Letters

NO TO CZ MASTER SETS

Your cover article in the March 1996 issue on jewelers’ gem labs (page 54) suggests that a jeweler may build both prestige and profits. I take exception to the listing of CZ master stones as aiding either endeavor.

CZ master sets are sold by many firms as sales aids, to explain color differences to customers. They are not sold, or cannot be taken seriously, as tools for professional graders. There is no serious lab I am aware of that would stake its reputation on an unstable material that resembles diamond in only the most superficial fashion.

With the litigious tendency of U.S. customers and the crying need for responsible appraisals and appraisers, it is irresponsible at best for you to recommend such “equipment” in a lab doing appraisals. If cost is an issue in properly equipping a lab, why not save the expense of a microscope and just use a loupe? Don’t invest in a refractometer, simply rely on Hannenman and Hodgkinson’s “Visual Optics” method. A proper set of diamond color grading master stones is as basic to doing a good appraisal as any other piece of gemological equipment.

If the jeweler cannot afford master diamonds then send the work out to a professional lab until enough profit is realized to afford the equipment necessary to do the job properly. In the article you quote Rod Miyata as suggesting that “a gemologist is as good as the tools that are used.” This is true. Why “hamstring” an appraiser by suggesting the use of inferior tools?

Anne Neumann, GG CGA (AGS) HW Gemmological Laboratory Toronto, Canada

SYNTHETIC GUIDELINES

William Hoefer of Hoefer’s Gemological Services, San Jose, Cal., prepared the following comments on the “Jewelers Vigilance Committee Inc. Appraisal Task Force Recommended Minimum Guidelines for Insurance Cost Estimate Documentation for Jewelers.” (For full text of the guidelines, see JCK, December 1995, pages 146-151.) Further comments will appear in next month’s Letters section.

On the surface, the Jewelers Vigilance Committee’s new guidelines for replacement-cost documentation seem to solve the rampant problems associated with point-of-purchase jewelry appraisals.

In reality, the guidelines only worsen the problems.

By allowing retailers to use their own store’s selling prices to estimate replacement costs for items bought elsewhere, the guidelines legitimize low-balling and risk riling an already litigious buying public. Here’s how.

A mall jeweler sells a diamond ring to a customer who later decides to have it independently appraised while shopping at a so-called “wholesale mart.” These “wholesale marts” flourish all over the country, so the example is certainly relevant nationwide.

After asking for an insurance appraisal, the consumer is told that she is being given a document suitable for insurance purposes developed and endorsed by the JVC, a trade group that polices the jewelry industry and defends its ethics.

Remember the customer is told it’s not an appraisal per se, but a statement of the cost to replace her ring in the store which has been asked for insurance documentation. Not realizing the difference between a bona fide appraisal based on market research and an insurance document that’s based solely on a store’s selling price, the consumer accepts the document.

Guess what happens when she sees the wholesale mart’s price for her ring is considerably less than the price she paid? It’s safe to say the original seller can expect a visit from his former customer.

And there is little the original seller can say in his defense. After all, JVC has said it is all right to substitute replacement cost documentation. Can the guy at the wholesale mart help it if he works on 10% or 20% mark-ups and the mall jeweler works on 75% or 100% mark-ups? And does it matter the mall store price might better represent the market value of the item?

Distinct from appraisals? I suppose guideline supporters will remind me that JVC has not issued appraisal guidelines and has made it very clear that replacement cost documentation is a different animal. But they miss some deeper issues that need examining.

First, the guidelines assume the courts will accept replacement cost documentation as something separate and distinct from an appraisal. However, even experts in the field often don’t understand the difference. Despite caveats and disclaimers, the courts may find the consumer had every right to expect a replacement cost document to be an appraisal. Thus, issuers of replacement cost documents ­ most of them jewelers with no appraisal training ­ might be held to the same standards of education and proficiency as a trained appraiser.

Second, by permitting users of the guidelines to use store replacement costs for valuing merchandise bought elsewhere, JVC has revoked a central principal of modern appraising ­ market-based research ­ which has been recognized and upheld by the courts. Also upheld by the courts is the legal need for indemnity, or compensation for a loss. Appraisers have the burden of providing a proper value that secures indemnity. If an appraisal causes the insured to overpay premiums or become a coinsurer, the appraiser is liable. But since the guidelines do not require a value, the guidelines have effectively placed the appraiser’s burden and liability back onto the public. The guides undermine the principle of indemnity.

Third, the JVC guidelines are a powerful disincentive to appraisal education. Because replacement documentation accounts for at least 90% of the typical jewelry appraiser’s business, the guidelines allow the jeweler to bypass appraisal education when preparing the report. It is safe to say jewelers will not feel the pressure they might have felt to learn appraisal methodology.

I think it is somewhat suicidal for appraisal groups to offer courses in replacement cost documentation when jewelers can spend the same time learning to write replacement-value appraisals.

Preface problems: Some time after JVC sent out a draft of its guidelines for ratification or rejection, it realized it had created a mine field. To prevent casualties, JVC added a preface page to the guidelines that was not part of the draft on which the Appraisal Task Force members were to vote. In this preface, the group waives liability for “JVC, its Officers, Directors, Appraisal Task Force Members and/or anyone else connected with this publication.”

Everyone but the guideline user.

Before commenting on the legitimacy of such a disclaimer, I have to question JVC’s right to insert anything into the guidelines that was not part of the draft sent to members of the task force for a vote. That constitutes an unauthorized amendment to the guidelines and should have been deleted. If that disclaimer is retained, JVC should call for a new vote on what is essentially a new version of the guidelines ­ one that absolves the people who wrote it of any responsibility for it. For an organization of such high standing to refuse liability for actions it recommends is, to me, hypocritical and unethical.

I doubt that any trained appraiser who voted yes for the guidelines would have done so had they contained the new preface. Wasn’t it similar kinds of all-encompassing disclaimers seen on inflated, cost-based, sold-in-my-store “appraisals” that the task force was seeking to address and eliminate?

Why make a big fuss over a legal precaution? If the group must distance itself from its guidelines, why should any jeweler be asked to consider using them?

I seriously doubt that any group will actually require adherence to the guidelines the way that, for example, some groups require members to comply with the jewelry industry’s gemstone enhancement guidelines.

What was the vote? The guidelines sent to the Appraisal Task Force members for approval were so open to debate that the vote was premature. Six appraisers on the committee voiced personal disapproval of the guidelines to me and said they abstained from voting.

However, JVC counted all abstentions as “yes” votes. Their passive protest was translated into active support. I want to know the full results of the ballot ­ how each committee member voted. If the majority of trained appraisers voted “no” or abstained, then I think it is fair to rescind the new guidelines and formulate new ones. Hopefully, the new guidelines would be acceptable to a majority of the trained appraisers.

JVC does not have the right to ask for industry support of guidelines that lack the backing of a majority of the appraisal industry.

NO RAP FOR CSO

Although retired from the CSO I still read JCK etc. I did enjoy Glenn Rothman’s article, “Shrinking Profitability in the Diamond Business” (JCK April 1996, page 30). He makes good sense.

However, I must comment on “CSO prices rough diamonds to its sightholders based on the Rap List.” It does not. It doesn’t use the list. I have recently written to Martin Rapaport (whom I of course know), re prices and supply. I don’t think he really understands the diamond business. I will leave my erstwhile colleagues to eulogise over the rest of Glenn’s article.

Mike Grantham Oxted, Surrey, England

IN PRAISE OF AGS

That is an excellent article on jewelers’ gem labs by Robert Weldon and William Shuster. Let me toss some bouquets to American Gem Society members for their long-time involvement with this attractive and profitable instrumentation in their jewelry stores.

Your article quotes Bolender’s in Rockford, Ill., as having one of the first AGS Accredited Gem Laboraties in 1953. The current AGS roster now indicates 439 such labs among its retail firm members.

AGS Accredited Gem Labs require supervision by a Certified Gemologist or a Certified Gemologist Appraiser. The major instruments needed are almost the same as listed in your article ­ except the spectroscope. Master color grading diamonds and proportion grading equipment are necessary as is a worthy library and an attractively designed location (a diamond room does fine). AGS members were pioneers in gem instrumentation, going back to the first binocular gem microscope (the Diamondscope) and their first sets of master color grading diamonds.

Alfred L. Woodill Los Angeles, Cal.

STILL REPAIRING IWC

I read with interest the item about International Watch Co. (IWC) in JCK April 1996, page 204.

Please be advised that Superior Watch Service Inc. has been a factory authorized service center for IWC and Porsche Design watches for more than 15 years. By contractual joint agreement with IWC (see letter below), Superior continues to service IWC and Porsche Design watches as a factory authorized service center. Our company flyer to customers describes in detail the services we continue to provide built on years of experience.

We request that you provide your readership with this information in your next issue so they can choose their source for IWC and Porsche Design service as they see fit.

Jack Freedman, Pres. Superior Watch Service, Inc.

We are pleased to announce to you and your company that our IWC office in Winchester, Va., will be performing the following additional services effective Nov. 15. We will be capable of handling all of your after-sales service needs for both IWC and Porsche Design watches.

The new center will be identified as IWC After-Sales Service, a division of Swiss Prestige Inc., and will be located on our premises at 188 Brooke Road, Winchester, Va. . . . The new center will offer factory original parts and watch straps for both warranty and out-of-warranty service. This includes refinishing, waterproofing, timing and all other service needs.

We are pleased to announce at the present time we have three experienced watchmakers on staff and are scheduled to have two additional expert technicians joinging us in the very near future. All of the watchmakers are factory trained and in fact some have worked for IWC in Schaffhausen.

As you are aware, Jack Freedman of Superior Watch Service has serviced IWC and Porsche Design by IWC watches for many years, and we have been very happy with the quality of his work. Superior, an authorized service center, will continue to service IWC/PD watches.

Our new service center simply gives you, our valued customer, a further option to obtain quality service on a timely basis. We look forward to continuing to meet or exceed your needs.

A WORD FOR MORALITY

For virtually two generations (surely since the mid-thirties), we as a nation have leaned more and more upon Washington, D.C., to solve our problems. Despite the limitations on the power of our federal government by the Constitution, the tendency has been to look toward “bigger and bigger government” to solve more and more of our problems! But of recent years we’re beginning to see that it’s not working!!

Why, why, why?

Paraphrasing an observation by one of our founders:

“Those of us who do not learn from history are condemned to repeat the errors of the past.” The Federalist Papers (by John Jay, Hamilton and Madison) were written both to promote the new Constitution and to caution against abuse of its purposes. I think it was James Madison (in F.P. #51) who noted that “Men are not angels.” In today’s world, this requires some explaining.

For one thing, we must explain that this meant both men & women. . . . and we might need to explain what is meant by “angels.” This further makes it necessary to use the word “sinner” ­ a word that’s no longer very fashionable. Even in many religious circles nowadays the “S” word has fallen from fashion.

Anyway, a sinner is sort of the opposite of an angel. If this were a world full of angels, we’d not have to worry about gemstone treatments, about underweights, underkarating and other misrepresentations. One of the greatest influences toward more angelic behaviour is that we humans be intimately aware that each of us is not alone, that a “Power” outside ourselves is eternally present (better spelled with “caps,” as a PRESENCE!).

That gets us into the subject of morality and religion, with rightful first amendment restrictions re government’s role here. But that’s not a restriction on having moral people in government! (Sometimes we have the intent backward!) Government laws and rules will never make obsolete the sense of morality each of us can learn at our parents’ feet or with the help of our rabbi, priest or pastor . . . along with our own sense of the outside help each of us can call upon, to keep us from slipping.

As the Nordts head for a new century, we sense a century and a quarter of generations “looking over our shoulders” urging us on to maintaining the reputable heritage.

Paul Nordt John C. Nordt Co. Inc. Roanoke, Va.