Grade Expectations

It's taken more than a decade of research, millions of dollars, and many false promises—but the Gemological Institute of America says it's finally ready to release its first-ever cut grade sometime this year.

Of course, GIA has a history of missing cut-grade deadlines, so there may be an additional wait before we find out just what the white coats in Carlsbad, Calif., have cooked up. (The Institute's current line is "although we are confident that we will launch this year, there are no guarantees.") In any case, it is a fait accompli that the industry's largest and most famous lab will soon grade not just three Cs but four. And while no one knows if the new GIA grade will become as widely used as its scales for color and clarity, most think it will have, in the words of one veteran diamantaire, a "huge impact."

Proponents of the new grade say consumers will be more educated and cutters will have more freedom in manufacturing. But others worry that diamonds will become more of a commodity and the competing systems will confuse consumers.

In fact, GIA's plans have already caused confusion—in the industry. Many retailers contacted by JCK didn't know that the grade will be hierarchical, like GIA's color and clarity grades, and that it will be part of every GIA report.

For now, details on the grade remain scarce, although GIA scientists sketched its rough outlines in the fall 2004 Gems & Gemology (see sidebar). Below are some educated guesses as to what it will mean for the industry:

Commoditization's Final Frontier. Consumers have undoubtedly become more cut conscious over the last few years. The GIA grade will make them even more so. "It will change the way people look at diamonds," says Hertz Hasenfeld, former chairman of the Diamond Dealers Club Gemological Committee. "Almost every consumer knows what a D/Flawless is. This will make cut as unmysterious as carat weight." And that could be the final nail of the coffin in the "commoditization" of diamonds, some feel.

"You are moving toward a commodity situation where the quality of the diamond is completely defined and people may feel there is no need for an expert, and you can just buy off the Internet," says Bart Marks, vice president of Rogers Jewelry in Modesto, Calif. "But the fact is the situation is genuinely confusing, and people really do need someone to guide them."

The anxiety doesn't end there. Some fear that a completely "commoditized" stone will squeeze all the romance out of the diamond purchase. "If you turn a Picasso into a bunch of numbers, that's all it becomes. It's not a Picasso anymore," says Sean Cohen, former president of the International Diamond Manufacturers Association. "If you try to objectify beauty, you remove the key reason consumers buy diamonds." But Martin Hurwitz of MVI Marketing demurs: "I don't think you can make diamonds more of a commodity than they already are."

Fewer Poorly Cut Stones. GIA says the new grade will protect consumers and make it harder to sell stones with what are universally acknowledged to be bad makes.

"More information is better information," agrees Tom Gorman of famed Ideal cutter Keppie Kiger, based in Pittsburgh. "You look at a GIA report right now and you don't see the crown angle and pavilion depth, and you have no clue where the balance is. I have seen so many stones where the table is 55 percent and the rest is out of whack. It is just too easy to be hoodwinked."

And Fewer Ideals? It could also affect the high end. GIA has said for years that there is no one true "ideal" cut. Now it's enshrining that notion in its reports—at the same time the AGS lab is inching away from Tolkowsky. Ideal cutters say they're not worried, noting their stones will likely receive top grades from both AGS and GIA. "Everyone agrees an Ideal is a beautiful stone," says Gorman.

Susan Eisen, an El Paso retailer who participated in the observation tests that underpin the grade, says it "will definitely change the customer's perception of what is the best." But that might be the grade's saving grace for retailers: "It will show there is no one perfect cut and you have to rely on the expertise of the jeweler you are buying from," she says.

Other retailers worry that the top categories will have too much leeway, especially with GIA saying that "the majority of items submitted [will fall] into one of the top two—or three—categories." "The grading system they are considering is too broad," says Marks. "You have diamonds that are not in fact equal receiving the top grade. It implies they are all the same when they are not."

Cutters Set Free. It says something about GIA's importance that just the thought of a cut grade creates anxiety among cutters. Many worry they will have to cut stones to new parameters or recut old ones.

IDMA president Jeffrey Fischer says cutters are reacting "very nervously." He fears that what works for GIA on paper may not translate to the real world. "The actual result may not be as predictable as they say," he maintains. "Their recipe is there. The question is: When we throw it in a bowl and cook it up, will it taste good?" The key, he says, is whether cutters will be "forced to cut something they know in their guts is ill advised."

GIA scientists argue that its new grade will "liberate" manufacturers, freeing them to cut with an eye toward beauty instead of a predetermined set of numbers. "Cutters have gotten so conditioned to working by the numbers," Fischer says. "It remains to be seen how much freedom people will actually be getting, but I am approaching this with cautious optimism."

Mega-Backlog? The other wholesaler fear is short term. When the grades are issued, reports without them may become less valuable. Stones will be resubmitted, causing a strain on GIA—already under fire for its slow turnaround times. "What happens when everything is sent back to them to get recertified?" asks David Marcus, president of the Diamond Club West Coast. "As it is today, they cannot stand the load."

To ease this, since last year GIA has recorded the relevant data on every stone it sees, so it can issue at least some grades without stones being resubmitted. Still, the change in the reports—which will be accompanied by a new design—will undoubtedly boost the lab's workload.

Confusion? The GIA cut scale is entering a different world than its color and clarity scales did in the 1950s. Back then, the GIA system brought order to a realm with virtually no standards. Today, there are already cut standards—perhaps too many of them.

Many labs have graded cut for some time. The American Gem Society lab is on its second system, debuting this summer. There are also devices that measure cut, like the Ideal-Scope, BrillianceScope, and Isee2.

Peter Yantzer, director of the AGS lab, thinks the different systems "will cause confusion, though eventually the market will figure it all out."

Or perhaps the market won't want to. Glenn Rothman of Boston's Hearts On Fire agrees the dueling systems will create confusion but says that's good: "The more confusion there is, the more important it is to have a retailer in the transaction."