A Tale of Two Diamond Clients

May 22nd, 2010 by James L. Sweaney, CGA, FGA. GG

A couple of weeks ago, I did a gemological consultation for a young man who had purchased a diamond solitaire from a diamond merchant’s Ebay site.  He was able to win a diamond auction and wanted my opinion of the stone.

I looked over the stone first before asking him about the price paid, the representation, documentation, etc.  What I saw was a fairly well cut light yellow round diamond, about 1 5/8 ct, maybe M to P color, that was obviously glass filled. I told him about the glass filling, that before being treated, the stone would have graded I1 or I2, and that the color was very obviously light yellow. I said a retail price for the stone and ultra light weight gold solitaire should be about $3.000-3,500.

The stone was represented by the online seller as SI1 clarity, H color, and weighed a bit over 1.6 carats. No disclosure was made of the glass filling, and the grading cert (from a lab I never heard of) stated SI1 clarity, H color. He told me he had paid $3,000.

We discussed the glass filling, and I informed him that GIA and other established labs don’t clarity grade glass filled diamonds because there is no way to tell what the clarity (and value basis for the stone) was before treatment. I also warned him about some of the durability issues with glass filled diamonds. I told him that he got what he paid for, but certainly not the much higher quality SI1 H the stone was represented to be.

He said he was able to return the stone and would bring the replacement for me to verify.  Sure enough, he showed up yesterday with another solitaire– and sure enough, another 1.6 ct light yellow stone with easily eye-visible face up inclusion, complete with “GRA” grading certificate stating SI1 clarity, H color.

I tried to convey to him that he was again getting a stone that would retail for about $3,000, and that a 1.6 round diamond of SI1 clarity, H color should retail for over $10,000, since the current wholesale for a well cut stone of that size, color and clarity, with a GIA cert, is very close to $10,000.

He kept going back to the fact that he had “won” the Ebay auction and didn’t understand that no diamond dealer in his right mind would sell a $10,000 stone for $3,000, regardless of the circumstances.

Even though many other types of merchandise may be heavily discounted on the Internet, diamonds, gems, and precious metals are essentially commodities where prices stay within a narrow trading range set by a trader’s market. When the gold market is $1,100 per ounce, you may be able to buy it for $1,050, but you just can’t buy it for $300, and the same applies to diamonds and gems.

The other issue is that many consumers don’t know the difference between a diamond with a high quality grading document from an established laboratory like the Gemological Institute of America, the institution that invented the modern diamond grading system vs. a diamond with a piece of paper that looks very similar but is essentially just misrepresentation and nonsense.

Ebay site and online seller url available upon request

Shortly after the above episode, we were able to conclude a diamond purchase with one of our clients. They had purchased a beautiful “Naked Diamonds” engagement ring from us several years ago, but hadn’t been able to afford a center stone. Their budget initially was $4,000 but the ring really needed a one carat round, and a nicely cut white eye clean stone would be more like $5-6,000. We counseled them to buy quality, and settled on an SI1 G color target.

We worked with one of our better vendors who had 3 stones that fit the 5-6K budget– all 3 had GIA grading reports of SI1 clarity, with G, F, and E color to boot! When we received the gems, I noticed immediately that the G color stone had faint clouds throughout so that its face up appearance was somewhat dull.  Even though GIA graded it SI1, I personally would have graded the clarity as SI2 because of that fact, and decided not to show that stone to my client.

The 1.01 ct round, GIA graded SI1 F color with excellent cut grade, was our client’s perfect choice– good clarity, great color with a touch of blue flourescence, and excellent cutting, just a gorgeous diamond! Not only that, it has a one year warranty against loss from our vendor and it was the least expensive of the three– we sold it to our client for $5,360 + sales tax. We compared it with 22 similar diamonds available thru Blue Nile, the biggest Internet diamond retailer– the average price of their stones was $6,157.64, and our offering was less than the least expensive of the 22!

PDF of this search available on request

The moral of this story is that diamond grading is an expert field so work with an expert and don’t try to figure it out by yourself, that you shouldn’t buy a diamond solely by a certificate, and that your local jeweler can compete with the biggest diamond retailer on the internet. If you are shopping for a diamond, give us a try– we’ll apply our years of expertise to get you the best value for your dollar!

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