as beautiful as the $45,000.00 diamond.  On the other hand, the 1.50 carat L/I2 – (which in many cases is the mall store standard!) will not be beautiful when compared to the others !

My advice to a diamond buyer is simple.  Take a look at the chart above. Buy a diamond within the top three grades of the chart above.  Do not make yourself crazy distinguishing between ridiculous GIA grades.  It should not be that complicated.  You want a beautiful diamond. You don’t need a Rolls Royce.  Just avoid the junker!

Why pay more for the same diamond?

Why pay more for the same diamond?

If you have read any of my previous posts you will note a theme that runs through many of my blog posts. This recurring theme is that you should avoid the lowest price diamonds.  These diamonds are cheaper in price because they are usually worth less than the more expensive diamond. This is true despite the fact that – ON PAPER – they may seem to be the same GIA grade!

My wife and I recently purchased a new home. In the development in which the home is located there were six homes that we looked at. Each of the homes was built by the same builder at the same time. Each were similar in terms of their square footage.  Some had better lot locations than others.

The homes varied in the ‘sales price per square foot”.  The prices ranged from a bit less than $140.00 per square foot to a bit more than $180.00 per square foot.

Which home did we purchase?  The one for more than $180.00!!  And it was on one of the least valuable lots!

No. I am not wealthy enough that I do not care about the price.  I certainly do care.

Quite simply, despite the fact that each of the houses can be measured in “square footage”, the house we purchased was nicer.  It had a better feel. It had better finishes. It had a “special” character that the others did not have – for US!

So you ask – What is the point of this particular blog post?

As I have said repeatedly throughout my years in the diamond business, the specifications that are on paper tell only a part of the overall picture. The sure footage of a house  – on paper – is similar to the GIA designation of a color and a clarity. To some, it tells everything they think they need to know.  To others, they understand that things cannot be simplified down to numbers or letters – and the object, whether it be a house or a diamond or a beautiful woman or almost anything in life, must be seen with one’s eyes in order to determine what it truly looks like.

I could have bought the bargain house for 30% less money for the same square footage.  And, believe me, the difference in the overall amount of money is substantial.

But each time that I drive up to my house and each time that I walk into it – I will be home in the house that I truly will love and enjoy.

The bottom line is this.  If you go through life only concerning yourself with “lowest” price, you may be cheating yourself out of pleasure and enjoyment!