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Diamond Value


Michael Cohen
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Something all consumers of jewellery and specifically diamond jewellery should know. THERE IS NO SUCH THING AS CHEAP GOLD OR DIAMONDS. Gold is traded every day at world gold prices, the same is true for diamonds, they trade on the Rappaport diamond list, this list is not available to the public because it is a true wholesale list. BUT all diamonds have a price. If you are told it is a cheap diamond, what it actually means is that it is an inferior diamond, it has been misgraded or misrepresented. SIMPLE AS THAT. The next time you get offered a cheap diamond or cheap gold ask your self WHY. Michael Cohen

 

Diamond Certification Laboratory of Australia

Suite 1, Level 1

133 Castlereagh Street

Sydney, 2000

Tel: 02 9261 2104

Fax: 02 9261 4263

www.dcla.com.au

info@dcla.com.au

 

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Michael,

 

I disagree, although not with your conclusion. The Rapaport list is NOT a wholesale price listing and it is regularly made available to the public. Plenty of stores subscribe to it soley for this purpose. A standard strategy for the ripoff artists is to show a potential buyer a copy of the Rap sheet, a copy of a ‘certificate’ from some lab or other and to then launch into a spiel about what a great deal it is. Even reputable dealers use variations of this approach because it’s so common that people expect it. ‘Wholesale’ prices, meaning the prices that dealers pay for their goods can range from 50% of what’s shown on the list to 20% or more over depending on details that aren’t included on the sheet.

 

Note for those who don’t know what we’re talking about. The Rapaport Diamond Report is a magazine published for the diamond trade. It includes a price guide as a regular feature that’s used extensively in the industry to stay current on pricing trends. It’s available by subscription only and it's a bit on the expensive side so few people outside of the trade subscribe. Info is available at www.rapaport.com.

 

Neil

Edited by denverappraiser
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Hi Neil I agree with you that the trade abuse the Rapp list, But I doubt it was Martin's intention for it to be made available to the public.It is a subscriber only service which is not to be disseminated.That being said, the Rapp prices indicated are new York cash asking trade prices and in today's market, and would have a very small trade discount for a quality stone. back to my original point. I feel that the appearance of discounting jewellery when there is no real discount, unfortunately only serves to cheapen the idea of jewellery.In Australia jewellery has become just another sale item, and because of that the consumer expects everything to have a red 50% off red tag on it. this is not a good look and brings down the value of the jewellery industry. The reason we see stones in Australia that are discounted to the public at 40% back is because the stones are not what they are claimed to be. over grading or misrepresenting the quality allows for the perception of discount. this unfortunately then makes honest jewellers look like thieves when they are in fact doing the right thing.

 

In Australia we have thousands of jewellers of which only a few are real rogues. But as we all know it only takes a few bad apples to spoil everything.

 

 

 

Michael Cohen

 

Diamond Certification Laboratory of Australia

Suite 1, Level 1

133 Castlereagh Street

Sydney, 2000

Tel: 02 9261 2104

Fax: 02 9261 4263

www.dcla.com.au

info@dcla.com.au

Edited by Michael Cohen
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Martin’s a smart guy. He knows what people use his list for, and he’s known it for decades. It’s made him rich. Distribution is just limited enough to carry the feel of an insider secret when a dealer pulls it out and points to it with reverence.

 

Neil

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Martin’s a smart guy. He knows what people use his list for, and he’s known it for decades. It’s made him rich. Distribution is just limited enough to carry the feel of an insider secret when a dealer pulls it out and points to it with reverence.

 

Neil

 

 

Neil you have a point.

 

But you obviously don't have the same problems in your market as we do, I take it because your industry has a stonger ethical content.

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Martin’s a smart guy. He knows what people use his list for, and he’s known it for decades. It’s made him rich. Distribution is just limited enough to carry the feel of an insider secret when a dealer pulls it out and points to it with reverence.

 

Neil

 

 

Neil you have a point.

 

But you obviously don't have the same problems in your market as we do, I take it because your industry has a stonger ethical content.

 

Neil's point is very well taken.

Michael- while I believe it's true that there are a lot of sellers abusing "Percentage Off" sales- I do not necessarily agree that it cheapens the industry as a whole.

If you were to use cars as an example- some of the highest price cars command prices closer to sticker ( percentage -wise) compared to cars that have less perceived value. I'll bet a brand new Porsche trades pretty close to sticker- and also that they probably move pretty well for Australian dealers

In other words, many buyers looking for something extra special, in terms of quality, are generally going to expect to pay for it.

The "Fifth Avenue" high line stores are perfect proof of that in the US.

 

I'd expect that even down under, people who want quality above the norm, will pay for it. Is there an equivalent to "Tiffany's" in Sydney ( or even the real thing?)

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Martin’s a smart guy. He knows what people use his list for, and he’s known it for decades. It’s made him rich. Distribution is just limited enough to carry the feel of an insider secret when a dealer pulls it out and points to it with reverence.

 

Neil

 

 

Neil you have a point.

 

But you obviously don't have the same problems in your market as we do, I take it because your industry has a stonger ethical content.

 

Neil's point is very well taken.

Michael- while I believe it's true that there are a lot of sellers abusing "Percentage Off" sales- I do not necessarily agree that it cheapens the industry as a whole.

If you were to use cars as an example- some of the highest price cars command prices closer to sticker ( percentage -wise) compared to cars that have less perceived value. I'll bet a brand new Porsche trades pretty close to sticker- and also that they probably move pretty well for Australian dealers

In other words, many buyers looking for something extra special, in terms of quality, are generally going to expect to pay for it.

The "Fifth Avenue" high line stores are perfect proof of that in the US.

 

I'd expect that even down under, people who want quality above the norm, will pay for it. Is there an equivalent to "Tiffany's" in Sydney ( or even the real thing?)

 

 

Hi I agree with you both whole heartedly, and I think the discounting is a normal practice. But what I am saying is, that the odd unethical jeweller is selling a stone as a F vs for example that is in fact a I Si with strong fluoro so it appears white. The stone is labelled or valued as a F Vs and the price reflects the quality. But again it has a discount on it sticker of -50 %. So what we see is the consumer who is conditioned to shop on price, buying these stones thinking that the paper work is right.How do you fix this situation?

 

PS; I believe you refer to it as grade bumping?

Here it can be as many as SIX grades difference!

 

Michael Cohen

 

Diamond Certification Laboratory of Australia

Suite 1, Level 1

133 Castlereagh Street

Sydney, 2000

Tel: 02 9261 2104

Fax: 02 9261 4263

www.dcla.com.au

info@dcla.com.au

 

Edited by Michael Cohen
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Every market is different and each has it’s own foibles but the US certainly has snakeoil salesmen and huxters that compare with the best in the world. 70% off sales, perpetual going-out-of-business sales, investment programs and appraisals for 1000% of the sales price are all staples here. My office is in a building full of ‘wholesalers’ that includes one of the biggest volume retailers in the city. It’s also the show venue for the traveling gem show circus that comes through town a few times every year and trumpets great bargains through full page advertisements in the newspaper and on the radio. Jewelers have a bad reputation and people are anxious to believe that the reason diamonds are so expensive is because the retailers are ripping them off. To some extent this reputation is deserved but in most cases it’s just because diamonds are a blind item. Colored gems are even worse. It’s hard for people to tell the difference between a $5k stone and a $15k one. It’s hard to imagine that a pebble could cost so much and it’s easy to imagine that the whole thing is a scam that you could circumvent if just you knew the secret. Most diamonds aren't bought by people who want them, they're bought by men who HAVE to get one or they'll look like a boor in the eyes of their beloved and her friends. A brief visit to Google will produce literally millions of explanations about what a rip the stores are attached to a counteroffer that's supposedly better. It makes the whole situation very confrontational and it becomes very friendly to smooth talkers, both online and on the street. In the meantime, Walmart has become the biggest jeweler in America.

 

Believe it or not, this can be good news for you. I’ve never seen a stone you’ve graded but your reputation has preceeded you even though I’m about as far away from Sidney as you can get and still be on Earth. The consuming public is smarter than people think. Grade things accurately and consistently and they will quickly learn that DCLA is a brand to watch for. It can be done. GIA is the dominant player in the lab business here to be sure but AGSL is only 9 years old and they are giving them a run for their money as the lab to use for people who want to know the truth, the whole truth and nothing but the truth.

 

By the way. Welcome to Diamond.info

 

Neil

Edited by denverappraiser
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Two thoughts:

 

1. Misleading practices reflect badly on all of us - and no market is immune :) (although some do have it worse than others Michael).

2. I'm a huge fan of any thread where someone uses the word "foibles."

 

 

Amen John

 

PS; Are you going to open an outlet here down under?

Edited by Michael Cohen
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AGSL grading is popular for ‘ideal’ cut round natural white diamonds of fairly high clarity and colors and increasingly for princess cuts of the same general description. This is a fairly narrow segment of the diamond business but stones with their report sell at a premium in their own specialty niche. Business for them is growing exponentially to the point that growth pains are a significant problem. Although GIA is the standard, I don’t recall every hearing anyone suggest that a stone with AGS paperwork should be regraded or discounted because the pedigree is seen as a defect. This is a problem that pesters every other non-GIA lab in the world. At worst customers seem to count it as an acceptable substitute for GIA and if market dynamics are any clue, many seem to consider it preferable. I too may have a bias because I'm an AGS member and that may put a filter on which stones cross my desk but I see stones with AGSL paperwork frequently and increasingly and the majority of the consumers who bring them in chose that stone at least in part because of the AGSL documentation.

 

Neil

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Michael,

 

Welcome!

 

You make some very good points.

 

There is one other element here with respect to price and value.

 

"Value" has much to do with a consumers specific/individual perception.

"Perceived value" will usually influence, if not determine what a consumer is willing to pay for a specific item.

 

 

High scale companies like Tiffany have this psychology down to a science and figure out a way to increase the "value" of their merchandise and therefore the prices.

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AGSL grading is popular for ‘ideal’ cut round natural white diamonds of fairly high clarity and colors and increasingly for princess cuts of the same general description. This is a fairly narrow segment of the diamond business but stones with their report sell at a premium in their own specialty niche. Business for them is growing exponentially to the point that growth pains are a significant problem. Although GIA is the standard, I don’t recall every hearing anyone suggest that a stone with AGS paperwork should be regraded or discounted because the pedigree is seen as a defect. This is a problem that pesters every other non-GIA lab in the world. At worst customers seem to count it as an acceptable substitute for GIA and if market dynamics are any clue, many seem to consider it preferable. I too may have a bias because I'm an AGS member and that may put a filter on which stones cross my desk but I see stones with AGSL paperwork frequently and increasingly and the majority of the consumers who bring them in chose that stone at least in part because of the AGSL documentation.

 

Neil

 

HI Neil,

I agree that an AGS report is certainly on the same level with GIA regarding the way the market vaulues the grade. THat is to say, no dealer I know would knock a diamond's grade if it was issued by AGS- well they might disagree, but any legit dealer will agree an AGS color clarity grade is on par with GIA for accuracy.

 

BUT- the segment for so called "Ideal" cut stones is quite narrow- of course compared to diamond sales as a whole- but it's even a small segement compared to the smaller market of people looking for a quality or "Ceritified" diamond.

 

Add to this the fact that GIA's issuance of "Cut Grades" on round diamonds since 2006- grades which are far more inclusive of many different well cut diamonds than the old AGS "triple zero"....

Maybe it is becasue you are an AGS member, and specialize in such stones is why you see more AGS reports.... but in the NY market AGS is very limited on the market.

Remember, if a stone does not make triple zero, who wants the AGS report?

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Judah,

 

ALL value is perceived value. That’s why the definition of value is such an important element to a proper appraisal and why it’s so appalling that so many so-called appraisers simply omit it from their reports. Without it a value conclusion means nothing. The example you give of Tiffany is a good one. I think we can agree that Tiffany sells mostly pretty good stuff and I’m sure we would agree that they are far from being the only company that sells good stuff. For the most part, their customers are aware of this and are equally aware that Tiffany is not a place to go if you want to buy things cheaply. They go there for the Tiffanyness of the whole deal. This is an attribute that they knowingly and willingly pay extra for, often quite a bit extra. For some this is crazy as the day is long and for others it’s the #1 value characteristic of the piece. Is it worth it? Yes and no. If that’s what they’re seeking than the only way to get a genuine Tiffany shopping experience is to visit a Tiffany store, to chose something from their selection and to pay their price. A knockoff or a 2nd hand piece at a lower price is not going to be a substitute because it misses the whole point. For those who find the whole Tiffany ‘tude to be an irritant instead of a feature it’s definitely not going to be worth it and they might even be willing to pay extra to avoid it. It’s not up to either me as an appraiser or you as a competitor to say that it’s foolish to shop there. Most Tiffany customers are pretty happy about their purchases, even when they know that they can get jewelry with similar or in some cases better gemological specs elsewhere for lower prices. It’s not a gemological question.

 

Neil

Edited by denverappraiser
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Amen John

 

PS; Are you going to open an outlet here down under?

 

We already have an outlet in everyone's home, mate. ;)

 

Seriously tho, we get a fair number of clients from there but your duties seem steep...maybe an Oz office isn't such a bad idea - and I'd love to smash the tops of a few stubbys with you.

 

Neil, I laughed as I read your post. Why? I just came from Starbucks...

Edited by JohnQuixote
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Thanks for the welcome,

 

I agree with you the price is not the problem, the problem we see, is the over stating of the quality to justify, and achieve the price of the real item, this is not a single grade difference it can be as many as three on colour, purity and fluoro, or it may not be a diamond at all.

 

If high end stores can attract fantastic margins because of the brand name they have built up through ethics and quality, I say more power to them they work hard for it.

 

I am referring to the odd rogue that is grossly overstating the quality, by using bogus paper (not recognised certificates at all) and discounting to attract the consumer. This is to the disadvantage of the ethical retailer, and I want to be clear most retailers are honest.

 

John

 

When you visit Oz, the beer is on us mate. It would be a pleasure to show you around.

 

PS: I believe we have a friend in common Mervin Cohen

 

Michael Cohen

 

Diamond Certification Laboratory of Australia

Edited by Michael Cohen
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Hi All

 

I am sure you have all seen this but I think it is very relevant

 

http://www.idexonline.com/portal_FullNews.asp?id=28317

 

http://www.diamonds.net:80/news/NewsItem.a...ArticleID=19090

 

Happy Sukkos to you all too. Don't over eat.

 

Michael Cohen

 

Diamond Certification Laboratory of Australia

Edited by Michael Cohen
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