Saturday, 9 June 2012

Stunning Statistics about Grading Labs

Rapaport Certification Seminar Reveals Stunning Statistics

Saville Stern, COO of Rapaport moderated a discussion at JCK Las Vegas about diamond grading certificates.  I found it quite condescending the way he introduced the retail panelists and announced how proud he was to “include them in the diamond industry.”  AS IF RETAILERS AREN’T!!!  As one of the panelists stated, “it is up to us to get the diamond the last 18” into the customer’s hands.”

Discussions continued around the effect of inconsistencies between grading labs all through the supply chain; from site-holders through to the consumer.  The retail panelists did a great job of explaining how certs affect their businesses.  None seemed to dispute the fact that GIA was the originator of diamond grading standards; having the most comprehensive definitions of what constitutes different clarity grades, and with diamond color masters indelibly established.  The issue of “SI3” clarity grading was brought-up, but Martin Rapaport emphatically stated that including it in his pricing report was only a reflection of how site-holders were conducting business.

At the end of the session, Stern delivered some compelling statistics as promised.  Following is a comparison of selling prices between different gem labs:

AGS                             106
GIA                              100
HRD                            93
IGI                               86
EGL USA                     69
EGL Israel                   61
EGL Hong Kong         51

In other words, a GIA certificate that says: “SI1, H, VG, VG, VG” that a dealer pays $10,000 for would fetch only $6,100 to $6,900 from EGL.  There was no indication where EGL Canada or GemScan compare.  In the highest echelon of size and quality all other labs sold at a discount against GIA.  Does this mean that GIA’s paper is more valuable?  No!  It means that AGS and GIA are holding truer to the established, standardized definitions of grading, and the other labs are ignoring these definitions to give the purchaser an artificially inflated value.

With a quick-check of diamond pricing charts, that means an EGL VS1/G equates to the value of a GIA SI1-SI2/H, or an EGL SI2/H is worth the same as a GIA I1/I-J.  Ronnie Cox from AGS acknowledges that between grading labs there could easily be a single clarity grade difference.  After hearing that, an audience member pointed out that one grading lab could be a step higher and another a step lower.  That makes a two-grade difference between the highest and lowest labs.  AAARGHH!

I think we should just do our best to purchase assuming that “seeing is believing” and sell to the public according to Todd’s three-clarity-grade system!

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