Diamond Grading Lab Survey

[Garry H (Cut Nut)]

We have offered it to a few trade magazines Ana.

Any and all are welcome to publish or print it as long as it is printed in its entirity (perhaps with links to the appendix and tables etc).

If anyone wants to publish a shorter version then we must reserve the rights to approve the edit. This could be a hot potato, and we do not want any missleading interpretations.

 

[Mark Turnowski]

First I would like to thank Leonid, gary and David for their effort in this project and the valuable time they devoted to provide this information to the Pricescope community. Secondly I would like to relate my previous experience with a similar survey.
In 1980,I was priviledged to participate with 3 other gemologists in a similar survey that at the time included diamonds graded by the GIA, EGL, and IGI. The results were published in a national jewelry magazine. At the time it was the 1st survey of it's kind within the jewelry trade and our findings were somewhat similar as this survey. The results indicated that the GIA was the most consistent lab with the EGL and IGI less consistent. The question at the time was why,as it should be today. As a former staff member of the GIA in New York and the 1st director of the IGI in New York I believe I have some insights that I would like to share.
As all labs are staffed by competent gemologists why should there be discrepancies? The reasons vary. Among them are the training provided, the pressure to produce as many certificates as possible in a given day , and the quality of the 2nd and sometimes 3rd gemologist who rechecks the other gemologists. As diamond grading is subjective, there are situations where there are errors that appear on the certificate. Usually these errors or differences in grading occur in the VS2/SI1,and the SI1/SI2 category for clarity and the H/I range for color. In conducting our own tests within the GIA and IGI we foundthat these were the areas most likely for differences. Being the case we initiated stricter controls after reviewing those catagories. We must all realize that the labs are in the busines of producing certificates. They do not have the time to analyze everydiamond to it's fullest though we would like to believe this. They provide an honest opinion that the consumer can trust. As I mentioned earlier, yes they do make mistakes and sometimes they overgrade as well as undergrade. But that is rare. In defense of the GIA as well as the other labs in the survey, they require the gemologists to go through a vigorous on site training program after they have completed their GG's. The diamond trade has come to rely on their abilities as well as there honesty.The fact that one lab may have a different color F as a master is not an indication of incompetence. Rather they choose to have differnet master sets. If this helps one lab over an another the trade itself has a way of pricing the diamonds accordingly. As consumers you may notice that though a diamond can have the same clarity and color it is priced differently. At times it's because of the cut and at other times specifically in the SI1/SI2category, the owner may see that the diamond is a low SI1, or the imperfection is too strong or it's located closer to the center. The trade has it's own method of policingthe grading system which is then reflected back to the Pricescope consumer in the form of a greater discount. Seeking the help of an Independent appraiser can provide another experienced source. In addition to verifying that the diamond and certificate match they can provide an independent evaluation. Another source of help is asking that the vendor provide you with a detail account of the inclusions and if they feel that the certificate grade is accurate. Using all these sources can help the consumer in making an accurate and intelligent choice. The Pricescope community is full of resources. This survey is just one option and as such is an excellent source of information.

Mark@EngagementRingsDirect

 

[kevinng]

This is a wonderful survey and a real eye opener. I think this effort should be repeated periodically. I think every 5 years would be great. I think this would help keep the grading standards in check.

 

[kevinng]

I was just wondering... wouldn't it be better if HRD and IGI were also included? HRD enjoys a very good reputation as well. Many pricescope members love to slam IGI. Wouldn't it be better if we can back out our suspicions with hard evidence? Just a thought.

 

[Garry H (Cut Nut)]

Thanks Mark, for your wisdom. You comment that GIA is most consistant. We were not able to decide if one lab was more or less consistant - can anyone offer an opinion from the small amount of data?

Kevin perhaps EGL USA and IGI have recieved similar amounts of criticsm?
We would have liked very much to have included HRD and IGI, as well as EGL overseas in the survey, however the small number of stones listed online from these labs meant that we would not have had enough data to do a proper pricing comparison, and after all that is what this whole thing is about; do you agree?

 

[kevinng]

Yes Garry. I agree that pricing is a very important factor in your study, and I can see why you excluded HRD, IGI and EGL Overseas. Most readers of this forum are probably from the US. So, comparison of the 3 labs would be most relevant to them.

However, I would like to present an alternative view. Pricing is a fluid thing. As soon as you figure out the 'truth' about these certs, the price would adjust themselves in light of this information. Hence, I foresee that if the readership of this paper gets high enough, the price of diamonds with AGS and GIA certs will come closer to their EGL counterparts with one grade better in color.

I would assume that these labs would like to keep their grading standards as consistent as possible to avoid reputational risks. Therefore they will not change them after reading the information presented in this study.

My point is, expectations will change with your report, rendering the conclusions on price (which was accurate during the time of the report) inaccurate in a short span of time if there are enough people reading the report and word gets around.

My second related point is, I think we should include as many reputable lab as possible as we want to let consumers know what these certificates mean, and adjust their expectations accordingly. This will ultimately affect the price of the diamonds associated with these certs as well.

Finally, I would like to add that I am not trying to discredit this paper in any way. This paper offers great insight on the grading standards of the 3 labs and the current price discrepancy. I think it is a very informative piece of work. I am just offering some suggestions.

 

[Garry H (Cut Nut)]

2 questions K:

1. So you do not place any credence on GIA's brand value and reselling convenience?

2. Next time you will contribute a thousand dollars so we can survey more labs in more countries?

 

[kevinng]

----------------
On 8/10/2004 8:31:06 AM Garry H (Cut Nut) wrote:

2 questions K:

1. So you do not place any credence on GIA's brand value and reselling convenience?

2. Next time you will contribute a thousand dollars so we can survey more labs in more countries?

----------------

I have full faith in GIA's brand value and reselling convenience. I have full faith in AGS too. But what's in a brand?

Is this study to ascertain the difference in grading standards and hence the value of the underlying diamond... or is it to ascertain the brand value of the certifying labs?

I don't know about you, but if all studies show consistently that EGL grading standards are as strict as AGS/GIA, and the diamonds with EGL certs are 10% cheaper... I'd buy an EGL anyday.

I do not trade diamonds, and I do not stand to gain economically (at least not up to $1000 in value) from surveying one lab or denying another. I just buy diamonds once in a while and I'd like to find out what I am getting out of these certificates. HRD certificates are quite highly prized where I come from, so I'm curious if their standards are as good. IGI diamonds are available too, but I would like to know if I am doing the right thing by staying clear of them. Also, I'm not exactly very rich.

So, I will not give you $1000. If cost is the driving factor for choosing one lab over another, then let that reason be known. If there are other reasons, perhaps they should also be made clear.

However, I have spent $80 on several items on www.idealscope.com. Maybe you can contribute some profit for the sake of consumer knowledge?

I must emphasise again that I like the study very much. As a consumer, I just wish that it covered more labs, that's all.

 

[Garry H (Cut Nut)]

sorry K, I was just trying to make the point that running such a survey is both costly in courier and lab costs and requires a big favour from vendors to allow their stones to be out of action and exposed to risk for a considerable period of time.

BTW you might be surprised at the negative profits from Ideal-Scope; it is a passion, not a business. And it is only with the passionate support of people like Dave Atlas and Paul Slegers (from Antwerp), and OctoNus for modelling it on DiamCalc that it is sustainable for me at near break even.

 

[kevinng]

No need to apologise, Garry. I fully appreciate the difficulties you have and the risks the vendors take, and I am thankful for the work you have done as is. I am sure everyone who has read the paper will gain from the knowledge the next time he/she shops for a diamond.

On the idealscope thing... I was just kidding. Even if you were making big bucks on idealscopes (which you are not), you certainly deserve it. Not only do you make the idealscope readily available, you spend time and give out information on how to use it as well. I have mentioned before, the idealscopes cost nothing compared to the price of a diamond, and it tells so much... based on fundamental common sense. A diamond must return light to be beautiful. How much light it returns, and how it returns it, determines it's beauty... and you can see it with an idealscope quite clearly.

You know what? I think they should put idealscope images on grading reports. Not that they need to comment on it or anything. Having the image there would increase the information value of the reports by quite a fair bit.

 

[Garry H (Cut Nut)]

"You know what? I think they should put idealscope images on grading reports. Not that they need to comment on it or anything. Having the image there would increase the information value of the reports by quite a fair bit."

I agree. We have made the offer to some labs, but none has been game to be first

 

[pricescope]

GIA Insider: Thoughts from the President: Diamond Grading

 

[elmo]

----------------
On 8/13/2004 2:27:10 PM leonid wrote:

GIA Insider: Thoughts from the President: Diamond Grading----------------

I guess that article is supposed to make me feel better about waiting 10 weeks for a GIA report recently.

 

[Rank Amateur]

Though the commitment of $$ and time to the effort was significant, it seems to me that the sample was too small from which to draw meaningful conclusions.

A fun read, though. I bet some labs are a-buzzin'.

 

[Garry H (Cut Nut)]

The grading sample was small, but the pricing sample was quite large.


For the purpose of establishing what lab graded the diamond that a buyer might select, the information has meaning.


But to say that this lab always grades like this or that lab does it like that, you are correct RA. However we hope to be able to continue to conduct surveys with stones graded by these, and also other labs, maybe even in other places. this would build a larger and more meaningful and analytic body of data

Interestingly all the labs co-operated fully and 2 found mistakes that we made. And we have been reproached by one lab for leaving them out!




We do hope that the survey helps people in the trade and the public to understand that diamonds do not have grades. We humans give them grades, and we might not always give the same stone the same grade, especially in the case of border line calls.

 

[canuk-gal]

HI:

This undertaking--reminded me of a pilot study--was a laudable effort: I suspect much was learned by the authors from which other research will spring. I just love research and its potential to answer questions (and create a million others), thus aiding in problem solving. But then again, I am a nerd.

As an aside, size does matter

--but in regards to critiquing research, I always keep it in perspective as part of the overall methodology--afterall your sample size (n) could be "adequate" (yes, these things can be calculated at any point in a study), but if the rest of your sampling technique is not properly controlled/conducted, your sample will be biased. And that limits generalizability of findings outside of your study. Hence, sampling is just ONE part of the overall method that must be considered when engaging in research studies. Like cut is to diamond purists, methodology is to researchers. As I used to tell my students before they nodded off in class, "take care of your research method, and it will take care of you".

cheers to future endeavours

Sharon

 

[hoorray]

The research may have been "limited" based on time and cost constraints, but I think it highlighted an important point to consumers that the lab grades are still subjective, not carved in stone. That needs ot be taken into consideration when considering or not considering stones based on their lab grades.

 

[jesrush]

One thing I like about this "study" is that it proves EGL (or at least EGL-USA) isn't as bad as many people like to assert. I don't have an EGL stone but I saw several impressive ones during my search...

 

[canuk-gal]

----------------
On 8/20/2004 11:45:18 PM jesrush wrote:

One thing I like about this 'study' is that it proves EGL (or at least EGL-USA) isn't as bad as many people like to assert. I don't have an EGL stone but I saw several impressive ones during my search...----------------

Hello:

I am not your Professor and therefore have no wish to lecture, but in short I will take issue with the usage of the word "prove" in the above posting--notwithstanding this concept is almost never used when discussing findings in applied research as it suggests a rather firm cause and effect relationship between measured variables (very difficult to achieve!!), but because it suggests a generalization of the findings outside the study which is something (I previously alluded to) I doubt can be done with complete confidence.
But take heart

, proper word usage when critiquing research is a common challenge--I know what you "meant": and without putting too many words in your mouth might you otherwise have written, "Within the confines of the study I found the authors........"?

cheers

Sharon

 

[BrianTheCutter]

Pricescope is to be commended for undertaking its test of the gem the AGS,
GIA and EGL-USA trade labs for strictness of grading and the relative trading
values of diamonds graded by each of these labs. It might interest you to know
about what is very likely the first such test published by The Goldsmith in
September 1981.

At the time, grading reports had just earned their universal pedigree
stature, thanks largely to the investment diamond boom of the late 1970s. What's
more, COMDEX and other commodities exchanges contemplated making futures markets
in diamonds that would trade on the basis of lab grading reports. Essential to
the creation of such markets was the concept of fungibility—the
interchangeability of stones based purely on grading reports.

Silly as the idea of a futures market for diamonds now seems, the prospect of
one raised serious issues about the reliability of diamond grading. For there
to be such a market, it was imperative that the major labs grade consistently
and agree with one another. It was also imperative that independent
gemologists who often were hired by consumers to co-certify diamonds also reach the
same conclusions regarding color and clarity.

Goldsmith adopted a very interesting way to test the labs. It created its own
lab manned by four top independent gemologists, two of whom had worked in
GIA's New York lab as graders and one of whom had managed EGL's New York lab.
Using master stones provided by American Gemological Laboratories, Goldsmith's
lab re-graded 145 stones—54 grades by GIA, 67 by EGL and 24 by IGI. Goldsmith's
reports agreed with GIA's only 37% of the time, EGL's 25% and IGI's 67%. Such
poor results shocked the trade and probably did as much to doom diamond
futures markets as anything else.

But at least the issue of grading subjectivity was out in the open. To assure
greater accuracy and agreement between labs, Modern Jeweler Magazine later
proposed creation of a master stone set which would be donated to the National
Bureau of Standards and used to settle the nastiest grading disputes. They
called it, fittingly enough, "the Solomon set." The idea never got any attention,
but it seems to me it had a lot of merit—especially in combating lab
subjectivity and giving consumers greater peace of mind. Just for public relations, it
would have been worth it to create such a set.

 

[Serg]

----------------
On 8/25/2004 1:06:11 AM BrianTheCutter wrote:

Pricescope is to be Using master stones provided by American Gemological Laboratories, Goldsmith's
lab re-graded 145 stones—54 grades by GIA, 67 by EGL and 24 by IGI. Goldsmith's
reports agreed with GIA's only 37% of the time, EGL's 25% and IGI's 67%.

----------------

Brain,

Do you know how many grades (in %) had difference more than 1 gradation?

 

[G Weldon]

I loved reading the report. Fantastic! I was curious though; I'm currently viewing several Tiffany Lucida stones and there is no published criteria for the cut. Because the cut is most important, I would really like to know the parameters. Is there a fancy shape in the report that most closely resembles the Lucida? The grading report for the princess shape does not seem to apply. Tiffany's says that all of its Lucidas are cut to "strict standards" etc... but no one knows what those strict standards are or what they are supposed to be. Thanks!

 

[Garry H (Cut Nut)]

There are too many unknown variables for you to use this #'s based approach.

I think you are best to use an Ideal-Scope - or better still, ask them to sort through their inventory and select the stones with the best Ideal-Scope image.
But please do not continue non Lab survey related topics on this thread.

 

[rubydick]

Just a few comments on diamond grading. It's not my field, but sometimes it takes an outside perspective to see clearly

1. With even the best labs (GIA, AGS), the tolerance is generally ± one full color and/or clarity grade.

The Naked Eye: A Diamond's Worst Friend

2. With diamond color grading, the methodology is so flawed that it is shocking the labs are as consistent as they are.

The Crying Game: Diamond Color Grading

See those links for a more complete description of some of the issues.

 

[newbie1conewbie]

This article is right on point. One of the 17 stones was a 1/2 ct. round I ordered from DCD on my buddy's behalf. When we got the stone it came with all of these reports. I was initially mad as h-ll because when I looked at the Euro. and GIA report there values were totally different (color, sym, etc. I called DCD (thinking that I had got hooked) but they told me about the study and that I needed to look at all of the certs. collectively. Very interesting to look at all of the differences! Good Study and article.

 

[pricescope]

Check out comments made by the labs in this article: Survey calls lab grades 'highly subjective'

 

[strmrdr]

----------------
On 10/2/2004 11:40:52 AM leonid wrote:

Check out comments made by the labs in this article: Survey calls lab grades 'highly subjective'----------------

I could go on a 2 hour rant at the labs replies in that article.
It just goes to prove my often repeated point that the labs are in bed with everyone one else in the industry.
Inspite of the few great vendors in the field the odds of a consumer getting a square deal are well somewhere between slim and none.
Who in the diamond industry stands on the consumers side?
It sure isnt the labs.......

 

[oldminer]

"Who in the diamond industry stands on the consumers side?
It sure isnt the labs......"

I think Pricescope is one of the few things that helps consumers overcome the phrase "Caveat Emptor". Small labs like my own are more in bed with consumers than with the major forces of the diamond trade, but the diamond industry asserts a very strong will into the way all diamond grading is done. If it was not for relentless and excellent marketing there would be far less consumer interest in diamonds. Without this inordinate demand, the few dealers and labs left in the diamond business would be far more obligated to consumers than to the marketers....

The way things are now, with the big money driving demand and lab standards, the consumer has only a few good friends to rely upon. At least, there are excellent resources for those consumers who have done their homework. These consumers represent a very small minority of the overall market. How do we make a greater impact without the nearly unlimited resources of those who drive the market? This is a question that I have pondered for more than 20 years. Over time there has been some progress, but there is much more that could be done.

 

[strmrdr]

True enough Dave.
Im not down on pricescope or the good vendors that hang out here but like you said they are a drop in the bucket compared to the vast majority in the industry.
And they are at the mercy of the rest a lot of times just like the consumers.

 

[Richard Sherwood]

-----------
Who in the diamond industry stands on the consumers side?
It sure isnt the labs.......
-----------

The labs created order out of chaos. Before the advent of lab reports, there was no standardized system of quality analysis and documentation. This standardization, coupled with the creation of systematic and ordered publishing of market prices (such as Rapaport, Market Monitor & The Guide) empowered and benefited the consumer as never before.

The labs are ever vigilant in detecting and reporting methods of treatment & enhancement, both old and new. They are ever vigilant in documenting the quality of diamonds, without an eye to whether they are being paid by a dealer or a consumer. There have been many times where they have brought the attention of the world upon a new treatment whose existence is not in the best interest of the consumer.

Dealers are dependent upon the consumer for their livelihood. It is in their best interest for the consumer to be satisfied regarding their service, quality control, honesty and integrity. Not only that, but a dealer's entire business is built upon having a reputation of trust so he or she can operate smoothly within the network of dealers and consumers who make the diamond world go 'round. Business in the thousands and millions of dollars is still often done upon a handshake. Of course there are "bad apples", but because of the nature of the industry, such individuals are usually discovered and blacklisted quicker than you would see happen in the "non-diamond business world".

I daresay it would be hard to find a large group of professionals who operate at a higher overall level of integrity than that of diamond dealers and diamond grading laboratories. In my opinion, it would also be hard to find an industry that surpasses the diamond industry in the pursuit of consumer education, protection and safeguards.