Alex Waldman, owner of Waldman Diamond Investments, writes in with the following thought-provoking email:

Diamonds, even when graded by the top diamond grading laboratories in the world, are by many players in the alternative investment market still not thought of as fungible. 

Why is this so? In my stock, I may have two round cut diamonds, of the same weight, of the same cut grade, and the very same clarity, and of identical color grades. Both stones are accompanied by a diamond grading report from the Gemological Institute of America’s lab. 

However, when these stones are put on the market, there can be a difference of more than 10 percent in the prices that these stones will fetch! 

How come? It is because neither GIA, nor any other internationally recognized diamond grading lab that operates in the B2B market, relates the issue of tint on their grading reports.

It must be noted that this issue is NOT something new that has come only to light now or that it is new to the trade. In fact, within the trade itself, tint, sometimes also related to as ‘hue,’ is in effect a non-issue as the rule of ‘caveat emptor’ reigns: we know about it. You know about it (if you do not you’re apparently not a diamond professional) and the professional downstream market also is aware of this.

However, when outsiders, i.e. investors, investment brokers, and consumers are sold stones under the premise that all diamonds that were assigned a ‘D’ color grade are invariably the same, we are in fact operating in a misleading mode—at best—and in a fraudulent mode, at worst!

Let’s expand on this a little more. When a consumer buys a piece of jewelry, he or she is not (yet) concerned about the resale value as it is an emotional purchase and reselling is not on his or her mind. For the investor, however, the resale value of the stone is of paramount importance—for no serious investor will enter into an investment without a clear and efficient way to realize his investment. However, under the current circumstances, at the point of sale the issue of tint/hue will impact his sale greatly.

Waldman is asking grading labs to start adding tint to their reports. GIA has told him it is “continuing to look” at this. He adds:

I’d hope that this article will help jumpstart a discussion, and that ultimately the representative organizations of the trade—such as the IDC (on behalf of WFDB and IDMA) and CIBJO, will bring this to the discussion table. Once that happens, the labs and the gemological business community at large will have to face the music.

What do you all think?

Rob Bates

JCK News Director