• Industry Analysis: Fuel Costs, Unrest Hit Colored Stone Supplies
• From Gems & Gemology: Summer Issue Features Koh-i-Noor Diamond, Coated Tanzanite
• GIA Welcomes Three New Board Members
• Gold Takes Center Stage in "Facets" Exhibit
• Designer Contributes Space-, Nature-Inspired Pieces to Brazilian Collection
• GIA Offers Options for Students to Finish BBA, JBM Programs
• Price Elasticity: How Shifting Prices Affect Demand for Jewelry
  
• Brush Up on Your Executive, Marketing Skills at GIA New York
• Find a GIA Lab Class in a City Near You
  

Industry Analysis: Fuel Costs, Unrest Hit Colored Stone Supplies

A combination of soaring mining costs and instability in key gem-producing countries has cut supplies of colored gem rough to critical levels, say dealers and manufacturers in Thailand.

Governments around the world have reduced or ended fuel subsidies to local industries. In countries such as Sri Lanka, Myanmar and Brazil, this has hit mechanized mining operations hard, causing many to suspend activity or close completely.

"Very little is coming through," said one Chanthaburi dealer, who had recently returned from Sri Lanka. "Things have become very quiet in this city, and prices of [quality] ruby and sapphire keep rising. Right now, we are relying mainly on supplies from Tanzania."

In addition, much of Myanmar's interior remains paralyzed after a devastating cyclone earlier this year. As a result, very little high-quality ruby and sapphire are coming out of the country, dealers said.

And in Madagascar, the government has halted all gemstone exports since the spring theft of a major stone, which remains unsolved. A delegation of Thai gem manufacturers and trade officials went to Madagascar in mid-July to ask the government to resume gem exports. No report on the results of the meetings was available at publication time.

A number of Thai dealers said they would rather suspend or reduce trading than compete for inventory, because they fear prices will subside once Madagascar reopens its exports and mining operations resume in other countries.

"Right now," said one dealer, "there's a feeling that everything is overpriced, and we cannot afford to be stuck with such goods if prices fall."

DIAMONDS: The De Beers Diamond Trading Company (DTC) raised prices an average of 5% for its July 7-11 sight. Other key producers such as Rio Tinto and Russia's Alrosa followed suit.

All told in 2008, the DTC has raised prices an average of 13.5% as manufacturers continued to bid up sight boxes, particularly in goods that will polish out to 3 ct or larger. Such stones have been commanding high premiums for most of the year.

The July sight was strong, estimated at $775 million, and there are indications that the DTC sold additional allocations of large goods to certain clients.

Bloomberg News reported that average price gains of 76.5% this year for top-quality diamonds over 5 ct are "drawing interest from wealthy investors and structured investment funds."

The article quoted executives from Graff Diamonds and Christie's International as saying that extremely wealthy individuals have begun investing in diamonds, with Christie's noting the rarity of top stones as one attraction: "only 200 D-IF diamonds over five carats are discovered each year."

Yet one large-stone fund, Diamond Circle Capital, raised less than half its expected $150 million in capital after launching in London at the end of June.

While Indian diamond manufacturers continued their strong demand for rough, labor unrest in the state of Gujarat, where the industry is concentrated, caused many operations to shut down for as long as six days. Indian workers went on strike for wage increases as manufacturers, beset by shrinking profits, were accused of reneging on increases granted during previous negotiations.

India's Gem & Jewellery Export Promotion Council noted that workers were seeking new pay increases of 10% to 20%.

The Council added that the situation has calmed and the diamond industry would look into reforming labor practices, particularly among smaller operations that typically see high employee turnover.

While the bigger shops, especially around Surat, are highly automated, the smaller manufacturers often depend on large numbers of workers who are paid by the piece.

RETAIL: The U.S. Department of Commerce reported that department store sales, adjusted for inflation, declined 3% during the first half of 2008, while June sales were off 1.3%. Non-store sales, which include online retailing, rose 7% during the first half of the year.

Discount stores, however, showed greater-than-expected sales gains, said economists, because shoppers were bargain-hunting and spending their tax rebate checks on necessities.

Russell Shor
Senior Industry Analyst

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The Summer 2008 issue of G&G mailed today.

From Gems & Gemology: Summer Issue Features Koh-i-Noor Diamond, Coated Tanzanite

Plus: Norwegian Emeralds and Two Topaz Treatments

The Summer 2008 issue of Gems & Gemology (G&G), which mails today, features a replica of the original Koh-i-Noor diamond, a study of emeralds from a historical Norwegian deposit and investigations of a new tanzanite coating and two topaz treatments.

Leading the issue is Scott Sucher and Dale Carriere's "The Use of Laser and X-ray Scanning to Create a Model of the Historic Koh-i-Noor Diamond." The original Koh-i-Noor, which was owned by a succession of rulers across Asia for hundreds of years before it became part of the crown jewels of England, was recut from 191.03 ct to 105.6 ct in 1852. The authors, using photographic and scanning methods applied to a plaster cast of the original stone, fashioned a cubic zirconia replica that recreated its surface topology and optical performance.

"The Koh-i-Noor is one of the world's most famous diamonds, a legendary stone with a rich history," said G&G Editor-in-Chief Alice Keller. "By using modern technology to create both a computer model and a CZ replica of the original diamond and analyze its cut, the authors have made an important contribution to the history of gemology."

In "Characterization of Emeralds from a Historical Deposit: Byrud (Eidsvoll), Norway," Dr. Benjamin Rondeau and a team of co-authors reveal the distinguishing gemological, spectroscopic and chemical characteristics of gems from this classic locality.

The Summer issue lineup also includes two brief articles. First, Shane McClure and Dr. Andy H. Shen of the GIA Laboratory describe a new tanzanite coating and the identification clues provided by microscopic examination and spectroscopic analysis. Then, Dr. Harald Gabasch and co-authors examine the coloring of topaz by two surface-treatment methods -- coating and diffusion -- that have become viable alternatives to irradiation.

The Lab Notes section presents recent discoveries from the GIA Laboratory, including gem-quality CVD synthetic diamonds with traces of boron, bleached Pinctada margaritifera cultured pearls in non-"chocolate" colors and a filled diamond with very subtle flash-effect colors. Highlights from Gem News International include new rubies and yellow danburite from Tanzania, "red andesine" from China, a new source of Persian turquoise and a variety of tourmaline imitations sold in Afghanistan.

Purchase the Summer 2008 issue or subscribe to G&G today. Contact Circulation Coordinator Debbie Ortiz by calling toll-free (800) 421-7250, ext. 7142. From outside the U.S. and Canada, dial (760) 603-4000, ext. 7142.

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GIA Welcomes Three New Board Members

Jeffrey H. Fischer, James P. Shinehouse and Ephraim Zion -- leaders in jewelry and business -- have been elected to GIA's Board of Governors.

"We welcome Jeffrey, James and Ephraim to our board," said Helene Fortunoff, chair of the Institute's Board of Governors. "We look forward to working with them as they apply their unique mixture of wisdom and experience to help fulfill the Institute's nonprofit mission to educate the public about gems and jewelry."

Fischer and Zion come to GIA from influential positions in the jewelry industry, while Shinehouse brings expertise in international business restructuring. They assumed their duties at the May Board of Governors meeting in New York.

Ralph Destino, chairman of GIA, said he is looking forward to working with each of the new board members. "Their expertise within the industry and in the world of international business will be invaluable to the Institute as we look to achieve rapid international growth and broaden the range of services we offer clients around the world."

Fischer is president of Fischer Diamonds, Inc., in New York City, where he is based, and of Fischer Diamonds Ltd. in Israel. He is also president of the International Diamond Manufacturers Association, vice chair of the World Diamond Council and a board member of the Jewelers Vigilance Committee. He is past president of the Diamond Manufacturers & Importers Association of America, among many other activities.

Shinehouse is a managing director at Kroll, a wholesale-only supplier of personal public safety, law enforcement and homeland security products, and the U.S. practice leader for its European-based corporate restructuring business. His specialty is helping North American businesses improve corporate performance and serve international clients. He also leads complex forensic accounting investigations and transactional due diligence projects and is regularly hired as an expert witness. Shinehouse joined Talbot Hughes McKillop in 2003 and headed its U.S. practice until 2005, when it was acquired by Kroll.

Zion set up business in Hong Kong in 1971 and has become one of Asia's leading dealers of large and fancy-colored diamonds. As managing director of Dehres Ltd., a major manufacturer of fine diamond jewelry, he has expanded the company internationally, with offices in New York, Tel Aviv, Shanghai and Thailand.

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GIA's assistant curator, Mark Mauthner, will display this crystallized gold specimen during his Aug. 29 lecture. It is similar to the crystallized gold specimens that will be featured beginning Aug. 4 as the central display in the "Facets of GIA" exhibit. Photo by Mark Mauthner.

Gold Takes Center Stage in "Facets" Exhibit

The "Facets of GIA" exhibit will get a fresh look in August with a glittering display of crystallized gold. Another rare book from GIA's Richard T. Liddicoat Gemological Library and Information Center will also be rotated into the exhibit.

Mark Mauthner, the Institute's assistant curator, says a number of California gold specimens will be featured in the new central display, which opens Aug. 4 and replaces the "Aurora Butterfly of Peace."

Mauthner will speak about crystallized gold and how this precious metal has shaped the human experience in a presentation titled, "The Age of Gold: A Natural and Human History," on Aug. 29 as part of GIA's 2008 Museum Lecture Series.

The "Facets of GIA" exhibit, which runs through April 30, 2010, is a stunning educational experience that is the first of its kind for the Institute, says Museum Director Elise Misiorowski. It features more than 30 jewelry pieces and mineral specimens, including an emerald and diamond necklace and earrings designed by Jean Schlumberger for Tiffany & Co. circa 1950, and a 10 ct Brazilian Paraíba tourmaline set in a platinum and diamond ring.

In addition to the new central display, August marks the exhibit's first rotation of rare books. Les six voyages de Jean Baptiste Tavernier, published in 1678, will make way for John Mawe's Travels in Brazil (1812). The latter, compiled from 1809-1810, is one of the earliest firsthand accounts of the Brazilian gold, topaz and diamond districts.

Each book that goes on display will correspond to the most recent lecture series and will come from GIA's Library, the largest collection of gem and jewelry books in the world, which includes the Cartier Repository and Rare Book Archives.

Rose Tozer, GIA's senior research librarian, says the books bring an extra dimension to the lectures and are rotated about every two months to preserve them. "We don't want to keep any one book on display for too long," she said, because propping them open is hard on the binding. "We want to expose the pages to as little light as possible, even though it is indirect light."

For more information on individual and group tours, contact Guest Services by e-mailing guestservicesmailbox@gia.edu or calling (800) 421-7250, ext. 4116. Outside the U.S. and Canada call (760) 603-4116. Photo identification will be required for entrance to the campus.

To learn more about the Richard T. Liddicoat Gemological Library and Information Center, visit the Web site, e-mail library@gia.edu or call (800) 421-7250, ext. 4046, or (760) 603-4046 in Canada or outside the U.S.

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Citrine and gold combine to create Gotthilf's "Pluto Ring," which is modeled after shapes found in outer space. Photo by Robert Weldon.

Gotthilf's "Jóias do Cerrado" earrings were inspired by lush Brazilian countryside in the Cerrado region. Photo by Robert Weldon.

Designer Contributes Space-, Nature-Inspired Pieces to Brazilian Collection

GIA's Brazilian Jewelry Collection continues to grow, thanks to a donation by designer Patricia MB Gotthilf at the Las Vegas summer shows.

Her "Pluto Ring," made of citrine and gold, was inspired by her fascination with the stars and the cosmos. It is part of her Kosmos Collection, which features pieces based on planets, asteroids and star shapes.

"The gems [in this collection] are usually displaced and seem to be floating in air," said Gotthilf, who studied art and design in São Paulo and trained with a master goldsmith before venturing into her own design career in 1995.

Kimberly Vagner, GIA's project manager of In-Kind Gifts, said Gotthilf's ring is a welcome addition to the Brazilian Jewelry Collection, which debuted in 2006.

"I'm delighted to see that Brazilian designers are still coming forward and donating pieces to our growing collection," Vagner said. "We are privileged to have a collection in place that showcases the creativity and beauty of Brazilian jewelry."

Gotthilf also donated her "Jóias do Cerrado" earrings to GIA's collection in 2007.

"My earrings refer to equipment used in the tillage process. They are made of recycled pink peroba, which is a kind of wood found in tropical forests, and each has a tourmaline on top and many small colored gems hanging from the bottom," the designer said. Gotthilf is inspired by Brazil's natural environment, and often incorporates organic elements such as bones, seeds, wood and leather into her designs.

Gotthilf said she is proud to be part of a jewelry collection that helps promote public awareness about the aesthetics, culture and colors prevalent in everyday life in Brazil.

"It is very important for me to take part in this collection because GIA is one of the few institutions focused on raising the standards of the entire jewelry trade," Gotthilf said. "For me, it is an honor to join a collection featuring pieces donated by Brazil's top designers, and it is a good opportunity to acknowledge the creativity that has caught the eye of so many around the world."

Her pieces went on view with the rest of the Brazilian Jewelry Collection this month at GIA New York.

For more information about making a donation to the Brazilian Jewelry Collection or other GIA collections, contact Kimberly Vagner at (760) 603-4150 or kimberly.vagner@gia.edu.

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GIA Offers Options for Students to Finish BBA, JBM Programs

GIA is closing its Los Angeles campus Nov. 14 and discontinuing its Bachelor of Business Administration (BBA) and On Campus Jewelry Business Management (JBM) programs. Students currently enrolled in the BBA program will have the opportunity to complete their coursework by March 2010; the Institute will continue to offer its online JBM program.

The decision to end these programs was not made lightly, said GIA President Donna Baker. The ongoing economic downturn affecting schools and universities across the nation continues to impact enrollments in the BBA program, preventing the Institute from covering the costs of providing the superior education it is known for.

Students and new enrollees at GIA's Los Angeles campus can continue to take select programs, courses and Lab classes through Nov. 14, and at GIA campuses worldwide or through Distance Education after that date. For more information, visit the Class and Lab Schedules page or contact the Los Angeles campus for availability and registration. Los Angeles students should consider attending GIA's Carlsbad campus, located about 90 miles south.

The specifics of the School of Business changes are as follows:

BBA Program -- Starting with the Summer 2008 term, the Institute is no longer accepting new students for the BBA program. Students who are already enrolled or have been accepted into the BBA program will be able to attend classes on campus and online through December 2008. As of January 2009, all business courses will be offered online only.

Online courses for the BBA program will be offered through the Winter 2010 term, which concludes March 28, 2010. This will be the last date for coursework to be completed for the BBA degree. This schedule gives online BBA students seven quarters to complete their remaining requirements; students may have to take multiple courses per term.

JBM On Campus -- New On Campus JBM students can enroll for the Summer 2008 term, provided they complete their required eight courses by the end of the Fall 2008 term, which concludes Dec. 19. Students must attend GIA full time (four courses per term) during the Summer and Fall 2008 terms to earn their JBM diploma on campus.

JBM Online -- New students are being accepted into the online JBM program and may continue to take the required courses, along with a selection of electives, to complete the eight courses needed for the diploma.

The JBM diploma and BBA degree are conferred by the Institute; the credentials remain fully accredited and are backed by GIA's worldwide reputation as a high-quality educational institution.

For questions about the Los Angeles campus, call (866) 702-2088 or (310) 670-2100, or e-mail LAEdu@gia.edu. For information on the School of Business or BBA or JBM programs, contact GIA Admissions at (800) 421-7250, ext. 4001. Outside the U.S. and Canada, call (760) 603-4001 or e-mail admissions@gia.edu.

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Price Elasticity: How Shifting Prices Affect Demand for Jewelry

Americans have witnessed a dramatic increase in gas prices over the past year. While some have lowered their demand by taking extreme measures such as trading their vehicles in for hybrids or relocating closer to work, others have simply started carpooling, biking to work, combining errands into one trip or reducing summer travel plans.

Still others, who seem unaffected by the high gas prices and have not changed their consumption at all, likely appreciate the lighter freeway traffic, not waiting in line at the gas pump and the incredible offers at car dealerships. In short, dramatic change in a product's price affects individuals differently. In economics this is called "price elasticity," the measure of the change in demand for a product or service in response to a change in its price.

Here are levels of price elasticity and examples as they relate to jewelry:

Relative inelasticity -- When no substitutes exist for a good or service. As the price increases, demand remains relatively the same because consumers have no choice in their selection -- they cannot avoid purchasing that product or service. Examples: engagement bands, diamond rings or branded jewelry.

Perfect inelasticity -- When changes in the price do not affect demand for a product at all. Examples: estate pieces or jewelry with sentimental value.

Relative elasticity -- When a product or service offers many substitutes. Consumers can easily switch from one good to another if the price increases slightly. Examples: jewelry pieces in general.

Perfect elasticity -- When any increase in price, no matter how small, causes demand for a product to drop to zero. Examples: generic costume jewelry or generic gold.

In general, the demand for branded jewelry tends to be relatively inelastic. People still purchase it when prices increase. If the jewelry pieces are highly exclusive and ultra-luxurious, they will most likely have a perfect inelasticity of demand and will continue to sell regardless of the price tag. To some extent, store loyalty may also contribute to price inelasticity.

The average buyer shopping for generic jewelry will express a relative elasticity of demand. When prices increase, this shopper will most likely switch to another product, retailer or channel of purchase. And the ultra-penny-pinching consumer's demand will be perfectly elastic, as he or she will cease to purchase a good when the price goes up.

As a jeweler, it is critical to identify the price elasticity of your target market. Knowing how your customers' demand changes when the price of your merchandise changes gives you the ability to price your products accordingly and carry merchandise that will make it possible for you to profit when prices shift up or down. At the end of the day, your mission is to find those products that are either relatively inelastic or, ideally, perfectly inelastic for your target customer.

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Brush Up on Your Executive, Marketing Skills at GIA New York

The Executive Training Program, held at GIA New York, is a two-week boot camp about running a successful jewelry business. Designed to keep you up-to-date and competitive in today's rapidly changing global marketplace, the program offers advanced coursework based on the jewelry industry and academic fields. You'll develop strategies to improve market share, enhance your sales and merchandising methods and build leadership techniques.

Tuition: $990
Dates: Aug. 18-28 (6:30-9:30 p.m., Monday through Thursday for two weeks)
What you earn: Letter of completion

Reserve your space today. Or for more information, email us or call (800) 421-7250, ext. 4001. Outside the U.S. or Canada, call (760) 603-4001.

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Students gain the practical experience needed to succeed in the jewelry industry in GIA's Lab classes. These classes also provide the perfect opportunity for those already established in the trade to refresh important gemological skills. Space is limited. Enroll today.

GIA Lab classes offered through August 2008 are:

Apply online, e-mail GIA Education or call (800) 421-7250, ext. 4001, for more information. Outside the U.S., call (760) 603-4001.

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