Why We Don’t Need SI3

In the trade, we encounter many diamonds we call “borderline.” Among the most controversial of these stones are the ones that fall on the cusp of SI2 and I1 on the Gemological Institute of America’s clarity grading scale. The distinction is important because a stigma is associated with diamonds that are sufficiently included to merit an I grade; an I diamond is less likely to sell than an SI stone. In the past eight years, a new “SI3” grade has come into use to fill the gap between SI2 and I1, although GIA doesn’t recognize this designation. Those who use SI3 say they are conforming to what has become common practice in the industry. But is the additional grade necessary? I agree with GIA on this issue: It isn’t.

The term SI3 first appeared in an article David Atlas wrote in 1991 for the Accredited Gemologists Association. Though he’s said to have been the first to suggest the term, his laboratory, Accredited Gem Appraisers in Philadelphia, never used the grade or commercially endorsed it. “My article was a wake-up call to the association members and the industry to put some definable meaning into the very subjective field of clarity grading,” he recalls. “Even if we had to add a new grade such as ‘SI3,’ I was suggesting, we had to look at reasonable alternatives to the existing system so that other graders could do consistent and less subjective work.”

In April 1992, the European Gemological Laboratory in Los Angeles was the first notable lab to begin using the SI3 grade. EGL USA in New York also uses the SI3 grade.

In May 1993, the Rapaport Diamond Report started including the SI3 grade. Initially, the price list added the grade and simply described it as a split SI2/I1. It priced the new category midway between the SI2 and I1 grades. Today, the grade still appears, but the price listed for it isn’t always halfway between the prices for SI2 and I1. In some categories it’s a little closer to the I1 price, and in some categories it’s a little closer to the figure for SI2.

The addition of this grade to the Rapaport list certainly boosted its use among dealers in New York. My own publication, The Guide, doesn’t use the grade. Our position is that we are following a GIA standard for grading. As long as GIA doesn’t endorse the grade, we have no plans to add it to our list. If GIA were to add this category to the scale, however, we would follow suit.

Diamond dealer Jeff Pancis of Pancis Inc. in Morris Plains, N.J., uses both the GIA lab and EGL USA. When it comes to SI3, he feels that the EGL USA lab does a good job in grading with strict parameters.

Other than the EGL facilities, no other major American laboratory uses the grade. Peter Yantzer, director of the American Gem Society Laboratory in Las Vegas, doesn’t think a change is necessary. A directive to add a grade at his lab would have to come from the AGS board, he notes. Yantzer says he doesn’t hear much interest either from AGS members or from nonmembers who use AGS laboratory services, so it’s unlikely that the board would consider adding it at this time. Yantzer sees some acceptance of the grade in the industry as a whole, however.

Tom Yonelunas, CEO of the GIA Gem Trade Laboratory in New York, also doesn’t see a need for SI3. “Most customers don’t even ask for it,” he says. Yonelunas also feels that the introduction of any new grade would create two difficult new boundaries to deal with, not one: that between SI2 and SI3 but also the borderline of SI3 and I1.

Evolution of the SI3 grade. As it was first used by EGL in Los Angeles, SI3 was designed to categorize the low SI2 grades. The table below shows how the grade was used in its early days.

The problem with this early logic is that dealers wouldn’t be likely to submit a diamond to a lab that might grade it as SI3 if it would receive a grade of SI2 from GIA. Eventually, SI3 was redefined. The trade and the laboratories that use SI3 are mostly in agreement that a grade of SI3 fits a diamond that might get an I1 grade from the GIA laboratory but is not as included as other I1 diamonds. Tom Tashey, head of EGL-LA, defines the grade today as “applicable to diamonds with perhaps opaque feathers on the edge that are not deep but might be slightly eye-visible, causing an I1 grade.” The scale today could be represented as follows.

I1 is a large range, and some diamonds within the range aren’t as included as others. While the astute grader or appraiser should account for the range when buying, selling, or appraising, many do not. The I1 stigma is enough to knock the price way down and often kill the sale. The solution for many became SI3. Perhaps the biggest obstacle to recognition of the new grade has been the interpretation. The concept may work in theory, but a set of well-defined, accepted guidelines for the grade has yet to surface. Labs, dealers, and individuals may use the grade to mean different things.

Do we need a new clarity-grading system? The current diamond-grading system was developed back in the 1950s, and therefore some people argue that it’s time for a change. In those days, jewelers rarely sold an SI2 or I1 diamond. Prices were much lower, and people bought smaller diamonds. Now, nearly everyone wants bigger stones, but the prices make them unattainable for many, so consumers are more willing to accept lower grades.

Another change has been in the volume of diamond grading certificates being issued. Few diamonds used to be sold with reports. Dealers didn’t want to spend the money to obtain a lab report for a lower-grade diamond. Today, so many people want certs, even for lower-grade stones, that the labs have trouble keeping up with demand. With so many diamonds in the lower grades being sold and with the increased demand for reports, many dealers and jewelers argue that it’s time for the system to be changed.

In round-table discussions and informal gatherings, I have heard the pros and cons of SI3. Some people in the industry have even called for a revamping of other grades. For instance, VVS1 and VVS2 could be combined and simply called VVS. Not many consumers shop these grades, the reasoning goes, and the definitions are narrow. Now that SI3 has caught on, I have seen price lists that offer VS3. What is this—a good SI1? And the arguments don’t stop there. I1, I2, and I3 are broad ranges that are sold today with broad price differences. Have you ever received a mailing on promotional-quality diamonds? I have witnessed (at least on paper) I4, I5, and I6. Would more grades make the system better or more confusing? I’m sure you know my answer.

“An eye-clean I1.” Many diamond dealers and retail jewelers like the SI3 grade. New Jersey diamond dealer Pancis says, “I feel like I don’t have much choice. It’s not so much whether I accept the grade, but whether I accept reality. The reality is, the trade uses it. I tell customers that it’s an eye-clean I1 when they ask. Some of my customers don’t accept the grade, so they simply call it an I1. They usually understand that there’s a difference in quality vs. a straight I1, hence a difference in price.”

Appraisers may face a dilemma when a diamond comes in rated SI3. If the grade was a representation from the jeweler or dealer only, and no laboratory report exists, the appraiser must make the call. If the appraiser doesn’t accept this grade, a call of SI2 or I1 is appropriate. If a laboratory report exists with the SI3 grade, it should be referenced in the appraisal report. The appraiser can grade the diamond independently of the report but should still reference it because market acceptance needs to be considered in the evaluation process. Referencing the other laboratory report means that responsibility for the SI3 grade is shifted to that grading laboratory.

Although I recognize that SI3 is widely used, I don’t think we need it. I’d like to see it eliminated. The GIA system can be used effectively without alteration. The key is that every grade is a range, and every price associated with the grade is a range.

If I were convinced that SI3 were being used only for the best of the I1 diamonds, I might be more accepting. But, as with any grading system, the SI3 grade is open for abuse. I see many I1 diamonds that dealers label SI3. Even when the labs give a grade of I1, dealers persist in using the SI3 designation—without any reports, of course. This is partly what keeps Atlas from using the grade. “SI3 as we know it [today] is not anything close to what I was calling for in my article of long ago,” he laments.

One last point to consider. Most dealers, jewelers, and appraisers state that they adhere to GIA diamond-grading standards. If they use SI3, they can’t make that claim. That’s something to consider in today’s notoriously litigious climate.

Richard B. Drucker, G.G., is the president of Gemworld International and publisher of The Guide, a pricing periodical he began in 1982. An international gemstone consultant, he has published numerous books on the jewelry industry.