Your Turn

In this column, members of the jewelry industry can state their views, wax poetic or otherwise pen their thoughts in slightly longer form than the traditional letter to the editor. We welcome your submissions. Please send them to P.J. Donahue, JCK, One Chilton Way, Radnor, PA 19089; fax (610) 964-4481, e-mail pdonahue@ chilton.net.

WGC SWITCHING CHANNELS

[A response to a new World Gold Council policy addressed in “WGC Looks to Mass Merchants,” JCK, June 1997, p. 54.]

The new policy of the World Gold Council seems to be a departure from previous policy.

The council’s annual report says discount stores, department stores and retailers such as QVC and HSN all have better growth in gold jewelry sales than independent jewelers in terms of dollars and units. So the new WGC direction is to supply these newer outlets.

Even though the council also reported that independent and chain jewelers remain the leaders in dollar share, the WGC is supporting “tonnage.” The council’s Michael Barlerin left out the flea markets, mail order houses, people who sell on the street and “home” jewelry parties. Do these mass merchandisers concern themselves with the Gold Stamping Act, underkarating, trademarks, refund policies?

What about the legitimate retail jewelers who have spent lifetimes building reputations for honesty, trust, confidence and truth in pricing?

Now we find that an organization we helped to build is pushing us aside for more “tonnage.”

Do you realize every time a piece of underkarated jewelry turns up, the first thought in the consumer’s mind is “you can’t trust the jeweler” – even if it was bought at a flea market?

The article says that as consumers begin to focus on gold’s intrinsic qualities, they will be less attracted by 50%-off sales. You are a dreamer. Did your research show you that consumers will buy only when these discounts are in effect? In many urban areas, consumers believe the final price is close to what the jeweler paid for the item.

And now the mass merchants who created this situation can use the same promotional materials that WGC provides to independent jewelers and work with WGC-affiliated vendors. Independents should refuse. They should not carry the same articles as mass merchants. We must sell merchandise by companies we believe in and have built brand name associations with. Can you imagine a customer buying a gold necklace in your store and then seeing it advertised on QVC a week later? The jeweler’s credibility is completely eradicated.

I would like to ask Jewelers of America to reconsider its support of the WGC. Perhaps it is time for JA to “switch” its support to an organization that supports its membership.

Remember Korvette, Masters, catalog showrooms and other mass merchants that are now gone? Independent jewelers were here long before them and will still be here long after they are gone. The WGC should not be shortsighted. “Tonnage” is temporary.

The 21st century is upon us. Retail jewelers will be setting the trends, instilling confidence and leading the way for all to follow. I sincerely hope the World Gold Council doesn’t become another “Remember when.”

Albert Solomon Solomon’s Fine Jewelry Plainview, N.Y.

PROBLEMS WITH APPRAISAL COURSE

After having read, tested and passed the Gemological Institute of America’s $495 “Insurance Replacement Appraisal” correspondence course, I feel qualified to comment on it publicly. I am dismayed that in 72 pages or less, anyone subscribing to this material can call themselves “insurance appraisal specialist.” This course contains nine chapters plus a reference manual with each chapter averaging 18 pages. Yet only four of the nine chapters really deal with anything approaching value science.

This course throws away the true definition of an appraisal, defiles the market data approach and consecrates the cost approach. Ethics, in this course, is nothing more than having “impeccable integrity” and a “general sense of right and wrong,” opposed to subscribing to a codification of ethical behavior with enforcement provisions as outlined by a qualified appraisal association. Price and value are convoluted. Threaded throughout the text are mixed messages of “don’t take outside merchandise in for appraisal” and “chances are you’ll have to take in outside merchandise for appraisal.”

GIA, for decades, has been the industry’s leader in the education and training of gemologists. Now they throw their hat into the appraisal arena and issue a product that complements neither the appraisal profession nor GIA’s image of a quality educator. I am disappointed with some of the contributing authors who, like myself, have invested scores of hours and thousands of dollars to learn proper appraisal procedures from qualified appraisal educators and assist in the issuance of this product, setting the appraisal profession back.

It is my recommendation that GIA refrain from entering the appraisal education system and continue focusing on issuing quality gemological programs. It is also my recommendation that qualified appraisers refrain from entering into the “pop psychology” of appraising by contributing to these quick-appraisal-to-easy-insurance reports. Insurance appraisal reports are anything but simple and easy.

Please understand that information on important subjects such as “insurance appraising” needs to be presented in a professional, methodical and well-researched manner.

In my opinion, GIA’s appraisal course is a risky product made available to unknowing people who, upon completing the course, will boldly and confidently walk out onto the most conspicuous liability limb and plunge into grief.

Vincent C. Rundhaug, GG, ISA Columbia Gem & Jewelry Kennewick, Wash.

GIA RESPONDS TO CRITICISM

Criticism is usually a good thing. At worst, when it involves something like a printed course, it sends you back to the material to evaluate the critique. And that’s just what we did after reading Mr. Rundhaug’s letter (see above). We found little, if any, supporting evidence for Mr. Rundhaug’s comments.

In his general remarks, he criticizes the length of the course. With 194 pages of text and a 41-page reference manual (it’s not clear what he means when he states “72 pages or less”), the course has a very targeted objective: to teach people to prepare insurance replacement appraisals. And we are very specific about this. Consider the name: “Insurance Replacement Appraisals.”

Mr. Rundhaug also expresses “dismay” that people who finish this course might call themselves “insurance replacement specialists.” This is a term of Mr. Rundhaug’s own devising. It does not appear in our course text or on the certificate that someone receives upon successful completion of the course.

Taking his other specific comments point-by-point:

1. Mr. Rundhaug states “This course throws away the true definition of an appraisal, defiles the market data approach, and consecrates the cost approach.” We say an appraisal is an estimate of an item’s worth, given by an expert – meaning by someone who is knowledgeable about the item in question. We based this definition on research, input from our subject specialists, and the Uniform Standards of Professional Appraisal Practice (USPAP) (“the act of estimating value; an estimate of value…”). As for the market data approach versus the cost approach, it’s true we advise our students not to use the former for the document we teach them to prepare. Our approach mirrors that taken in the Jewelers Vigilance Committee’s “Recommended Guidelines for Insurance Documentation by the Jewelry Retailer.” We felt, and many of our industry experts agreed, that this method is practical and realistic.

2. Mr. Rundhaug states “Price and value are convoluted.” Here’s how the course defines value: “To an appraiser, then, value has an overall sense of an item’s worth as perceived by the market as a whole … its worth as determined by the market data approach.” Because we teach the cost approach, the course uses the term “retail replacement price” for the dollar amount on an insurance replacement appraisal. To make sure the students are clear about this distinction from the outset, the first assignment states, “In this course, the word ‘value’ is used … to describe worth as established by the market as a whole.”

3. Mr. Rundhaug states “Ethics, in this course, is nothing more than having ‘impeccable integrity’ and a ‘general sense of right and wrong,’ as opposed to subscribing to a codification of ethical behavior as outlined by a qualified appraisal organization.” One entire assignment is dedicated to ethics. It covers professional standards, qualifications, confidentiality, disclosure, conflicts of interest, disparagement, fiduciary responsibilities, etc. All of this is grounded in USPAP, accepted practice and common sense. In addition, there is a section on the benefits of belonging to a professional appraisal organization in the ethics assignment. (The organizations are listed in the Reference Manual too.) Almost every assignment in the course contains a discussion of what is ethical and what isn’t – sometimes in general terms, as in the examples cited by Mr. Rundhaug, and sometimes quite pointedly:

  • A willfully misleading appraisal that inflates the insurance replacement price of a piece of jewelry you have sold is obviously unethical.

  • One of your ethical obligations has to do with your competence: You’re supposed to know what you’re doing.

  • The ethical ways to price your services are by the hour or by the job.

4. Mr. Rundhaug states “Threaded throughout the text are mixed messages of “don’t take outside merchandise in for appraisal” and “chances are you’ll have to take in outside merchandise for appraisal.” These statements do seem to be contradictory, but only when taken out of context. There is a discussion on the pros and cons of appraising “outside merchandise” (merchandise the appraiser didn’t sell). In that discussion, and in other parts of the course, we make statements like these:

  • Good appraisers know their limits and will not undertake to appraise items which are outside their areas of expertise. You’re going to hear this again and again in this course: Sometimes the best service you can give your customer is to decline the job.

  • Don’t try to perform appraisals you aren’t qualified to do.

  • This assignment will show you how to do after-market appraisals – but only on the type of merchandise you routinely buy and sell.

Our point to the student is clear: If you do after-market appraisals, do them only on the kind of merchandise you deal with regularly.

A natural step in developing a new course is to look at the needs of the industry. We quickly identified insurance documentation – particularly the problem of overstated insurance replacement appraisals – as a large issue. We developed “Insurance Replacement Appraisal” to address the problem.

The course has strong roots in accepted appraisal theory, USPAP, and the JVC’s “Recommended Guidelines for Insurance Documentation by the Jewelry Retailer.” It is not designed to be a comprehensive appraisal course. And with his level of training, that might be the root of Mr. Rundhaug’s concerns.

“Insurance Replacement Appraisal” explains how insurance companies operate, discusses the legal and ethical obligations inherent in preparing an appraisal, explains how to assemble a coherent description of a piece of jewelry and the like. It is a good course for a retail jeweler – not a full-time appraiser – with no appraisal training who wants to learn to properly prepare insurance documentation for their customers. That’s exactly how we market the course and why we offer it to our students.

J.F. Ellis Vice President of Education Gemological Institute of America Carlsbad, Cal.

EUNICE MILES

It is with profound regret that I learned of the death of Eunice Miles (JCK, May 1997, p. 38). She was a dear friend and colleague many years ago when I headed the geology and mineralogy department of the American Museum of Natural History.

In the mid-forties, when Roger Peterson asked me to do a rock and mineral book for his Houghton Mifflin nature series, there was no popularly available work of its type. I resolved to produce a book that would serve the growing number of hobbyists making mineral collections. Eunice had recently come to New York City after working with Dr. Wigglesworth of the Natural History Museum in Boston. There she had become enthralled by the study of minerals and gems and, upon moving to New York City, volunteered to do almost anything useful in my department. Since I was provided with no scientific assistant for my department by the museum, she was welcomed and proved a faithful assistant.

For the preparation of the book, I needed considerable help. Three knowledgeable volunteers – Eunice, Jane Hearn and Guinever Pendray – did many of the things for which I had no time. Though several mineralogies of that time described the conventional blowpipe tests, none actually detailed the behavior of every blowpiped-Bunsened chip, so it was essential to repeat every recommended test, observing and reporting how they melted and what changes occurred. Choosing and photographing in black and white, Eunice and I chose specimens from the drawers for illustration. The criterion was to picture supertypical specimens, though not worldshakers – which I felt would discourage aspiring collectors. Using my father’s turn-of-the-century plate camera, with cut film sheaths, Eunice took the black-and-white pictures. Knowing something of crystals, with little coaching she was able to orient many examples in a conventional fashion with the c-axis upright. This had been a real problem for Leon Boltin, a freelancing museum photographer who got an education, took the color pictures, and soon became sufficiently experienced to make quite a name for himself – especially in the photography of archeological artifacts – for the National Museum of Natural History in Washington.

How we shall miss Eunice!

Frederick H. Pough, Ph.D. Reno, Nev.