RAPAPORT Diamond Pricing

[zebramoray]

I had a jeweler tell me that the prices are based on GIA graded color / carat weight / clarity.. Is that true? I know the different labs all grade stones, but is the RAP sheet prices based on GIA grades?

 

[Paul-Antwerp]

Nobody knows what the Rapaport-price is based on. Question is whether Mr. Rapaport himself knows.

It is sold to us as the list of High New York Asking Prices. In theory, it is the highest asking-price (not the transaction-price) between dealers in New York. In reality, this clearly is not the case anymore, as many goods are currently trading between dealers at price-levels above the Rapaport-list.

Live long,

 

[zebramoray]

Paul-Antwerp

Thanks.. I knew what the jeweler was bs.. I could see it in her eyes..

 

[Indira-London]

The Rap sheet prices have 4 parameters:
carat,
colour: D to M
clarity: Internally Flawless, VVS1, VVS2, VS1, VS2, SI1, SI2, SI3, I1, I2 and I3 - there is no such grade as "SI3" on GIA certificates but nevertheless the trade price for this reflects diamonds that are considered by traders to be better than I1 but worse than SI2
quality of the cut - prices are based assuming well-cut, there is a written note to say that poorly cut or shaped diamonds trade at very large discounts.

 

[denverappraiser]

Where Rap SAYS they get the information is by polling a list of diamond sellers and asking them what they are charging for various things and distilling the results into the grid. I see no reason to disbelieve them but perhaps there is valid cause to question the usefulness of the data, especially for consumers. Other than the obvious issue pointed out by Paul that asking for a particular price is not the same as getting it, It’s far from clear what the standards are for the stones.

It’s instructive to use PS to do exactly what Rap does with his group of informants. Search the database for a particular weight/clarity/color combination and you’re likely to get hundreds of superficially similar offers from a list of a few dozen highly competitive dealers. The results will normally will range in asking price by about a factor or 2 or 3 from the most to least expensive although this varies somewhat depending on what parameters you choose. Choose the highest of these, or even an average of the top 10 or so and call that the ‘high Pricescope asking price’(PSAP) and you have set a benchmark where all others are available at a discount. This may be mathematically correct but it strikes me as not especially useful. If a particular stone is being offered for 70% off of PSAP, does that make it a good deal? What about 50%? What about a stone being sold elsewhere for more than PSAP? Is that, by definition a rip off?

This gets further complicated by the behavior of the informants. Again using the PS example, I point out that PS has no control at all over what the dealers choose to offer and it would be easy for a dealer or a collaboration of dealers to list a few stones that they KNOW to be a bit on the expensive side, even if they never sell until they relist them at a lower price, in order to manipulate the PSAP results. Everything in the list becomes a bargain save for a few stones that they don’t really expect to sell anyway. Whoohoo!

Since the Rapaport informants are theoretically anonymous but surely know one another in practice, you have a system that is ripe for collusion and insider manipulation of the results. Even if Mr. Rapaport or his staff aren’t directly involved, they have no way to prevent it and, in practice, have no incentive to do so even if they could.

Neil Beaty
GG(GIA) ICGA(AGS) NAJA
Professional Appraisals in Denver