Interview with Peter Yantzer - Consumer issues

[WinkHPD]

I had the great fortune to speak with Peter Yantzer at the JCK Jewelry Show this year. I have placed the other interviews I did in the JCK 2009 thread that was so graciously started by Andrey but after discussion with Andrey we came to the conclusion that this information deserved its own thread and discussion. There are many interesting things in the JCK thread, and I recommend visiting that thread if you have not already. I am told that John Pollard will be adding further updates as he catches up.

I have broken the interview into three parts.

Wink

[ PSAdmin: oops i messed up the rest of the post, but i got the videos to show. ]

First Video : Peter Yantzer talks about diamond pricing






Second Video: Peter Yantzer - Improving diamond beauty





Third Video: Peter Yantzer - Scintillation and virtual facets

 

[Todd Gray]

Now you might think that since Wink and I fly the same icon that I get to see all of these cool videos before they are released, but the reality is that this is the first time I''ve had the chance to see these videos! Yea, I get this telephone call from Wink yesterday telling me all about the cool video he''s cutting of an interview he conducted with Peter Yantzer, Executive Director of the AGS Laboratory, and then proceeds to tell me "Yea it''s really great, you''re going to love it!" and do you think I get a sneak peek of it or anything? Uh, no...

What can I say, this is SO cool! I love how Peter describes the concept of 1st / 2nd / 3rd / 4th "Tier Laboratories" and acknowledges the fact that there is a difference in grading between the tiers in terms of grading practices, consistency and YES valuation within the industry as a result of that difference in grading!

One minor point I''d like to make with reference to a comment made by Peter on the 2nd video (which I''m sure he would have clarified if not speaking with a member of the diamond trade) is that diamond is not the hardest substance on earth, it is the hardest "mineral substance" on earth and thus it can be damaged! This is partially due to the grain structure of a diamond (which Peter refers to as being similar to wood grain) and the fact that it can be cleaved along the grain lines... It is actually possible to damage a cut / polished diamond when trying to cut glass with it if you happen to attempt to do so at the wrong point on the structure of the diamond, in line with the grain and with too much pressure! So don''t do it! There are better ways to "test" diamond!

How cool is the third video?!?! Love the visual example of the virtual facets and the reference to the thousands of virtual facets present with a princess cut diamond as it is turned in one degree increments! Whoa!

Thanks for posting these videos Wink, they are very cool and well worth the couple of minutes it takes to watch them. Okay, okay, it was even worth the 24 hours you made me wait to watch them. I will exact my revenge, oh yea, bet on it.

 

[strmrdr]

Why is the pricing different with the varies grading reports?

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.
.
.
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Yes I know the answer but I'm being lazy lol
People new to the forum may not.

 

[Todd Gray]

Date: 6/8/2009 5:28:01 PM
Author: strmrdr
Why is the pricing different with the varies grading reports?

Yes I know the answer but I''m being lazy lol

People new to the forum may not.

Evil, Evil... Feeling antagonistic today?

"Because SOME of the 2nd / 3rd / 4th / tier laboratories couldn''t grade their way out of a paper bag... And no, I''m not going to name them by name because, uh, that might get me sued despite it being "my personal opinion". But I do believe that Peter Yantzer referred to the GIA and AGS as 1st Tier

 

[WinkHPD]

Date: 6/8/2009 5:28:01 PM
Author: strmrdr
Why is the pricing different with the varies grading reports?

.
.
.
.
.
.

Yes I know the answer but I''m being lazy lol
People new to the forum may not.

Yes, I can see that if someone is not familiar with the reality of the diamond trade that they may not know what I think they do.

Thank you for helping me realize the error of my ways.

There is a harsh economic reality in the diamond world.

In the United States, GIA is the 300 pound gorilla, every one else is not. For those who want the best cut grading, there is also the AGS, but they grade a fraction of the gems that GIA grades as only those dealers dealing in the top quality cutting will normally send their diamonds to AGS.

So, for purpose of this illustration we will make the following assumption. Let us say that a dealer has sent his diamond to both AGS and GIA because perhaps he was hoping one lab would come back with a better grade than the other lab.

Becasue all of the graders were fresh and accurate that day the diamond comes back from both AGS and GIA as a 1ct G-SI1. This will actually happen a lot, although it is entirely possible that the color or clarity grade could be higher or lower by one grade too.

Frustrated because he really wanted a better grade our dealer now sends the diamond to some second third and forth tier laboratories. Now his diamond comes back with a myriad of grades One has it an F-SI1, another an E-VS1, a couple settled on F-VS2, and one particularly eggregious lab in another country decided it was a D-VS1.

Now our dealer bought it as a G-SI1 and could make a profit on it as a G-SI1, but with one of the more recognized second, third, or fourth tier lab papers claiming it to be an F-VS2 he can mark it up to the price of a real F-SI2 and then give a HUGE discount because he likes you so much, or you were the third nice couple to come in this afternoon or what ever excuse and make about triple the profit he would have made with a paper saying that it is what it is, a G-SI1.

The beauty of it is, he can do this with uneducated retail jewelers who should, but don''t know better, or he can do it through the internet with clients who really can not be expected to know this nefarious little trick.

And that my friend is why we retailers and other wholesalers automatically discount the grades of some labs by one, two or even three grades, depending on the lab and how disreputable we believe them to be. And since we are discounting the grade we expect the diamond to really be, we also discount the value we will pay for the diamond since we know it is not what it says it is.

How do we know this you ask? Why because with incredibly rare exceptions, if we honestly expected the stone to get an equal or better grade when sent to a first tier lab, we would send it to that first tier lab. That way we could sell it for what it is worth, not sell it for a discount because others believe that it is not what the paper says it is.

Wink

 

[WinkHPD]

Storm,

Thanks, that was an excellent question, I hope my response made sense to the consumers. If not, please feel free to jump in and say it better.

Wink

 

[strmrdr]

Date: 6/8/2009 6:03:50 PM
Author: Wink
Storm,


Thanks, that was an excellent question, I hope my response made sense to the consumers. If not, please feel free to jump in and say it better.


Wink

sounds good.

To simplify...
Wholesale pricing is based on what gia would grade it as.
First tier labs and some boutique labs try and track gia grading as closely as possible.

The lesser tier labs apply softer grading standards.
The trap for consumers is set like this:
GIA would grade a stone H/SI1 and that sets the market price.
The trap is it is sent to a softer lab for a F/VS2 and sold at a higher price than a GIA H/si1 to the end consumer.

 

[WinkHPD]

Date: 6/8/2009 6:24:27 PM
Author: strmrdr

Date: 6/8/2009 6:03:50 PM
Author: Wink
Storm,


Thanks, that was an excellent question, I hope my response made sense to the consumers. If not, please feel free to jump in and say it better.


Wink

sounds good.

To simplify...
Wholesale pricing is based on what gia would grade it as.
First tier labs and some boutique labs try and track gia grading as closely as possible.

The lesser tier labs apply softer grading standards.
The trap for consumers is set like this:
GIA would grade a stone H/SI1 and that sets the market price.
The trap is it is sent to a softer lab for a F/VS2 and sold at a higher price than a GIA H/si1 to the end consumer.

Yeah, that is what I was trying to say...

 

[strmrdr]

lol you did good Wink, just to much trade politics so the message got kinda buried.

I could have said...
A G is not a G is not a G and that is the problem

 

[WinkHPD]

LOL! Did you like that beautiful photo that Jim Caudill took?

Wink

 

[strmrdr]

Date: 6/8/2009 6:46:36 PM
Author: Wink
LOL! Did you like that beautiful photo that Jim Caudill took?


Wink

yes it is kewl

 

[Rhino]

Date: 6/8/2009 6:01:51 PM
Author: Wink

Date: 6/8/2009 5:28:01 PM

Author: strmrdr

Why is the pricing different with the varies grading reports?

.

.

.

.

.

.


Yes I know the answer but I''m being lazy lol

People new to the forum may not.

Yes, I can see that if someone is not familiar with the reality of the diamond trade that they may not know what I think they do.


Thank you for helping me realize the error of my ways.


There is a harsh economic reality in the diamond world.


In the United States, GIA is the 300 pound gorilla, every one else is not. For those who want the best cut grading, there is also the AGS, but they grade a fraction of the gems that GIA grades as only those dealers dealing in the top quality cutting will normally send their diamonds to AGS.


So, for purpose of this illustration we will make the following assumption. Let us say that a dealer has sent his diamond to both AGS and GIA because perhaps he was hoping one lab would come back with a better grade than the other lab.


Becasue all of the graders were fresh and accurate that day the diamond comes back from both AGS and GIA as a 1ct G-SI1. This will actually happen a lot, although it is entirely possible that the color or clarity grade could be higher or lower by one grade too.


Frustrated because he really wanted a better grade our dealer now sends the diamond to some second third and forth tier laboratories. Now his diamond comes back with a myriad of grades One has it an F-SI1, another an E-VS1, a couple settled on F-VS2, and one particularly eggregious lab in another country decided it was a D-VS1.


Now our dealer bought it as a G-SI1 and could make a profit on it as a G-SI1, but with one of the more recognized second, third, or fourth tier lab papers claiming it to be an F-VS2 he can mark it up to the price of a real F-SI2 and then give a HUGE discount because he likes you so much, or you were the third nice couple to come in this afternoon or what ever excuse and make about triple the profit he would have made with a paper saying that it is what it is, a G-SI1.


The beauty of it is, he can do this with uneducated retail jewelers who should, but don''t know better, or he can do it through the internet with clients who really can not be expected to know this nefarious little trick.


And that my friend is why we retailers and other wholesalers automatically discount the grades of some labs by one, two or even three grades, depending on the lab and how disreputable we believe them to be. And since we are discounting the grade we expect the diamond to really be, we also discount the value we will pay for the diamond since we know it is not what it says it is.


How do we know this you ask? Why because with incredibly rare exceptions, if we honestly expected the stone to get an equal or better grade when sent to a first tier lab, we would send it to that first tier lab. That way we could sell it for what it is worth, not sell it for a discount because others believe that it is not what the paper says it is.


Wink

Not having watched your video I love your response Wink. I wish more consumers were aware of these facts.

 

[Rhino]

Date: 6/8/2009 6:42:15 PM
Author: strmrdr
lol you did good Wink, just to much trade politics so the message got kinda buried.


I could have said...

A G is not a G is not a G and that is the problem

Haha... good summary.

 

[Todd Gray]

Date: 6/8/2009 10:15:38 PM
Author: Rhino
Not having watched your video I love your response Wink. I wish more consumers were aware of these facts.

Me too, but I watched the video

And one of the things I thought was cool is that it gives consumers a chance to get to know Peter Yantzer better, he really is that enthusiastic about diamonds and really is that open when he talks with people about diamonds... Every time I''ve spoken with Peter Yantzer, I walk away thinking "Wow! That guy is totally on top of his game and so excited to teach others about it..." he''s like the Pied Piper of Improving Diamond Cut! Or is that the Pied Peter of Diamond Cut? Uh..?

 

[WinkHPD]

Date: 6/8/2009 10:31:47 PM
Author: Todd Gray

Date: 6/8/2009 10:15:38 PM
Author: Rhino
Not having watched your video I love your response Wink. I wish more consumers were aware of these facts.

Me too, but I watched the video

And one of the things I thought was cool is that it gives consumers a chance to get to know Peter Yantzer better, he really is that enthusiastic about diamonds and really is that open when he talks with people about diamonds... Every time I''ve spoken with Peter Yantzer, I walk away thinking ''Wow! That guy is totally on top of his game and so excited to teach others about it...'' he''s like the Pied Piper of Improving Diamond Cut! Or is that the Pied Peter of Diamond Cut? Uh..?

LOL!

Thanks for the nice words Rhino. When you get a minute watch the video, Peter says some wonderful things!

Visually the one on virtual facets is cool, but for content you have to spend the time on the first one. Peter is brilliant!

Wink

 

[risingsun]

Thanks for posting the interviews. They were very informative.

 

[rustyshrapnel]

Agreed, these look awesome! I snuck a little bit of one in but I''m definitely going to watch these in full when I get home from work.

 

[oldminer]

Peter Yantzer Talks about diamond Pricing



Peter is telling it like it really is. We have been saying similar on Pricescope for a long time and Peter has added his considerable reputation to this discussion. I applaud his stance and openness. Informed consumers no longer fall for the "All certs are the same and all labs are the same" nonsense, but there remain many uninformed buyers.

It is easy enough to name the top tier labs in the USA. One must tread lightly on naming the lesser tiered labs for fear of legal reprisals. We know who they are and so do many consumers, but naming names or actually doing anything about it has been problematic. The Jewelers Vigilance Committee could, if it felt there was a need, go after the habitual misrepresenters using secondary and lower lab grading as equal to GIA/AGS level grading. Do I see this happening? No. Currently the JVC does not appear to me motivated in this direction. We must rely on the viral approach instead with informed consumers sharing this message to their less well informed friends. Eventually, with education, the appeal of this tactic will wane, but can ethcial retailers all wait that long? Many can't.

I hope this interview with Peter stays available to the consumer for an extended period of time and in a place where they will readily find it. It would be good to house it somewhere in the more permanent parts of Pricescope rather than see it dissappear in an old thread in a few weeks.

 

[Todd Gray]

Date: 6/9/2009 12:16:06 PM
Author: oldminer
I hope this interview with Peter stays available to the consumer for an extended period of time and in a place where they will readily find it. It would be good to house it somewhere in the more permanent parts of Pricescope rather than see it dissappear in an old thread in a few weeks.

I second the motion. It is so rare to get such an interview from a prominent industry figure like Peter Yantzer and what he has to say is of such importance that I feel this series of videos should be kept available in a more prominent area here on PS for future access by newbies to the forum. Is there a knowledge base / video archive somewhere? Maybe one can be added to the Knowledge directory?

 

[Lorelei]

Date: 6/9/2009 12:51:37 PM
Author: Todd Gray

Date: 6/9/2009 12:16:06 PM
Author: oldminer
I hope this interview with Peter stays available to the consumer for an extended period of time and in a place where they will readily find it. It would be good to house it somewhere in the more permanent parts of Pricescope rather than see it dissappear in an old thread in a few weeks.

I second the motion. It is so rare to get such an interview from a prominent industry figure like Peter Yantzer and what he has to say is of such importance that I feel this series of videos should be kept available in a more prominent area here on PS for future access by newbies to the forum. Is there a knowledge base / video archive somewhere? Maybe one can be added to the Knowledge directory?

Yes, I will link it into the Helpful Thread Archive sticky for now.

https://www.pricescope.com/community/threads/helpful-threads-archive.72078/page-2

Video gallery link below

http://diamondscope.pricescope.com/

 

[strmrdr]

Date: 6/9/2009 12:51:37 PM
Author: Todd Gray

Date: 6/9/2009 12:16:06 PM

Author: oldminer

I hope this interview with Peter stays available to the consumer for an extended period of time and in a place where they will readily find it. It would be good to house it somewhere in the more permanent parts of Pricescope rather than see it dissappear in an old thread in a few weeks.

I second the motion. It is so rare to get such an interview from a prominent industry figure like Peter Yantzer and what he has to say is of such importance that I feel this series of videos should be kept available in a more prominent area here on PS for future access by newbies to the forum. Is there a knowledge base / video archive somewhere? Maybe one can be added to the Knowledge directory?

http://diamondscope.pricescope.com/

 

[oldminer]

Its good to have it saved for now on the Important Threads sticky spot, but I am concerned that the video which is expernal to Pricescope eventually will be deleted and any link to it wil not work. It would be great for Wink to let Andrey put it among the saved videos on Pricescope, too.

 

[Lorelei]

Date: 6/9/2009 1:51:53 PM
Author: oldminer
Its good to have it saved for now on the Important Threads sticky spot, but I am concerned that the video which is expernal to Pricescope eventually will be deleted and any link to it wil not work. It would be great for Wink to let Andrey put it among the saved videos on Pricescope, too.

That would be great if it could be done as those videos would be very useful as part of the permanent video library Dave.

 

[WinkHPD]

I am deeply honored that you would like to have these videos permanently available. I thought Peter was on top of his game that day, and on a normal day I think he is genius! The session on pricing absolutely belongs on record and the other two sessions, especially the scintillation and vvirtual facets session are just plain fun!

When you go to play most of my videos, if you choose the details button below the video there will be a download link that will allow you to download both the video and the controller if you need it.

If you ever go to one of my videos and want to download it, chances are very good that if you ask me I wll turn on the download button.

Please do so with my blessings, and thank you for asking!

Wink

 

[WinkHPD]

I admit to being a little surprised. As badly as the public is being hoodwinked by the second, third and fourth tier labs I expected more discussion of these issues.

I thought there might be much thunder from those who use those labs and more from those who are just now finding this out...

Wink

 

[liquidh2o]

Thanks for the info and lengthy answer Wink!

I think this just furthers the case to stay away from most "whoelsale" and "discount" jewelers, where the gimmick is "low" cost.

This was a trap I watched many friends fall into.

 

[Moh 10]

Do these tier 3 and 4 labs think that they have a leg to stand on?

How would their leaders reply when confronted with evidence that there are diamonds 4 grades more colorless than a diamond they graded D?

Do they claim that grades should not be standardized, or they serve a different market . . . blah blah blah?

What could they possibly say in their own defense?
Do they shy away from the media?

 

[WinkHPD]

Date: 6/10/2009 12:43:39 AM
Author: Moh 10
Do these tier 3 and 4 labs think that they have a leg to stand on?

How would their leaders reply when confronted with evidence that there are diamonds 4 grades more colorless than a diamond they graded D?

Do they claim that grades should not be standardized, or they serve a different market . . . blah blah blah?

What could they possibly say in their own defense?
Do they shy away from the media?

I have read one interview with the head of such a lab where he told the interviewer that his lab was known for its accuracie and when asked if that was true why was his lab not better thought of. "It will be in time, we are earning our reputation."

I wanted to gag, but I am sure that the jewelers who use that lab were very happy.

Wink

P.S. One thing that Peter did not get into was that many of these second, third and fourth tier labs issue bogus "retail values" along with their high grades. A stone that sells on the internet for $6,000 may well have an appraisal price with the diamond document of $15,000 or more.

 

[WinkHPD]

Date: 6/8/2009 4:40:52 PM
Author: Todd Gray
Now you might think that since Wink and I fly the same icon that I get to see all of these cool videos before they are released, but the reality is that this is the first time I''ve had the chance to see these videos! Yea, I get this telephone call from Wink yesterday telling me all about the cool video he''s cutting of an interview he conducted with Peter Yantzer, Executive Director of the AGS Laboratory, and then proceeds to tell me ''Yea it''s really great, you''re going to love it!'' and do you think I get a sneak peek of it or anything? Uh, no...

What can I say, this is SO cool! I love how Peter describes the concept of 1st / 2nd / 3rd / 4th ''Tier Laboratories'' and acknowledges the fact that there is a difference in grading between the tiers in terms of grading practices, consistency and YES valuation within the industry as a result of that difference in grading!

One minor point I''d like to make with reference to a comment made by Peter on the 2nd video (which I''m sure he would have clarified if not speaking with a member of the diamond trade) is that diamond is not the hardest substance on earth, it is the hardest ''mineral substance'' on earth and thus it can be damaged! This is partially due to the grain structure of a diamond (which Peter refers to as being similar to wood grain) and the fact that it can be cleaved along the grain lines... It is actually possible to damage a cut / polished diamond when trying to cut glass with it if you happen to attempt to do so at the wrong point on the structure of the diamond, in line with the grain and with too much pressure! So don''t do it! There are better ways to ''test'' diamond!

How cool is the third video?!?! Love the visual example of the virtual facets and the reference to the thousands of virtual facets present with a princess cut diamond as it is turned in one degree increments! Whoa!

Thanks for posting these videos Wink, they are very cool and well worth the couple of minutes it takes to watch them. Okay, okay, it was even worth the 24 hours you made me wait to watch them. I will exact my revenge, oh yea, bet on it.

LOL! I love it that the evening after writing this comment you change your avatar to the new killer black hat avatar. Looks good on you dude!

Wink

 

[John P]

Date: 6/10/2009 12:43:39 AM
Author: Moh 10

Do these tier 3 and 4 labs think that they have a leg to stand on?

According to who Moh? Consumers?

I imagine someone buying an overgraded F VS1 either (a) doesn't know or (b) doesn't care what it would be elsewhere. (a) Doesn't know: If he/she has only shopped in commercial or discount markets it's apples to apples, since all VS2s have pepper in them and all Gs show tint - no awareness stricter standards exist. (b) Doesn't care: There are those who will research and realize the grading is softer on a diamond they are considering, but getting the lower price point and keeping the "bragging rights" of F VS1 (even knowing it's an inflated grade) may be okay for some.

Example: In Las Vegas there is a steak house at Circus Circus. The sign outside says they've been voted "Best Steak House in Las Vegas" for 20 years in a row...I have no idea who voted. When you consider the elite steak restaurants at The Wynn, The Bellagio, "Nine" at The Palms and many standalones like Ruth Chris, Rosemary's (etc) any notion that the Circus Circus joint is the "Best in Las Vegas" is frankly laughable. But their price point is less than 50% of the first-tier steak houses and there is that sign... I suspect some people will go there and proudly tell friends and family back home they ate at the "Best Steak House in Las Vegas." - And (like a fiancee receiving a proposal ring) not many friends or family will contradict the perception of the value the buyer/storyteller received at their "fine dining experience."

How would their leaders reply when confronted with evidence that there are diamonds 4 grades more colorless than a diamond they graded D?

Their leaders are glad to serve a different market. In fact some will boldly ask "why should lab X set OUR standards?" ... In short, who is GIA (or AGS) to dictate what we should be doing with our grading?

Actually the opposite is happening in China right now. The national lab is being overstrict to tighten things up so that "foreign reports" are not as reputable by comparison (that is a whole 'nother story).

Do they claim that grades should not be standardized, or they serve a different market . . . blah blah blah?

Yes.

What could they possibly say in their own defense?

Considering their market-share in numerous commercial and discount outlets they might reverse the question: They might ask what right you or I - or anyone - has to spread the notion that the first-tier labs "have it right" in public forums like this one.

Do they shy away from the media?

The media brings it up seasonally. Here's an expose from 2005: http://www.msnbc.msn.com/id/8661995/

But the issue is more complex than casual newstime can capture. You have to have someone's attention on the issue while they're immersed in the issue, to communicate details of the issue. That's one of the great functions of Pricescope.