The first reports of high-pressure, high-temperature (HPHT) treatments for diamonds hit the trade like an earthquake. Eventually, HPHT producer Pegasus (now Bellataire) agreed to inscribe its stones and sell them directly to retailers. The industry hoped it had solved all the problems associated with this new treatment.

But that may not be the case. JCK has learned that new companies are selling colorless HPHT diamonds on the open market—often without disclosure. There’s also a growing market in treated yellow diamonds that are not always identified as treated.

“HPHT is something that’s really exploding,” says Joe Menzie, a colored-stone dealer with hundreds of treated yellows in his safe. “You are seeing a lot of people getting into it.”

But not all of these people are following the rules. The Federal Trade Commission’s “Guides for the Jewelry Industry” mandate disclosure of such treatments, but this treatment is easy to slip by jewelers and dealers, because it’s undetectable without the proper equipment. The only way to ensure certain diamonds are untreated is to send them to a lab, and even labs can spot only the “vast majority” of treated stones.

“We don’t know everything,” admits Tom Moses, vice president of research and identification at the Gemological Institute of America. “We can distinguish the vast majority of the stones we’ve seen. [But] we don’t know if there is a type that we haven’t encountered that doesn’t reveal its treatment so readily. I can imagine in some cases it will be very difficult.”

What Moses describes is an improvement over the situation that existed when the stones were introduced. At that time, they were proclaimed “undetectable.” This summer, both GIA and New York’s European Gemological Laboratory (EGL) caught a handful of HPHT diamonds submitted by dealers who didn’t know they were treated. These are the first undisclosed “annealed” stones GIA has seen since it discovered then-Pegasus stones with polished-off inscriptions in 1998.

“We’re on high alert,” says Tom Yonelunas, CEO of GIA’s Gem Trade Laboratory. “We are [confident] we are catching them all, but the problem is the science is changing under our feet.”

Visual clues. Will this cause another earthquake? Many say no, noting that it’s not likely jewelers are unknowingly selling treated stones. For one thing, most are large diamonds of high color and high clarity (piqué stones crack under the treatment), which means they are likely to be bought and sold with reports. And since only certain diamonds are candidates for the treatment, the number of colorless stones will always be limited—even GE-backed Bellataire can whip up only several thousand each year. “It’s not as if there are tons of these diamonds being dumped on the market,” says Gregory Sherman, director of marketing and education for EGL.

But the number of “treatable” stones is rising. At first, it was thought that only the ultra-rare low-nitrogen brown Type IIa stones, which can be turned white, were treatable. Then it became possible to turn certain Type IIa stones pink and Type IIb stones more blue. Recently, it was discovered that rare Type IaB stones also were receptive to “whitening.” These types make up only a fraction of the diamond market—probably less than 2% combined.

Now it appears that any brown stone is receptive to treatment, although an overwhelming majority of them (those that aren’t Type IIa or Type IaB) turn orangey-yellow or yellow-green, not white. Economically, it doesn’t make sense to treat all of these.

David Hall of Provo, Utah-based NovaDiamond, which until recently sold treated greens (See “NovaDiamond Quits HPHT Business,” JCK, October 2001, p. 52), estimates there are between $20 million and $50 million in mostly colored treated diamonds on the market right now—and the majority of them are undisclosed.

“That may not be a large amount compared to the overall market, but it’s a nice little cottage industry operating below the radar,” says Hall. “We thought we had made this big discovery with HPHT. It turns out this had been going on for a while, and we were the Johnny-come-latelies. You can make a lot of money at this if you don’t disclose.”

Hall says these treatments are easy if you have the proper HPHT press. There are currently 2,000 such presses in the world, and they can be had at relatively low cost ($100,000 or so) since they’re no longer suited for industrial applications.

To market, to market. While Russia and China are the most frequently mentioned starting points for these diamonds, they are also said to come from India, Israel, and even the United States. One company, New York’s Nice Diamonds, is selling diamonds produced in New Jersey, says company president Nilesh Sheth.

For Sheth and others, the problem is no longer supply, but rather how to market these stones. Menzie is waiting until the industry has a better handle on the treatment before he sells his. Sheth plans to disclose the treatment with EGL reports and sell each diamond at 40% to 50% less than the price of naturals. And while he thinks that even gem labs can’t catch every treated stone, he feels that the talk of undisclosed stones is overblown. “People may be able to get away with it once or twice, but eventually they will get caught,” he says.

The treaters themselves mostly prefer to remain anonymous. During an interview conducted through EGL, one treater told JCK that while the company hasn’t always disclosed HPHT, it will now sell its treated yellows with EGL reports and at a price that’s 30% to 40% less than the price of untreated diamonds. And while the company wouldn’t provide exact figures on how many treated stones it has produced, it’s now cranking out at least 50 carats a week of mostly yellow stones. “We just received hundreds of carats of yellow stones to certify,” says Branko Deljanin, EGL’s director of gem identification and research.

In addition to more diamonds on the market, the trade is also likely to see more colors being produced. Bellataire has produced pinks and blues, and Menzie has even seen a treated red. The new HPHT yellows include some impressive large fancy vivids—although the biggest problem may be the unimpressive small light ones. “How many people are going to test a half-carat light yellow stone?” asks Sherman.

It’s another sign that diamond handling is becoming more complicated—and the labs aren’t the only ones who need to be on high alert.