TOP OF THE NEWS

Florida Company to Sell Synthetic Diamonds

Working with scientists at a nearby university, a small Florida company says it’s able to produce consistent quantities of synthetic diamonds and will start selling them next year.

Gemesis of Sarasota, Fla., plans to market fancy-colored synthetics—including blues, greens, and yellows—to foreign jewelry manufacturers, says company president Carter Clarke, a retired U.S. army general turned entrepreneur. Domestic sales will be delayed until production increases. And while the company can produce colorless stones, Clarke says it’s holding off for now: “We’ll do colorless eventually, but that’s not our priority. They’re more expensive to produce than coloreds.”

Consistent production of colorless synthetics has long eluded manufacturers—including Tom Chatham, who first said he would produce them in 1993. Chatham’s San Francisco firm produces synthetic rubies, emeralds, and sapphires.

Clarke will sell the stones as “cultured” but declines to give specifics regarding pricing. “They’ll fall somewhere in between simulants and naturals—probably a little closer to the naturals,” he says. “There’s a large group of men who want to go home to their wives and girlfriends and say, ‘Honey, I bought you a diamond,’ but can’t afford one. That’s the niche we’re focusing on.” The stones will range mostly from 1.5 cts. to 2 cts. Clarke says it’s too early to know how many will be produced each year.

Clarke first heard about synthetic diamond technology on a trip to Russia. He eventually put scientists there in touch with engineers from the University of Florida at Gainsville, who modified the process. (The university, whose work is partly funded by Gemesis, has a stake in the project.) “We have moved way beyond what the Russian scientists had,” says Dr. Reza Abbaschian, a professor of mineral sciences who specializes in crystal growth. “We’re able to produce the synthetics much more consistently and economically.”

Using machines imported from Russia, the Florida scientists subject elemental carbon and a tiny diamond “seed” to extremely high pressure and temperature. Over a period of 50 hours or so, the seed grows into a bigger diamond. Abbaschian says he hopes one day to produce a “designer diamond—whereby a person specifies what kind of diamond he wants—the color, the size, and we produce it for him.” Clarke says his company’s ultimate goal is to use the crystals in computer chips, which could be enormously lucrative.

Tom Moses, an expert in gem identification at the Gemological Institute of America, has seen the Florida stones and says they’re no different from previous synthetics GIA has examined. “They’re detectable in the same ways,” he says.

Gemesis joins Ultimate Created Diamonds, a company in Golden, Colo., in selling fancy-colored synthetics (but Ultimate makes them in Russia). “We welcome the competition,” says Grizenko, president of Ultimate. “The market for synthetic diamonds has been largely untapped.”—Rob Bates

Questions About JCK’s Orlando Show

Retailers and manufacturers are questioning the timing of the upcoming JCK International Jewelry Show in Orlando (Jan. 28-30, Friday through Sunday). Unlike the previous three Orlando shows, the 2000 show will be open on Saturday, when observant Jewish exhibitors and attendees celebrate the Sabbath. The show is also open on the day of the Super Bowl, Jan. 30, though it closes before kickoff.

Since JCK magazine and the JCK shows have the same corporate parent, we thought it appropriate to address these concerns here. In a recent interview, we put the following questions to Dave Bonaparte, the show’s vice president.

Q: Will the timing of the show cause exhibitors to pull out, making it less worthwhile for buyers to attend?

A: We’ll have the same number of exhibitors as last year—970. In fact, we have 1,000 companies that would like to exhibit but can’t get in for lack of space. And again this year, we’ll have an international section, with exhibitors from 14 countries. There will be enough exhibitors from 10 of these to have pavilions of their own.

Q: Will retailers stay away?

A: Not at all. Eighty-six percent of the 1999 Orlando attendees told us they planned to return, and buyer hotel reservations are already running 23% ahead of last year at this time.

Q: What about Jewish exhibitors and buyers who will not want to participate on Saturday?

A: That’s a legitimate concern, and we’re responding several ways. First, we’ll give buyers more time to be on the show floor on Friday and Sunday, as well as on Saturday. We’ll open each day at 9 a.m. instead of the usual 10 a.m. Second, we’ll provide facilities for Sabbath services. Third, we’re making an exception to show rules that prohibit early closing; we’ll allow Sabbath observers to shut their booths by 3 p.m. on Friday. Fourth, we’ll encourage retailers to visit these exhibitors early Friday and on Sunday and to focus on the other exhibitors, as much as is practical, on Saturday. Finally, for any exhibitor who can’t participate in the show because of a religious conflict, we’ll give priority status for the 2001 Orlando Show.

Q: What about the Super Bowl conflict?

A: It won’t be a conflict. It will be a giant party! The show will be open that Sunday from 9 to 4:30, and at 5:30 we’ll start our special Super Bowl event in the Grand Ballroom of the Omni Hotel. There will be two giant TV screens with stadium-style seating. There’ll be an open bar and plenty of food, buffet-style. And best of all, admission will be free for every exhibitor and buyer.

Q: Still, wouldn’t it have been better to pick other dates?

A: Well, we’re fortunate to have any days at all. When we assumed management of the JCK Shows in 1998, there were no dates available for Orlando in 2000—none at all. But because we bought the Professional Golfers of America show, also held in Orlando every January, we were able to squeeze out three days for the JCK Show. These were the only possible days we could get. We even tried other cities for a winter show. Nothing was open.

Q: What about the snafus you had at Las Vegas last summer that made registration such a headache? What are you doing to prevent a recurrence?

A: The primary cause of the delays for exhibitors was getting photos for the show badges. We didn’t have enough photo stations, and the computer system used for the digital images functioned poorly. In Orlando, we’re eliminating the photos on the exhibitors’ badges and using another means of verifying identification. We made that decision after conferring with our advisory board of exhibitors and retailers. They’re convinced that dropping the photos won’t compromise security. As for retailer registration, we’re taking steps to make sure it goes quickly and efficiently.

Q: One last question. Will the 2001 winter show be in Orlando? Or should it be called the spring show?

A: Yes, it will also be at the Orlando Convention Center, but the dates will be Feb. 4, 5, and 6—Sunday, Monday, Tuesday. It’s a winter show for the spring selling season, so I guess you can call it either one.

TV Program Suggests Diamonds Have Little Value

ABC’s World News Tonight took an unexpected swipe at the diamond industry in August, questioning whether the jewelry industry’s favorite gem has any real value. The report, part of a series that challenges “Conventional Wisdom,” promised the “hard truth about diamonds.”

“While diamonds are perceived as more special than other gems, they are no more rare or precious,” asserted correspondent Betsy Stark. “In fact, 1-ct. rubies, sapphires, and emeralds are more rare than 1-ct. diamonds. And yet, diamonds are typically more expensive.… Even the chairman of De Beers … has conceded that diamonds are ‘intrinsically worthless, except for the deep psychological value they’ve built.’ ”

The last quote is from an interview Nicky Oppenheimer gave the New York Times in January.

Stark added that the perceived value of diamonds stems from De Beers’ advertising and role in maintaining the market. De Beers is a “monopoly that controls sales and prices by limiting distribution to a few select dealers,” Stark said. “When demand for diamonds withered during the Asian economic crisis, rather than let a flood of new stones drive down prices, De Beers simply cut back the number of diamonds dealers could get. Today the company is sitting on an estimated $5 billion in inventory.”

In the end, she said, the “diamond dream” is “a fantasy that rests on the conventional wisdom that diamonds are uniquely valuable, and forever.”

“We weren’t trying to bash the diamond industry,” says ABC producer Kate Felsen. “We just wanted to let people know about diamonds. We showed some beautiful pictures of them.” She notes that she has an engagement ring herself and “loves it.” “I don’t think our piece will make people not buy diamonds,” she says.

“It’s one of the most derogatory things I’ve seen on the industry,” counters Dan Archibeque, Tuckers Fine Jewelry, Columbia, Mo. “I couldn’t believe my ears.”

Joan Parker, director of the Diamond Information Center, De Beers’ U.S. public relations group, says, “It’s no revelation to report that much of the diamond’s true value lies in its emotional connection to the consumer. Just as a great painting’s value is not derived by the paint and canvas it is made from, but the pleasure it evokes, a similar criterion applies to diamonds. What was omitted from the story, however, and adds tremendous value to the diamonds, are the many costly stages such as exploration, recovery, sorting, and polishing that the diamond undergoes before being sold.”—Rob Bates

G&C Wholesale Files for Bankruptcy

G &C Wholesale Inc., a well-known Boston gold jewelry supplier, has gone bankrupt and closed. The 15-year-old firm, whose clients included both independent and chain jewelers, owed $15.2 million when it filed for bankruptcy reorganization in early August.

Fleet Bank of Boston, its major creditor, won court approval to change that filing to bankruptcy liquidation after G&C said it would have to use the bank’s collateral to operate while reorganizing. G&C owed Fleet Bank, and its subsidiary Fleet Precious Metals, $12 million. The other creditors were primarily Italian gold jewelry manufacturers.

G&C’s inventory, most of it 14k jewelry, was sold to a single buyer at the end of August. The successful bidder’s name wasn’t released at press time. The firm’s seven condominiums, which formed its headquarters in the prestigious Jewelry Building on Washington Street in Boston’s jewelry district and had no mortgages, were to be auctioned Sept. 30, as were fixtures and similar assets.

Leo Tahajian, president of G&C, couldn’t be reached for comment. In early September, a recorded C&G phone announcement was still asking callers to fax in their orders.—William George Shuster

Diamond Sales Continue Climbing

U.S. retail sales of diamond jewelry rose 7% in the first half of 1999, according to De Beers. This is especially impressive, since 1998 was itself a record year.

“I think it’s a good sign,” says Richard Lennox, head of the De Beers account for J. Walter Thompson. “Clearly, there’s a lot of consumer confidence, and the market continues to be extremely healthy.”

He hopes that the second half will be even better. “Given all the marketing we are putting behind the millennium, and what an opportunity we think the millennium is, we are confident we can exceed that number,” he says.

The United States now comprises 46% of the entire diamond market, De Beers officials say.—Rob Bates

DGSE Acquires Silverman Group

The Silverman Group of Mount Pleasant, S.C., one of the country’s largest liquidators of

jewelry, was acquired by Dallas Gold & Silver Exchange. DGSE is a wholesaler and retailer of jewelry through its Dallas superstore and its live auction Web sites.

The acquisition was made in exchange for 200,000 newly issued shares of DGSE common stock, worth about $800,000 on Aug. 17, the day the transaction closed. The purchase includes assets of the Silverman Group, which operated as Silverman Jewelers Consultants, Silverman Retail Consultants, and Silverman Sports Consultants. DGSE also assumed a financial obligation of $2.5 million and acquired jewelry and related merchandise worth $2.5 million. Earlier in August, Silverman Jewelers Consultants sold its Silverman’s Jewelers chain to Samuels Jewelers, Austin, Texas.

Since its founding 55 years ago, Silverman has managed the liquidation of more than 3,500 retailers and the purchase of more than $1 billion in jewelry, watches, and other merchandise.

As a subsidiary of DGSE, the Silverman Group will be known as Silverman Liquidations Inc. All senior management and key employees of the former Silverman Group (about 16 people), including president Stuart Fetter and vice president Harry Aureli, retain their positions. The main offices will remain in Mount Pleasant.—William George Shuster