IS THIS ARTICLE MISLEADING?

[Gypsy]

https://www.pricescope.com/wiki/diamond-grading From 2004 (maybe it's out of date?)

So I recently posted that EGL diamonds are not good values, and listed the reasons why for a poster and they were frustrated because they felt that my post (which is very similar to many of the standard EGL posts by RT prosumer posters) was contradicted by this article. And that the article was misleading.

I, for one, was just happy someone was actually reading our articles (YAY!) and trying to educate themselves, but also wanted to get your thoughts on whether this article does contradict the experiences and the threads we see on here where some of the EGL stones come back 3-5 grades off, or where the cut quality is bogus, or whatever.

Do we need to ask that this article be revised?

I personally think that people misunderstand what 'average' stats mean. To me it means that there will be the occasionally graded correct stone, and the occasional stone that is 5 grades off. So you average those two and you get that stones are 2.5 grades off. Which doesn't sound so bad, right? Well, it is if you are the guy with the stone that is 5 grades off. So perhaps the terminology needs to be defined better, or something, so that people understand that average means= your results may vary (and not in a good way).

The article says 2/3rds of the stone were this, and 2/3rd were that... so what are your thoughts on how helpful or misleading the article is?


ETA: I EDITED THE LINK!

 

[Haven]

I think this article is probably very comforting to anyone who wants to buy an EGL-graded stone against the advice of many PSers. Does that make it misleading? I don't know if it is technically misleading, but it definitely paints a very different picture than the one we see on the threads, where EGL stones seem to enjoy much softer grading than GIA and AGS stones.

I know I found this article very comforting when *I* chose to buy an EGL stone back in 2007 against the good advice of many PSers. Of course, I no longer own that stone and when I had the option to send my new stone in to any lab, I sent it to GIA.

 

[MyDiamondSparkles]

I've read that article and I'm probably not an expert enough to comment on it, but it does seem to go against what advice is most likely to be given on RT.

I prefer to know the median as opposed to the average. In the median you throw out the highs, throw out the lows and find the numbers in the middle which affords better clarity (pun intended) on what most consumers would expect to receive.

 

[Karl_K]

The problem is which EGL?
It only covers EGL-usa which is the best of the EGL labs.
You would get very different results from any of the other EGL labs.
My personal buying strategy is that anything other than GIA/AGS goes to an appraiser of my choosing and I buy based on the appraisers findings not the report.

 

[yssie]

An analysis of trading prices for the diamonds showed that the trade adjusts prices based on expected strictness of the grading reports.

I think that sentence says it all - and that's exactly what everyone on RT says as well. It would be interesting to see an updated study - with pics and all the lab report details

 

[Dancing Fire]

remember, clarity is just an opinion of the graders who was working at the lab that particular day. today he/she call it an VS2,but tomorrow the same grader might call the same stone an SI1.

 

[denverappraiser]

Yes, I find that article misleading.
Yes, I think the issue is worse since 2004.
Yes, I think there is great variation between the labs using the EGL name.

 

[Gypsy]

Neil, do you think the study should be redone?

 

[Rockdiamond]

That's a great questions posed to Neil Gypsy- I hope you don't mind me commenting.
There's a time factor involved, on a professional basis, writing an article effectively takes some time.
Then, we have other articles which are not necessarily "invalid", but possibly contradictory.
From the standpoint of most information, it might be deemed best to leave both. Not that I presume to speak for mgmt of PS< just making a point.
I've been complaining about the 60/60 tutorial forever- but it does make for interesting discussion.
For me, what seems to be an effective approach for a professional is affecting the trade in a positive manner through their daily chores. That might be involvement with the general questions that come up on RT- or writing an article.
I just know that when I have questions about a product, and join a forum, I like the like back and forth of asking and answering- much more than people who just advise others to do a search, or read an article.

ETA- specifically regarding articles that "measure" gem lab accuracy- I agree, in general they should not be used in such a way that consumers infer a "reliability of discrepancy". And I have seen that happen in RT many times with the other study of lab results.
" the study shows EGL is 18% more lax, and I got a 25% discount, good deal, right?

 

[Gypsy]

I agree with what you are saying RD. I think the best way to educate is organically, in response to specific questions and on a case by case basis that allows you to take into account variables that an article posted somewhere can't do. But at the same time the "helpful threads" thread is a limited tool, and it can be hard to dig up the best threads for reference for newer posters, and it can be repetitive for the vendor/expert to rehash the same ground over and over again. Some people have a higher tolerance for that, and other's don't. Still others want to contribute but don't have the time. So writing and article for an hour a day is more productive for them than posting on here for an hour a day.

I especially agree with your comment here: " ETA- specifically regarding articles that 'measure' gem lab accuracy- I agree, in general they should not be used in such a way that consumers infer a "reliability of discrepancy". And I have seen that happen in RT many times with the other study of lab results.
'the study shows EGL is 18% more lax, and I got a 25% discount, good deal, right?'"


OH--

ETA: Maybe what we need is a NEW article that discusses this phenomenon. Of people thinking that 'reliability of discrepancy' is somehow an accurate measure of anything.

 

[Rockdiamond]

Now THAT is an awesome idea!!!

Formulating now......

 

[denverappraiser]

Neil, do you think the study should be redone?

The study was expensive and quite a bit of work by some excellent people. The primary problem is in the sample size of 17 and the generalization of 'EGL' to include all labs with that name. Presumably the sample size was a budget decision. Lab grading costs on the order of $50-100 per stone per lab and a sample set of, say, 100 or 200 stones to 5 different labs is a BIG budget. 17 required a substantial budget. I don't fault them for this decision but I don't think it would be productive to try to reproduce it without a bunch more money, double blind methodology, etc.

An interesting question is what would be proven even if someone were to embark on this? Labs are not 100% consistent even within the same lab. EGL, in particular, doesn't even claim to be using the same scales or methodology as GIA. They make no claim that their grades will match or that they can be convereted to the grades of any other lab, including other labs with similar names. They don't even claim that they will assign the same grade to the same stone if submitted to the same lab on a different day (neither does GIA by the way).

That's why I called it misleading. The entire gestalt of the article is to make a case for comparing unseen stones that have been graded by different labs using the lab reports and applying a conversion formula, a comparison process that not even the labs suggest is appropriate.

 

[sgc3301]

Unintentional rant here but here it goes...
After purchasing my first diamond (EGL-USA), my experience left me feeling like most of us out there just want a fair price for a good looking diamond. I really couldn't care less if the diamond was M colored and I3 as long as it looks good (bright and sparkly) and I know I'm not getting ripped off. From my research I learned the RAP sheet is junk to a consumer so the second a jeweler told me he only goes by rap, I told him thanks but no thanks. Now thanks to PS I learned what kind of specs I wanted, how to read an idealscope, and using the avg $/carat of the diamonds listed on pricescope, James Allen, etc., I got a good idea of what was a fair price and negotiated and shopped until I went with someone. He showed me GIA and EGL USA. I went with the EGL because it looked as good as the GIA for about 20% cheaper. Now I know EGL can be off a grade sometimes so that obviously was taken into consideration. He never tried to tell me he was selling me a true E, SI1. I was comfortable with the price and look so I did it. Now I did have a jeweler try to use the rap on me with egl grades and I told him no thanks too. I read all the time how appraisals from the seller are loaded so why worry about an EGL not being "worth" the insurance, I have no intention of selling this diamond ever, or trading it in for an upgrade. If she wants an upgrade later in life, I'll get her a big new one. And if we do want to trade it in, the guy will give me what I paid for it. I can understand why we need grading for some people but lets be honest, there are plenty of uncertified diamonds sold by reputable guys and people are saving a ton of money that way. So I think rather than scare people away from egl, push them towards great jewelers, more knowledge, and let the confident consumer choose for themselves because at the end of the day, if you're confident in your decision, you're going to be happy with it no matter what a piece of paper says.

 

[Paul-Antwerp]

Neil, do you think the study should be redone?

The study was expensive and quite a bit of work by some excellent people. The primary problem is in the sample size of 17 and the generalization of 'EGL' to include all labs with that name. Presumably the sample size was a budget decision. Lab grading costs on the order of $50-100 per stone per lab and a sample set of, say, 100 or 200 stones to 5 different labs is a BIG budget. 17 required a substantial budget. I don't fault them for this decision but I don't think it would be productive to try to reproduce it without a bunch more money, double blind methodology, etc.

An interesting question is what would be proven even if someone were to embark on this? Labs are not 100% consistent even within the same lab. EGL, in particular, doesn't even claim to be using the same scales or methodology as GIA. They make no claim that their grades will match or that they can be convereted to the grades of any other lab, including other labs with similar names. They don't even claim that they will assign the same grade to the same stone if submitted to the same lab on a different day (neither does GIA by the way).

That's why I called it misleading. The entire gestalt of the article is to make a case for comparing unseen stones that have been graded by different labs using the lab reports and applying a conversion formula, a comparison process that not even the labs suggest is appropriate.

I am in agreement with Neil here, but the process of such a study also will have an effect.

As a test, I recently had some stones graded by EGL-Antwerp. The service was amazing, in the sense that we got full reports back on our desk within 24 hours, at a very cheap price. Side-bar: compare this to GIA's current turnaround of over 20 working-days.

Most importantly, despite the horrible reputation of EGL-Antwerp, I must say that the grade was very conservative, in general either color or clarity being one grade more lenient than GIA. However, the important factor in this is the lab's formal question, when delivering the stones for grading: 'Do you have any special requests?'

Now, I do not know what this question means, and if a 'special password' is necessary for a 'special request', but I do know there are thousands of such reports floating around, not worth the paper they are printed on. And when performing such a study, you cannot mimick the personal factor.

Live long,

 

[denverappraiser]

I don’t know EGL-Antwerp other than by their reputation and from seeing a sampling of their work product but EGL-USA is a very agreeable company. They work fast, their prices are reasonable, and they’re pleasant in communications. They have a well-trained staff and maintain a well-equipped lab. They offer a considerable number of different sorts of reports and services and if EGL-A is like EGL-NY, ‘Special Requests’ probably means choosing a particular report format, shipping to the correct address using the correct carrier or some similar concern. It may be as simple as an attempt to upsell inscription services. At worst it’s asking if you want a recheck on something before shipping, something GIA does as well. I would be quite surprised if it’s an offer to adjust the grades based on your client relationship or a secret password.

I think EGL results are less consistent than GIA’s, especially if all EGL labs are considered as one aggregate. I think this variation is considerably more than the Pricescope study suggests. I think that when the results are different between GIA and EGL, EGL grading results will be the higher of the two in the majority of cases. Most people here seem to agree with those statements but they are all unsupported hypotheses. That’s the point of doing an experiment like this. The question of the study seems to be demonstrating if these (or something else in this same vein) are true and, if so, understanding how to predict the differences using only information found on the reports. Did it do that? Could it do that? Would redoing the study with a different methodology or a bigger sample set help? Maybe, but I think not, at least not in a study that could be accomplished with a reasonable budget.

 

[John P]

...So I think rather than scare people away from egl, push them towards great jewelers, more knowledge, and let the confident consumer choose for themselves because at the end of the day, if you're confident in your decision, you're going to be happy with it no matter what a piece of paper says.

I know capable jewelers who use EGL for the reasons Neil and Paul outlined above. The good guys price them according to their own expertise and don't leverage the paper (if it's inflated) to squeeze more margin from their clients. Unfortunately, in a world where cash is king, far more pros who deal EGL diamonds are content to get more from less. They do it to win sales and that is an irritant to pros who take the "grading lab high road."

 

[John P]

An analysis of trading prices for the diamonds showed that the trade adjusts prices based on expected strictness of the grading reports.

I think that sentence says it all - and that's exactly what everyone on RT says as well. It would be interesting to see an updated study - with pics and all the lab report details

Here's a slide from this year's Rapaport Certification Conference. Rapaport is the largest business-to-business diamond trading network.

In the general 1-2ct range Rapaport reports that industry professionals expect to pay 31-55% less for diamonds with EGL reports than they do for diamonds with GIA reports.

 

[denverappraiser]

Wow, I missed that at JCK. There's a 35% PREMIUM for EGL-USA over EGL-HK.

 

[DiamondBrokersofFlorida]

I always go by a stone per stone basis versus an article. I can tell you this week I had a stone come in based on someone wanting this one. It was an EGL USA SI1 F ideal cut. I believe GIA would give this stone an I1 G. That is 3 grades off and an unbelieveable difference in price. It is priced high for a real GIA or AGS I1 G to the trade. It would be better and cost less to get an I1 G than the misgraded SI1 F EGL USA stone. However if you compared it to a real price on a GIA or AGS SI1 F, which it is not, it would sound like a bargain. But in reality it is not a good deal.

 

[Karl_K]

In the general 1-2ct range Rapaport reports that industry professionals expect to pay 31-55% less for diamonds with EGL reports than they do for diamonds with GIA reports.

If that discount is passed on to the consumer and they know what they are getting then it is less of an issue.
However I know for a fact some don't.
Here is how it works:
In popular sizes and color/clarity they have one GIA graded stone they offer at a high markup then they offer a EGL graded stone of the same grade at a 10% discount under the GIA graded diamond as a "great deal".
When the real discount should be as much as 55%.
They pocket the difference, wash rinse and repeat year after year after year.

 

[DiamondBrokersofFlorida]

As far as I could see, there were no discounted prices as they were running almost 40% more if you use the real grade versus the bogus paper. It is what it is. The real rub is that you think you are getting a discounted price when in actuality you are paying more than you should. At least that was my experience on the stone we got in. The price graft from the Rap price study, would be assuming the grades are all the same and correct on the paper. So the price discount is tricking the trade if they don't know how to grade.

 

[yialanliu]

Because it's a study with standards involved and a methodology that while isn't perfect, is reasonable, I do not think it is misleading at all.

Things may have changed in the past 8 years but in all honesty, in my opinion it's not that big of a difference. This is about diamonds which don't change as much as say computers.

If the article needs to be edited, it should be removed altogether. You can't splice in information into that kind of article like a normal wiki with references to various news articles, journals, newspapers since this is referring to 1 study.

With regards to removal, I disagree. This study while not perfect, is still very informative. A lot of what is being thrown around are opinions that EGL stinks. Until another study is done, that's just an opinion and I find facts from studies to trump these opinions.

 

[Rockdiamond]

Because it's a study with standards involved and a methodology that while isn't perfect, is reasonable, I do not think it is misleading at all.

Things may have changed in the past 8 years but in all honesty, in my opinion it's not that big of a difference. This is about diamonds which don't change as much as say computers.

If the article needs to be edited, it should be removed altogether. You can't splice in information into that kind of article like a normal wiki with references to various news articles, journals, newspapers since this is referring to 1 study.

With regards to removal, I disagree. This study while not perfect, is still very informative. A lot of what is being thrown around are opinions that EGL stinks. Until another study is done, that's just an opinion and I find facts from studies to trump these opinions.

This is one of the real "double edged swords" about the free flow of information on the web.
I trade in many millions of dollars in diamonds every year- as do many people I'm very close with personally and professionally.
With NO exception, we ALL share the same opinion of the disparity between GIA and EGL.
SO, I suppose you could say that's just "opinion"- but its one shared by every honest, knowledgeable professional. Then we have the opinions of consumers about this issue- which certainly are interesting to read.
All the seasoned posters on PS are well aware of the problem regarding the sub-standard reports.
These are also folks that are probably more well versed in some of the technicalities regarding cut than many professionals.

But for folks who have not spent a lot of time here- and possibly those who own a diamond graded by EGL, this might be confrontational.

I agree with Neil- EGL is a great company to work with. They're fast, and far easier to deal with than GIA- which lately is more like a local Driver's Licence office lately- you know, lots of lines, supervisors overwhelmed.
But speed of service can never make up for what we're discussing here- that being accurate grading, and transparency in trading.

Danaviles - in terms of the "rap sheet"- virtually ALL diamond dealers and cutters use it.
I agree, it's not meaningful to consumers- and trade members are not supposed to use it as a sales tool- but some do.
The point is, a dealer claiming they rely on it makes sense.

 

[Garry H (Cut Nut)]

As a participant in that study, it was a snap shot with a small sample at a point in time.
It would be heresy to remove it and criminal to edit it.
That is why we called that section Journal Articles

Regarding the findings – we showed that diamonds listed and sold online are traded at different prices based on different grading reports that come with that particular stone. There may have been 2 or more reports for the same stone and some vendors multiple list their stones on B2B sites with different reports – it might be a way to conduct a survey ‘virtually’ for free?

The RapNet slide John showed indicates that the same practices with now larger discounts are still happening. Presumably that means the grading differences between labs is now even greater. But Neil I disagree that this is more of an issue now – specifically in that savvy Pricescope consumers need not be ripped off at all (see Danaviles » 28 Jun 2012 03:22 post).

Retail store shoppers who have not done their research can easily be duped – as John has often pointed out. However if Joe Doe wants to buy his wife an I SI1 1ct stone for a couple of K, then fine. He is smart enough to know that the stones that salespeople are showing him for 2-3 times the price are clearly better – but he just wants to shut her up for the least cost.

Very happy to discuss another survey, but so far it seems the main issue here is the old thing that some labs grade strict and some are soft – well kiddies, that’s life.

Are people being ripped off?

Some yes, but some are getting good deals and some others are getting what they want – that’s life too.

Buyer beware.

 

[Texas Leaguer]

I think that although many things have changed over time, the conclusion of the original study is still quite valid:
"The study confirmed that business to business Internet listings effectively priced diamonds graded by these laboratories"

As John stated and Garry and others alluded to, there is only a problem for the consumer if the information is misused by the retailer.

It is the purpose of forums like this to help consumers become aware of differences in diamond attributes and diamond grading so that they can make the best choices for themselves.

Consumers have more access to better information than ever before. That might be why we are seeing some increasing differential in the spread between different labs, as John's helpful slide of the Rap presentation indicates. For instance, incresing awareness of the importance of cut quality may account for AGS certs commanding a relatively higher premium today.

The dynamic is also changing as more folks are shopping diamonds online. The better, stricter, more consistent labs will naturally be the ones people will have more confidence in when buying diamonds sight unseen. Therefore, those stones will command increasing premiums relative to the others as online sales become a bigger part of the sales pie.

Bottom line, I don't think there is a pressing need for another study on this subject. The information is available and confirms what we already know. The business to business market consists of thousands of certified stones in competition from hundreds of manufactures and dealers. These are smart people. So at the trade level, differentials on all sorts of different aspects (including the lab report) are factored in to pricing. And those prices are published every day.

It's what is done with them at the consumer level that is quite variable. And it is there that consumers have the responsibility to do a little due dilligence.

 

[denverappraiser]

The article implies that EGL graded stones can be reasonably compared to GIA graded stones by applying a conversion to the grade. The subject seems to be deciding what that conversion formula should be. This is addressing a false dilemma and we all know it. I further think it is not reasonable for to just say ‘buyer beware’ and ignore the issue because the labs can grade however they like, even though they can.

Pricescope advertises EGL graded stones.

Lots of them. I would guess it’s more than half the database. Pricescope is a player in this game, as is Rapnet. The way the search engine is designed overtly encourages people to compare several stones based on lab reported grades. An unsophisticated searcher or one who doesn’t delve into the forum at considerable depth is likely not to come across this issue, even after a reading of the tutorials of the world’s #1 consumer diamond information site. This article used to be front and center on the Pricescope home page and I applaud that it’s now in the articles section. I agree with Garry that it should be neither edited nor removed. It’s where it belongs. I’m calling it misleading because of what people tend to read into it but it’s not incorrect or in any way bad faith by the authors.


It’s common for a casual visitor here to use the PS database to conclude that EGL stones are bargains because they’re less expensive than similarly described stones from other labs. When they get a taste of this issue, it’s also common to conclude that grading is just a matter of opinion and that the grading doesn’t really mean much of anything. It's all a scam. This often supports what they’ve been told by others, and it’s directly opposed to the advice dispensed on a near daily basis here in the forum. I think this does not lead to clear thinking and wise shopping although I suppose it DOES lead to people getting jewelry appraised so perhaps, in the end, I’m one of the beneficiaries.

 

[Garry H (Cut Nut)]

The article implies that EGL graded stones can be reasonably compared to GIA graded stones by applying a conversion to the grade. The subject seems to be deciding what that conversion formula should be. This is addressing a false dilemma and we all know it. I further think it is not reasonable for to just say ‘buyer beware’ and ignore the issue because the labs can grade however they like, even though they can.

Pricescope advertises EGL graded stones.

Lots of them. I would guess it’s more than half the database. Pricescope is a player in this game, as is Rapnet. The way the search engine is designed overtly encourages people to compare several stones based on lab reported grades. An unsophisticated searcher or one who doesn’t delve into the forum at considerable depth is likely not to come across this issue, even after a reading of the tutorials of the world’s #1 consumer diamond information site. This article used to be front and center on the Pricescope home page and I applaud that it’s now in the articles section. I agree with Garry that it should be neither edited nor removed. It’s where it belongs. I’m calling it misleading because of what people tend to read into it but it’s not incorrect or in any way bad faith by the authors.


It’s common for a casual visitor here to use the PS database to conclude that EGL stones are bargains because they’re less expensive than similarly described stones from other labs. When they get a taste of this issue, it’s also common to conclude that grading is just a matter of opinion and that the grading doesn’t really mean much of anything. It's all a scam. This often supports what they’ve been told by others, and it’s directly opposed to the advice dispensed on a near daily basis here in the forum. I think this does not lead to clear thinking and wise shopping although I suppose it DOES lead to people getting jewelry appraised so perhaps, in the end, I’m one of the beneficiaries.

I was worried that no one was going to mention appraisers Neil?
I do not think there is enough recommending that stones are sent to appraisers by Pricescopers in the past few years Neil.

I am sad that labs do not grade the way consumers would like them to for real true consumer protection. Not saying they are grading wrongly, but that for example:
Clouds - so many times when consumers want an SI stone that is eye clean - they end up with a stone that has diminished brilliance.
Feathers - as above - running across table / crown facets just waiting to chip.
Labs use terminology that describes features. Features can be benign or bad and we know that consumers don't and can't know the difference.

 

[Garry H (Cut Nut)]

If there is anything constructive regarding the survey article it could be a follow on article indicating changes that we may believe have occurred in the market?

I am sure we would all agree the gap between top tier and soft labs has widened. But how do you prove that?

I have had a crack at this issue before https://www.pricescope.com/journal/diamond_grading_labs_–_plan_peer_review and I still own that stone.

I would also point you all to this thread:
https://www.pricescope.com/communit...ide-ps-feedback.177148/#post-3226036#p3226036 where the FTC is calling for submissions.

 

[Texas Leaguer]

I agree with Neil that just saying "buyer beware" is not enough. Many consumers do get misled by certain practices regarding the use of lab reports as selling tools. A responsible and wise industry will self-police. I guess the question becomes how to do it. Is worldwide standardization of grading even feasible? As has been pointed out in this discussion, was evident in the study, and as every lab will admit there is an element of subjectivity is color and clarity grading. Can that be eliminated? If not, how much variability is allowable? What are the penalties for excessive deviation? Who enforces those provisions? What about representations made about non-certified stones? (as you can see I have more questions than answers on this topic!)

People obtain all kinds of information through a variety of diverse sources. They may prefer to decide on which presidential candidate to vote for by listening only to a particular cable news outlet or a reading only a certain newspaper. Some may dig deeper and acquire different perspectives before deciding what is right for them. Some news outlets are known for excellence and accuracy in reporting. Some are known for half truths and inflamatory, divisive reporting. In the end, the people decide. As long as they have freedom of choice, in aggregate they generally make the right decisions.

Is it not enough to let the market decide on which labs are the best and how they should be valued? Some people may value blue fluorescence and pay more for it. Some may want to avoid it altogether. Buyers who do a little homework will come to value AGS and GIA certs for accuracy and consistency and gladly pay more for diamonds graded by them. They will be reluctant to embrace less accurate or consistent labs without corroborating evidence (seeing the stones in person, and/or enlisting the help of an independent expert). Great companies can command premiums just because of their reputation. That is their reward for investing in best practices. Others with less than sterling reputations will struggle and may fall by the wayside. Or they may improve their performance in order to compete!

As some have already lamented, this is not a new problem. The fact that it has not been solved before raises questions about whether it can be solved- at least in conventional ways. I recall years ago many people in the trade upset about online diamond sellers ruining the market. There were many who suggested ways to stop it from happening. But it's part of the free market. You can't stop it.

The best approach it seems to me is for all of us to our part to bring quality information to the market and make sure that anyone interested in true understanding about diamonds can easily acquire it.