RAP TO ADD PRICES TO CONSUMER WEB SITE
Martin Rapaport, publisher of the Rapaport Report and the RapNet Internet system, will add retail diamond price information to the consumer portion of his Web site.
Rapaport says he has not finalized plans but that diamond prices “will be part of an overall package of information to help consumers buy diamonds.”
He told members of the New York Diamond Dealers Club that he’s contemplating a retail list with prices higher than those on his current market report, “based on realistic levels.” Many diamond dealers have urged him to do such a list because they believe that large numbers of consumers now have access to his wholesale list and refuse to pay higher prices at retail. A retail-oriented list would allow for greater margins, they say.
Some believe such a list would find it difficult to pass legal muster with the Federal Trade Commission. But Rapaport says he’s studying ways of presenting price information without running afoul of any laws, “so it will benefit the industry, not harm it.”
He’s also considering adding other resources, including information about retailers, appraisals and general information consumers need to buy diamonds.
Rapaport also announced that he is enlarging his trade sites in RapNet by giving all subscribers to his Report free access to his Internet site and a free Web page within RapNet that includes an e-mail address. “Right now, there’s competition to provide the most Internet service at the lowest price and this is part of that process,” he says.
Eventually he’s hoping to add a “super secure” part of his network to create a diamond exchange similar to the NASDAQ stock market in which diamonds are traded through bid and ask prices.
RapNet has more than $110 million worth of diamonds listed in its trading site in any given week. Polygon Network, the oldest on-line jewelry industry service, has roughly the same.
Literally hundreds of diamond dealers worldwide are offering diamonds to both the trade and consumers. Few diamond people want to discuss their Internet dealings, but one says consumers eventually will have access to a myriad of price information through dealers’ Web sites, adding “there are so many inventory lists out there that the Rapaport Report won’t matter that much in the future. Everybody’s putting their prices out there.”
Bruce Verstandig, of the New York diamond company bearing his name, agrees. He’s had a Web site selling diamonds for several years and finds that the vast majority of “hits” are consumers looking for diamond price information.
“Many use the Rapaport Report as a guide, then check the inventory lists to see what kind of prices they can really get,” says Verstandig. His biggest cyber sale to date was only $3,000.
Luxury watches are among the most cyber-shopped jewelry-related products today, with Rolex at the top of the list, says Polygon president Jacques Voorhees, and loose diamonds aren’t that far behind. Polygon has about $2 million worth of diamond transactions daily, he reports, about 90% of which are loose stones. “If this trend increases greatly,” says Voorhees, “retailers will have to mount them into more distinctive settings so they can’t be as strongly cyber-shopped.”
What’s holding diamonds back from such explosive growth is reluctance by jewelers and consumers to accept technological advancements in diamond grading. While the Gemological Institute of America’s grading system has created a near universal language, the GIA grading reports don’t tell everything about the diamond. Today, however, Sarin diamond measuring devices – which can instantly grade diamond proportions (but not finish) – and programs able to grade brilliance and dispersion will make diamonds fully tradable on the Internet.
“Once that’s accepted, the tidal wave will come,” Voorhees says. – Russ Shor.
NEW SIGHTHOLDER ‘AFFIRMS N.Y. ROLE’
The appointment of Isaac Klein Inc. as the first New York sightholder in seven years is a message that the U.S. manufacturing community remains vitally important, says Naftoly Horowitz, who represents broker I. Hennig in the U.S.
Horowitz says the firm, which has roots going back more than 50 years as Shamroth and Klein, is one of New York’s best-regarded diamond manufacturers. Heading the business are Isaac Klein and sons Haskel and Philip.
The Kleins say they produce a full range of sizes and shapes from just under one carat up to about 10 carats in their factory. They employ seven polishers and their primary clients are better-quality independent retailers and smaller chains.
The Kleins’ basic philosophy is very conservative: not to grow beyond their ability to provide diamonds polished in their own factory. They do send a small percentage to Israel to make.
“Our main selling point is quality make,” says Haskel Klein. “We will sacrifice size for a better cut because there is growing demand for quality.”
While many sightholders complain about the low profitability of sight goods, Klein is optimistic: “It’s true profits have been squeezed in the past few years, but demand has been growing and our business has grown. The CSO sight is a good deal and we keep a positive outlook because over the years [the CSO has been] a positive force in the diamond industry.”
Diamond Dealers Club President Eli Haas calls the appointment “a modest first step” in the CSO’s recognition of New York’s importance as a diamond center. He wants the CSO to follow up the appointment with mini sights to smaller and medium dealers from Diamdel, the De Beers supplier of rough to the secondary market. He’d also like to see significant rough sights going to New York – allocations to rough dealers who resell it to local manufacturers. These generally are much larger than manufacturing sights. – Russ Shor
APRIL BIRTHSTONE: THE DIAMOND
Diamond is the gem synonymous with love. Its romantic history dates back to the first diamond engagement ring, given by Archduke Maximillian of Austria (1459-1519) to his fiancee Mary of Burgundy. But not until N.W. Ayer, the first U.S. advertising agency for De Beers, created the slogan “A diamond is forever” did the diamond engagement ring really make its mark in history.
Diamond is America’s leading gem. Diamond jewelry sales in the U.S. totaled $17.9 billion in 1996, up 7% from the year before. J. Walter Thomson, which now manages the De Beers account in the U.S., currently is putting a big promotional push behind necklaces, especially the diamond solitaire necklace, although other women’s jewelry and bridal rings remain a hefty portion of the market.
Overall, De Beers spent more than $50 million on advertising in the U.S. alone last year. Diamonds are big business. And they are April’s birthstone.
Whence the name. The word for diamond derives from adamas, a Greek/Macedonian term meaning “like ice.” Diamond’s colorless or near-colorless appearance justifies that name. The word adamantine is defined as having the hardness or luster of a diamond.
Diamond’s ability to disperse white light into spectral colors, its “fire,” ranks higher than that of most commonly used gems. People even refer to a diamond as “fire in ice.”
Localities. Diamonds from centuries long past, detailed in literature, came from the alluvial deposits of Golconda in India. When diamonds were discovered in Brazil in 1725, they were sent to India and sold as “Indian” to counter unwarranted rumors that South American goods were inferior. Then diamonds were found in South Africa in 1866, soon eclipsing all other sources. The nearby countries of Namibia, Botswana, Zimbabwe (formerly Rhodesia, named for Cecil Rhodes, founder of De Beers) and Angola all produce diamonds, as do other African nations.
Today, while Southern Africa still produces some of the world’s finest diamonds, Russia (Republic of Sakha-Yakutia) and Australia (Argyle) are among the top producing areas of the world. Explorations in the Northwest Territories of Canada and even in the western U.S. (Wyoming and Colorado) have discovered new and important deposits.
Hardness. Diamonds have long been praised for their durability as well as their beauty. Their hardness is 10, the highest ranking on the Mohs scale. That means no other natural substance on earth can scratch a diamond, except another diamond – which, in turn, means that only diamond can be used to polish a diamond.
A flat rotating steel wheel which has been impregnated with diamond dust is used to polish a diamond. If you examine the wheel from the outer edge towards the inner circle, you’ll see that the size of the diamond dust becomes finer. That’s because polishing theory calls for using the coarsest grit to roughly polish a surface, then finer grit to create finer and finer scratches, until the finest grit places such invisible scratches on a surface that it appears smooth. Polishing a diamond along the outer edge of the wheel creates a flat but rough surface; polishing it close to the center of the wheel creates a much smoother, clearer surface.
Because diamond has directional hardness, a skilled cutter can look at a rough crystal and see which direction is the best in which to polish. If the cutter does not place the diamond onto the wheel in the right direction, the one to be polished actually will start to cut into or polish the wheel. When polishing a faceted diamond, the sound of the grinding tells the cutter whether the gem is facing in the correct direction.
Quality grading. Diamonds are unusual in that they have a recognized language for quality ranking. While other grading systems exist, the most widely used is the one taught by and used in the Gem Trade Lab of the Gemological Institute of America, starting in the 1950s.
The clarity grading system goes from Flawless to Imperfect, reflecting the fact that unlike other important gems, diamond may show no inclusions at all under 10 power magnification. GIA’s system originally went from Flawless to VVS (Very Very Slightly Included) 1 and 2; then VS (Very Slightly Included) 1 and 2; SI (Slightly Included) 1 and 2; and finally I (Imperfect) 1 and 2. As new and better magnifiers were developed and new diamond deposits began producing diamonds with unusual inclusions, the scale was expanded to include IF (Internally Flawless) and sometimes I3, the lowest possible Imperfect grade of gem-quality diamond.
The color of diamond ranges from Colorless through Near Colorless, Faint, Very light, Light, Fancy light, Fancy and Vivid. Diamonds can come in almost any color. Using the alphabet, GIA began its colorless-to-yellow grading scale with the letter D, simply because many wholesalers already used A, B and C to describe the quality of their diamonds. Of course, it follows that colorless diamonds, being the rarest, are also among the most expensive. Fancy and Vivid colors such as pink, blue or even yellow can command even higher prices.
Most diamond engagement rings are sold with colorless, near colorless and faint yellow color descriptions. This would include all color grades from D through M.
Lucky April birthdays. Most of those born in April love their birthstone, and why not? It has great beauty, brilliance and fire. But sometimes a transparent colorless gem just doesn’t appeal. That’s when you might suggest a fancy colored diamond, if your customer has the bank account to afford one.
Fancy brown diamonds, the champagne colors, are the most common, with fancy yellow diamonds coming in a close second. Argyle, the Australian diamond mining giant, developed a marketing program to describe the various shades of champagne, since a large percentage of the Australian mine production of 30 million-plus carats falls into that category. A diamond with approximately the same saturation (not hue) as a very light yellow diamond is called Light Champagne (C1 or C2). As the color becomes more saturated, the trade terms Medium Champagne (C3 and C4) and Dark Champagne (C5 and C6, the equivalent of a fancy yellow color) are used. Fancy browns with a tremendous amount of saturation are called Fancy Cognac. As in most colored stones, the more attractive and saturated the color, the more appealing and the more valuable these gems are.
Astrological signs? Perhaps your customer wants something more affordable than a fancy colored diamond. He or she can always look to the stars. Astrological signs and their associate stones offer alternatives to those who dislike their traditional birthstones. Here is the astrological vs. birthstone list for the year so far:
Capricorn, Dec. 21–Jan. 20 – ruby; January – garnet.
Aquarius, Jan. 21–Feb. 20 – garnet; February – amethyst.
Pisces, Feb. 21–March 20 – amethyst; March – aquamarine or bloodstone.
Aries, March 21–April 20 – bloodstone; April – diamond.
Gems of the day offer yet another alternative:
Sunday, topaz and diamond.
Tuesday, ruby and emerald.
Thursday, sapphire and carnelian.
Friday, emerald and cat’s eye.
Saturday, turquoise and diamond.
(Note: All references of astrological significances come from Frederick Kunz’s The Curious Lore of Precious Stones.)
Brilliance. Diamond is known for its optical properties. With proper proportioning of the crown (the top third or so of a diamond) and its pavilion (the bottom two thirds), light is reflected internally until most can find its way back out through the crown. Because of their lower refractive index, it is difficult if not impossible to proportion most colored gems so they reflect light as well as diamond.
Fire or dispersion is the key to the “life” of a diamond. Without it, the gem just sits there – brilliant, yes, but lifeless as well. Fire is diamond’s ability to fan out white light within the stone into spectral colors as that light is released. When white light approaches an inner surface just within the critical angle (about 24° 26 minutes), that light is not only released from the stone, but also spread out into the colors of the rainbow.
Shape. Diamonds are cut into all shapes and sizes. The standard round brilliant shape is the most symmetrical, allowing light to react better than in any other shape. The classic shapes are round brilliant, pear shape, oval, marquise, heart and emerald cut. All but the emerald cut are made up of triangular and kite-shaped facets; the long rectangular facets of the emerald cut are called “step-cut.”
Some fancy shapes and novelty cuts should also be mentioned. The most common of fancies are princess cut (brilliant), radiant cut (brilliant), triangle/trilliant (step cut or brilliant) and baguette or tapered baguette (step cuts). Some novelty shapes, many of which originated in the South, are extremely clever. There are horse heads, five- pointed and six-pointed stars, the state of Texas, pistols, etc.
Enhancements. Diamonds, like all other gems, can be enhanced to improve their appearance. In addition to the usual faceting and polishing, there are laser drilling to enhance clarity; irradiation to enhance or add color; fracture filling to improve appearance; and a combination of filling and drilling to enhance clarity and appearance. Diamonds also are laser inscribed to aid in identification.
The Federal Trade Commission recently ruled that it is not necessary for a jeweler, wholesale or retail, to disclose laser drilling. (See “Laser drilling: Another time bomb?” in March JCK, page 86.) However, all other forms of enhancements must be disclosed. – Gary Roskin
FILM ON THE 47th ST. DEALERS AVAILABLE
Dealers among Dealers,” an award-winning PBS film on the diamond dealers of New York’s 47th St., is now available for purchase. Price per cassette is $39.95 plus $5 shipping and handling.
The documentary, produced by Gaylen Ross with Andrew Cohen and Harvey Lieberman, includes scenes from 47th St. exchanges and manufacturing offices, inside Christie’s auction house in Geneva, and from the historic $31 million auction of the Countess de Boisrouvray’s jewels at Sotheby’s in New York.
National Center for Jewish Film, Brandeis University, Lown Bldg. 102, MS053, Waltham, MA 02254-9110; (781) 899-7044, fax (781) 736-2070.
U.S.-CHINA GEM TRADE TO GROW
The opportunity for significant expansion of American diamond trade with China is clear, New York Diamond Dealers Club President Eli Haas reported after intense discussions with a high-level delegation from the diamond industry in The People’s Republic of China.
“China has enormous potential for growth in the buying and selling of diamonds, growth that is supported by both the government and the rapidly-emerging private sector,” according to Haas. “We are pleased that the Chinese delegation approached the DDC to learn more about the diamond business worldwide, and in particular, the American diamond business.”
Haas’s statement came after more than 20 hours of meetings with senior representatives of the Chinese government and that nation’s diamond industry. In addition to being hosted by Haas, World Federation of Diamond Bourses President Eli Izhakoff and the board of directors of the Diamond Dealers Club, the Chinese delegation also toured a New York diamond manufacturing facility and met with banking and security officials. After the meetings, Chinese officials expressed considerable interest in hosting a DDC delegation in China. – Russ Shor
RUSSIAN EMBARGO HITS LAZARE KAPLAN
Lazare Kaplan International Inc. of New York announced polished diamond sales of $39.7 million for the six months ended Nov. 30, 1997, compared to $51.2 million in the same period of 1996. Much of the decline came from reduced and delayed rough supplies from Russia.
For the second quarter, polished diamond sales were $21.6 million, compared to $33.1 million in the second quarter of ’96. Overall polished diamond revenue was impacted by delays in shipments of large gem quality polished stones from the company’s factories in Russia.
Kaplan previously reported that it received two Russian shipments during the last week in November, but this was too late to positively affect second quarter revenue.
Second quarter sales of rough diamonds were $25.3 million in 1997, compared to $47.2 million in ’96. For the six months, rough diamond sales were $52.4 million, compared to $98.4 million for the comparable period last year. The decrease in sales for the second quarter and six months was attributed to continued lower sales of better-quality rough diamonds into the marketplace by the company’s primary diamond supplier, as well as the company’s closing of its rough diamond buying office earlier in the calendar year in the Congo Republic.
Net income for the second quarter was $205,000, compared to $2.9 million in 1996. Net loss for the six months was $454,000 in 1997, compared with net income of $4.6 million in 1996.
Leon Tempelsman, president of Lazare Kaplan International Inc., commented: “Although we would have preferred to receive the shipments of diamonds from Russia earlier than we did, we are very encouraged that these shipments have begun and are continuing. Our relationship with Almazi Rosii Sakha [the Russian mining company] continues to strengthen. Initial steps have been taken to expand our cutting and polishing venture.”
Tempelsman added, “All indications point towards a continued strong performance in the U.S. domestic market. Of particular note, we experienced a significant sales increase during the 1997 holiday season.”