Previous month:
April 2008
Next month:
June 2008

5 posts from May 2008

Round Diamond Prices Up 8.5% Already This Year

Rough_diamonds Even though there is a softening of the Unite States diamond retail market, prices of diamond are continuing up due to increases in rough diamond prices.  Prices for rough diamonds this year through the May De Beers sight distribution are up 8.5% overall and over 25% over the past 12 months.  However, most of the price increases were for high clarity and larger carat weights (those that will be finished to 2-carat weight).

One of the reasons that diamond prices is continuing to go higher is that the worldwide demand for diamond jewelry is still growing, thanks in part to an exploding Chinese jewelry market.

While the price increases for rough diamonds mean higher prices for consumers, it is the middle of the diamond distribution pipeline that are getting hurt the most.  The diamond cutters and wholesalers are often not able to pass on all of their cost increases and become susceptible to cash flow shortages.  For many of these diamond cutters, survival will depend on whether they can pass these cost increases to retailers and what financing support they can get from banks.


Laser Drilled Diamonds

Laser_drill_hole2aOne treatment to enhance the clarity appearance of a diamond is laser drilling, which consists of using a laser to bore a hole in a diamond.  The hole, resembling a wormhole, is used to reach a dark crystal so that acid can be injected to bleach the inclusion and make it a lighter color. 

Laser_drill_hole4aLaser drill holes are usually easiest to see from the side of the diamond.  The “wormhole” extends from the surface in a straight line down to the target inclusion.  The hole on the surface can often be felt if explored with a sharp pick or needle.

Sometimes the laser drill hole is then fracture filled with a liquid glass-like material to make the hole less visible.  Fracture filling is also used in diamonds without laser drilling when it is injected into fractures that reach the surface (feathers).  Companies that perform fracture-filling market themselves as being better than their competitors are, based on the proprietary formulas they use for the filler substance.  Most fillers react to heat, light, and other conditions, thus changing color or becoming more visible over time.

Laser_drill_hole5a_3It is critical that laser drilling be disclosed to the consumer, even though the Federal Trade Commission Guides for the Jewelry Industry do not require disclosure.  Therefore, it is up to the diamond suppliers (wholesalers and retailers) to ensure that this treatment is properly communicated, especially to the consumer.

While the purpose of laser drilling is to improve the appearance of the diamond, there is still much debate over how to price these diamonds.  Obviously, the biggest danger to the public is if they purchase a diamond that has been laser drilled without being informed of the treatment.  Most consumers do not inspect their diamonds under a microscope and are relying on the word of the retailer or on the report from a grading laboratory.  The best protection to avoid laser-drilled diamonds is to purchase GIA graded diamonds because the GIA always indicates on the Diamond Grading Report if a diamond has been laser drilled.  Laser drilled diamonds should be properly disclosed and sold at a lower price.  Since most knowledgeable diamond shoppers avoid laser-drilled diamonds, they become very difficult to resell.

The laser drilling is not to be confused with laser inscription, which is the etching of the certification number on the diamond for identification purposes.  The laser-drilling process actually bores a hole into the diamond, while laser inscribing only darkens a thin layer of carbon molecules on the surface of the diamond and does not damage the diamond.


Diamond Laser Inscriptions

Laser inscriptions are messages, usually grading report numbers, inscribed on the girdle of the diamond.  The process uses a very precise laser beam to transform the micro thin layer of diamond from its transparent form to an opaque carbon (graphite) form that is visible under magnification.

Today’s laser inscription technology uses a “cold laser” process that utilizes the short wave length of light and thus has no thermal effect on the diamond.  This safe process will not chip, fracture, or otherwise damage the diamond while providing great control over the precision, contrast and depth of the marking.

Because diamond laser inscriptions can use any text, font, symbols, or artwork, they provide great flexibility for identification and marketing efforts.  The laser inscriptions are so small that they are not visible to the eye.  They are visible using 10x magnification, but are usually more readable with 20x or greater magnification.

Gia_16986791smThe most common use of diamond laser inscriptions is to label the diamond with the certification number for the grading laboratories’ diamond grading reports.  Since laser inscriptions can be applied by anyone with the inscription equipment, there have been some rare cases of fraud.  Usually this can be avoided by simply cross-referencing the inscription number with the grading laboratory’s database.  For the GIA numbers this information is available at http://www.gia.edu/reportcheck/.  If the laser inscription was done prior to or during the inspection at the grading laboratory, the laser inscription is usually indicated on the actual diamond grading report.  Sometimes the laser inscription is applied after the grading report, in which case the certification would not make note of the laser inscription.

Nenoirlaserinscription2aThe Canadian diamond industry has made use of laser inscriptions to differentiate their diamonds from other sources.  Many of the diamonds mined in Canada are laser inscribed with a marketing trademark, a “Canadian Product” notation, or a unique serial number including a code for the particular mine where the diamond was extracted.Canadian_product_inscription2sm 

These laser inscriptions aid in identifying the diamond but are a valuable marketing feature for those diamond shoppers looking for something a little special or requiring a diamond from Canada.

Princecut_005423sm Some branded diamond shapes or retail chains are using the laser inscription to market their diamonds as illustrated by the PrinceCut inscription photo on the right.  For the branded diamond shapes, the laser inscription provides a validation that the diamond is the branded or patented cut.

Gia_16108800_hasmAnother common use for diamond laser inscriptions is to indicate if the diamond displays a Hearts & Arrows pattern.  Since there are no industry wide standards for “grading” the Hearts & Arrows pattern, it is up to the owner of the diamond to determine if the pattern warrants an H&A laser inscription.  It has been our experience that some of the diamonds laser inscribed H&A have marginal Hearts & Arrows patterns while many diamonds displaying beautiful H&A patterns are not laser inscribed.  Grading laboratories do not determine H&A grades and many diamond wholesalers do not even own an H&A scope, let alone examine every round diamond they own so H&A inscriptions are somewhat hit and miss.

TencommandmentsdiamondSince laser inscriptions can include any text or artwork, they can be used for personal messages.  One diamond cutting company, Trillion Diamond Company, used laser inscription as part of their patented Ten Commandments Diamond®

While a personal laser inscription could be a romantic touch to a diamond gift, the personalized message becomes a liability if the diamond ever needs to be sold again.  Not many diamond shoppers want a diamond with someone else’s names and wedding date inscribed on it.  A skilled diamond cutter can polish off the laser inscription but that requires additional time, effort, and expense and has the potential of changing the weight of the diamond.

While diamond laser inscriptions are a nice feature for identifying a diamond and we wish all diamonds were laser inscribed with their certification numbers, most diamonds (especially the bigger, more expensive stones) are not laser inscribed and there are other ways to identify a diamond.  With most diamonds, it is easier to see the unique "fingerprint” of inclusions than it is to read the laser inscription with a 10x loupe and few consumers have high powered microscopes necessary to read the laser inscriptions.


PrinceCut Diamond Shape

Pc_156_ct_143_ratio5a_2 For diamond shoppers who like the shape of the emerald cut but would like to have more sparkle, yet not as much as the radiant cut, the PrinceCut diamond shape is a great option.

The PrinceCut, patented by the Avi Paz Group, was designed to be an improvement on the traditional emerald cut.  With 111 facets, compared to the emerald cut’s 57 facets, the PrinceCut has a much greater brightness and fire.  The PrinceCut® received international patents and a U.S. patent in August 2000.

The mesmerizing facet pattern of the PrinceCut diamond produces an ever-changing kaleidoscope of alternating reflections and flashes of rainbow colors.  The rectangular shape is stunning as a solitaire setting but also is beautiful in a three-stone ring.

Learn more about PrinceCut diamonds...


De Beers Role Has Changed

De_beerscompany In discussions with clients the past few weeks, I have spent considerable time discussing the changes in the diamond industry, especially the role of De Beers.  The topic typically comes up when the diamond shopper makes a comment about De Beers owning vast supplies of rough diamonds and keeping diamond prices artificially high.

It becomes obvious that the average consumer is basing their perceptions of the diamond industry on stories that are now decades old.  Those of us who work in the industry every day are well aware that the industry has seen dramatic changes.

Botswanajwanengmine_3 For about 100 years, De Beers operated a near monopoly by either mining or buying as much as 70% of the world’s rough diamond supply.  They did use their stockpiles of diamond to control the supply and thus the price of diamonds, keeping the industry stable during times of widely fluctuating demand and production.  A byproduct of the tight De Beers control was that they ensured the bulk of the profit left the country where the diamonds were mined as quickly as the diamonds were moved to London for sorting and marketing.

In the last decade, De Beers has dramatically changed their business model under the direction of Gareth Penny, the current managing director.  Today, De Beers only manages the diamonds it mines, which totals about 40% of worldwide production.  That means other companies market 60% of the world’s rough diamonds.  The vast stockpiles of diamonds are long gone with only enough diamonds kept to keep the pipeline of diamonds moving fluidly.

Botswanadiamondsorting One of the other big changes is in how De Beers and the rest of the diamond industry are attempting to improve the lives of the miners and compatriots in the countries where the diamonds are mined.  There is no better example of this change than in Botswana.  The mines have long been operated as a equal partnership between De Beers and the government of Botswana but now the country is getting even more benefits.  De Beers has moved its diamond sorting operation from London to Gaborone, the capital of Botswana.  The new facility will employ 500 Botswana workers and generate another 2,500 support and related job, including 16 cutting and polishing factories built around the new sorting plant that will process about 22% of the world’s production.

The economic growth and governmental stability of Botswana have not gone unnoticed by other diamond producing countries, especially in Africa.  The De Beers/Botswana model is likely to be implemented in other countries and is expected to continue the ongoing positive change within the diamond industry.