Diamond grading reports are probably the most sensitive and confusing subject that the diamond industry regularly is forced to address. Since the beginning of the trade of diamonds, there was always a need to regulate and standardize the way that diamonds were graded so that they could be traded on one universal system. In the 1930s, the Gemological Institute of America was established to standardize the diamond trade, establish a level of quality of all goods, and unite the diamond industry. Since this was so desperately needed, they quickly filled the void that they were created to fill and became the ultimate standard for diamond grading certification. Since then, many other diamond grading labs have been established (and some have even folded), but none have the power and prestige of the GIA.
A GIA certificate
That is, until 2016. Now, two industry giants are trying to become the golden standard and complement or even entirely replace the GIA and its purpose. These two companies are Rapaport and DeBeers. Before we elaborate any further on either company’s plans and intentions, one point does need to be made. The difference between the GIA grading diamonds and a laboratory that was established by a diamond company is that the GIA will always be perceived as being completely objective, as there is no financial gain possible for them, which people may always be suspicious of Rapaport or DeBeers graded diamonds because these companies sell diamonds as well.
DeBeers has debuted the International Institute of Diamond Grading & Research (IIDGR) to the industry at large. The founding premise of the lab is that all of the diamonds will be graded with top of the line technology, automated devices that will determine the characteristics of the diamonds that it is meant to grade. All results will be double checked by human graders to make sure there are no discrepancies or that the diamond does not fall on a border between two grades, or the diamond will be subject to grading again. Forevermark diamonds will be graded this way, and diamond dealers are welcomed to send their diamonds to the IIDGR for grading as well.
DeBeers advertising Forevermark diamonds
Let’s note a couple of problems with the IIDGR. Firstly, this can only apply to colorless diamonds, and cannot possibly be relevant for fancy color diamonds. Colorless diamonds are far less unique and can probably be analyzed in such a simplified process, but fancy color diamond grading is far less precise and most likely can never be analyzed in this way. DeBeers does not claim to be a top brand in fancy color diamonds and therefore it may not be a top concern of theirs. However, if they were to become a grading leader, they would need to account for all of the diamonds in the industry and not just some! Secondly, the fact that this process still requires humans means either that it is not sufficiently efficient, or that they are counting on diamond graders to fix the errors that the machines make. This implies that their machines are not good enough, and also possibly that if a diamond grader decides, he can regrade a diamond until it comes out to the grading of his liking. Is he now bribable? This process does not seem the most efficient or objective. One can only hope that the machine will return with the same results on a diamond every time that it is put in, or the DeBeers system cannot be trusted at all in any case!
The other new diamond grading laboratory is that of Rapaport, called the Rapaport Investment Diamond Report (IDR), for diamonds of the ‘best quality’. This will include Round 0.50 ct. and larger, D-H, IF-VS2, excellent cut, polish and symmetry, Rapaport Specification A1 diamonds that, in the opinion of Rapaport gemologists, meet investment quality standards. Diamonds that lack overall brilliance, have features that limit trade liquidity or have borderline grades may not be issued IDR’s. This is the Rapaport Group’s attempt to break into the investment diamonds market, and to introduce the concept of investment diamonds to a wider circle of buyers. The IDR certificate will only be issued to diamonds that also have a GIA report. Although it has not been specified, one can assume that the IDR certificates will be issued by diamond experts and not machines. It was also not specified whether IDR certificates will only be issued to colorless diamonds.
The Rapaport index tracking their definition of investment diamonds
There are a few problems with the Rapaport Investment Diamond Report as well. The first is that this is not a universal diamond grading report either. Not only is it intended only for investment diamonds, it excludes many diamonds from its jurisdiction, such as fancy color diamonds. It is not meant to replace the GIA. Let me ask you this: do you think that a 0.50 carat, round brilliant diamond, with an H color and VS2 clarity, 3 Ex none, is an investment grade diamond? really? what was the price of such a diamond 5 years ago? 10 years ago or even 20 years ago? at best it followed inflation. This diamond is not an investment diamond! I want to know how many of you think like me? please raise your hand? i will bet my career that the majority of dealers, and consumers will agree with me! This is a simple attempt by Rapaport of generating more sales and income using his Long established name and reputation within the industry, rather than stay true to his core business. This is simply a continuous practice of conflict of interest. the spectrum of Colourless diamonds for investment is a much narrower one than presented here. This is simply due to the fact that rarity will play a major role in the establishment of “investment grade”, and 0.50 carats diamonds are simply not rare enough to be designated as an “investment” . This attempt will only hurt the industry and more so investors.
In the context of diamond regulation, it bears mentioning the Fancy Color Research Foundation and the FCRI, the Fancy Color Price Index, the FCPI. Unlike any of the organizations mentioned above (except the GIA), the FCPI attempts to demonstrate Fancy Color Diamond price trends for the industry only. Although the FCRF is not for grading diamonds, it is instrumental in the Fancy Color Diamond trade because it helps dealers understand how different colors have behaved in the markets and how they can be expected to continue behaving. That being said, it is still the GIA to whom dealers and buyers turn to know how much their diamonds are worth – because they need to know the diamonds specifications in order to know how much it is worth. Once that information is established, the FCPI is welcomed. On the other hand, one of the challenges for the FCRF is the fact that it is connected to the industry and therefore may give the impression of a potential conflict of interest. We think that the best solution to this scenario would be for the FCRF to be headed by an outsider. This will give major confidence to industry players. Another step the FCRF can take to increase its visibility and confidence would be to be recognised by the WFDB (World Federation of Diamond Bourses), and even by the FTC (Federal Trade Commission) in the USA, which a major body for the protection of consumers.
The Fancy Color Price Index
These new diamond grading systems, although interesting, do not replace the functionality and trustworthiness of the estalibshed and esteemed GIA. If someone is seriously looking into buying diamonds, whether colorless, fancy colored, for investment purposed, or for any other purpose, it is still recommended and even encouraged to use the GIA as your method of certification. It is by far the most universal and established grading system, and can be relied upon to be respected far into the future. Let’s not drop the GIA just yet. For Fancy Color Diamonds, you will still need the help of an expert in Fancy Color Diamonds due to color depth, which is not described in a GIA certificate. the GIA certificate only mentions color in a broad term such as Fancy Intense or Fancy Vivid, yet even within the term Fancy Intense, you still have the strength of the color which may be described as a 1 for a weak Fancy Intense, to 10, which is a strong Fancy Intense, but will definitely impact the value of such a diamond.
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