DEMISE OF COLORMASTER: END OF AN ERA

A controversial chapter in the way gem color is communicated has come to an end. The Gemological Institute of America has halted the production and sale of its ColorMaster machine.

“Sales of ColorMasters had decreased over a long period of time,” says Dick Agnew, chief executive of GIA’s Gem Instruments Division. “It was just not practical to continue to make them. And there was a lack of interest in reviving the project.”

GIA unveiled the ColorMaster in 1979 to meet the need for an accurate and efficient way to communicate gem color. (The machine was based on a color simulator, originally dubbed the Ritziscope, invented by Tom Ritzi of Florida, who sold the patents to GIA in 1978.) The idea itself was ingenious. Color filters allowed the user to calibrate colored light mixtures by dialing in combinations of red, green and blue. Results of the color mixes appeared as transmitted light images on a small screen – a three-dimensional representation of an actual gem. The user then compared the color of an actual gem with the color achieved by the ColorMaster and noted the coordinates. Under ideal conditions, those coordinates could be dialed on another ColorMaster anywhere around the world to communicate the color.

But ColorMasters met with some resistance and generated controversy from the start. First, they were expensive ($3,495 was the latest published price) and heavy (50 pounds) for tabletop equipment. Even more importantly, some users say ColorMasters are finicky, especially if moved or jostled. The dialed color coordinates on one machine don’t always match those of another. When that happens, GIA has to recalibrate the machines. Furthermore, critics say color readings by humans using a ColorMaster are subjective and open to interpretation.

The decision to halt production came quietly in September and started to spread through the industry in January. While the demise was quiet to the outside world, some instructors inside GIA reportedly celebrated with champagne and a symbolic smashing of a ColorMaster.

Meanwhile, GIA’s inventory of ColorMasters will be destroyed and written off, says Brook Ellis, vice president of operations. GIA will still service those already in the market, says Agnew, noting some 500 were sold.

In other news, rumors circulated during the Tucson gem shows that GIA might discontinue GemSet, as well. (This portable color communication system marketed by GIA has 324 plastic color comparators. Color can be chosen from GemSet’s 31 hues, seven tone levels and six saturation steps.) But Agnew says, “It will remain available for quite some time. Someday it will be discontinued because new products we develop will make it obsolete.” He notes, “GIA is always working to develop new products. We would like to develop a system that would work in tandem with GemSet. Specifically, we want the system to be more user-friendly and versatile, and we want it to have an infinite number of colors.”

ROTHSCHILD REEMERGENCE RILES BROKERS

The January sight allocation of rough diamonds at De Beers’ Central Selling Organisation headquarters saw a lot of frayed tempers. The complaints weren’t from clients upset with the selection, but from brokers upset over a client’s “defection” to a new broker.

Brokers serve as go-betweens for clients (or sightholders) and the CSO. The brokers spot potential sightholders, lobby CSO officials to get them sights and represent them once they are accepted. Sightholders pay brokers a commission of 1% of their rough purchases.

The controversy began when Ramesh Goenka, an Indian sightholder, switched from the brokerage firm of I. Hennig to Gerald Rothschild, a former Hennig partner. Goenka became Rothschild’s seventh client. In essence, that makes Rothschild a member of an exclusive club of established brokers that formerly had only five members: I. Hennig, Bonas & Co., H. Goldie & Co., W. Nagel & Co. and Jack Morgan.

At the same time, Rothschild brought in Charles Wyndham, a former CSO executive, as a partner and incorporated as Rothschild-Wyndham Ltd. Rothschild says he’s not actively pursuing clients from other brokers. “Those who switched came to me first,” he says. “I did not go to them.” But he says he is pursuing potential clients not already connected with brokers. (Rumors suggest that Rothschild offers potential clients a lower commission rate. He denies it.)

Rothschild was a top director at Hennig for 30 years until he and another top executive, Vivian Prins, were forced out about seven years ago in a power move by some large shareholders. At Hennig, Rothschild developed contacts with the Shanghai Outer Gaoqiao Gem and Jewelry Co. Ltd., which supervises most diamond polishing and pearl production operations in China.

After leaving Hennig, Rothschild secured a CSO sight for the Chinese operation; most brokers regarded him as a special case for Chinese interests. But he quietly added some non-Chinese clients that left Bonas and I. Hennig. Other brokers kept quiet until Goenka’s defection, after which Rothschild actually mingled with other dealers at the sight. “That really upset some brokers, who asked the CSO board to intervene,” says a dealer who declines to be identified. CSO executives won’t comment on the situation. But one says the CSO doesn’t intervene in broker/client disputes.

“What makes this different is that Rothschild was not one of the established brokers,” says one executive close to the situation. The executive notes that Rothschild has called one or two of the brokers to assure them he isn’t after their clients. “I think revenge does play a role here,” says the executive. “And I believe Hennig has the most to worry about because there’s never been any love lost between them after Gerald left.”

Rothschild, however, insists he has no agenda beyond developing his business.

FOUREVER DIAMONDS OFFER BIG LOOK

Yuval Harari, an Israeli diamond manufacturer, has combined invisible setting and precision polishing to create Fourever diamonds – four smaller stones mounted in the same frame to achieve the look of one big one. The advantage is a big look at less than half the cost of a single stone of the same size.

The diamonds are cut using a combination of laser and mechanical polishing, a technique developed by the Israeli diamond industry for cutting calibrated diamonds. “Now we can achieve full brilliance in polished diamonds in all shapes,” says Yuval Harari, whose company bears his name.

Harari’s company now offers Fourever diamonds in a line of earrings, pendants, bracelets and cuff links.

Yuval Harari, Suite 47-50, Ninth Fl., Macabbi Bldg., One Jabotinsky Rd., Ramat Gan 52520, Israel; fax (972-3) 575-0654.

ISRAEL SEEKS MORE ROUGH

Israel wants to feed its hungry diamond factories by increasing its share of the world diamond market.

Toward that end, Israelis are building a new rough diamond trading center to accommodate rough diamond sellers (70% of the country’s $3.7 billion worth of rough diamond imports last year came from outside of De Beers). The center is expected to open late next year.

Israel also lifted import and currency restrictions by designating the country’s diamond exchanges as a free-trade zone. Rough importers can receive a permit on the spot to sell to any dealer in the country.

Officials say Israel needs more rough to alleviate chronic shortages. “The situation has become so critical that some factories have closed for lack of supplies,” says Itzhak Forem, president of the Israel Diamond Exchange.

If Israel can attract enough rough sellers, its diamond factories will be spared the cost and time involved in traveling to Antwerp and other diamond centers to try to obtain supplies, says Moshe Schnitzer, chairman of the Israel Diamond Institute trade organization.