Season 4 Episode 7

Girls Best Friend or Foe – synthetic diamonds.

Worth is relative to how much you can sell something for. A house for example can generally be purchased and then resold fairly soon, for approximately the same selling price, all conditions same. However, try selling a knock off of a brand or clone of any item and how much can you sell it for.

So what does this have to do with synthetics diamonds.

 

Synthetics

Pricing in 30 years what is your diamond worth

History

Shows that with time production efficiency increases and costs to produce decreases along with competitors entering into the market

Synthetic Emeralds

Have lost 80%

Average Retail Price for a Standard Gem Chatham 1ct RD is 370.00

Cubic Zirconium

1970’s 40pct equivalent to  147.06 adjusted for inflation 2015 today Wholesale

Better Quality CZ at wholesale about 3.00 pct

98% deduction

Though there are some branded CZ’s that sell for 100pct today.

Synthetic Diamonds

Started out about advertise  they were 30% less than Natural

IGI reports

Problem comparison

Pedigree Problems

discounts vs top tier labs

21% Discount

only 14% compared to IGI naturals

Not as big of a difference

Not using Top Tier Reports

All over the internet lab opinions

Ask for GIA

What will they be worth 10, 20 or 40 years from now.

Well I don’t know but my guess is that you will be able to buy a synthetic diamond for 100-150 dollars in the next several decades.

If you have any questions you may call me at 803-792-1326.

 

Do you have a different opinion? Do you have any advice? Do you disagree? Let me know! I would love to hear from you!

 

J.  Christopher Guritz

Selling a diamond with a report that doesn’t match the most known standard. What must you do that you have NEVER done? Find out on latest Diamond Answer Man show with guest Cecilia Gardner CEO of the Jewelers Vigilance Committee.

 

Wow what a great show we have ahead!

Its not to often that I have guests on the show – I’m very very excited to welcome you to the Diamond Answer Man Show Season 4 Episode 5.

If you are in the market for a diamond – sit back and listen. We have Peter Yantzer the Executive Director of the American Gem Society Laboratories on the show today. This show is about 1 hour long.

Wow made what a putz I am! Dialed the number wrong the first time!!

Here are the notes from our questions – However listening to the show you will find far more in depth details of the WHY you need an AGS report.

Enjoy the show!

J. Christopher

* What is the AGSL grading process.

Stones go to weights and measures where they are also checked using the DiamondSure device which tests for natural diamond or refers for further testing.  Depending on the results of the DiamondSure it may also be checked with the D-Screen device.  Depending on the results of the combination of DiamondSure and D-Screen results it almost always ends up in research for further testing for Synthetic origin, HPHT treatment or simulants.

Once that is accomplished it goes through the grading process for Cut, Color and Clarity.

 

What are the checks and balances?

Every stone is graded by at least two graders.  Disagreements are looked at by a third person (supervisory level).  Clients can request a recheck of the grading and it is rechecked by supervisory personnel.

 

Why?

We are a top tier laboratory.  In order to earn that reputation we have had to prove that we grade consistently and accurately for the past 20 years.  That’s why we have a robust set of Quality Assurance procedures.

 

 

* How has the AGSL performance cut grade system positively changed the industry?

Previous to the AGS 3D Cut Grading Process diamonds were cut graded by looking at the table diameter%, the average of the crown main facets and the average of the pavilion main facets.  This method worked OK for its time.

The AGS Light Performance System took the grading of diamond cut to a 3 dimensional level.  We have at least a dozen patents for our metrics and methodologies.  Our system fully measures the effect that all of the facets on a diamond have on its light performance.  This method is still leading edge technology 10 years after its introduction in 2005.

 

Why?

Being able to assess diamonds in 3 dimensional space rather than two dimensional averages allows us to create light performance metrics and grading systems for almost any shape and facet arrangement.  Not all shapes perform the same.  Nor do different facet arrangements perform the same.  We can analyze the light performance and if there is enough business potential we can develop a grading system for it.  That is an interesting story in and of itself.

Because all the facets matter with respect to light performance our analysis has led the industry to cut much more consistently and accurately than in the past.

We also help the industry optimize existing cuts as well as new cuts.  This helps the industry bring new cuts to market and breeds creativity.  All pluses for our industry, wouldn’t you say?

 

* How do you approach the 4 C’s in preference of priority.

The American Gem Society has always ranked the 4 C’s in this order:  Cut, Color, Clarity and Carat Weight.  I think you can argue the order of color and clarity but I don’t think you can argue that Cut is by far the most important.  Carat weight is really the least important but because of human nature being what it is Carat Weight is usually ranked the highest by consumers.  For example, the psychology of a 0.98 carat diamond versus a 1.00 carat diamond still holds sway over many consumers.

First in the News

* Reuters reports

* Manufacturers who cut and polish diamonds have found themselves caught between giant mining companies charging high prices for rough stones, and big retail chains that demand gems at low margins to keep sales moving.

* “Have you ever heard of a 20-year-old standing outside a store all night to buy jewellery?” Ernest Blom, president of the World Federation of Diamond Bourses, asked delegates at an industry conference at a Tel Aviv luxury hotel.

* No major deposits have been discovered in about two decades. The miners say they are investing heavily to keep supplies coming.

What this means for you!

* Prices dropping is some areas (reported by rappaport)

* Rounds 1-1.49ct

* G SI1

* However in  SI2 all G and under in colors have dropped.

* Want a K – M VVS to SI2 dropped here too (I know not many of you)

* D IF to VVS2

* EF IF

* Rounds 1.5 – 1.99

* Main Areas

* I-M IF to SI2

* FG SI2

* D IF-VVS1

* E IF

* Rounds 2-2.99

* SI2 all G and under in colors have dropped.

* D IF-VVS1

* E IF

* Rounds 3-3.99

* KLM VS to SI2

 

This means go get your deals! With the reduction of rough coming in – You will see an eventual turn around and I believe what could be a sharp increase in price.

Though DeBeers only handles 33% of the worlds mining production they have dropped their rough prices to polishers in India. This is only a small bandaid on the polishing industry.

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You may contact me through the speak pipe app to the right or call me at 803-792-1326 if you have questions or suggestions! How is the show doing? What do you think??

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Yikes! I got JACKED my appraiser says so?

Ok Ive been in California for a couple of months and being a Native who’s worked in the jewelry trade (in just about every capacity) gives me the awareness of many jewelers on the West Coast. So this has led to me visiting and staying in some of these stores for a day or longer! Wow! Lucky guy that I am!

Having been an appraiser in my past life has helped with a certain awareness of valuation that you don’t receive with gemological diplomas and training. Appraising is an art unto itself and though you strive for being unbiased, bias always creeps in. This is why many organizations suggest using an independent appraiser. The industry is fractured and most are grandfathered into the practice which is where a problem may arise between consumer and jeweler and appraiser. An appraiser should not act on the best interest of anyone and statements on an appraisal should arise as factual and indifferent to the individual and the seller. Of course we are human beings and I like you don’t like engaging with automatons so bias creeps in. Our feelings get involved and this is great but only when it affects value in a positive way (not higher or lower, were talking about defendable statements of value).

So here is the situation – I was spending time with a jeweler recently and she is a member of the American Gem Society. The American Gem Society (AGS) is the parent of the American Gem Society Laboratory(AGSL). I’ve spoken about the AGSL and there creation and use of the ASET for performance grading in other shows. This jeweler has been in the business for over 30 years and shes been a wholesale manufacturer, a trade repair shop and a full blown guild store during this time.

Diamond Reports – Its wrong – Who Cares?

Alright, you’ve heard me rant about this before! If you are buying a diamond don’t become price blind! That is where you become so focused on price that you are willing forget everything about true grading and end up BUYING the PAPER!!

O.K. So this is my second show after JCK Las Vegas and I’ve had some time to think and I’m Cranky!

Any JEWELER who advertises that they sell WHOLESALE is LYING to you! That is unless of course you are truly buying from a wholesaler (which 99.9% of the time you aren’t) – BTW if you want to find out if they are a wholesaler just contact me and I’ll check for you!

Now reasonably, they might just be saying “Hey, I’ve got lower prices than the other guy.”  So instead of legally stating “Low prices or Deep discounts”  they use this word “Wholesale” Not so legal – Now, what they can legally say is “Wholesale Prices.” That is if they truly had an occasion when their price at retail was at current wholesale levels.  Their margin or markup may be minimal but, when you pay sales tax you are buying from a seller who is reporting your retail purchase on taxes. Otherwise they can be hit with penalties from their state department of revenue. You are an end consumer – you’re a retail customer.

Rule number 1. Never Buy from a business that lies to you!

Ok, so you met your “UNCLE/FRIEND” in the business and he’s got this diamonds that matches your request for color, clarity, price and cut grade.  He’s even going to read the “certificate” for you if you want. He will even write it out in email or text it to you. You’ve learned about grading and even have an app that tells you what the different grades on a diamond mean. So you go with the deal! Your “Uncle/Friend” sells you the diamond and puts money in his pocket – everyone is happy.

REALLY? You just got taken and you are happy!?

The problem:

* BOGUS Reports

* BAD Jewelers

Paper mills /Bogus reports – Terrible Labs who care more about running money through the till than accurate ethical grading. Bad jewelers – I was at JCK and I overheard a jeweler at a table actually saying that “all my customers want is some certificate with the diamond, so I give them a certificate”. I couldn’t believe this! Now I’m back in California and I’m visiting stores up and down the Northern California Peninsula  and I hear this again. Some jewelers out there don’t care because you don’t care about the diamond as long as it has paper/report and it fits your price range. This has been going on for a long time. This is not the first or last time that I have mentioned it – When will we get a clue and stop being price blind. A jeweler is a person and a jewelry store is the representative body of those who work there (jewelers). Any business that acts as a vending machine and can’t explain or earn your business doesn’t deserve it. If you are looking for a diamond today – please understand this, Jewelers deserve to make a profit and stay in business – discounters who reduce  your out of pocket expense are doing the same thing – making a profit. Most of the time though, the “Value Capture” is bent  highly in their favor when they use these unethical reports. Price blindness is a term I use for conscious and subconscious acts of Loss Aversion.  Contrast happens when one person says 7k and another person says 4k. Absent blindness – You can’t compare the actual stones next to each other so you do the next best thing and compare the “paper”, Right? WRONG! Just because you want to believe it to be true does not make it true – so Loss Aversion kicks in and h...

News First

* Jewelry and Diamond Sales grew over last year! US buyers still buy more diamonds than any other country.

* 2/3’s of all online sales are made by Brick and Mortar stores.

* No new diamond mines – Out of 7000 pipes only 60 are producing and only 10 are big producers.

* Diamond production is going down -nudging De Beers to alter its mining methods to extend the life of the mine and maintain profitability.

 

#1 The diamond industry is struggling for your business!

Rough buyers who polish diamonds for sale to wholesalers and retailers are complaining that the going rate for polished diamonds is too low! Making it impossible to stay in business. The banks are charging higher rates for loans – Indian polishers are folding because they use the loans to purchase rough and then polish to sell through to the wholesale market – *Problem, the current margins on polished diamonds are not profitable for them and they are just closing up shop.

What does this mean for you??

Well, if you are in the market right now – there are some deals to be had! It also means that prices will go up in the near future. I have been saying for about 4 years now that prices on the wholesale market are low and in some cases have been dropping. This will turn around and you will see movement in the other direction.

Philippe Mellier CEO of De Beers gave a talk at JCK 2015, which I had the pleasure of hearing and this is what I took from it! De Beers only controls about 1/3rd of the market and they are not  going to go out of the way to help businesses that show no effort to improve processes in mfg and or aren’t using GAAP standards with their financials. They are not going to support the other diamond groups that produce the other 2/3rd’s of the market by Marketing and Advertising generic diamond products to boosts sales overall.  Makes sense to me!

Why does this matter? Well for those who will not opt for improving processes, accounting , creating their own marketing and advertising its near the end of the line. For those De Beers Suppliers of Choice (sight-holders) who make the needed changes and add value to the diamonds they produce – De Beers has a division that may help with financing rough purchases. Overall what does this mean for YOU the groom to be. Prices are going to go up! By adding value they mean increasing value perception in a way that increases margins. Forevermark is a prime example that its possible… This De Beers brand is only available to select dealers.  The diamonds they select must adhere to a minimal set of parameters to receive the Forevermark designation. There are many generic diamonds in the world that are far higher performers in the beauty arena – However, US buyers are eating this brand up and paying the premium for it.  This tells us that US buyers are BRAND conscious and are willing to pay a premium for it. Which in turn tells De Beers that polishers are not paying attention. Brands sell in this case even if there isnt a big difference. Is the Forevermark worth it?? Well from an appraisers perspective of insurance valuation – Yes, You can only get Forevermark from a Forevermark dealer, much the same way you can only get a Hearts on Fire from an HOF dealer, or a Tiffany diamond from Tiffany.  Overall brands carry a premium because of what they stand for or mean to you.

I think two things are going to happen – the polishers not making money will leave the industry and prices will go up. This will happen not because the weak polishers can’t compete but will happen because polishers will be forced to refine and innovate. I wouldn’t pay more for a generic diamond unless it performed better.

In this episode we revisit synthetic diamonds for the engagement ring purchase along with the reasons why I do this show.

If you have ever wondered if I get paid to do this show – this is your episode.

Do you have any ideas on how we can both produce an unfettered opinion on the trade and monetize the show? Drop me a line and let me know.

 

(btw this is the lost episode – between some major changes to my life, family and the Diamond Answer Man Show)

Coming soon – JCK show 2015, the state of the diamond industry, more on synthetic diamonds and reports – again what is the trade doing to help the problem.

 

In this episode I talk about my thoughts on synthetic diamonds as an option for engagement rings.

Hello! My name is J. Christopher Guritz and I launched the Diamond Answer Man podcast in response to encouragement from my family, clients and many now friends. I started over three decades ago working in the jewelry trade. I worked from the jewelry bench all the way up to Vice President of Sales for not one but two diamond polishing (cutting) firms. I am the inventor of the first handheld 10X achromatic and aplanatic optical performance tool for diamonds. In the early 90's my team started using the use of word "performance" with our clients in response to all the overly technical grading that was coming out at the time. We related performance to the diamonds beauty and shared it with friends, jewelers, jewelry authors, lab directors and scientists...today the word performance is now used on certificates from almost all major labs in the world. My goal today is to help you feel confident about your purchases used to memorialize your special moments. I do this all from my small sound studio in San Jose, California.

How to protect yourself from a 10,000 loss in 5 minutes. Part 2 Season 3 Episode 1.

Channel Set diamonds review this week!