Welcome to the NDRDiamond Blog.

The postings on this site 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 appreciated 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

In a prior post I discussed the necessity of dealing with someone who you can trust.

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 my prior post on the subject of “Trust”.

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.

For as long as I can remember I have been recommending to any diamond buyer that they buy a diamond with a  GIA “certificate” or “diamond grading report”.  It has recently occurred to me that, while this recommendation my be second nature to someone like me who is involved in the whole diamond trade, the idea of a GIA “certificate” is a concept that is not familiar to the consumer diamond buyer.

The Gemological Institute of America (GIA) is the preeminent authority in determining the quality of a specific diamond. The GIA is an nonprofit educational institute which operates diamond grading laboratories in multiple locations around the world.

Although there are other laboratories that issue diamond grading reports, there are no other diamond grading laboratories or companies that have the same significance with regard to accuracy and respectability.   In fact, other diamond grading laboratories have been the subject of a major class action lawsuit among diamond consumers who alleged that they were defrauded when they purchased diamonds with a certificate that was, in fact, very inaccurate with regard to GIA quality assessment standards.

A GIA “Certificate” or “Grading Report” is a report issued by the Gemological Institute of America with regard to the specifications of a specific diamond. The report represents an  independent and professional assessment of a diamond’s specifications with regard to the actual carat weight, color and clarity of a specific diamond.

The information within the report provides specifications about proportions and other things that provide insight about the “Cut” of a diamond. The GIA has only recently begun issuing a grade with regard to the “Cut” of the diamond.*  Since 2005, the GIA has assigned a “Cut” grade only on round diamonds. Fancy shape diamonds, meaning all diamonds that are not a round shape, are not graded with regard to cut.

The GIA report records many aspects of a diamond’s specifications and scientific measurements which serve as “identification markers” of the diamond.  These “identification markers” identify and differentiate the subject diamond from all other diamonds. For this reason, the GIA report is a record of one specific diamond and thus becomes the “Certificate” for the diamond.

A “GIA certified diamond” refers to any diamond that has been submitted to a GIA laboratory and has been issued a grading report.  This report is in one of three formats.  It can be a full report which contains a diagram and plot of the diamond.  It may be a “Dossier” report which is smaller in size and is usually issued on diamonds which weigh less than 0.99 carats.  A newer report format is referred to as an “E-Report” as it refers to a diamond for which an electronic report is issued without a paper report.  This report, no matter which format, is referred to, interchangeably, as the “GIA Certificate” or “GIA grading report”.

A GIA report is not a statement of valuation. Diamonds of a similar GIA grade are not identical and are not necessarily of equal value.  There are many factors that determine the overall beauty and valuation of a diamond. For this reason, there can be significant valuation differences between diamonds of the same GIA grade.

With regard to diamonds that are not certified by the GIA, it is wrong to believe that such diamonds are less expensive than similarly GIA graded diamonds.  It is my professional belief that most diamonds that are sold without a GIA grading report are sold with inaccurate and exaggerated color and/or clarity grades at higher prices than would otherwise be realized with a GIA grading report.

An additional protection inherent in GIA certification is that the GIA will only offer a diamond grading report on a natural diamond. This eliminates the concern that the diamond may be a laboratory created “diamond” of significantly lesser value.  The GIA grading report will also note if the diamond has been subjected to any treatment or enhancement processes which, in most cases, will effect valuation.

Most diamonds that are sold at mass retailers or typical mall locations are not certified by the GIA.  The reason for this is that the diamonds sold in such stores are usually inferior in quality than that which is typically certified by the GIA.  Also, small diamonds used in jewelry are almost never certified by the GIA .

As I stated at the outset, I recommend that a diamond engagement ring buyer should purchase a diamond that has been certified by the GIA. The GIA diamond grading report provides essential information about the diamond.  A GIA certificate protects the buyer from “puffery” or exaggerated claims made by unscrupulous salespeople.  It protects against synthetic or lab grown diamond imitations as well as non-disclosed enhancements. The GIA report also serves as documentation and identification of the diamond that is useful to its owner with regard to insurance and other matters of ownership.

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For more information on the subject of the new “CUT’ grade, see:   “GIA’s new round brilliant cut grading system sheds light on diamond’s overall appearance”

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.

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 “SI1” 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!!

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* * In the spirit of honesty and transparency, I have recently swapped my wife’s diamond for a new diamond. The original diamond was a round diamond that she received before we were married. Her new diamond is A Cushion Brilliant shape which is a “H” color and “VS2” clarity. If you read my posts you will see that my recommendations for round diamonds are somewhat different than my recommendations on fancy cut diamonds.     (05/02/2023)

It has taken me a few years to write this post. As a wholesale diamond dealer with 45+ years of experience in the diamond and fine jewelry trade, I was not sure how to best answer this question when lab grown diamonds first started to appear on the world market. I had many questions.

• Are lab created diamonds as beautiful as natural diamonds?
• Would lab created diamonds be widely accepted by the diamond consumer?
• Would lab grown diamonds replace natural diamonds?
• Would lab created diamonds bring down the price of natural diamonds?
• Would lab created diamonds create an additional market that would coexist with natural diamonds?

After a few years of witnessing the development and growth of the lab created diamond market, I can finally address the issue of lab grown vs natural diamonds. However I cannot answer the subject title of this post. The answer is one that is very personal to the buyer for the reasons stated below.

A natural diamond is one of the wonderful and beautiful natural creations of nature. Mined from 150 to 200 kilometers deep in the Earth, natural diamonds (of the quality that are used in jewelry) are very rare. Natural diamonds have been cherished for hundreds years for their beauty and uniqueness and rarity- and as a symbol of love and marriage. Because of their uniqueness and rarity, natural diamonds are expensive and are thought to be a “store” of value and future price appreciation.

A lab created diamond is a man made simulated diamond that is grown in a laboratory environment. Unlike other simulated or synthetic diamonds of the past, lab created diamonds share the same chemical makeup as natural diamonds. Because of this, lab created diamonds are the same as natural diamonds in terms of their specific gravity. What this means is that whereas previous man made “diamonds” were easily distinguishable by their weight as well as other factors in their overall appearance, a lab created diamond will weigh exactly the same as a natural diamond.

To emphasize a point made above, natural diamonds are very rare! Natural diamonds are made by forces deep within the earth over a period that may take more than a billion years for the diamond to form. Estimates of a diamonds age range from a mere 90 million years to over 3.5 billion years! Because of the contrasting conditions of natural and lab grown formation, lab grown diamonds display several features which allow them to be Gemologically distinguished from natural diamonds.

As for their beauty, I must admit that lab created diamonds can be very beautiful and, in some cases, more beautiful than natural diamonds. Also I must state that I have seen many lab grown diamonds that are not nearly as beautiful as mined natural diamonds. Some lab grown diamonds display a brownish or grayish or bluish tinge which is not usually seen in natural diamonds.

A for my statement that lab created diamonds are more beautiful than natural diamonds, one must understand this is full context. A natural diamond and a lab grown diamond of similar GIA grading will be close in appearance as any two natural diamonds within the same grade. (See caveat about color tinges above). The reason for my comment is that most consumers who purchase a lab created diamond will purchase a lab grown diamond that is of a higher GIA grade than if they were buying a natural diamond. At 10% percent of the cost of a natural diamond, most buyers of lab grown diamonds can easily afford the difference in price between a high grade diamond as opposed to sacrificing quality in a natural diamond in order to meet their budget requirement.

Another factor affecting the beauty of lab grown diamonds is the fact that it may be easier to locate a beautiful lab grown diamond – particularly in “fancy shapes” – meaning all non-round diamonds. Beautiful fancy shape natural diamonds are more rare and are often more difficult to locate on the world market and consequently in retail stores. Lab grown diamonds, on the other hand, are readily available and more easily sourced at wholesale and retail levels.

As for my initial question about the “acceptance” of lab created diamonds, lab grown diamonds have made significant inroads into retail jewelry stores and consumer acceptance. To the retail jeweler, lab grown diamonds are more readily available and profit margins are likely to be significantly higher due to the lower product cost. To the retail consumer who is struggling to be able to afford a diamond in order to get engaged, a lab created diamond offers an opportunity to satisfy his partner with a bigger and nicer diamond than he would be able to acquire in a natural diamond.

To some, the justification for buying a lab created diamond is that it is a “greener” choice. The early marketing campaigns designed to interest consumers in lab grown diamonds focused on “sustainability” and “conflict-free”. I believe that these marketing “buzz words” serve as justification to one who is trying to justify the purchase of the lesser priced alternative. Some buyers choose a lab grown diamond because all that matters is “getting a ring” and they do not care about uniqueness or “natural” or long term value.

The fact of the matter is that lab grown diamonds are coexisting with natural diamonds. The prospective diamond buyer who frequents mall type operators such as Zales or Kay – the buyer for lower quality commercial grade diamonds and diamonds of 1.00 carat or less is more likely to acquire a lab grown diamond than the more affluent or more sophisticated buyer. Another likely buyer of lab grown diamonds is the customer who could afford a 1.00 carat – 2.00 carat diamond but wants to acquire a bigger size diamond.

Lab grown diamonds have had lesser impact at the higher end of the diamond market. The high-end and top quality diamond buyer has been non-receptive to the idea of lab grown diamonds.

It has been my experience that the natural diamond buyer is more traditional and more concerned with his own family history and traditions as well as his partner’s expectations. He understands the history and generational tradition of a diamond engagement ring. This buyer understands the uniqueness and rarity of a natural diamond. This buyer also believes that the acquisition of a diamond is an emotional and financial commitment to his future partner and feels that a natural diamond is “real” and that a lab created diamond is not the same.

So where does this leave us with regard to the title of this post, “Lab Grown vs Natural diamonds – Which to Buy?”. The answer is up to the buyer who must weigh these choices in relation to affordability and emotional considerations.

A lab grown diamond may be very beautiful. It may be a better choice than acquiring a natural diamond that is of a lower commercial grade. It is also a good choice when the primary objective is a large diamond with a limited budget. It is the right choice if this is what your prospective partner/girlfriend/fiancé/wife tells you that it is what she wants because the size of her ring is what is most important to her.

On the other hand, many diamond merchants and jewelers and many consumers compare lab grown diamonds to crypto currency or other “fake’ products. They are not “real” nor do they have any inherent or intrinsic value. I agree with this. However, I also understand that the lab grown diamond buyer is not interested in history or intrinsic value but simply in obtaining a beautiful and, in most cases, a bigger looking ring. If this is the objective, a lab grown diamond may be a good choice.

To others, the process of acquiring and owning a natural diamond is something that is steeped in pride and tradition and history. A diamond is a once-in-a-lifetime purchase. It is an financial and emotional acquisition that shows an emotional commitment and promise.

There is no right or wrong in the choice of lab-grown vs natural diamond. It is entirely a personal decision. In either case, the acquisition of a diamond engagement ring is the act of acquiring something beautiful that you and your partner should be proud of and that you will look at and admire for many years – hopefully for a lifetime.

* The lab-grown diamond boom is over, jewelry industry experts say. 

* Lab-grown gems are mainstream now and real diamonds are back in vogue, analysts told Business insider.

* Prices for lab-grown diamonds are likely to tumble amid a glut of supply. 

The man-made diamond boom is over, and prices for ultra-trendy lab-grown diamonds are set to tumble this year, industry veterans say.

Paul Zimnisky, a leading diamond analyst, foresees jewelers scaling back their business in lab-grown diamonds while ramping up their focus on natural diamonds over the next year. In fact, most jewelers aren’t even bothering to stock lab-grown diamonds in inventory, and are only purchasing them on consignment, he told Business Insider. 

It’s the exact opposite of what jewelers have been doing since 2018, when the hype for lab-grown diamonds took off. 

“Some of the fad is starting to fade a bit,” Zimnisky said, pointing to lower-priced retailers like Walmart and Pandora, who have started to “aggressively” push lab-grown stones. “I think it’s become a lot more mainstream.”

Prices for lab-grown diamonds will continue to fall over the next year, he said. Ziminsky didn’t have a price target, but said he believed loose lab-grown diamonds could see nearly the same price decline as they did in 2023, which the jewelry analytics firm Tenoris estimated to be about 20% in the 12 months leading up to November. 

Cormac Kinney, the CEO of the commodities trading firm Diamond Standard, believes the plunge could be even steeper as the hype over lab-grown gems fades. Man-made diamond prices could ultimately drop another 50%-80%, he estimated. 

“Fashion jewelry is always worth a small fraction of real jewelry,” Kinney said. “Only real is rare.”

Man-made fad

It’s not hard to imagine why man-made diamonds were so popular last year. Even A-list celebrities like Emma Watson and Meghan Markle have been known to buy lab-grown jewelry — they’re cheaper and basically identical to the naked eye. 

“It was basically a manufactured version of one of humans’ most valuable and natural resources,” Zimnisky said of lab-grown stones. “It basically allowed consumers to buy a diamond at really affordable prices that allowed consumers to buy very large diamonds that would cost hundreds of thousands of dollars if they were natural diamonds.”

But some of the shine behind lab-grown gems has diminished, largely because they’re so widely available. Lab-grown diamonds now make up around 20% of the total diamond market, Zimnisky estimates, up from nearly zero percent in 2015. 

Sales of lab-grown diamond jewelry soared 51% in the 12 months leading up to November, while sales of loose lab-grown diamonds grew 47%, Tenoris data shows.

But prices for lab-grown diamonds have actually been declining since 2015, the year they first started to become mainstream. Back then, a man-made diamond was priced at around a 10% discount to a natural diamond. Today, they’re priced at a 90% discount, Zimnisky estimates.

“I think people kind of just bought it, and they thought, ‘you’re the only one with a three-carat diamond. But … if you go to a wedding these days, you’re just looking at people’s engagement rings, there’s a lot of three-, four-, five-carat diamonds and it’s become ubiquitous,” Zimnisky said. “I think now you might actually start to see the opposite happen, where people are like, I just want a smaller natural diamond.”

“A synthetic diamond is not the same as a natural diamond,” Kinney added. “Any gem lab can tell the difference, and your friends probably can too — especially if the diamond does not match your economic status.”

That doesn’t mean demand for lab-grown stones will disappear, and the gems will surely still hold appeal for some buyers, but sales will likely grow at a slower pace. Zimnisky estimates that sales growth could fall as low as a single-digit percentage this year, down from the 20%-30% growth when lab-grown diamonds were at the peak of their popularity.

In fact, lab-grown stones will probably no longer be seen as an alternative to owning a bonafide diamond. Rather, they’ll segment off into a different, lower-priced market for those who don’t want to buy the real thing, or will one day upgrade to a real stone, Zimnisky and Kinney said.

And as for people who have already bought lab-grown stones? You’re probably stuck with them. According to Kinney, pawn shops likely won’t even pay 10% of what customers paid for any synthetic diamond — even diamonds above one carat. 

“Jewelers tell me that a growing number of couples are coming one to three years into a marriage and replacing a synthetic stone with a smaller but real natural diamond,” Kinney said. 

**The above content is a repost of an article published on February 18, 2024 in Business Insider written by Jennifer Sor.

Low 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.

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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: $3,250.00

This diamond is certified by IGI as opposed to GIA.  This lab is not in any way in parity with the standards of the GIA.  Diamonds from IGI and EGL are much less expensive than similarly graded diamonds with a GIA report.

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: 3,950.00

This diamond is also a non-GIA graded diamond.

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: $4,600.00

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: $5,400.00

This is the “right” diamond.

Although it is priced at 66% 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

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!

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!

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!

This 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 

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!

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:

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.

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

Inconsistency on GIA Grading Certificates.

To diamond dealers and everyone associated with the diamond and fine jewelry trade, there is perhaps no thing more disturbing in recent times than the extreme inconsistency in GIA diamond grading reports.

While there has always been some level of inconsistency in diamond grading itself, today there are 10 GIA laboratories around the world.  It is obvious to knowledgeable Diamantaires that several of the GIA laboratories are significantly off the mark from the established standards of traditional GIA diamond grading.

The diamond buying public consumer must understand that diamond grading reports are not based on any scientific method of evaluating a diamond. The color characteristic is perhaps more consistent than the clarity characteristic.  This is because color is based on master color samples.  In a perfect world these master color samples used by the ten laboratories are all uniform and consistent. Clarity, on the other hand, is based on “standards” such as “a minor inclusion somewhat easily seen under magnification” or “somewhat difficult to see under magnification”.   There is no hard fast standard that determines one clarity grade from another. It is just the grader’s subjective opinion of the level of visibility of the inclusions within the diamond!

As a  result of the “blurry lines’ that are inherent in  GIA diamond grading, there has always been pricing differentials of diamonds within any particular GIA grade.  For instance, two 1.00 carat round brilliant diamonds that are graded “H/SI2” may be priced 25% more or less than the other because one might have a black carbon inclusion in the center whereas the other might contain a white feather located near the girdle.  Obviously, this second diamond is more desirable and valuable than the black center included diamond.

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.

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 seller’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.

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

Never before have I reposted a Blog post written by someone else. I happen to have come across this Blog post on the site “Cheap FAQ -Best Deals in Life” which discussed buying a diamond. I found the post to be very accurate and worthwhile for anyone interested in purchasing a diamond.

Here is the link:

www.cheapfaq.com/avoid-buying-diamond-jewelry-from-mall-chains-zales-kay-etc/

Happy reading!

In response to nonexistent profit levels and soft demand for diamonds, many of the largest Indian diamond companies appeared to recently change their marketing strategy. Realizing that the current system was all about the “lowest price” and that this was becoming destructive to their bottom line as well as the health of the diamond industry, these companies began listing their diamonds on Rapnet at the “list” price instead of at their discounted price. It was an attempt to revert back to market-making via personal communication as opposed to the cheapest price on a computer database.

I believe this was an attempt to avert the ongoing race to the bottom in which everyone is a loser. I believe that this was a good move with regard to restoring the health of the diamond industry.

Unfortunately Martin Rappaport felt it necessary to show the world that he is the only one with power to control the dynamics of the diamond market. And so he lowered his list prices to strike back.

This is unfortunate. The market was starting to recover from the abyss of January and early February. I sensed that there was a healthier attitude and increasing demand. Now, by lowering the list, demand will again stagnate as buyers will be afraid of diamond price deflation which could become a self fulfilling prophecy.

We, as diamond professionals, have an obligation to protect the integrity of our trade. Profit margins are senseless at all levels. More importantly, the appeal of diamonds in all aspects has been destroyed.

I yearn for the days when there was a “diamond market”. At that time there was also a thriving market for diamonds.

When buying a diamond a diamond grading report is essential. The grading report or “Certificate” represents an independent analysis of the quality of a diamond. Without such a grading report, one is at the mercy of the seller and assumes that the seller is accurately describing the quality. In many cases, sellers have a tendency to exaggerate the color, the clarity, or the cut proportions of a diamond. Some may do this on purpose; others simply do this because or their own lack of knowledge with regard to accurate diamond grading.

There are several diamond laboratories that offer diamond grading reports – often referred to as diamond “Certificates”. Among the most popular “Certificates” are those of the Gemological Institute of America (GIA) and of the European Gem Lab (EGL).

The Gemological Institute of America, or GIA, is a nonprofit institute dedicated to research and education in the field of gemology and the jewelry arts.Founded in 1931, GIA’s mission is to protect all buyers and sellers of gemstones by setting and maintaining the standards used to evaluate gemstone quality. The institute does so through research, gem identification and diamond grading services and a variety of educational programs. Through its world-renowned library and subject experts, GIA acts as a resource of gem and jewelry information for the trade, the public and worldwide media outlets.

The GIA Certificate is the gold standard of diamond grading. Although diamond grading is not an exact science and GIA grading may not always be perfect, the GIA attempts to be consistent within the framework of the color grading scale and clarity grading scale that GIA created.

One should not assume that every diamond that has the same specific color and clarity grade from GIA is exactly the same. GIA grading is subjective and deals with differences in clarity such as “minute inclusions extremely difficult to locate under 10X magnification” and “minor inclusions somewhat difficult to locate under 10x magnification”. These can be very subtle differences. For the most part, there is not much of a difference in GIA clarity grades in the Flawless or VVS grades. There can be significant differences among diamonds within the “VS”, “SI” and “I” clarity grades. For this reason, often diamonds within these are described as being a “top SI1” or a “weak SI2”.

EGL and most other diamond laboratories are for-profit businesses that are in business to make money. Unfortunately, they make money by issuing inflated or “bogus” diamond grades that do not adhere to GIA standards.

Unlike GIA, which has multiple locations throughout the world but strives to achieve uniform standards for grading diamonds, EGL has several independently operated labs throughout the world. Each has its own standard of how “far off” the GIA standard they are willing to go.

The best of the EGL labs is EGL– USA. There is a lab in New York and one in Los Angeles. I have once or twice seen a diamond grading certificate from EGL-USA that was very close to a GIA standard. In many cases, there tends to be a color grade difference of perhaps one color and a clarity grade difference of the same magnitude.

EGL International, which can be in any one of several locales, is a joke with regard to diamond grading and the Certificates that these labs issue. Color grades may be off by four or five shades – for instance, a diamond that is graded as a “G” color may, in reality be a GIA “L” color. Because of the fewer categories of clarity grades, the clarity grade is usually not off by as many grades as the color, however a variance of two or maybe three clarity grades is not unusual.

Perhaps now you can understand why GIA is the gold standard when it comes to a diamond report or Certificate. To take this a step further, one must understand that if they are comparing GIA graded diamonds and EGL graded diamonds; they are comparing apples to bananas. If one thinks that they are saving money by purchasing an EGL graded diamond, this is usually not true at all. If one were to get a GIA certificate on the EGL diamond they would most likely find that they are overpaying for an inferior diamond.

Such is life. Some people think they have found a way to beat the system. They only understand “low” price. This is the purpose of the non-GIA labs – to give these consumers what they are looking for.

UPDATE: On October 1, 2014 Rapnet banned all EGL grading reports from its diamond database listings. This is a link to the official notice.

How important is Polish and Symmetry in a Diamond Certificate.

This question is one that arises in my business several times every week. The typical request comes in for a “Triple Excellent” of for “EX/EX/EX” diamond.

To begin with, one must understand that “Triple Excellent” applies only to Round Brilliant diamonds. GIA diamond grading reports do not grade “Cut” for Fancy Shape diamonds. A fancy shape diamond is anything other than a Round Brilliant Cut. This includes Cushion Cut, Princess Cut, Radiant Cut, Emerald Cut, Oval, Pear Shape or Marquise. This being the case, only a round diamond can be an Excellent Cut or EX/EX/EX or “Ideal Cut”.

With regard to Polish and Symmetry grading, GIA assigns a grade to each that can range from Excellent to Poor. There are five possibilities. They are Excellent, Very Good, Good, Fair and Poor.

It is my opinion that Polish and Symmetry are more important on a Round Brilliant diamond than on a fancy shape diamond. To many retail diamond buyers, this may seem somewhat surprising since there is no “Cut” grade assigned for fancy shapes and, therefore, Polish and Symmetry is all they have to go on when determining the “cut” of a particular fancy shape diamond.

Truth be told – a fancy shape diamond is all about the cut. Unfortunately, the determination of the beauty or brilliance of a fancy shape diamond has nothing at all to do with Polish and/or Symmetry! (For more on this, see below.)

With regard to Polish and Symmetry, whether it be a round or a fancy shape diamond, one must understand what these things really are. Polish refers to the appearance or lack thereof of any surface remnants or surface blemishes that remain on the diamond after the cutting is completed. These are not flaws or imperfections in the diamond. Think of the final diamond polishing process as being akin to sandpaper on wood. In a perfect situation, , there is no trace that the wood has been sanded as it is left in a pristine, smooth condition. This is also true with regard to diamond polishing.

Symmetry on the other hand is something specific to a diamond. This refers to the faceting of the diamond. Specifically, a diamond is cut with many different facets. In a round diamond there are 58 facets – or individual “planes” on the surface of the diamond. The number of facets on a fancy shape diamond varies. Symmetry refers to how precisely the “point” of each “facet” is aligned with the “point” of the adjacent “facet”.

One must realize that with regard to polish and/or symmetry, there are many facets and “points” of a diamond. Usually, the polish or symmetry grade of a particular diamond can be based on an extremely minute detail of just one or two facets.

In order to put this whole thing into perspective, one must understand that within the grades of Excellent and Very Good (and, in most cases of “Good”), the differences in these Polish and Symmetry grades are very minimal and have virtually no effect on the overall brilliance or sparkle of a diamond. We are talking about things that are apparent only under magnification and, even then, are extremely difficult to visualize.

“Fair” or “Poor” grades in either Polish and/or Symmetry are somewhat significant issues that may affect the overall beauty of the diamond. In these instances there are numerous misaligned facets or facets that are “way out of whack”. In the case of fair or poor “Polish”, there are numerous or somewhat more obvious surface blemishes that remain on the diamond’s surface. These diamonds should be avoided.

On the other hand, It must be understood that the differences between “Excellent”, “Very Good” and sometimes “Good” are very minor differences and are inconsequential to the overall appearance of a diamond. These are facet junction issues or surface issues that I assure you will never ever be aware of – even under magnification.

My advice is to stick with “Excellent” and/or “Very Good” in both Polish and Symmetry. More importantly, do not think that a diamond with “Excellent” Polish and/or Symmetry is any more beautiful that one that is “Very Good”.

Think of the difference in this way. Assume you have beautiful custom wood cabinets built in your home. Assume that these cabinets are made of beautiful wood and the craftsmanship of the project is spectacular. Assume the final step on the installation is applying the final coat of varnish to the the surface on which several coats of varnish has already been applied. If you then went over the entire surface of the many linear feet of cabinetry inside and out with a magnifying glass and found an exceptionally minuscule spec or blemish in the varnish on the inside of one cabinet, this would be the difference between “Excellent” or “Very Good”. Remember – this is with magnification and even so we are talking about something that is exceptionally minute!!

As in everything in life, we all want perfection in every way. But, as a diamond merchant for 40+ years, I assure you that I cannot tell the difference between “Very Good” and “Excellent” when it comes to Polish and/or Symmetry. I am human and do not possess the vision and technical analysis of a computer that is programmed to do nothing else except examine a diamond and every one of it’s facets under extreme magnification. I have no doubt that you also will never see any difference between “Excellent” and “Very Good” when it comes to Polish and Symmetry.

Retail diamond consumers often drive themselves “crazy” with details about somewhat trivial things. Today, advances in technology have taken the diamond cutting process and the ways in which diamonds are evaluated far beyond levels that were possible in the past. Realistically, we have gone way beyond the things that really matter – the overall beauty of a diamond!

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

A WORD ABOUT “POLISH” and “SYMMETRY” and “FANCY CUT” DIAMONDS . . .

I happen to think that many fancy shape diamonds are ugly. I also think that there are fancy shape diamonds that are spectacular. In most cases, what makes one fancy shape diamond nicer than another is all about the diamonds “cut”. But the “cut” that makes a fancy shape diamond spectacular almost never has anything to do with Polish and/or Symmetry.

In my personal experience, I often prefer fancy shape diamonds in which the Polish and/or Symmetry is only “Good”. Many times I find that the fancy shape diamond that has “Good” polish and/or symmetry is much more beautiful than another fancy shape diamond that is Very Good or Excellent.

This is not to say that the fancy cut diamond is more beautiful because the Polish and/or Symmetry is only “Good”. It is because the Polish and Symmetry is usually inconsequential to the big picture – which is “How beautiful is the diamond?”.

Unfortunately for the consumer, the Polish and Symmetry grade on a grading certificate does not give even the slightest inkling of whether or not a particular diamond is beautiful. The beauty of a fancy cut diamond is about the proportions of things such as length by width – or the depth and table. It is about the brilliance and “life” of the diamond. It is about what the diamond looks like when you actually look at it as opposed to looking at a grading report!

The overall beauty of a fancy shape diamond has nothing to do with Polish and Symmetry. Most fancy shape diamonds have Polish and Symmetry grades of “Good” or Very Good. Unlike Round diamonds in which “Excellent” or “Very Good” is more common, a grade of Good” in Polish and/or Symmetry is the “norm” for fancy shape diamonds.

This is one of the issues of buying a diamond online or strictly buying a diamond based on the certification paper. The simple truth that I know after spending a lifetime in the diamond trade is that the beauty of a fancy shape diamond – whether it is a Cushion Cut, an Oval, or an Emerald Cut or any other fancy shape – has nothing to do with the Polish and/or Symmetry grade (except in cases of Fair or Poor). The beauty of a fancy cut diamond is about the diamond itself. It is about how that diamond disperses light.

Unlike a round diamond in which there are scientific parameters when cutting which provide for maximum brilliance, there is no scientific formula for cutting a fancy shape diamond. Most often when cutting a fancy shape diamond, the diamond cutter is working within the parameters of the rough diamond that he starts with and the beauty of the finished diamond is the direct result of the diamond itself.

The creation of a fancy cut diamond is similar to the work of a sculptor. A diamond cutter cuts the shape and dimensions from a rough diamond that has been extracted from the earth. Trust me in that the minor detail of the facet alignment or the smoothness of the surface is inconsequential to the overall appearance of this diamond. A sculptor may achieve a beautiful smooth finish that one could say is “Excellent” or “Very Good”. But that may overlook the fact that the sculpture is ugly!

The bottom line is this. Stick to “Excellent” and/or “Very good” in a round diamond. And understand that in a fancy shape you are fooling yourself if you think that the Polish and Symmetry grade gives you any inkling of the beauty of the diamond.