Letters

A Pearl Dealer’s Challenge

In the December 1999 issue of JCK, in the Gem Notes section (p. 28), Senior Editor Gary Roskin draws attention to the fact that there are indeed natural-colored black Chinese cultured freshwater pearls similar in color to black Tahitian pearls.

It seems as if Roskin is trying to support his own opinion with a picture of some pearls he obtained from a freshwater pearl dealer. If the goal was to prove such an important point, it seems that the only proof of the existence of natural colored freshwater pearls could be provided by a credible lab such as the Gemological Institute of America or the American Gem Trade Association facilities. Where in this picture is the gemological proof that these pearls are indeed freshwater and natural black pearls?

In an effort to provide your readers with clear and accurate information, I am willing to purchase these pearls from Roskin’s source and send them to the AGTA or GIA lab to be sliced in half and evaluated. I am willing to absorb the cost of the pearls and the evaluation because I believe that this very important information will benefit the entire jewelry industry, regardless of the results. Until a reputable lab evaluates these pearls, I find it to be rather irresponsible journalism to report this as “fact.”

Avi Raz

A&Z Pearls Inc.

Los Angeles

Gary Roskin replies: Raz is correct. A laboratory report is definitely warranted. Nadine Ifrah Nelson, owner of the Mississippi Pearl Jewelry Co. in Red Wing, Minn., who provided the pearls in question, took up the challenge and sent the pearls to the GIA Gem Trade Lab for analysis. At this point, after almost two months of examination, the results are still inconclusive. It has been decided that the pearls, indeed, have to be sawn in half to examine the internal structure. However, this still may not yield any conclusion. GIA gem identification experts are just as curious as we are and are hoping that once the pearls are cut, they’ll find something to help them identify whether the color is natural or created. They also hope to find some non-destructive method of identification to examine similar pearls submitted to the lab in the future.

Re: Treatment

As the newly appointed managing director of Pegasus Overseas Limited, I would like to clarify a few points in Frank Dallahan’s Counterpoint column, “LKI’s Retreat to Higher Ground” (JCK, February 2000, p. 42).

As you probably already know from the results of our Christmas season market test, consumers have responded extremely favorably to our diamonds—most favorably, in fact, when their rare attributes have been explained in full and their prices set at a 5% premium to the market. While the consumer is the ultimate judge of the beauty and authenticity of our diamonds, we still feel an obligation to make sure that the trade, too, is fairly and fully apprised of the facts.

First of all, regarding the identification of our stones, you should be aware that our laser inscription is indeed permanent, short of the fraudulent act of intentionally polishing it away. Nevertheless, we still second your call for a truly tamper-proof, permanent marker, yet for slightly different reasons. Our stones are a premium product. Diamonds have great value for their beauty and rarity. Ours are equal to any on the market for color, cut, and clarity. Plus, nitrogen-free, they are purer and rarer than more than 99% of all diamonds worldwide. We encourage the development of a fraud-proof, permanent marker—as well as for detectability technology—to distinguish our stones from all others and to support our premium pricing.

Secondly, Dallahan’s reference to our diamonds as “no better than created gemstones made in a lab” must mean that we have not done a good enough job explaining the process we use. Very simply, we start with a rare, natural, type IIa, nitrogen-free diamond whose molecular structure was misaligned by the intense volcanic forces that brought the stone to the earth’s surface. Applying the same forces that naturally created the diamond billions of years ago—extremely high pressure and temperature—we allow the diamond structure to realign itself spontaneously and return to the colorless state in which it was originally crystallized. We have added nothing to the natural stone nor taken anything from it. That is precisely why gem laboratories have been unable to distinguish with certainty our stones from other stones that have not undergone our process. It is also why the Gemological Institute of America grades our stones with a comment referencing our laser inscription but no comment as to a “treatment.”

Finally, you should know that the integrity of the diamond industry has been an abiding concern of my family since 1914. I am now affiliated with a company whose reputation in the industry is second to none.

Charles A. Meyer

Managing Director

Pegasus Overseas Limited

New York

Casting Stones

In his February “Counterpoint” column, Frank Dallahan says that Pegasus diamonds are “no better than created gemstones made in a lab. They should be positioned, marketed, and priced accordingly, just like other created gemstones.”

I’d suggest that with this claim to the moral high ground, Dallahan opened a can of worms that would have been better left closed.

Before casting any stones or making demands on General Electric or any future “enhancer” to permanently mark its products, the jewelry business had better be without sin itself. That day will not come until it similarly condemns all those color-enhanced sapphires as also being created. I’m not holding my breath.

I know I shouldn’t use the “S” word, but being synthetic is like being pregnant—one is or one isn’t. All the rationalizations and euphemisms in the world can’t change the fact.

W. William Hanneman, Ph.D.

President

Hanneman Gemological Instruments

Poulsbo, Wash.

De Beers: A Dreary Report Card

How does the diamond industry feel De Beers is performing? If it were grading De Beers, let’s see what its report card would look like.

Subject: Controlling Diamond Prices. This is one area in which De Beers is very proficient. If nothing else, the company is a formidable practitioner of supply-side economics. During the 1998 crash of the economy in the Far East, De Beers was able to control the supply of diamonds to the marketplace in a manner efficient enough that price stability was essentially maintained worldwide. In this subject, we have to give De Beers a grade of A. Advertising. Over the last number of years, De Beers’ advertising has improved considerably. Its television commercials have gained recognition by the public. Its print advertising now features jewelry of more universal taste. De Beers’ ads do help jewelers sell more diamonds, but this is of little consolation to the many jewelers who have seen their margins on diamonds shrink. Grade: B+

Branding. Where is De Beers going with this one? Personally, I don’t think even De Beers knows. It’s apparent that the company is trying to use branding to maintain control of its channels of distribution. De Beers’ claim that a branded diamond could increase profit margins is ludicrous. In fact, it would make the diamond more of a commodity, as the brand becomes one more specification on the consumer’s list as he price shops for a 1-ct., G color, SIl, “De Beers Brand” diamond. We have to say the jury is still out on this one. Grade: C– Creating Shareholder Value. If you had bought stock in De Beers three years ago, you would have lost approximately 20% of your money. It’s hard to believe that a company that has a virtual monopoly on the world’s diamonds has been an investment disaster in the greatest bull market in the history of the United States. As major companies in other industries have showed substantial growth, their shareholders have been duly rewarded. Because of shrinking profit margins on diamonds, De Beers is choking off its own distribution channels. Look elsewhere to invest. Grade: D

Creating Profitability in the Diamond Industry. This is another area of dismal failure. De Beers and the industry have let the diamond become a perceived commodity. Profit margins are so low that jewelers either no longer want to invest in inventory or just plain don’t have the money to do so. The diamond business has become a “Fed Ex overnight” industry. My forecast is that margins are about to be squeezed even further, especially on certificate diamonds now plastered all over the Internet. The only reason I won’t give De Beers an F is that jewelers can still make a living, albeit a modest one. However, don’t look for any “Microsoft Millionaires” in this industry. Grade: D

Overall, a pretty dreary report card. While De Beers is excellent at controlling prices and is becoming more adept at advertising, these functions are mostly self-serving and are of little consolation to jewelers whose shrinking profit margins on diamonds are stunting the industry’s growth.

Steven R. Martin, G.G., MBA

M. Martin & Co. Jewelers

Chicago

An Open Letter To Colleagues

To my many friends and colleagues in the jewelry industry: I would like to extend my heartfelt thanks and gratitude for your thoughts, prayers, and concern during my recent illness. It’s impossible to convey how much they meant to me.

Barry Friedman

N. Gogolick & Son

Cleveland