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De Beers to Reduce Diamond Supply 50% on U.S. Slump

Tuesday, February 3rd, 2009

By Carli Lourens for Bloomberg

Jan. 21 (Bloomberg) — De Beers, the world’s largest diamond producer, will reduce the amount of rough gems offered to customers by about 50 percent until April after U.S. retail sales slumped over Christmas.

Retail sales in the U.S., the world’s largest diamond market, dropped by as much as 20 percent over Christmas and “underperformed” the company’s expectations, said Varda Shine, head of Johannesburg-based De Beers’s marketing unit. The drop in full-year U.S. sales was in “the high single digits,” Shine said in a speech yesterday, a copy of which was e-mailed today.

Consumers in the U.S., which accounts for about half of global retail sales, are reining in spending as the economy shrinks. ZAO Alrosa, Russia’s diamond monopoly, said last month it expects fourth-quarter sales last year to drop 31 percent below average quarterly levels. Toronto-based BRC DiamondCore Ltd. said last week it will extend a shutdown at its South African operations and start talks with labor unions over job cuts because of “depressed” diamond prices.

Global demand contracted marginally last year and will do so again this year, Shine said. Diamond prices fell about 11 percent in the last six months according to an index compiled by Polished Prices, which tracks prices.

“The diamond market will worsen before improving, simply because the chill of global recession is going to become increasingly evident in the form of accelerating job losses,” Des Kilalea, an analyst at RBC Capital Markets in London, wrote in a report yesterday. “People don’t rush out to buy luxury goods in a recession.”

‘Limited Market’

Generations have seen “world wars, a depression, and too many booms and busts to remember, but none of us have ever seen anything quite like this,” De Beers managing director Gareth Penny told customers at a function late yesterday. “There is no point in producing or trying to sell it when there is a limited market for it.”

De Beers has already started reducing capital expenditure, cutting discretionary spending and reviewing staffing levels across all operations, Penny said. The company’s production cuts will be “significant,” he said.

Market reports estimate De Beers will reduce annual output “well in excess of 30 percent,” RBC said in its report.

De Beers’ sales of rough diamonds, or gems that have yet to be cut or polished, climbed 10 percent to $3.3 billion in the first half. Demand growth in China, India and the Middle East helped counter lower gem sales in the U.S.

Anglo American Plc, which is based in London, owns 45 percent of De Beers with the rest owned by the Oppenheimer family and the government of Botswana.

Original Article on Bloomberg.com.

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Blood Diamonds

Saturday, January 17th, 2009

Blood diamonds are synonymous with conflict diamonds. The term is designed to dramatically emphasize that behind the glamorous image of diamonds lies a web of corruption, influence peddling and brutality in some parts of the diamond-producing world.
Consumers began clamoring for assurances that the diamonds they desired were not being used to finance conflicts. To that end an alliance of government, civil and industry groups created the “Kimberley Process” to clean up the trade in rough diamonds.
First, in 1998 the United Nations (UN) initiated action that culminated with the establishment of the “Kimberley Process.” However, the UN’s definition of the term blood diamond or conflict diamond is very narrow and was designed to get everyone on board. The definition reads as follows:
“A blood diamond (conflict diamond) refers to a diamond mined in a war zone and sold in order to finance an insurgency, invading army’s war efforts, or supporting a warlord’s activity.”
Next, in July 2000, the World Diamond Congress in Antwerp passed a resolution blocking the sale of blood diamonds. The resolution installed an international certification system on the export and import of diamonds. Countries could only accept sealed packages of diamonds with an official seal, and criminal charges would be levied against anyone and everyone trafficking in blood diamonds.
Six months later, in January 2001, the top elements of the diamond industry formed a new organization—the World Diamond Council. They drafted a process whereby all know diamond rough could be “certified” as coming from a non-conflict zone. Thus, the “Kimberley Process” was created and approved by the UN in March 2002. The United States followed with the Clean Diamond Act in April 2003, and the “Kimberley Process” became law in the United States.
According to the “Kimberley Process” website, there are now 46 members blessed by the Kimberley experts. Only the Ivory Coast (Africa) has rebel forces that control diamond production, but less than 0.2% of the industry.
Our narrative could end here, but I have a much broader definition for a blood diamond. Here is my definition:
  • Any diamond that was mined using oppressed labor in unsanitary working conditions.
  • Any diamond whose oppressed labor force was victimized in the form of rape, mutilations (loss of arms or legs), beatings, verbal abuse, unconscionable working hours, and below poverty wage structure.
  • Any diamond that the company who mined it or controls its tariffs is part of a monopoly.
  • Any diamond that funds wars or corporate greed where profits supersede human life.
  • Any diamond that is used to oppress any human life or the extinction of any race, tribe or sub-culture.
  • Any diamond that is purposely graded incorrectly and marketed for corporate profits instead of consumer satisfaction.
  • Any diamond that is sold at a price above its secondary market resale value forcing the consumer to take a significant loss if it was to be resold.
So, what percentage of diamonds sold in the world today are blood diamonds? Well, maybe the question should be what percentage of diamonds are NOT blood diamonds.
 
by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

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Building Noah’s Ark & Joining Lucy

Saturday, January 17th, 2009

Genesis 6 (New International Version)
1
When men began to increase in numbers on Earth and daughters were born onto them,2 the sons of God saw that the daughters of men were beautiful, and they married any of whom they chose.3 Then the LORD said, “my spirit will not contend with man forever, for he is mortal; his days will be a hundred and twenty years.”

4
The Nephilim were on the Earth in those days- and also afterward- when the sons of God went to the daughters of men and had children with them. They were the heroes of old, men of renown.

5
The LORD saw how great man’s wickedness on the Earth had become, and that every inclination of the thoughts of his heart was only on evil all the time.6 The LORD was grieved that he had made man on the Earth and his heart was filled with pain.7 So the LORD said, “I will wipe mankind whom I have created, from the face of the Earth- men and animals, and creatures that move along the ground, and birds of the air- for I am grieved that I have made them.”

Well, let’s see. In the last couple of weeks Bear Stearns got bought out by JP Morgan Chase for $2.00 a share; oil broke past $110 a barrel; the dollar dropped to an all-time low against the Yen and the Euro; the housing crisis is still out of control; gold passed $1,000.00 an ounce and platinum past $2,200.00 an ounce. The president is telling us the check is in the mail.
Now I have an idea how Noah felt before the Great Flood. I also have an idea how he must have felt after it started raining. Having built his ark he must have felt relieved! (If there was rain with no ark, he would have been kicking himself!). In the current economic climate, anyone who has jewelry, is thinking of getting jewelry, or is trying to unload jewelry, needs to build a financial Noah’s Ark to get them through the storm that is currently upon us. Here’s what you need to know.
Contemplating on buying jewelry? Diamonds- yes! Metals- no!
Diamond prices are up over 40% in the last two years, and in certain sizes and qualities, prices are expected to double by 2010. If you’re thinking about getting an engagement ring, thinking about upgrading for your anniversary, looking to buy your dream rock, DO IT NOW! Not tomorrow, or this Christmas, NOW! You can thank me later! Diamonds are hot since DeBeers closed their last three underground mines in September 2005 and the prices are going to get very, very, very expensive before they level off. They won’t go down. Read my lips, the prices are in the process of doubling and tripling; they won’t go down. Okay, now let’s say you just bought a new diamond and now want to pick out a gorgeous platinum or fancy white/yellow gold setting… STOP! Keep the setting simple. If you have an old setting you can use over the next 15-18 months, do it. Metal prices have risen as far as the secondary market will allow. Tons of scrap gold and platinum are flooding back into the primary market that is extinguishing the scarcity. The “hot” metals market is ending and you can thank the greed of consumers who are taking all their old jewelry and cashing it in. Within the next year to year and a half, platinum will be back to under $1,000.00 an ounce and gold will be sitting comfortably around $500.00 an ounce (where it should have been years ago). The point is, don’t buy an expensive setting now that will be half-price next year!
Have jewelry you want to unload? Go to you local jeweler and ask about cashing out any old piece of jewelry while you still can. While I write this article gold has already dropped -$61.00 an ounce! The chance to forget eBay and sell all your old baubles and beads will soon be over!
A smart jewelry portfolio is like Noah’s Ark. In the Ark should be one or two of your favorite things that you love to wear and everything else should be liquidated. If you are a true connoisseur of diamonds, you’re going to need all the cash you can get from the stuff you don’t wear anymore so you can immediately buy the diamonds of your dreams before the prices are out reach!
Don’t let Lucy be the only one in the sky with diamonds!
Happy buying/selling!

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

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The Blue Nile Blues

Saturday, January 17th, 2009

A little over a year ago, Blue Nile stock peaked at $106.16. As of close of market today, the stock was at $22.90. What a difference a year makes! One might ask if the stock was over priced or the business model is unraveling, or is it just bad timing?

 

For those of you who don’t know about Blue Nile, let them, in their own words describe what they do.

 

“The company is built on a unique idea: choosing an engagement ring doesn’t have to be complicated. Diamonds can be simple to understand. Making the right choice can be easy.”

 

A few years ago, Bear Stearns, AIG, Fannie May, Freddie Mac, Lehman Brothers, Wachovia, Ford, G.M., IndyMac, American Express and countless others said to us with a very similar drum beat, “Buying is easy, credit is easy, credit default swaps and derivatives aren’t complicated, come follow us to the land of riches. Follow us to easy street with cars and homes and diamonds. You deserve a McMansion. You earned a Mercedes Benz. Life is short; buy now! It’s easy! Just charge it! That’s the American way! Want to start a war or two to feel better about 9-11? No problem! Just charge it! Put it on the tab! Pay for it later! Bills? Just pay the minimum. You don’t want to miss the Grand Old Party!

 

Well America, “Easy come, Easy Go.” On the world stage, all the developed nations took the short cut and are shocked that we stabbed ourselves in the back.

 

Buying should never be easy. It should be hard. It should be thought out. It should be complicated enough to stop our impulse buying reptilian brains from stockpiling more crap that we could use in ten life times. Half the world doesn’t have clean running water and depends on fire as the main source of energy, and we want easy?

 

Blue Nile believed they could build a company with no assets. No skin in the game; use other companies’ inventory, play middle man and walk away with an Ebay broker commission. Did it work? Kinda—until customers found out they couldn’t return merchandise they didn’t need after 30 days—until customers found out that they couldn’t exchange mistakes after 30 days—until customers found out that all those precious “certificates” that Blue Nile proudly tout with every diamond sale don’t guarantee the quality or authenticity of what they bought.

 

How would you feel about buying a refrigerator and getting home and realize you got a trash compactor? A little crushed?

 

Sadly, in the end Blue Nile, if they survive will be remembered not for top quality at the best price but as a consolidator of ground round that has passed its expiration date. Is it still safe to consume? Don’t ask me; I like to buy things with my eyes wide open from someone who stands behind their product and is there for me if anything goes wrong.

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

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Miners unearth the world’s biggest diamond

Saturday, December 20th, 2008

· South African find is twice as big as the Cullinan
· Expert predicts feverish bidding on huge stone

David Beresford in Johannesburg and Lee Glendinning
Tuesday August 28, 2007
The Guardian

Millennium Star diamond
The 203 carat Millennium Star
is the second biggest flawless diamond.
The newly found stone could produce a stone even bigger.
The world’s biggest diamond, believed to be twice the size of the Cullinan, has been discovered in the North-West Province of South Africa. The find has electrified the diamond community, but the circumstances of the discovery are shrouded in mystery.
The diamond is expected to attract furious bidding from buyers worldwide and could fetch up to £15m.
A spokesman for the mining house which made yesterday’s find, Brett Joli, said the diamond was being rushed to a bank vault in Johannesburg and would be kept there for a couple of days “until we calm down and decide what we are going to do”. A security company was being hired to protect the precious stone.
The mining company which made the find has not been identified.
The South Africa Broadcasting Corporation said the stone was said to be twice the size of the Cullinan diamond.
Fred Cuellar, the founder of Diamond Cutters International and author of How to Buy a Diamond, said he first heard about the find a few days ago. “I get a phone call when any rare stone around the world is found and when I heard about this one it was stunning news.
“It caught everybody in the diamond industry offside. There will be a lot of mad bidding from a lot of private individuals as to who is going to buy this stone.”
The Cullinan, which was found near Pretoria more than a century ago, was until recently acknowledged to be the largest cut diamond in the world, weighing in at 530.20 carats. In 1985 it lost the record to the Golden Jubilee, which was found in the same mine as the Cullinan and weighed 545.67 carats.
In its rough state the Cullinan weighed 3,106.75 carats. It now forms part of King Edward’s sceptre and is in the Tower of London.
The Cartier diamond, famous as a gift from Richard Burton to Elizabeth Taylor, weighed a mere 240.80 carats rough and 69.42 carats cut.
Mr Cuellar said the most important information about the latest find was yet to be forthcoming, including whether it is colourless. “The reported size of the stone is accurate, but there are all these other factors we still don’t know and what matters now is how wide, how clear and how well cut it will be.
“Will this diamond rank above the best quality diamonds in the world? I can tell you right now, no. But in as far as the list of the largest diamonds ever found in the world goes, would it make that list? Yes it would.”
He said the first seven people who looked at the stone thought it was industrial grade, but that view has changed and it now appears to be a stone that will be cut into a piece of jewellery.
The quandary facing the owner of the diamond now is how best to cut the stone he said. “The thinking usually is with these types of things, we know how big we could get it but we don’t know how much it will hurt us on the quality side.”
The Cullinan, also known as the Star of Africa, was thought by some to be part of a larger stone which still lies somewhere undiscovered.
There will be interest in who made the find and how they will be rewarded. The black miner who discovered the Excelsior, said to be the second largest uncut diamond ever found, received a horse and saddle, and a sum of money.
Rock stars
  • The Cullinan Diamond was discovered in 1905 and at 3,106 carats was the largest gem-quality rough diamond ever found. Cullinan I, or the Great Star of Africa – at 530 carats formerly the largest cut diamond – was one of the 105 gems cut from it.
  • The Koh-i-noor is part of the British crown jewels. It originated in India but seized by Britain as a spoil of war in 1849. The diamond supposedly brings good luck to female owners and misfortune or death to any male who wears or owns it.
  • The Hope Diamond is a large (45.52 carat), deep blue diamond. It is legendary for the curse it supposedly puts on whoever possesses it. Previous owners include Kings Louis XV and XVI and Marie Antoinette.

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What’s in a Name?

Sunday, December 14th, 2008

The Brand Naming of Diamonds

Whether most people realize it or not the diamond industry has been going through a revolution over the past few years. From Baked Diamonds1, Bonded Diamonds2, to Color Typing3, the diamond industry is going through a major face-lift. And it isn’t over yet. It won’t be long before the slogan “A Diamond is Forever” will be replaced with ” A DeBeers Diamond is Forever” or some other name brand or stamp to segregate themselves from the pack.

No longer will any large diamond conglomerate do generic advertising that will benefit the new competitors on the block. With DeBeers strangle hold of the world’s diamond market barely at 60% from their good old days of 85%, their long held monopoly is over.Other players like Argyle Diamond Mines from Australia, Ekati from Canada and the Russian United Syndicate are staking their claim to a piece of the polished diamond pie.

What this means to the consumer is, each diamond syndicate will be stating why their diamonds meet a higher level of excellence then their competitors. Soon you’ll be doing the “Pepsi Challenge” but with diamonds. I can just see the ads now. Let me set the stage. A dark candle-lit restaurant; cherries jubilee have just been served, the Dom Perignon has been poured; then you’ll see a dark haired man with chiseled good looks say “Darling, you are the light that engulfs my life. Would you make me the happiest man in the world and be my wife”. At that moment he’ll pop open a little black box and reveal a beautiful diamond engagement ring. The next thing you’ll see is her closing the box and handing it back and say “Listen baby, if I’m not good enough for an original DeBeers diamond, the King of Diamonds, then I’m going to have to say No!” At that moment the narrator will say “Why would you take a chance on a copy cat when a DeBeers original is where it’s at. A DeBeers diamond when our one of a kind meets your one of a kind!” Oh, brother!!

The thought of this sickens me but I know its coming. With the breakup of the DeBeers monopoly, DeBeers has no choice but to start marketing their diamonds as the first, the best, the original. Whether they will use their famous DeBeers name or market under another name remains to be seen. Through a massive media campaign which has already started in the U.K. DeBeers will try to intimate that they choose only the purest ripest, most succulent diamonds in the world. (Maybe they’ll team up with Sunkist) That their standard of excellence supercedes the Canadians, the Australians or the Russians.

Listen folks, regardless of where you dig up a diamond or who mines it, a diamond is a diamond. Slick advertising campaigns may have convinced women from here to Japan that a diamond deserves to be on their wish list but to say that one brand name diamond, like the Millennium diamond, is better than another of the same quality just because of who is selling it is ridiculous.

Every diamond syndicate will be selling great diamonds, good diamonds and crappy ones, Don’t let the new advertising onslaught that is to come convince you otherwise. Every consumer will still have to go over the 4 C’s and warranties on any diamond they might consider buying regardless of what label is stuck on the rock. Is Coke better than Pepsi? You decide, but is a DeBeers diamond better than an Argyle diamond? The answer is No!

Footnotes

1. A Baked diamond is a diamond that has been heat treated to remove nitrogen or boron from a diamond to improve its color. Baked diamonds are brittle and less valuable.

2. A Bonded diamond is a diamond that is fully warranted by the jeweler and covers breakage, buy back, exchange and authenticity.

3. Color typing is the divisioning of individual color grades into types to more accurately assess the diamonds nitrogen context.

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

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Warping

Sunday, December 14th, 2008

One more thought on crown & pavilion angles for the perfectionist

Is it possible for any single round or fancy shaped diamond to have more than one crown angle or pavilion angle? You bet! In fact a round diamond can be checked anywhere on its circumference and fancy shaped diamonds, usually checked at the 3 and 9 clock positions, can also be measured slightly off those positions to render multiple crowns and pavilion angles.

Now here is the million dollar question. When a lab grading report appraisal is done, which crown and pavilion angle are you given? Are you given the best one? Probably. The worst one? Not likely. In an ever competitive race for your dollar, the cutter, the jeweler, and even the appraiser can be caught up in “warping.”

Warping is the placement of accurate pavilion and crown angles on the diamond but solely in one location. The rest of the crown and pavilion angles are off to the benefit of weight retention. There are two types of warped diamonds – inward and outward. An inward warped diamond may have the side of the pavilion slightly curved to pickup the correct measurement. In an outward warped diamond there is a slight bulge in one location above or below the girdle. Warps to a good cutter can make that cutter many more dollars. Knowing that most labs and appraisal services check for the best measurement or an average lets a cutter push through a diamond as a class 1 or 2 when in actuality it is a class 3 or 4 (a poorly proportioned diamond).

In purchasing your diamond don’t be afraid to ask the question, “Is the crown and pavilion on my diamond based on a single measurement, an average or on the worst?”

If a diamond’s worst crown and pavilion angles are acceptable then surely the rest will be as well. You can also ask for minimum and maximum pavilion and crown angles to see the extremes in both directions. If a jeweler doesn’t know how the angles are derived then I would not put much faith in the numbers he tells you.

PS: The only two pieces of equipment that can accurately check for warping are Sarin and Megascope machines. Also see Diamond: Parts of the Stone and A Glossary of Diamond Terms.

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

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Tricks of the Trade

Sunday, December 14th, 2008

BLUE DIAMOND BLUES

Some jewelers may try to market a “blue-white” diamond as though it were a white diamond with a hint of blue, and more valuable than a plain white diamond. It’s not! It’s a diamond that fluoresces blue and is therefore less valuable. Avoid it!

THE “50% OFF” SALE

Browsing through your Sunday paper you spot an exciting ad: a local jeweler is having a “50% Off” sale on diamonds! Wow! You jump into your car, drive to the store, and you make what you are sure is an incredible buy on a one-carat diamond.You’re still patting yourself on the back a week later when you happen to walk past another jewelry store where you see the same size, same quality diamond selling for less than what you paid and it’s their regular price! What happened?

You were taken in by a fake sale. Many jewelers run these sales. They’ll take a diamond that is worth, say, $1,000 wholesale and instead of marking it up 100%, which is standard practice, they mark it up 400% and tell you that $4,000 is the regular price when in fact the regular price for such a stone would be $2,000. Then the jeweler takes 50% off the inflated price and sells it to you for full retail, $2,000.

The way to know if you’re really getting a sale price is to compare the jeweler’s price with the wholesale price list in the book. If the jeweler’s regular price is more than double the wholesale price, you’re not getting any bargain.

For example: Joe’s Jewelry Store has a one-carat VS1-G on sale for $12,400, marked down from $24,800. You look at my price list and see that a one-carat VS1-G wholesales for $6,200. Therefore, full retail should be $12,400. Joe has artificially inflated the “regular” price to trick you into believing you’re getting a bargain.

“BAIT AND SWITCH”

This is a term that’s been around for a long time, and it’s not limited to the diamond business. Bait and switch refers to anyone who runs an advertising special on a particular item just to get you into the store. When you go to the store, however, you’re told that the advertised item is sold out. Then they try to sell you something else – invariably, something more expensive. The jeweler hopes that since you’ve already made the trip to the store, you won’t want to go home empty-handed.

Don’t be impatient! Many people arrive at the store determined to buy something and get talked into something they don’t really want. Take control! Grade the jeweler using the Jeweler Questionnaire Sheet in my book, and if he or she passes the test, stick around and look at some diamonds, using a scratch sheet to check each one. Compare the prices to the wholesale prices in the book to see what kind of deal you’re being offered, and for an exact updated price on a particular stone, call my HelpLine.

“IS WHITE REALLY WHITE?”

Jewelers love diamonds that fluoresce blue, and will sometimes install special lighting to enhance the fluorescence of their diamonds. The blue masks the yellow color that might be in the diamond and makes it appear to be a higher color grade than it really is. Always take the loose diamond you’re looking at and place it on a white background to check the color, and make sure there are no spotlights shining on it. Always take the loose diamond you’re looking at and place it on a white background to check the color, and make sure there are no spotlights shining on it.

“GRADE BUMPING”

The Federal Trade Commission requires that a diamond be within one clarity and one color grade of what it is originally sold as. Because of this, jewelers tend to “bump” the grade. For example, if a jeweler buys a stone as a VS1-G, he’ll bump it up and sell it as a VVS2-F. If you buy it as a VVS2-F and have it appraised as a VS1-G, the dealer is legally covered, because he sold it within one grade of what it really is.

“THE FRACTION SCAM”

Some jewelers will list the weights of their diamonds only in fractions, such as 3/4 of a carat. Your next question should be, “Well, is it 75 points are not?” Many jewelers will call anything from 65 to 75 points a 3/4 carat diamond. These same jewelers will call anything from 90 points to 100 points a full carat. This is illegal. A diamond must weigh within half a point of its stated weight. You’ll notice a jeweler will never round a diamond down they’d never call an 85-pointer a 3/4 carat stone. Ask the jeweler to weigh the stone, in front of you, on an electronic scale. If he says he can’t because it’s in a setting, you shouldn’t be looking at it anyway. Only buy loose diamonds.

“THE OLD SWITCHEROO”

You’ve shopped around, rated the jewelers, graded the diamonds, and finally found the stone you want. You lay your money down and order a setting. When you get the ring, you have it independently appraised – only to discover that the diamond in the ring isn’t the same stone you purchased! The jeweler has pulled a switcheroo. You go back and confront him, and he accuses you of switching stones. What now?

Well, sad to say, you’re stuck. There’s really nothing you can do, no way to prove a switch was made. You must prevent the switcheroo before it happens.

When you decide on a diamond, get the jeweler to put in writing the exact weight, and the clarity and color grades of the stone. Before he diamond is mounted, have the jeweler show you where the blemishes and inclusions are, and plot them on a drawing. Keep this drawing with you, and when you return to pick up the mounted diamond, check it again, looking for the same flaws that are on your drawing. If they match, you have the right diamond.

“THE SANDBAGGER”

If you’ve purchased a diamond by following all my instructions, you shouldn’t feel the need to go to an independent appraiser to double-check your purchase. But if you do, watch out for the sandbagger! The sandbagger is someone who lies to you and tells you that you’ve been taken, that your diamond isn’t worth what you paid for it. Why would he do that? So that he can recommend where you should buy your diamonds – no doubt at a place which gives him a kickback! Or he may tell you, “You should have bought from me.”

Fred’s Advice: If you ever want to have the diamond checked, don’t take a chance. Send it to GIA for an unbiased opinion.

“THE VANISHING ACT”

Now you see it – now you don’t! Carbon, that is. There is a laser beam process for removing carbon from inside a diamond. It’s called laser drilling. A diamond that contains black carbon, visible with a 10X loupe, is zapped with a fine laser beam which vaporizes the carbon, removing the black spot.The problem is that the laser beam creates a tunnel from the surface of the diamond to where the carbon used to be. You might not be able to see this tunnel with the naked eye, but you’ll see it under a loupe. And if a stone has been drilled several times, it can be weakened.

Laser drilling can make a diamond more attractive to the eye, but it can also lower the resale value. Beware! The Federal Trade Commission no longer requires jewelers to disclose to consumers whether a diamond has been laser drilled.

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

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See No Evil

Sunday, December 14th, 2008

My job is to talk about diamonds. How to get a good one, how not to get ripped off, how to get the most for your money. But, I’m seeing a society where the “truth” belongs to the one who can tell the best story, not the one based on the facts.

For example, every year 5,000 people are indicted, convicted and sentenced for a whole list of horrific crimes. From petty theft, to rape, assault and even murder. What is even more horrific is all these crimes hold three special things in common; the men and women that are convicted were primarily incarcerated on eye witness testimony, spend an average of ten years in prison and oh, one more thing all of these criminals are eventually set free because they are later proven to be innocent. How must it feel to spend a decade of your life telling the whole world you didn’t do it, to lose your family, friends, livelihood all based on what some one else believes they see. As it turns out magicians knew it a long time ago, that the hand was quicker than the eye.

The eye can be fooled! It happens everyday. In our streets, in automobile showrooms, to tires we’re told are safe enough to drive our families around. Now I’m not here to talk about how our justice system is broken (I think all but the most naïve of us already knows that) or about slick car salesman who try to sell us the virtues of undercoating or who roll back odometers to give us the perception of more value. It’s not even to pick on Firestone who felt profits superseded the quality of a tire and the lives that trusted those tires not to explode when driving 65mph. For me it’s still about diamonds.

“Seeing is believing”, you might say. But does believing constitute the truth? Does it constitute a fact? Well try this on for size, for the last few years the diamond industry has been fighting the Federal Trade Commission (FTC) to not have to disclose laser-drilled diamonds. The industry felt it was an insult. For starters, to require disclosure of a treatment that alters the value or durability by changing the FTC guidelines would be paramount to announcing to the world that jewelers are dishonest. Jewelers can’t be trusted to tell the truth.

For God’s sake, the industry can police itself. But every year over 5,000 complaints are registered at the Better Business Bureau, FTC and Jewelers Vigilante Committee that this system of the fox guarding the hen house wasn’t working. People were and are buying diamonds every day based on who has the best story to tell and with a constant reminder “See for yourself, isn’t it a beautiful diamond?” Even in the casinos with no clocks and free liquor you know what your odds are. But in a jewelry store with its hundred canned spotlights, its very good stories, its lab grading reports and its appraisal documents, we lay our money down. Is it worth it? It must be it’s an AGS000. Is it worth it? It must be, it’s been graded by GIA. Is it worth it? It must be, it’s 100% natural. Is it worth it? It must be, just look how pretty it is. And that is where they get you. That is where they set the hook. Then to reel you in, the jeweler says, “How can you put a price on something that lasts forever?” The love card.

So you forget about the months or years it took you to save your money or the loan you have to take out or even the VISA you’re going to max out at a 22% interest rate because how can you put a price on love? The illusion is complete. Like the frog that turns into the handsome prince. The rock becomes the magical diamond. Seeing is believing or maybe better said believing is seeing. That’s where any good salesman will get you. If he gets you to believe; you will see. Last month the FTC changed their guidelines and made it mandatory to disclose laser-drilled diamonds or for that matter any form of treatment that would give you the impression that something is better or more valuable than what it is.

The convict gets released, the automaker gets fined, the tires get recalled. Is that the lesson here? The end justifies the means until you get caught. The poor go to jail, the rich go free. If we see no evil than, everything’s okay. Good always triumphs in the end. Let me ask you this, if 5,000 men and women are convicted for crimes they didn’t commit, if there are over 5,000 complaints each year about non-disclosure in treatments, how many people are still in jail that are innocent and how many diamonds are on the fingers of our loved ones and are worthless?

Here’s one more thing to chew on; it has just been announced (to the jewelry industry not the public of course) that a company by the name of 3-Beams Technology (a separate division of Norsam) has created a process called Focus Ion Beam Technology. FIB for short. Apparently taking ideas from Los Alamos National Laboratory, FIB instruments can focus a beam of ions down to a diameter of 7 nanometers (that’s .000007 millimeters, or .00000028 inches). Using this technology they can drill a diamond to remove carbon leaving a drill hole 1/1000th the size of the current technology.

According to 3-Beams’ CEO, Jayant Neogi, with a special modification a gas can be injected into the void which will solidify making the drill hole practically invisible.

FTC makes a law that treatments must be disclosed then the industry we were supposed to trust announces a new way not to get caught. What’s the moral of this story? Seeing is not believing, take everything with a grain of salt and please cut the deck before you’re dealt a hand.

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

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Royal Asscher Diamond

Sunday, December 14th, 2008

The Royal Asscher Diamond

It’s not very often in one’s life you can hold magic in your hands that all at once reflects the magnitude of the past and the promise of the future. The Royal Asscher diamond is that magic. Cut from an octahedral shaped piece of rough to a 74 facet step-cut octagon, this diamond exhibits all the punch of a hurricane without sacrificing its quiet sophistication and regal temperament. Quite simply, lightning has struck twice for the Royal Asscher diamond company that first introduced its predecessor, the Asscher, back in 1902 and now the Royal Asscher at this summer’s Las Vegas Jewelry Show.

With just a glance one is pulled into this masterpiece like a fish to water, drawn deeper and deeper into its trance and pond-like effect that can only be described as a pebble tossed into a lake that ripples and reverberates its cinematic impact upon the fortunate viewer.

When I interviewed “Joop” Asscher for this article (his friends call him Joe). I was immediately put at ease by his soft-spoken demeanor. A man of 51, married with two children, he is descended from a line of cutting royalty dating back to 1854. His grandfather, Joseph Asscher, was entrusted by King Edward VII of England with cutting the largest diamond ever found, the Cullinan weighing in at 3,015 carats. Asscher’s clients read like a who’s who of royalty from Emperor Hirohito and Emperor Akihito of Japan; Queen Elizabeth II of Great Britain; Queen Juliana and Prince Bernhard of the Netherlands; King Carl-Gustav and Queen Sylvia of Sweden; King Constantine and Queen Annemarie of Greece and Queen Beatrix and Prince Claus of the Netherlands.

When I asked Joe why the new Asscher he simply said, “It’s a diamond whose time had come! With the mass marketing of a new brand or style practically every single day it was time for the old guard to take its rightful place in history.” And I couldn’t agree with him more. Every Tom, Dick and Harry with a cutting wheel thinks they can invent a new standard overnight, which isn’t going to happen. What impresses me so much with the new Asscher is its attention to detail and symmetry. Without it you’d just have a lifeless block of ice. More good news is the marketing arm Asscher has chosen to deliver their new baby and that’s by making veteran M. Fabrikant & Sons the sole North American distributor.

Recently, I put the new Royal Asscher through its paces measuring every angle, facet and percentage. This is how it performed:

  Royal Asscher Traditional Emerald Cut
Brilliance: 52% to 55% 70% to 80%
Dispersion: 45% to 48% 20% to 30%
Light return: 67% to 91.3% 38.8% to 54.78%
Bow tie: None Medium to strong

Summary

Where the Royal Asscher appears to get its magic is from its carefully sculptured pavilion. By removing the keel line and replacing it with a small or pointed culet and slightly bowing out the step cut pavilion main facets, the pavilion is transformed more into a mirrored bowl than an ornamental cone. Opposing pavilion main facets are precision cut to twin themselves in order to not disrupt the fluidity of the “Pond effect” created upstairs from the nucleus of the table to the octagonal-faceted girdle. Practically from any vantage point the diamond appears to be poetry in motion always desiring to reflect and redirect a kaleidoscope of bar flashes back to the eye.

In closing, I think the thing to remember here isn’t we’ve got another traditional cut diamond with a new brand name, because we don’t. Brand names don’t sell diamonds, it’s the fire from the ice that will determine the success or failure of any new cut. This diamond isn’t breath taking because it’s called The Royal Asscher, its beauty lies in its cut and facet arrangement. That is true today as it will be true a thousand years from now. Quite simply you’ve got to see it to believe it. Mere words do not suffice. To find a retailer near you call (800) 432-8895.

Please note that Royal Asschers are no longer on the primary market since 2005. The only way for one to purchase this cut is through the secondary market—aka used diamonds.

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

Posted in Understanding the Diamond Trade | No Comments »

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