Diamond Notes

Argyle Considering Rejoining De Beers?

Officials at Australia’s Argyle mine recently told JCK they’re willing to discuss rejoining the De Beers cartel – or at least help create a cooperative advertising effort. This is a noteworthy change of heart; mine officials have been critical of De Beers since Argyle left the cartel in 1996.

“Argyle doesn’t see a competitive battle with the CSO,” says Argyle sales manager Mike Mitchell. “We should cooperate to restore confidence and increase sales.”

But Argyle feels that De Beers needs to do more promotion of its core product: small, off-color rough. “[De Beers] needs to take a wider view to accommodate smaller goods,” says Mitchell. “De Beers’ people talk about a trickle- down effect [from big-stone advertising]. And that’s all well and good. But there’s also the opposite side: Diamonds are addicting, not satiating. Promoting smaller diamonds helps create demand for larger diamonds.”

If Argyle wants to rejoin the CSO, it had better act quickly. The mine is expected to close in 2002, although officials are looking at ways to extend its life. – Russell Shor

Loupe-de-Loupe

Questions persist about the inscription De Beers is using on the “branded” diamonds currently being test-marketed at a three-store chain in Man- chester, England. Some leading gemologists say that the inscription – which is on the stone’s table – could hurt the clarity grade of a “flawless” stone, knocking it down to internally flawless. (The determining factor is the inscription’s size.) De Beers all but acknowledged this in its announcement of the branding program, which said the brand would not affect the grade of any stone “up to and including internally flawless.”

Yet this may also challenge some of De Beers’ early contentions about its brand – namely, that it can’t be seen with a loupe, only by a special reader. (Every jeweler who sells the stones has to buy the reader, which should cost about $5,000.) If the inscriptions do affect the grade of flawless stones, then by definition they would have to be visible with a 10x loupe.

When questioned by JCK, a De Beers spokesman maintained the inscription is not visible with a loupe. However, another company official said the inscription can be seen if “you know what you’re looking for.” – Rob Bates

Eight of 10 Jewelers Flunk Moissanite Test

Another TV show has caught jewelers misidentifying synthetic moissanite. Washington, D.C., station WJLA recently brought moissanite to 10 local jewelers. Only two recognized it was not a diamond. One of the jewelers who recognized it turned out to be a stockholder in C3, moissanite’s manufacturer.

Last year, a Miami TV station took moissanite to 10 local jewelers and pawnshops. Only one recognized the synthetic.

In related news, moissanite manufacturer C3 recently fired its ad agency, DDB Needham in Dallas, and is shopping for a new one. C3 says it wasn’t unhappy with the agency’s work; it just wanted an agency that was nearer to its plant in North Carolina. The company plans to spend $1 million on advertising this year and will spend between $5 million and $7 million in the year 2000. – Rob Bates

Mad Lampoons Diamond Industry

As if the diamond industry didn’t have enough problems recently, that perennial skeptic, Mad magazine, took a swipe at De Beers in a recent issue.

In a direct parody of De Beers’ “Man’s Guide to Buying Diamonds” ads, the kiddie-humor mag published a fake ad that asks: “Are you a victim of engagement ring ad anxiety?” From there, it’s almost a word-for-word parody of De Beers’ copy: “Most guys don’t know about [diamonds], and that’s exactly what the diamond industry is counting on when they read ‘friendly’ ads like this one.”

Other Mad-dening swipes at the industry:

  • “Just like no two diamonds are alike, no two appraisals for diamonds are alike.”

  • “Find a reputable jeweler. Good luck! And while you’re at it, maybe you can help O.J. find the ‘real killer!’ Once you’ve found a jeweler, ask questions like, ‘If you say you make “almost nothing” on a ring sale, how can you afford to wear $3,000 Armani suits and drive a Mercedes?’ ”

  • “Learn the 4Hs: How much? How come you keep showing me rings I told you I can’t afford? How come, if this ring is ‘appraised’ at $5,000, you’re willing to sell it to me for half that amount? How much will you give me for the ring if this engagement blows up in my face and I want to resell it back to you?”

  • “Finally, think romance. Chances are, if you don’t break down and give her a ring, she’s going to cut you off. So buying a diamond is an important occasion in your relationship. No ring, no sex. Besides, it’s not like you had anything important to do with two months’ salary!”

The fake-ad is credited to the “De Bores Conspiring Mines” and concludes: “A diamond is an error.” – Rob Bates

CSO Suspends 30 Sightholders

Just before the January sight, Gary Ralfe, deputy chairman of De Beers’ Central Selling Organisation, met with the heads of the six diamond brokerage houses to inform them that a number of their clients would not be getting parcels for the foreseeable future. At least 30 sightholders have been placed in a netherworld between temporary suspension and permanent expulsion from the CSO client list.

CSO officials never comment directly on sights or clients, saying only that the sightholders have been asked not to apply for goods for an indefinite period – which, in the words of one, “is a fine line between on the client list and not on the list.” Several brokers say there’s currently no way of knowing which clients will be reinstated eventually and which will be dropped permanently.

Dani Shein, managing director of I. Hennig & Co., believes that clients who don’t receive any sight goods through the first quarter of the year can “pretty much assume they’re off the list.”

Brokers agree that Ralfe’s announcement surprised few people because many sightholders haven’t taken goods since the CSO began its drastic supply cutbacks in the fall of 1997. “Many of these companies were inactive buyers, and the CSO was basically confirming a situation that already existed,” adds Mark Boston of H. Goldie & Co.

While no official head count was available at press time, most of the suspensions were levied at Israeli and Indian manufacturers who were hit hard by the Asian downturn. One New York sightholder reportedly was placed on the suspension list. – Russell Shor

Goldman, Oved Split

The Goldman-Oved company has split up now that the cofounders of the company, which specializes in fracture-filled diamonds, are going their separate ways. Jonathan Oved will run the company’s New York office with existing staff, while Eitan Goldman will take over the company’s Los Angeles office and may also establish a New York office. Both companies will sell filled stones.

Oved says the split between the two partners, who have worked together for nine years, was amicable. “We separated in an unbelievable way – with hugs and kisses,” he says. – Rob Bates

Piercing Pagoda Expands Its Diamond Presence

Piercing Pagoda, the mall kiosk powerhouse, is going deeper into the diamond and gemstone business. The company recently launched the Diamond Isle, a kiosk of low-price-point diamond jewelry. The test launch in Delaware was so successful, says company president John F. Eureyecko, that five to eight more Diamond Isles are planned. In addition, the company intends to add diamond and gemstone products to 180 of its 940 stores. Gilbert Hollander, who was recently promoted to vice president of merchandise purchasing, is spearheading the move to diamonds and gemstones. – Rob Bates

Lab-Grown ‘Whites’ Still Years Off

Retailers are already worried about distinguishing diamonds from cubic zirconia, zircon, and moissanite, but at least they won’t have to worry about colorless synthetic diamonds hitting the market soon.

That’s the word from Thomas Chatham, owner of Chatham Created Gems in San Francisco. At a session during the recent Tucson gem shows, he said that his widely publicized plan to manufacture colorless diamonds in Russia had fallen through, even though the Russians have the necessary equipment and know-how. “They lack the will and discipline to function,” he explained with exasperation.

Chatham now hopes to produce synthetic diamonds in the United States, but even those plans have suffered a setback. A physicist he brought over from Russia to head the project in Utah stayed only a few months before returning home, permanently. “It will be years before we’re ready to make whites in the lab,” Chatham concedes.

Meanwhile, Russian Colored Stones is working hard to supplement its lab-grown colored diamonds with near-colorless ones, according to Alex Grizenko, president of the Golden, Colo., firm. Despite his optimism, he had few new “whites” to show at Tucson, and people in the diamond industry believe it will be many years before the firm can make near-colorless synthetics in significant sizes and numbers. – Larry Frederick