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Gem labs and the science, art and marketing of diamonds

certificate.gif (16622 bytes) There is much to be applauded about the gem labs, and GIA in particular. They have employed some of the best scientists in the field of gemology and have qualified and quantified an entire industry that used to be very vague about its terminology. In the old days, diamonds were an uneven marketplace to say the least. After all, how can you genuinely agree on a fair market value of a diamond if two trade people don't agree on the quality of the merchandise, let alone the end consumer?

This achievement has given the GIA a stellar reputation. Much deserved. But let's really analyze this from all points of view. As a consumer, does it help to have a grading system? Unequivocally. Without it, quality has no meaning or value.

Yet some in the trade were slow to accept standardizing the industry. It was "easier" to achieve a high margin selling diamonds to end consumers when they didn't know what they were buying. But in the long run, standardizing diamond grading actually helped the industry. To equate this with another field, people who bought cars often felt uncomfortable with car salespeople to the point that calling someone a used car salesman was considered derogatory. The diamond industry needed to make sure the same did not happen to Jewelry salespeople. And when the news started featuring stories of switched stones and unscrupulous behavior on the part of some stores, the public became weary. So overall, the GIA did the diamond trade a huge favor as well as the end consumer.

So today we live in a world where you can be assured of the quality of a diamond just by its GIA grade. It isn't perfect, but it's a standard that can be relied on.

But was the grading system optimized for end consumers? That is a debatable point and we will address that shortly as we discuss the standard below.

In the wake of GIA's standardized grading system grew new labs. The best ones tried to emulate GIA's system. Some tried to expand it. Bold moves with varying success. Read our article on the SI3 for a relatively successful implementation.

Once GIA became the gold standard, to start a new lab required offering something GIA didn't. Which was pretty hard. This is important for you as a consumer to understand because then you can judge the meaning and value of the grading report your diamond has.

If a new lab had strict grading standards, what use would it be to an industry person? While they might save a little on the cost of the report, no lab would beat the reputation of GIA. So the savings wouldn't offset the value of the cert.

A lab could offer quicker turnaround. This definitely helped because GIA is not the fastest lab. If you have a customer who doesn't know the difference between GIA and another lab, a 24 hour or less turnaround time could make the difference between making the sale or not.

But by far the most attractive way to generate sales and even obtain market share is to offer lenient grades. And this is why you have to be careful. If a seller is offering a diamond from GIA graded as E/SI1 costing $7,000 and you try to compare that to a diamond from another lab graded as E/SI1 with the same carat weight costing $6,800, you may believe that you are getting a bargain. But you are making a bad comparison because that first stone might score D/VS1 with the secondary lab making it worth more. And the second stone may score a G/I1 if GIA were grading it...

For the most part, labs that did make some inroads achieved it by offering lenient grades. But one lab found another way. And that lab is AGS.

AGS had a nice head start because the parent organization is actually made up of Jewelry Stores. And when they decided to open a lab following GIA's grading system, they got no business. Since they offered the same grading as GIA, no one needed an AGS report. And the lab was on the verge of bankruptcy. Until they realized that GIA did not offer a cut grade. And the public began to get more educated about cut.

Since the sellers had no way to show off a nice cut from the independent grading report, and at the same time this new marketing slogan of "Ideal Cut" started to take off, AGS came up with a great idea. They started offering cut grades. Speaking as a gemologist, the cut grades were nothing special at all. They overvalued polish and even symmetry. And basically just provided a marketing paper for sellers. But to their credit, their grades have always been relatively consistent and tracking closely to GIA's consistency. So the "Cut Lab" was born. This fact is borne out by the fact that the percentage of diamonds graded by AGS is almost identical to the percentage of diamonds cut to "ideal cut" proportions.

Something to keep in mind in any industry is bias. This is especially important where independence of undue monetary influences affect the outcome of the item being evaluated. In the pharmaceutical industry, a drug study conducted by an independent organization is preferred to a drug study sponsored by a pharmaceutical company.

This is where the economics of the Gem Labs and even independent appraisers come into play. There is far more money to finance even non-profit endeavours by looking to the trade than the end consumer. GIA is funded by contributions from the Trade. And this is clearly reflected by the fact that their lab is called GTL. Gem Trade Lab. AGS is closely aligned to the trade as well. There are many AGS Jewelry stores.

While the information given out by the labs is important, as are the drugs manufactured by the drug companies, that doesn't mean you should stop thinking when you are told something by a lab. You are in charge of your own education at the end of the day.

So now that you have a bit of an introduction into the history of Diamond / Gem Labs, let's discuss the actual grading system GIA developed.

Carat weight. There wasn't too much to standardize in this respect, as the carat weight was in use prior to GIA. However, GIA did set a standard by using ultrasensitive equipment and made sure to measure the diamond to an extra decimal place, as another method of being able to identify that a diamond described in their report matched the real diamond.

Color. While color is discussed in more detail in the 4Cs section of this tutorial, the basic non-fancy colors run from D through Z, with D being the best.

Is this standard really optimized for the benefit of consumers?

Well, most people can't tell the difference between a D or E color. Even D to F. Yet by breaking down the colors to such a fine point, there are large price hikes for marginal differences in color. It would have probably helped the consumer more to use a smaller scale. Let's say keeping D as the best color. But for example the novice won't be able to tell the difference between an E or an F, why does the scale need to break down so finely? It takes a long time for most graders in the lab to get good at judging color and then only when comparing against master stones. There were several gemologists in the lab who were hopeless in judging some of the colors if they didn't have the master stones in front of them. Yet people are paying hundreds and sometimes thousands more when an expert can't tell without expensive tools.

It might have been better to have a scale that reflected quality that actual consumers could detect differences in.

However, you can use this to your benefit. If you want the best, go with a D color. You won't be saving much no matter what. But if you can live with second best, have your fiance compare an E-F-G-H color, and if she can't tell the difference, go with the first color where she starts to notice it. You will save a lot of money picking out your desired color that way.

Clarity. One of the main tools used in grading clarity is a 10X power loupe (magnifying glass). In the trade, most people use only the loupe. In the lab, a binocular microscope is used. It is meant to be used at 10X but is often hiked up to the max (generally 40 power) to look for pinpoints and then brought back down to 10X to see if the pinpoint is still visible. If you increase the power of a microscope enough, ALL diamonds, even those called internally flawless, will have at least pinpoints in them.

That's a fact. GIA has standardized on the concept that inclusions matter if they are visible under a magnification of 10 Power. This unnaturally inflates the value of a diamond. While it might be more understandable to say that the best grade given out needs to magnified to 10X power before giving out a grade of internally flawless, why is it really relevant at lower grades? Consumers don't go around showing off their diamond with a loupe. The clarity scale could be improved if the standard reflected inclusions visible to the naked eye. What's the point of paying more for a diamond because one has less "invisible" inclusions than another?

Cut. Now that's the trickiest of them all. And although AGS has recently come out with some new initiatives and GIA has finally started issuing a cut grade, expect things to change over time. The AGS "technology" is so flawed that many in the trade are laughing about it. Don't rely on their cut grade at all these days.

And GIA's cut grade is only better because the grade given out is more general. But both based their grades on numbers and the numbers came out of computer models. They are trying to take art and turn the judging of beauty into a numbers game.

Rays of light bounce inside a diamond. The light is refracted and reflected and comes back out. The refraction causes colors to separate. The color of the diamond affects this. The inclusions in the diamond may absorb some colors in the spectrum. Fissures in the diamond will change the specific gravity. The carat weight may mean that a set of proportions that work at 1 carat will work completely differently at half a carat. There are so many qualities that make a diamond cut look beautiful. There are so many factors that affect light's behavior. There are millions of variables, little agreement on what constitutes beauty in a tangible quantifiable manner that a cut grade is implausible to do right...

This is why the "ideal cut" is nothing more than a marketing concept. There is no one "Ideal Cut". Tolkowsky came up with some proportions that make diamonds look good. But plenty of other proportions work well and GIA's lookup tables and the AGS theories based on the work of some vendors' wishful thinking just don't cut it as science. A diamond should be looked at to determine if it is cut beautifully. It shouldn't have its proportions compared to a lookup table.

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