• Industry Analysis: Business Soft in Vegas, but Designers, Luxury Defy Trend
• From GIA Research: Large Coated Tanzanites Lack Typical Identifying Features
• GIA Taking Steps to Respond to Growing Popularity of Colored Diamonds
• Kunz Display Honored at Tucson Gem Show
• Spring Loupe Highlights Scholarship Program
• From GIA Education: Become a Winning Jewelry Designer
• Find a GIA Lab Class in a City Near You

Industry Analysis: Business Soft in Vegas, but Designers, Luxury Defy Trend

Business at the May 30-June 3 JCK Show in Las Vegas was soft, especially for sellers of loose diamonds and gemstones. Orders were stronger at the upscale shows that ran simultaneously, though exhibitors reported that many of their orders were provisional.

Dealers at each of the shows noted that a number of important clients did not make the trip to Vegas, and some exhibitors, expecting a poor season, even cancelled their participation. As a result, traffic was down but buying did go on, albeit at a reduced level.

In general, demand for finished jewelry was down 10% to 15% from last year, even more for commercial-quality loose diamonds and colored gemstones. Companies specializing in the very top end -- colorless diamonds over 5 ct, fancy-color diamonds and unheated corundum -- generally saw brisk business.

One bright spot was designer jewelry, especially at the top end, where a number of exhibitors reported that retailers were looking for eye-catching, fashionable pieces.

DIAMONDS: The talk of JCK was the dramatic increase in prices published in the Rapaport Diamond Report. Exhibitors complained that the rates issued just prior to the show were substantially higher, particularly in large goods. As a result, sellers working with the new list collided with buyers working with the previous one, which reportedly killed a number of prospective deals.

The rising price of large diamonds also fueled talk of speculation. One dealer reported selling a 4-plus ct D-IF diamond to another dealer just before the show for nearly $100,000 per carat -- a price that reflected recent sales at the major auctions.

One prominent banker noted that such interdealing at seemingly unsustainable prices has become commonplace, and warned that buyers looking to hold such stones for a profit "may face a serious market correction."

In general, most diamond exhibitors reported very slow sales at the show, although a number of them noted that buyers flew in from Hong Kong, mainland China, India and even Malaysia to take advantage of the depressed U.S. dollar.

"Without these Asian buyers, we wouldn't have had any sales at all," said one New York diamond executive.

Fancy-color diamonds were strong across the board, even with prices exceeding $100,000 per carat in many cases. A number of independent retailers with wealthy clientele went for the top colors because such goods could not be found on the Internet or in discount stores. Jewelry designers were incorporating lighter colors and less-costly brown hues into distinctive pieces that were relatively affordable.

JEWELRY: The lofty price of gold and platinum tested designers' ingenuity in keeping costs down. Many of them created bold-looking styles with lots of open space, micro-pavé and smaller diamonds (using "light halves" instead of half-carat-plus goods, for example) or using less-expensive substitutes in colored stones. Still, it was difficult to avoid price increases of 20% or more over last year, in a climate where U.S. consumers are being squeezed by the rising cost of essentials.

In the luxury niche, vendors reported stronger-than-expected orders. Some of them noted, however, that many orders were provisional -- subject to cancellation, all or in part, later in the year.

GEMSTONES: Fancy-color cultured pearls were in strong demand, both for untreated goods at the high end and dyed goods at the low end. Pearl prices, while high, have not increased at the rate of top-color diamonds and other gems, according to buyers.

Demand was selective for unheated ruby and sapphire (blue and pink), though they were pricey, while color substitutes such as green tourmaline for emerald were also popular.

BUSINESS: Bankers, examining the nature of several major bankruptcies, are growing increasingly worried about the ease with which jewelry inventories can be shifted internationally. Some banking executives interviewed at the JCK show believe certain companies that have filed for bankruptcy have moved goods to affiliates in other countries to remove them from the court's jurisdiction. As a result, several leading industry banks have tacked a 0.25% surcharge on diamond and jewelry credit facilities as a hedge against such risks.

In addition, the continual lengthening of payments from retailers has caused banks to reduce credit lines to diamond and jewelry clients, even if their accounts are current.

"Banks are no longer lending against most receivables that are more than 90 days old," said one Israeli diamond manufacturer. "That is hurting a lot of people."

Russell Shor
Senior Industry Analyst

[return to top]

Figure 1. These two 3-plus ct coated tanzanites showed few of the visual clues we typically use to identify coated stones. Photo by Don Mengason.

From GIA Research: Large Coated Tanzanites Lack Typical Identifying Features

The following report on a new treatment for tanzanite was provided by Shane F. McClure, director of the GIA Laboratory's West Coast Identification Services.

The coating of gemstones to improve their color has been known for thousands of years, although the typical nonpermanence of the treatment has made it impractical at best and fraudulent at worst. Last year, GIA researchers reported on the emergence of a new generation of coatings -- created using technology from other industries -- that are much more durable than those studied previously (A. H. Shen et al., "Serenity Coated Colored Diamonds: Detection and Durability," Spring 2007 Gems & Gemology, pp. 16-34). That report described colored coatings on diamonds by Serenity Technologies, although we are aware of other companies that are using a similar treatment on diamonds.

During our investigation of these new coating operations in 2006, we also examined some tanzanite that purportedly had been coated to enhance its durability. Based on the samples we examined at that time, the durability problems and ineffectiveness of the coating did not distinguish this technique from most of the coating techniques reported in the past.

In April of this year, however, a Los Angeles colored stone dealer contacted us about a parcel of tanzanite his company had just received from New York. Evan Caplan of Omi Gems said the color did not look right, and when the company had one stone repolished it became significantly lighter. This sounded like a coating, so we asked Mr. Caplan if we could examine some of the stones. Initially, Omni Gems loaned GIA two 3-plus ct emerald cuts (figure 1) and four smaller (4-5 millimeter) rounds. Examination of the emerald cuts at about 10× magnification did not reveal any obvious coating characteristics. Coatings are usually visible in reflected light or by looking through the table of the stone toward the pavilion in transmitted light. The features we typically look for -- iridescence in transmitted light, or gaps or worn-off areas in the coating -- were not immediately evident. In fact, polishing lines were plainly visible on most of the facets.

On closer inspection at higher magnification, however, we observed a number of clues. With reflected light, we saw tiny holes in the coating. These holes seemed relatively sharp-edged, and the coating appeared thicker than we typically see in such material (figure 2). Fiber-optic illumination revealed whitish marks on the surface that looked like dirt but did not wipe off. We also saw several orangy iridescent lines that crossed facet junctions, which were similar in appearance to lines that might be left by a liquid drying on the surface. In addition, there were tiny bright pink to orange flashes of light that turned out to be related to minute areas of damage on the coating.

At our request, Omi Gems sent us 18 more samples, 4-5 millimeter rounds. Each had a depth of color that would be very unusual for tanzanites this small. In addition, when examined with magnification and reflected light, all the stones showed some characteristics that would be associated with a coating: a pale iridescence on the surface, as well as wear at facet junctions or on the culet that is typical of the "paper wear" often present on gems that are stored together in stone papers (figure 3). The worn facet junctions were readily apparent with immersion in water, since they appeared lighter in color than the rest of the stone. All the features observed in the smaller stones are consistent with those reported by the American Gem Trade Association Gemological Testing Center and American Gemological Laboratories in their joint May 23 press release on this new treatment.

Energy-dispersive X-ray fluorescence analysis of several samples showed cobalt as a major constituent of the coatings. This chemistry is consistent with the coatings on tanzanite we examined in 2006. In all 20 samples tested, significant amounts of cobalt were found only on the pavilion facets, not on the crown.

To summarize, it is important to emphasize that these coated tanzanites were sold on the market in New York undisclosed. The smaller stones were immediately suspect because it is very uncommon for tanzanites in these sizes to show such saturated color. All exhibited abrasion on facet junctions or the culet, probably from paper wear, which makes the coating easier to detect. Larger stones that are stored individually, however, may not show these features, and some do not show iridescence in reflected light. Detecting these stones requires careful observation.

More details on the identification of this coated tanzanite are provided in an article that has been submitted for possible inclusion in a future issue of Gems & Gemology.

[return to top]

Colored diamond expert John King speaks to a standing-room-only crowd at GIA's Robert Mouawad Campus in Carlsbad, California, on May 14. Photo by Robert Weldon/GIA.

Friends of Mona Lee Nesseth, a prominent gem dealer and supporter of the GIA Museum, were among those who gathered for the "Facets of GIA" exhibit opening and to attend King's lecture on colored diamonds. Photo by Robert Weldon/GIA.

GIA Taking Steps to Respond to Growing Popularity of Colored Diamonds

The champagne was a treat, but the blues, greens, pinks and "chocolates" held center stage recently as colored diamond lovers gathered to hear John King talk about the growing popularity of the many-hued gem stones.

"Colored diamonds used to be a novelty," said King, colored diamond specialist and technical director of GIA's New York Laboratory. "That changed over a very short time, to where they're [now] a key part of the industry."

King's comments came during the second lecture in the Institute's 2008 Museum Lecture Series, which drew a standing-room-only crowd to the S. Tasaki Student Lecture and Graduation Hall at GIA's world headquarters in Carlsbad, California on May 14. The "Facets of GIA" exhibit, which chronicles the Institute's history and significance through the words and stories of GIA and the people who have shaped it -- illustrated by beautiful gems and jewelry -- also opened that night.

King said that while colored diamonds don't make up a high percentage of gems in the jewelry industry, their allure is hard to miss. He pointed to celebrities such as Halle Berry, who wore a pumpkin-colored diamond ring by Harry Winston when she accepted her Oscar in 2002, and Jennifer Lopez, who received a much-publicized pink diamond engagement ring.

He regaled the audience with examples of notable colored diamonds and reviewed the processes used to grade them, including conditions that affect color observation. He also talked about and showed photos of notable colored diamonds GIA has graded, including the Hope diamond, the pink Agra, the yellow Tiffany, the Incomparable and the Centenary.

The Lab revamped its system for color-grading colored diamonds in the mid-1990s to accommodate the greater numbers and colors that were entering the marketplace. The system is based on the three dimensions of color -- hue, tone and saturation.

"As we began to study what we needed to do, we had to understand how we perceive color," King said. "How can we control the eye? What affects color appearance?"

When evaluating the color of diamonds, he said, a variety of factors can come into play, including light sources, a person's color memory and changes in background. "We tried to look at all these things," King said.

GIA offers two types of grading reports for colored diamonds. The GIA Colored Diamond Identification and Origin Report, known as the color-only report, focuses on the color grade and the origin (natural or treated) of the color. The GIA Colored Diamond Grading Report contains additional comprehensive information such as clarity.

King said that in recent years the Institute has seen a greater proportion of requests for the comprehensive report -- from 57 percent in 1998 to 75 percent in 2003 -- as the value and awareness of colored diamonds have increased.

Victoria Tse, who owns In-Color Diamonds with her husband, Christian, called King's lecture "fabulous," particularly his discussion about the difficulty of grading green diamonds. "It clarified a lot of uncertainties," Tse said. "No one tells us these things. This lecture is something all retailers should hear."

[return to top]

Kunz Display Honored at Tucson Gem Show

The luminous pinks and greens of rare kunzite and jadeite specimens lent eye-catching color to GIA's exhibit at the Tucson Gem & Mineral Show, but it was the depth of the display's educational content that captured the interest and ultimately the recognition of the Friends of Mineralogy organization.

"You can have a beautiful display, but if you educate at the same time, we feel it's more effective," said Virgil Lueth, one of the judges and president of Friends of Mineralogy. The organization advocates the collection of mineral specimens and furthers the recognition of the scientific, economic and aesthetic value of minerals, he said.

GIA's artistically designed exhibit, which used a combination of text, pictures, antiques and colorful minerals to highlight the contributions of legendary gemologist and author George F. Kunz, was named as "Best Educational Exhibit" (by an institution) at the show, which was held Feb. 14-17.

The award, a first for the Institute, hangs in the office of Dona Dirlam, director of the Richard T. Liddicoat Gemological Library and Information Center in Carlsbad, California. It's unique, she said, because it's an affirmation from the public and professionals.

"Part of what has been a challenge for mineralogists is for them to recognize gemology as a science," said Dirlam, who spent hours designing the case and securing the artifacts with Library staff members Cathy Jonathan and Caroline Nelms. "So for gemology to be recognized at what is primarily a mineral show is significant," she said.

Lueth said there's no entry process associated with the award; the winning education exhibit is chosen by the judges after viewing all of the displays. "[GIA's] was attractive and it had a very strong educational component about mineralogy or gemology, and that's the criteria we use," Lueth said.

[return to top]

Spring Loupe Highlights Scholarship Program

The Spring 2008 issue of the award-winning The Loupe: GIA World News is now available with a focus on the success of the Institute's scholarship programs, an overview of the Tucson gem and mineral shows, a photo essay on Chinese freshwater cultured pearls and the career paths of two successful jewelry designers.

Scholarship recipients share their stories and their gratitude in this issue's cover story. Carly Gerrity, a Graduate Gemologist and Graduate Jeweler since 1998 thanks to the James R. Lucey Scholarship, graces the magazine's cover and tells how her time at GIA led to her job with jeweler Robert Lee Morris. You'll also find a list of 2008 scholarships and their recipients and learn how to apply for those offered in 2009.

"Tucson 2008 Roundup" looks at gemstone prices, the popular sellers and how exhibitors and dealers made out during the gem and mineral shows this year. Also, see photos from GIA's annual alumni dinner and dance party and view in-kind donations the Institute received at the show.

Learn how local volunteers help GIA carry out some of its most important programs, view Native American jewelry on loan from a student and see part two of the Course Development department's exploration into the Chinese freshwater cultured pearl industry. Readers will also get a behind-the-scenes look at how GIA staff gathers information and assembles podcasts for students to access through GIA on iTunes U and learn how two jewelry designers took their businesses from start-up to stardom.

Also in this issue, articles present the issues of fair trade gemstones, the future of diamond prices and the value of networking.

To sign up for a free subscription to The Loupe: GIA World News, e-mail LoupeSub@gia.edu. You can also read copies of the magazine online.

[return to top]

Jewelry Design student Jung hoon Lee impressed his instructor and classmates with this spectacular rendering of a ruby, garnet, diamond, platinum, and gold necklace with a fish pendant. © Jung hoon Lee.

From GIA Education: Become a Winning Jewelry Designer

Thousands of students have completed the nine weeks of intensive training to earn their Jewelry Design certificates since GIA implemented its Jewelry Design course more than two decades ago. The course provides a solid foundation of design and rendering skills you can use in a variety of careers from jewelry sales to custom design. The program is completely comprehensive; no previous drawing experience is required to enroll. Even complete novices will walk away with a portfolio of 20-plus hand-drawn renderings to impress prospective employers and clients.

You'll be taught the fundamental skills needed to render jewelry metal and gems in the first few weeks, beginning with a graphite pencil and soon working your way up to colored pencils and paint. You'll learn to illustrate, shade, paint and highlight faceted stones, cabochons, pearls and phenomenal stones set in both white and yellow metals. Next, you'll discover how to use principles of design such as line, shape, texture, space and color. You'll also explore the history of jewelry design, including the major period styles and their characteristic motifs. Creative design projects include a pendant, pieces for a pearl competition, a bridal set and jewelry based on symbolism. You are only limited by your imagination.

A design show held on campus prior to completion of the course is one of the most anticipated events in every Jewelry Design course. "The design shows are a highly anticipated event here, not just for the free cookies, but the students get to see their fellow students succeed," says Mark Maxwell, a Jewelry Manufacturing Arts instructor. "They know how hard it is to create something from nothing and the results are always impressive."

For many of the students, the show is a debut that offers a first step to show off their creations to the real world. "Many family and friends admire the "fruits of their labor" from this intense class," adds Jewelry Design Instructor Robert Ackermann.

The show also gives students a taste of design competition: one student will win the Students' Choice Award, which can serve as recognition on a resumé when you're ready to launch your career. Several graduates have gone on to great success, including Carly Gerrity, director of product development for New York designer Robert Lee Morris, and Carley McGee-Boehm, a second place winner in the 2008 AGTA Spectrum Awards^TM.

This course also gives you the opportunity to interact with students from across the globe and with all levels of experience. The ability to communicate effectively with a pencil and through a network of contacts is a winning attribute for any jewelry designer. Learn more about GIA's Jewelry Design course.

[return to top]

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. Enroll today. Space is limited.

GIA Lab classes starting in June and July 2008 are:

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

[return to top]