The Gemological Institute of America’s 11/2-year-old colored diamond grading system has made a smooth transition into the trade, says Tom Yonelunas, director of the GIA Gem Trade Lab.
Some retailers and dealers disagree, saying the GIA system doesn’t tell the whole story and is applied inconsistently. They say it has hyped interest in colored diamonds at the top of the scale, but compromised prices in the lower middle.
Briefly, the system subdivides the higher end of the color quality range into new categories: better yellows that had been graded Intense now can be graded Vivid or Deep. But some feel the lines between Faint, Fancy Light, Fancy and Fancy Intense have blurred.
Jeweler Harold Tivol of Kansas City, Mo., says the system is not specific enough — particularly with yellows. “Two diamonds can be graded the same — perhaps Fancy Intense — but one is a deeper yellow,” he says as an example. “Surely, it must be worth more in the market. Unfortunately, that is not always the case because the color grading certificate determines the price, and all things being equal [on the certificate], they are usually priced the same per carat.”
Tivol says GIA should change its system to a minimum of 20 grades to recognize more differences in color. Yonelunas feels that many grades would be confusing. He also says the system was adapted from what the trade was already doing. “The trade was already using the divisions [between Intense and Vivid or Deep], so we believed the only people who would have trouble recognizing those boundaries were dealers not truly immersed in that market,” says Yonelunas.
Howard Rubin of GemDialogue Systems, Rego Park, N.Y., says the system uses the term Fancy differently for different colors. “A pale yellow is not a Fancy, but a very pale blue or pink is, even if the color cannot be seen in the face-up position,” he says.
The system is not without its champions. Argyle Diamonds of Australia, which conducts a yearly tender sale of top pink diamonds from its mine, believes the system has helped to increase demand and prices for its best pinks. Argyle executives say the addition of Vivid has legitimized their own descriptions of the stones and has boosted interest in them worldwide.
The new system also addresses complaints that the old system clustered prices at the low and high ends. “When the old system was in use, prices for Intense yellows ranged from $10,000 to $40,000 per carat with a big gap in the middle, says Ishiah Gol, a diamond dealer in New York, N.Y. “Now the Vivid range starts just where the prices for the top Intenses would take a big jump.”
At the lab: Yonelunas says the number of colored diamonds going through GIA labs in the first year of the new system increased 75%. “Much — but not all — of this increased volume was from dealers looking for regrades,” he says. “The market is getting pretty hot now and we’re seeing a lot of new stones of all different colors.”
GIA offered dealers a chance to have diamonds that had been graded under the old system rechecked for a minimal charge to make the new reports more marketable. GIA wasn’t deluged right away because the changes affect only the high end of the market where goods are comparatively rare, says Yonelunas.
Some dealers say they were reluctant to have stones regraded because the grading was inconsistent and because GIA graders were unprepared in the first several months of the new system. Yonelunas denies those charges and says GIA didn’t receive an inordinate number of complaints.The ones it did receive were intense, however, because colored diamonds are so much more expensive than white diamonds (top yellows are $40,000 per carat, top pinks and blues more than double that).
There’s even a big price difference between better and best quality colored diamonds, and this is where problems lie. “The price difference between a Fancy Intense yellow and a Fancy Vivid yellow can be tens of thousands of dollars,” says Alan Bronstein of Aurora Gems, New York, N.Y. “In pinks and blues, the difference between Intense and Vivid or Deep can be much larger.”
Bronstein and others say the bottom end of these grades is still blurred; they describe dealing with such stones as a roll of the dice. “We’re not always sure where the bottom end of Vivid and the bottom end of Intense are now,” he says. “If we are wrong, it can cost us a lot of money.”
Some dealers say they’ve lost lots of money guessing wrong. “I’ve had some diamonds graded Fancy Intense that have more color than some graded Fancy Vivid — and we have no explanation why this is so.”
Another dealer says he lost money well into six figures when a major stone fell below the Vivid grade. “I resubmitted it and talked to them, but it still came back the same grade,” he says.
Chuck Meyer of Henry Meyer & Son, New York, N.Y., says no one buys colored diamonds from the certificate alone. “But it’s still a foot in the door,” he says. “If the certificate says Intense and not Vivid, you have to fight a lot more to get people to look at it.”
Tivol believes GIA will get a lot of “repeat” business from clients trying to upgrade the color grade on borderline stones. “Can you imagine how many times a borderline stone might be resubmitted until it receives a higher grade?” he asks. “It would be well worth it because an extra 20% or more might be realized.”
The grade also can end up higher than expected. Some dealers say they’ve gotten Vivids on stones they thought were Intense. This has led to a dealers’ subgrade that’s not in the GIA system: Lucky Vivid. “There are a lot of Lucky Vivid certificates in the market now, which shows how inconsistently the GIA applies its own system,” says one major dealer. “Everyone in the trade is learning to recognize them, so they don’t carry such a high price.”
Dealer Bruce Smith of New York, N.Y., attributes the problem partly to GIA’s use of expensive and sophisticated lighting equipment and a special viewing box to grade colored diamonds while the trade generally uses a standard diamond light. “This is a subjective business anyway,” he says. “There’s no way they’re going to make this a completely exact science.”
The new reports have been criticized also for often failing to list modifying colors — even in extreme cases.
Despite support for the Vivid grade, Argyle’s team of colored diamond graders in Perth, Australia, believes the new reports don’t adequately describe secondary colors that give Argyle pinks much of their distinctiveness.
A leading dealer in blue diamonds says he’s sent back Intense blues and Deep blues because they had significant gray modifiers that weren’t listed on the report. “Clearly, the graders don’t include this unless it’s really obvious,” he says.
Safety net: For those dissatisfied with the GIA reports, there is one relief valve: no one ever trades colored diamonds by certificate alone. Fancy Intense, Fancy Vivid or Fancy Deep mean nothing if the color is unattractive.
One area where the trade and GIA agree is that “attractiveness” of color can never be documented properly. “We objectively and independently report the color of a diamond and let the market sort out whether it’s attractive,” says Yonelunas.
Dealers say taste, especially in yellow diamonds, varies tremendously. “Some like greenish yellow while others prefer orangy yellow,” says Bronstein. “This is one time where dealers and retailers still have to promote the diamond for its beauty, not its certificate.”
Opposite page, left: two GIA-graded Fancy Intense blue diamonds — a 3.68-ct. oval and an 11.54-ct. pear –are combined with white diamonds in these ear pendants. These didn’t meet the $4 million to $6 million price expected byChristie’s this spring.