Newsflash: Grading labs are not all the same.

[Paul-Antwerp]

Very good points, Neil, in fact so good that your words have seduced me into adding my 2 cents.

I personally like the basic info of such tests, like the Rapaport-organized one, but such test is always based on premises that are not correct.

Like you said, the company submitting the stones, generally a seasoned professional, makes a business-decision in choosing the lab. This is based upon projected dollar-outcome, but also on the suspected speed-of-sale. Diamonds with certain lab-reports have a broader and more eager market, so it is a very important factor in that decision.

As Garry pointed out, some labs are more often used for programs or brands, so you see less 'free' or virtual stones with such lab-reports, and the risk of such stones actually not being in line with the paper-report is generally greater.

Also important, a number of labs have different locations, and whatever they claim about them being on par, in reality, there are always differences, probably not static differences, but most seasoned professionals make it their business to know which lab-location today is a tad less strict than the average.

Even within one lab-location, I personally believe that there are internal distinctions. I do not believe that with a customer sending in a batch of 200 stones, these stones will go through exactly the same hands as those of a customer sending in a small batch of 10 stones. This is of course speculation from my side, but I do believe that bigger batches basically go to a different 'sub-lab', although the lab is doing its utmost to keep all labs and 'sub-labs' on the same level.

Aside from that, I believe that such tests take the initial lab-grade as final. I do not believe that labs can be influenced in their systems (at least not the reputable ones), but on borderline-stones today's re-check with another group of graders can give a different result. Asking for re-checks is a standard procedure at a lab, and each lab is organized differently in that interaction between customer and lab. Some labs even seem to make it a money-maker, giving an exaggerated strict grade at first, then charging for the re-checks, and only in second grading giving the correct grade. Such practice is totally missed by such lab-test.

For the consumer, this gives possibly a gloomy picture. If the report says the color is G, it does not mean that the stone is G in color. At best, it is within the G-range of color, but in reality, depending on the lab-name, the location of the lab, the way it was submitted and the way it got a re-check at the lab, the stone will be in a range around the G-range. The same for clarity. And with us checking 1,000's of lab-graded stones per week, please do not ask me about the joke of fluorescence-grading, even at the most reputable lab. The result is that the global diamond-business is gradually splitting up in 2 schools.

One school is selling paper, often in big businesses wholesale, but they eventually end up in retail, where actually the lab-report is sold, and not the diamond. The procedure is simple, get the reports at apparently the cheapest price (compared to the Rap-list) and you have a solid business.

The other school is taking the lab-report as a basis to compare to, then checks the stone and only buys if the stone is good. Depending on the needs, this process is labor-intensive and highly selective.

In that sense, Neil's advise to consumers to carefully select a retailer is very wise.

Live long,

 

[denverappraiser]

I should point out that one of the IGI directors (who has posted here before) was very put out they were not included and has often asked us to do the same again but include them.

Did he offer to PAY, or at least refund his own fees that would be incurred in the project?

That's not as flippant a question as it sounds. The cost of this sort of project is a serious problem, especially if the number of stones is going to be statistically relevant. Not even Rapaport can afford do this just as a favor to the public.

Here's a proposal where Rapaport could help:

REQUIRE participation in this sort of thing in order to have your lab be part of the 'favored' list on Rapnet. Rap will do random studies, at random times, and using random accounts to submit the stones. After the fact (so as to not poison the study), the labs agree to reimburse their fees. Rap eats the shipping or possibly even charges the labs a reasonable fee that covers it (again, after the fact). Do continuous updates and publish the results. Publicly. Attach a link to those results as part of every single Rapnet listing as something of a 'product warning label'. Labs that don't want to play can still be listed under the 'other' category, which comes with it's own warning label.

 

[Rockdiamond]

Interesting idea- kind of like a study to determine which way a brick will go if you pick it up and release it.

There's ZERO doubt about which lab's grades will be used to determine the value of a given stone by cutters , dealers or anyone seriously involved in the diamond business.
Even if they tested 10,000 stones, anyone who's looked at a lot of stones graded by GIA, compared to the other labs knows that the results will show far more inconsistency among all the other labs- aside from AGSL.
IN fact, submit the same stone to GIA 20 times and you could get two different results in the batch.
Grading is subjective.
I've heard cutters bemoaning this fact 100 times.
"Well, the stone is an SI1, but GIA gave it SI2."
There have been cases where I agreed- but the stone still goes for the price of an SI2. Such a stone may bring a higher price than a "bad" SI2- but no person in this business( who knows what they are doing) will pay the SI1 price for a stone with a GIA grade of SI2.

The same stone graded VS2 from any of the less reliable labs may find a retail buyer at the SI1 price.
People in the business may offer t purchase such a stone at the I1 price- and they may get it.

BUT- its been my experience that the better cut, more desirable stones , being sold by the most reliable cutters and dealers go to GIA ( or AGSL in the case of rounds).
Problem stones go to the second tier labs in many cases.

That would also be a good thing to add into the study- whose results are not going to enable consumers to effectively buy stones without the GIA grade.
Looking at stones being offered on the market that already have reports, what's the percentage of badly cut, or dull stones with GIA reports, as compared to the percentage of badly cut stones with second tier reports.

IMPORTANT NOTE- there are well cut, and desirable stones with EGL and other second tier lab reports. To find one, and buy it effectively you'd need to be very knowledgeable about diamonds so that you could grade it yourself. or have a dealer you trust do it for you.
There are members here who have such stones.

 

[denverappraiser]

There are surprisingly many people in the business who don't know what they're doing, including people who have invested their entire life savings into buying a jewelry store but, no, they aren't the ones who are being misled and no, cutters aren't using off-brand labs because they're stupid.

Here's how it works. A jeweler sells a stone and points to the 'certificate' as the justification for the grading. The customer compares with others that have similar grading and picks one. Maybe they pick wisely, maybe not. It doesn't really matter for this discussion. If there's a complaint later, the dealer again points to the lab and says 'Look. It's certified'! How was I supposed to know? In politics that's called plausible deniability. When you look to the lab, they say that they sold a service to their client, some dealer, and their client was happy. No harm, no foul. 100% of their clients present themselves as experts and experts dealing with other experts have different standards than experts dealing with consumers. The labs also have lengthy client agreements protecting them from liability claims. There is no chain leading from the consumer to the lab because the consumer wasn't the client and the dealer who was, hasn't been harmed. Indeed, they were the beneficiary of the whole process. If there was a misrepresentation, it came from the dealer, not the lab.

Legitimate merchants, especially big corporate outfits, use non-GIA labs because they're faster, they're cheaper, they're easier to get along with as a partner, and they are better at integrating into a supply chain. All of this is true and they're fine reasons. More subtly, it's harder for online or discount type customers to shop them. Large merchants do NOT like customers directly shopping point-to-point. The practice of 'showrooming', where you go visit a local store to see what you like and then Googling the manufacturers item number to see who will sell it for less is wiping out the likes of Best Buy and one of the defenses is to make the item # on the one in the store unique to them. Amazon may have similar stuff, and indeed it may be identical except for the package, but that's different enough that, at least for now, it's keeping the stores alive.

A very similar thing happens with diamonds. A client at Costco (for example, I'm not specifically picking on them) rarely expects much in the way of education or 'sales' on the part of the staff. Merchandise is presented in a way that's quite different from a traditional sort of jewelry store and that feels like a bargain. They're a big IGI client. People want to read the paperwork provided, think about it for a while, visit a few more stores and make a decision. They don't trust the salespeople in the jewelry stores anyway and prefer to shop like this. The stores don't tell people much in the first place and if, after the fact, you decide you're unhappy for some reason they'll cheerfully give a refund. Sams, Kmart, QVC and others do it about the same way. Google won't help all that much unless you dig fairly deeply and unless you get into this very issue. It's a very successful business model.

At the top, a high service fancy jewelry store that sell an AGS stone because their standards are the best, is differentiating themselves from the discount sorts of dealers who are selling diamonds as commodities. AGS caters to this market so they work with AGS for their branded goods.

On the bottom it gets far worse than the outfits we're talking about. There are 'labs' out there that don't even require an inspection! Tell 'em the grade you want, pay your fee, and they'll print up a report. Presto, it's 'certified'!

 

[denverappraiser]

Sounds like a fantastic idea to me I would look forward to you drafting a letter to all the reputable labs and to Rapnet and even Mr. Rapoport himself to support this. I'd be willing to sign such a letter as well and I think a lot periscopers would as well like a petition.
I might even be willing to build a website and online petition if necessary.

As you have observed in other threads, I do this for a living. I think the chances that Rapaport would hire me to design such a program is nil. Not that I'm opposed to it. I suspect they do have people working there who read and monitor this sort of discussion so if they see something that they would like they are welcome to run with it and if they would like my assistance I'll be happy to help. They've got my number.