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What's wrong with AGS Lab?

Discussion in 'RockyTalky' started by denverappraiser, Feb 10, 2012.

  1. denverappraiser
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    by denverappraiser » Feb 10, 2012
    I’ve been contemplating this question for several years and I thought I would put it out for the consumers and others here. As a preface, I’m proud to be a member of AGS, I’m a fan of AGSL, I'm a long time customer of theirs, and a fair number of my friends work there.

    Pretty much everyone agrees that they offer accurate and consistent grading services. They use the GIA grading scales (except the cut scale for rounds and a minor variance in the way they describe fluoresence) and they are consistently grouped with GIA as the top lab for consistent and useful grading.

    Their fees are less than GIA’s and they’re 10x the speed.

    They affiliated with the American Gem Society, which is a group of thousands of mostly well regarded stores all over the US and Canada.

    They have a cut grading system for rounds that many would argue is better than GIA’s, EGL’s and others, and that’s been through a scientific peer review process (unlike the competition).

    The offer cut grading on princess, emerald, asscher, oval and other cuts as well as round. They’re the only major lab doing this.

    Their documents and opinions are well regarded by nearly everyone in the trade and among the consumer market of diamond connoisseurs. In general, AGSL graded stones command a premium in the marketplace.

    They’re free of major scandals and complaints from either their customers, the AGS membership or the public.

    They’ve been doing all of the above for upwards of a decade.

    All that said, their ‘market share’ of the lab business is something like 2% and it doesn't seem to be growing. In terms of business success they’re getting hammered badly by GIA, EGL-USA, IGI and EGL International. Why? What could they do?
     
    


    


  2. ChrisES
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    by ChrisES » Feb 10, 2012
    I don't know what they can do, but in terms of why, it sounds like they occupy the awkward position of the honest little guy.

    By which I mean GIA is huge because of years of everyone saying GIA is the best, so people who are somewhat informed want GIA, and GIA reports command a market premium. The other houses are known to be soft in their standards, so sellers like to use them because they can get a quality bump. My understanding is that retailers will often send a stone to both GIA and, say, EGL, and then compare the GIA name bump to the EGL score bump and use one or the other. There's no incentive for a retailer to use AGS unless their calling card is integrity.

    And while AGS grades command a premium among PS users (consumers and retailers) I don't think your statement that they command a premium applies at most B&M or even online retailers.

    And yes, I am a total newbie compared to you, I just thought I'd toss out the obvious response and see if people tear it up.
     
  3. Karl_K
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    by Karl_K » Feb 10, 2012
    GIA has for decades educated a significant percentage of the trade members.
    Those that were not trained by GIA most certainly know and respect someone who was.
    I would bet that a lot/most of those AGS dealers have taken GIA training.
    That more than anything gives GIA the position it has now.
    People tend to use and trust those that trained them over all others.

    While it is changing a little even today I have met many jewelers that are not familiar with AGS.
    If they are they often say yea I heard of them at JCK but don't know much about them.
    It is also a generational thing also, many of the older mid range and higher jewelers I have talked to are GIA only where the younger generations are more open to AGS as a premium lab.
    This has a large effect on what consumers are exposed to.

    IGI by catering to the large chains gets the same type of boost but in a different market.
    Anyone who has worked in a chain has been exposed to them and taught to trust them.
    Anyone who shops in the chain stores will see their reports.

    Last time I looked at the member site/catalog(it has been a while it may have changed) there were no ags graded diamonds available through Stuller.
    This is huge in the independent jeweler market.
    They are the supplier that everyone knows and trusts in the US.
    I have not met one jeweler who was not a customer of Stuller.
     
  4. Jim Summa
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    by Jim Summa » Feb 10, 2012
    Karl,
    I just checked Stuller's website for rounds. They list 1,664 GIA and 83 AGSL stones.
    For Princess cuts they list 278 GIA and 9 AGSL...NONE of AGSL (princess shape) stones are in their Ideal cut grade.

    Your point is well taken because I believe the amount of AGSL stones are dwindling compared to the other labs. The irony is Stuller is an AGS supplier and I don't believe unique to them as far as suppliers go.

    I personally like the AGSL System of 0-10 (0 is the highest) on diamond cut quality and rarity ranking on their DQD and Platinum Report.

    I have had some confusion from people on the AGSL gold report. I think this report is exactly the same as GIA'S.

    Some of the members gripe the Society should market the AGSL lab reports better. The Society HAS provided the means for AGSL member retail stores to sign off and certify the stone at point of sale, in the form of another document that states such.
     
    


    


  5. jstarfireb
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    by jstarfireb » Feb 10, 2012
    I'm just a consumer, but I have a feeling that name recognition is a big deal within the trade. I think most trade members continue sending their stones to GIA because "everyone knows" GIA is the gold standard for grading. Never mind that AGS is pretty much on par with GIA with color and clarity and better for cut. Consumers recognize the name GIA and often seek out GIA-graded stones, and it's easier to meet that need by sending stones out to GIA for grading than by educating them about AGS.
     
  6. denverappraiser
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    by denverappraiser » Feb 10, 2012
    I’m a sucker for the whole better-faster-cheaper thing but it’s obvious that the market isn’t so responsive to it. I’m just not sure why not. I agree that GIA training plays a part but, without exception, every jeweler I talk to about GIA’s lab services is unhappy with them for one reason or another. Some of it is that they don’t like the results, for which I’m not especially sympathetic, but more often it’s about the speed, the prices (especially the ‘rush’ charge), the unwillingness to explain their thinking and the general holier than thou attitude that comes across from them in everything from their voicemail system to the client ‘agreement’ that you are required to sign before you can submit a stone in the first place.

    Chris. Most stores don’t sell AGSL graded stones for reasons that Karl points out so you may not have noticed it but they cost more at the suppliers and that cost is most definitely is passed through to the consumers. The perception that the only reason to choose a non-GIA lab is to get lenient grades may be a big piece of the issue though. If you’re going to get an accurate grade anyway, why waste your time with anyone else, especially if we’re talking about stones that aren’t going to get an AGS-0 cut grade. This is especially true if it IS going to get a GIA-excellent but even GIA-VG doesn’t seem to have a stigma where AGS-3 or less seems to be a total waste of paper. No one will buy it until you get it repapered somewhere else. I'm actually a little surprised Stuller has 9 non-0 princesses. Why Stuller doesn’t use them more is a curious question. I’m not friends with Matt Stuller to ask and it may be a simple as that their suppliers aren’t in the habit but it may be that they’ve found they don’t do as well with them for some reason. Money talks after all. Maybe Peter needs to be doing lunch with Matt. :)

    Karl. Good point but again, everyone in the trade I know is hacked off at GIA for one reason or another and I don’t know ANYONE who has a serious problem with AGSL. The worst criticism is that they or their customers have never heard of them. This has been going on for years. Since the lab opened really. Surely at some point this should start to show up in dealers’ selection of labs and in the sales pitch presented to consumers. No?

    Jim. Do you see any AGSL market presence at all in the non-cut grade categories like pear, marquise etc.?

    AGSL is not the first example but I would hate to see them the die off or just wither away over what strikes me as basically a PR problem. GCAL was a fine lab backed by serious advertising money and their backers finally cut and ran last year after hemorrhaging money for a while. They’re still a fine lab but they are a shadow of what the Collectors Universe people imagined. PGS in Chicago is a high quality lab run by skilled gemologists who have been offering fast excellent service for reasonable prices for years. Their market presence is zilch. There are others. It seems like Goliath is winning here.
     
  7. Rockdiamond
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    by Rockdiamond » Feb 10, 2012
    Great question Neil
    I was with a MAJOR league cutter the other day- he does some extremely fine makes- AND- he is one of us who refuses to become internet savvy.
    It's an unusual demographic- a person running a hundred million dollar business who has no desire to become internet savvy.
    His assistant places the stones on rapnet.
    I say an unusual demographic in business in general- but in the diamond business he's not all that unusual if we're looking at the highest levels of the trade.

    I asked him about sending some of the extra fine rounds to AGSL
    "NOBODY asks for it, and nobody wants them"

    Surely it's a closed minded view- and not one that I share- but the realities of the business are such that AGSL will never be able to elevate themselves about being a very boutique outfit.
    Believe me, the trade would LOVE to see GIA have to face competition in their market- their customer service....well it sucks.

    For those carrying AGSL graded stones it really does allow them boutique status as well, yes?
     
  8. ChrisES
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    by ChrisES » Feb 10, 2012
    Nowhere but PS could I be getting the supply-chain perspective on this stuff. Thank you for the info!
     
  9. Modified Brilliant
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    by Modified Brilliant » Feb 10, 2012
    Most of us that have been in the trade (since the late 1970's-early 80's) were born, nurtured, raised, and educated by GIA.
    It was our "college of knowledge." Even after receiving my college B.A. I knew that the G.G. designation was one that I had to have to make a career in the jewelry biz at most levels. Not many spoke about becoming a CGA (Certified Gemologist Appraiser). I worked as an appraiser for an AGS chain where seldom was the AGS affiliation ever mentioned and certainly not well promoted...a "missed" opportunity for sure. I do believe that the PR is lacking overall. The word "society" in AGS to me conjures up "conservative" and "a little old fashioned." Many of the AGS retailers that I know are in second and third generations of family and many seem to continue to do things the way that their grandparents did. A BOLD NEW LOOK and LOGO along with new consumer advertising and awareness might help tremendously.
    Great products, great lab....need to re-invent themselves.
     
  10. Karl_K
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    by Karl_K » Feb 10, 2012
    Thanks for checking.
    At that level if your not looking for them you are not likely to find them.
    That is a problem for AGSL.
     
    


    


  11. Karl_K
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    by Karl_K » Feb 10, 2012
    The gold report in my opinion was/is a big mistake and no one on the PS database that I know of uses it.
    I think I have seen 2 diamonds with gold reports posted and talked about here.
     
  12. Karl_K
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    by Karl_K » Feb 10, 2012
    I agree with that!
    We use AGS because we find them to be much more consistent than GIA with many fancies compared to GIA.
    We were getting grades all over the map with GIA compared to what experts who viewed the diamonds graded the stones as being.
     
  13. yssie
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    by yssie » Feb 10, 2012

    That's... disconcerting to read. Karl, is the take-away here that GIA is less consistent wrt grading colour/clarity on fancies - or at least step cuts - than AGS, and that's something for the consumer to be wary of? Or am I barking up the wrong tree?
     
  14. Rockdiamond
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    by Rockdiamond » Feb 10, 2012
    That is an interesting , and I agree somewhat disconcerting statement Karl.
    Who is "we"?

    Which experts, which stones, what kind of discrepancies?
    I look at hundreds of large GIA graded fancies in any given week- my experience is that GIA grading of fancy shapes is VERY consistent.
     
  15. Karl_K
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    by Karl_K » Feb 10, 2012
    I haven't seen a trend of gross over grading so haven't raised an alarm at the consumer level.
    When I talk of consistency it is being able to predict the grade a stone will get.
    It is a little different on the cutter level, Paul discussed it a little in his diamond cutting/cutter article here on PS where a slight shift by the lab cost him a lot. I don't have time to find and link it.
    Will post more later, just saw this and wanted to clear it up.
     
    


    


  16. yssie
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    by yssie » Feb 10, 2012
    Okay, so not for us to worry about then! Thanks for the quick clarification.
     
  17. Regular Guy
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    by Regular Guy » Feb 10, 2012
    Can I ask what may be a naive question.

    Who sends the diamond, generally, to the lab?

    To the extent Karl gives voice, maybe he does so in concert with Jonathan, so it is both.

    Also, of course, anyone can choose to send the diamond to the lab, and maybe a store frequently does it for a variety of reasons.

    But...I thought the old saw we hear on this board....maybe frequently from you, Neil, is that smart guys know who to send the diamond to...that these choices are made strategically. Maybe you're questioning that wisdom.

    If it is the cutter, the tight relationship between the trade and GIA shouldn't matter all that much.

    Then, the cutter judges if it is AGS worthy, and if not, might choose another lab.

    But, if the cutter chooses, and knows the diamond would meet the more stringent criteria of AGS...as the old saying goes that sung here...that's when the diamond is sent to AGS. We do understand it would command a modest premium in earning the zero, yes?

    So, in this case...maybe it's 2% because only that many would make the cut? And life is working like it should?

    But...maybe it is not so simple.

    Unusualy trade members like Jonathan at GOG make it his business to tell you what grade GIA graded stones would have gotten IF sent to AGS.

    To what extent are the relationships David mentions representative?

    Anyway, with Neil asking the question, obviously enough, maybe past assumptions are being questioned.

    But, before questioning the assumptions...I'm writing to make sure we even agree what those assumptions were.


    Ira Z.
     
  18. Ravinmad
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    by Ravinmad » Feb 10, 2012
    Some questions and thoughts that come to my mind reading all of this:

    is GIA what DeBeers was years ago? The powerful, nearly controlling power broker who strong arms everyone, dare I say Monopoly or near Monopoly that runs the roost. I mean DeBeers put diamonds on the map, GIA put the the G.G. after folks name.

    Is there contractual obligatons on getting x number of carats worth of stones graded thru them each and every month/quarter/year? You get a % price cut on your grading so long as XYZ criteria is met.

    IGI and like labs, they are the Yugo of the certificaton word. Sure, you got a cert, but is it worth the paper its printed on? I mean a brown floaty in the punch bowl is still a brown floaty in the punch bowl despite if its got papers or no papers.

    AGS could use some marketing help, some brand reconition, and some exposure. Perhaps they need to do a cities tour and have some "DiamondCON" where folks can buy diamonds at prices thou greater then .com pricing, still are a sufficiently better cost point then Box stores/Chains/etc.

    I dont know the legalities, but a US versus There's ratings campaign on There D is a F/G for us, and this is why ........ might also help
    but I dont know if maybe AGS is afraid or reluctant to flag wave.

    Also, AGS has no links on there site of diamond brokers/dealers/etc that have and display AGS certified stones. I mean BGD/WF/JA/ETC ETC could have links off of site to them, and any local jeweler who carries AGS certified stones. Michigan has 7 appraisers/jewelers listed... The Entire state! and only 2 have links to websites. :((

    Their facebook offering is very light/uninformative, and could have so much more impact with social media. http://www.facebook.com/AmericanGemSociety1934 also note there's nothing about the lab. They have a sweepstakes, and thats very good, but nothing about the labs??????????? Its also claimed to be a non profit? I dont see how you can grow expotentially and maintain that non profit status . I may be wrong, but I have friends or families who've worked for non profits and its a tightrope to walk.

    OK, enough bantering by me. Hope it is meaningful and helps with the actual discussion here.

    Thank you,
    Ravin :D
     
  19. kenny
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    by kenny » Feb 10, 2012
    To get AGS's top cut grade for rounds their customers have to send more rough down the drain than they do to get GIA's top cut grade.

    Few customers understand cut.
    Every customer understands weight.

    Nuff said?
     
  20. Ravinmad
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    by Ravinmad » Feb 10, 2012

    Carats=Cash and we all know cash talks
     
  21. ChrisES
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    by ChrisES » Feb 10, 2012
    I'm new here ...is this much cynicism really justified?
     
  22. denverappraiser
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    by denverappraiser » Feb 10, 2012
    There's perhaps a confusion between AGS and AGSL. This may be part of the problem but I think it's worth some clarification. AGS is a network of jewelry stores. They have been around since shortly after the invention of dirt and they mostly tend to be high end stores of the 'old money' style. I think there are about 5000 member stores currently. It requries an application to join, you have to be vetted and approved to join, and far less than all applicants are accepted. You have to subscribe to their code of ethics, stay current on their training and basically tow the line. It's overall a bit of a chore and a little on the expensive side but it does come with some benefits. The idea was (and is) to have a label for trained, ethical and competent jewelers for the benefit of consumer protection and the mutual benefit of the jewelers. AGSL is a laboratory opened in 1994 that's 51% owned by AGS and 49% owned by private investors. AGS is non profit, AGSL is for profit. They have different employees and are in different buildings although they are located next door to each other in Las Vegas. AGS owns the 0-10 grading scale and the cut grading technology like ASET and PGS and they license them to AGSL. AGS exists by and for the benefit of the membership. AGSL will work equally with anyone in the trade. There's not even a discount for AGS members. Most of their biggest clients aren't even AGS members, including many of the folks who are regulars in this forum and advertisers in the database.

    GIA has a similar shell game going on. GIA is a college from which most of us graduated. GIA Gem Trade Laboratory is a separate entity that's owned by GIA that issues the grading reports that everyone on this board is familiar with. GIA and AGS were both founded back in the 30's by the same guy but for different purposes, neither of which was to grade and report on diamonds. Both are continuing with Shipley's original plan for them and they very complimentary organizations. GIA as a college, AGS as a professional society. GIA got into the grading business back in the 70's and AGS got in in the 90's. GIA-GTL and AGSL are direct competitors in this arena and it's this competition I'm asking about. GIA is kicking their proverbial butts.
     
  23. denverappraiser
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    by denverappraiser » Feb 10, 2012
    Ira,

    My understanding is that the vast majority of stones submitted to ALL of the labs comes from manufacturers.
    This is true of both GIA and AGSL as well as both EGL's and IGI. AGSL does not accept work from the public. GIA does but I don't think it's a significant fraction of their volume. GIA's fees are the same for everyone. AGSL gives a token discount to their biggest clients.
     
  24. Ravinmad
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    by Ravinmad » Feb 10, 2012
    Thanks for clarifying things a bit. I thought the one was a division of the other, it like alot of things in diamonds, has its degree of mystique.
     
  25. jaebond
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    by jaebond » Feb 10, 2012
    One thing that AGS is doing that I think is AWESOME is that they have started putting QR codes on their reports so that you can just whip out your smart phone, scan it and go right to its report online. They also have an app for both iPhone and Android so that you can save your diamond's report and stuff like that. As soon as I propose to my girlfriend, that app is going on her phone and we're getting certification stored on her phone so she can whip it out whenever she wants. I loved the idea of the QR code so much that I e-mailed them about getting a new copy of the report for our diamond with the QR code on it. They were so awesome about everything that they were going to print a new one out and send it to me, even though they don't work with the public (BGD was currently setting my diamond, so they just sent it off to them and I got the new report along with the ring). I was very impressed and love this new feature.
     
  26. Karl_K
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    by Karl_K » Feb 10, 2012
    Paul's article is here:
    https://www.pricescope.com/journal/intricacies_and_risks_diamondcutting
    I think he explains it better than I can.
    Now picture a lab that gives unexpected results batch to batch and sometimes in the same batch.
    There is literally no way to run a business with that.
    AGSL has been more predictable and consistent than GIA with our diamonds.
     
  27. Karl_K
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    by Karl_K » Feb 10, 2012
    It depends, some dealers buy with factory grading and personal inspection then submit it for reports.
    The majority probably buy them pre-graded by a lab these days.
    Due to export laws Jon submits ours to AGSL otherwise we would have to import to US/export back/import to US again which is a real paperwork mess.
     
  28. marcy
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    by marcy » Feb 10, 2012
    I am just a comsumer who happens to really appreciate the cut quality of diamonds that are rated AGS-0. They are harder to find but well worth the search. I would sure hate to see them go away. Off to find the iPhone ap.
     
  29. Jim Summa
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    by Jim Summa » Feb 10, 2012
    Ravinmad,
    I have been in business for 32 years and yes there is always a degree of mystique. Maybe because theres so much to know and a lot of money at stake.

    Neil,
    I looked at a diamond listing service and came up with these #s on Marquise Shaped diamonds;
    GIA....5074
    AGSL..21
    All EGL's...3654

    Pear shaped diamonds,
    GIA...7399
    AGSL..38
    All EGL's...4128

    Jeff,
    Funny thing, around 5 years ago the society did update its logo from the Cloud one with AGS in the center to spelling it out " Member American Gem Society" because their research showed it would help with recognition for the membership. They then told everybody to ditch the cloud one. Problem is everyone sort of liked the cloud one.

    Ira,
    I am a small shop in a medium market with ALOT of diamonds owned locally by consuners that for one reason or another want to sell them. I am AGS-CGA and I sometimes give advice to people about selling their stones. I tell them they don't stand a chance without a report.I tell them GIA is the place to send it unless it can pull an Ideal grade. Guess how many customers stones I have sent to AGSL?

    Something I want to make clear is that I don't want to bash GIA and all the work and research that these people have dedicated themselves to over the years. AGS has an annual "Conclave" (I do like this name) were members go to share information. The folks at GIA do a tremendous job here and the members know it. That being said I do think the Platinum and DQD diamond reports have an informational advantage.

    Neil, it was a journey for me to get "elected" into AGS. I was turned down the first time and sent a letter saying that I didn't get in and if I wanted to know why write them another letter.
    I had it framed for a while to remind myself that always I am a benchman first and proud of it!
    Second time around (after I cooled off...around 10 years later) the Society at this time required 2 letters from other local AGS members. I thought they have GOT to be kidding, that will never happen, but it did....I don't know if this is still a requirement . They do call about prospective members and ask what we think.

    ChrisES,
    "Shopping for a diamond by carat weight is like buying a racehorse by the pound."
    This was quoted in the Boston Herald by a frustrated local diamond cutter named Henry Morse. The year was 1870.
    I am no Henry Morse but I have a long time in the diamond business and have put the effort into education because it was available to me. The way diamonds are cut and presented to the public in 2012 is frustrating and (people in the business) getting a little cynical goes with the territory.

    My own obsevations on whats wrong with AGS lab is absolutley nothing. The Lab asked the membership to use blue marker for plotting eye visable inclusions on its reports and to change the current way of communicating a Fancy Colored Diamonds color to GemDialouge. The Society turned it down but I admire the effort in more and improved information. I understand they are exspanding the lab and I look forward to the research in cut on other shapes I know they are working on.

    And finally Jaebond,
    That is so cool!
     
  30. aljdewey
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    by aljdewey » Feb 11, 2012
    You're essentially answered your own question, Neil. GIA-GTL enjoyed a 20-year headstart as the sole provider of an 'expert but disinterested' opinion about the Cs that affect diamonds' fair market values. This broke new ground in instilling consumer purchase confidence; they had something other than the (vested) opinion of the sellers.

    Even today, a G.G is the widely accepted pinnacle of credentials to attain, and who trains the experts? Yep - GIA. So all the consumer market really knows now is IGI (the lab that chain stores use for run of the mill goods) and GIA, which is trumpeted by fine jewelers as THE authority (and therefore clearly superior lab to IGI).

    To move people off the incumbent now, you'd have to spend tons of time educating the differences between AGSL and GIA-GTL, nuances that hardly matter to most shoppers. It's like trying to split hairs over the subtle note differences in two award winning $10K bottles of wine to someone who's perfectly happy with $25/bottle wines. They know just enough to want more than $2/gallon box wine, but they're perfectly happy with $25/bottle wines.

    You say that many vendors are clamoring for an alternative to GIA, but how many are willing to contribute to helping create that alternative? Will they be willing to take the harder path of carrying less GIA stock and investing more time educating their customers why AGL paper is at least equal (if not superior) to GIA paper? It's harder to put one's bottom line at risk, making it even harder to unseat the status quo dominance of GIA.
     

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