On January 22, 2009, founder and president of Gemworld International, Richard Drucker treated us to some insider information by on how The GemGuide staff prepares for and reports on pricing. The GemGuide is a pricing grid for diamonds and the most common coloured stones used in the jewelry industry.
Richard began by talking about the well-known Rap Sheet and how it went through a major revision of pricing in 2008 into 2009. Pricing for larger, better quality goods jumped considerably in the summer of 2008 and then started to drop by the end of the year. The increase was due in part to speculation. One reason for the decrease was that there was a site reduction in rough and for the first time ever, a non-delivery of rough in Dec. 2008. Site holders, who are required to accept their “boxes” without questioning, were asking to hold back on some of the goods due to a worldwide downturn in business.
The next few topics were in the realm of coloured stones.
Andesine: There was a class-action lawsuit against a jewelry television company for selling andesine as natural when much may be diffused. The problem here is in detection and labs are currently doing more research. For now, they can only state that the majority of andesine has been treated in some way.
Paraiba: Should all copper-bearing tourmalines be called Paraiba without regard to country of origin? The Laboratory Manual Harmonization Committee, a group of international laboratories that meet during the year, has determined that any origin of copper bearing tourmaline can be labeled as Paraiba. They do recommend however, the addition of comments to disclose that the gem may be from other geographic locations. Gem dealer David Sherman attempted to file a lawsuit against various labs and trade associations for lost income due to this broad-use term, but the case was dismissed.
Synthetic Spinel: Where once this was the most easily identified synthetic out there, it has become increasingly difficult. The refractive index, spectrum and specific gravity of the new generation are the same as the natural. It all lies in the inclusions.
Synthetic quartz: Major concern as so much is being produced and mixed with natural goods that the cost of separating outweighs the cost of the goods! One short-term solution is to pay for batch testing.
Synthetic tourmaline: Is it or isn’t it out there? Traditionally, the chemical make up of the stone is so complicated that it isn’t commercially viable on a large scale. While it is highly unlikely that synthetic tourmaline exists commercially, we must continue to be diligent in examining such stones.
Burmese Ban: The current guidelines are that it is ok to bring rubies and jade out of the country for “personal use” and it is ok to sell existing inventory. The ban does not affect other stones from the region such as pink sapphires.
Richard then turned explaining how the pricing is determined for diamonds. His research team, of whom two are DC Chapter members (Martin Fuller and Lois Berger) report on pricing in their designated areas of expertise. For diamonds, they contact a network of advisor-dealers, Polygon, Rapnet, Idex Online, auction houses and various Internet sites.
The factors that determine pricing are the labs, cutting proportions, type of seller, repeatability and treatments. He used an example in comparing a 1.00-1.05 ct. round, G VS2 using most of the above sources, The GemGuide’s pricing grid is an average of all the sources for “very good” makes. There are discounts and premiums suggested for off-made and ideal goods. The lab report that comes with the stone is definitely a factor in determining that average. A stone with a report from GIA or AGS is priced higher than a stone with the same grade from IGI, HRD, EGL US and EGL Israel.
Pricing for diamond treatments must take into consideration the price of the stone in original condition with the added cost of the treatment. The reason that diamond treatments are considered to have a negative impact on value is because we grade the diamonds after treatment and deduct some factor since the grades often improve.
With regards to auctions, there is the provenance issue to consider and for that, due diligence is required when researching for comparables. Online sellers may be working on a “wholesale” price to the public due to low overhead.
With regards to coloured stone pricing, the process is virtually the same.
Richard finished with several Gemworld International case studies on actual appraisal assignments, how they researched them, and what the final value conclusion was.
Submitted by Sherlene Y. Bradbury -Edited by Richard Drucker
Photos by Melanie Marts