• President's Message: 2008 Industry Outlook
  
• Industry Analysis: Holiday Report - Chains Decline, Internet Gains
  
• From Gems & Gemology: Winter Issue Features Newest
  CVD Synthetic Diamonds, Zambian Tourmaline
  
• New Retailer Support Kit Includes Essential Diamond Info
  
• Tucson 2008: GIA Offers Seminars, Presentations and Special Events
  
• GIA Presents Annual Staff of the Year Awards
  
• From GIA Education: Colored Stone Grading Terms Will Help Your Sales
  
• GIA 2008 Education Viewbook and Catalog - Available Now!
  
• Reserve Your Seat in One of GIA's Lab Classes
  

GIA President Donna Baker. Photo by Michael Justice/GIA.

President's Message: 2008 Industry Outlook

As we welcome the new year, I am confident GIA is stronger and in a better position than ever to address the constantly changing dynamics of the gem and jewelry industry. Each of us will be challenged to keep pace with the rapid changes in technology, education, communication, and most of all, globalization, but I can assure you that GIA is committed to addressing these needs and opportunities as they develop in the coming year.

As in 2007, our key goal will be to continue to serve our customers better and more efficiently. We launched several new initiatives to address customer service issues for Laboratory clients, students and alumni last year, and plan to make further strides in 2008.

One of those initiatives will be to make more of our Education courses available online. This will give us an opportunity to integrate all kinds of components - text, still photos, audio and video - in a complete package that we can deliver to a wider audience more efficiently. And, if economic predications are correct, it will become increasingly important that your staff is well educated and prepared.

We are also aggressively laying the groundwork to better serve our international customers. This strategy will enable us to continue to find even better ways to serve our loyal clients and make it possible for us to capitalize on new concentrations of wealth in areas such as India, China and the Middle East. Those areas are still experiencing double-digit growth of about 20 percent, and we expect that to continue well into 2008, barring any major political upheavals, of course.

All of our initiatives are developed with the goal to preserve our standards of excellence and integrity - the core of our nonprofit mission. We must provide gemological education to as many people as possible, run as many gemstones as we are able through our labs, stay abreast of treatments and synthetics and continue to set and maintain the highest gemological standards.

We do this in the name of our founding fathers, Robert M. Shipley, Richard T. Liddicoat and G. Robert Crowningshield, who believed that every person who buys a piece of jewelry or gemstone has the right to know exactly what they are getting. We intend to uphold that legacy today and well into the future.

I am delighted to be a part of this distinguished and exciting industry. I look forward to working with you and wish each and every one of you a healthy and prosperous new year.

Donna Baker
President, GIA

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Industry Analysis: Holiday Report - Chains Decline, Internet Gains

Holiday sales results from the major retail jewelry chains reporting this week were much lower than analysts expected. It is apparent that jewelry of all types fell out of consumer favor, the one bright spot being that a number of independent stores turned in a decent season. These stores tend to be well established in their communities and serve an up-market clientele that was less affected by the current mortgage crisis and rising energy costs than middle-class consumers. In addition, Blue Nile, the Internet diamond retailer, saw its fourth-quarter sales, ending Dec. 30, increase 24% from 2006.

Among the large retail jewelry chains, Zale Corp.'s same-store sales were down 9% from last season; Signet Group (Kay and Jared) U.S. same-store sales fell 8.1%; and Finlay Fine Jewelry was down 5.9%. Even Tiffany & Co., usually a strong gainer, reported that its same-store U.S. sales dropped 2% during the season.

Most retail analysts were expecting slight increases, at least from Signet and Tiffany, who traditionally turn in the best sales performances of the major chains. Signet consistently showed annual sales increases of 7% or more until this year, while Tiffany's sales growth was somewhat higher. Zale has had trouble with stagnating sales (previous quarter sales were down slightly from the year before), which has brought several management changes and a potential stock raid by an activist investor, but such a large drop was still surprising.

Additionally, because prices for precious metals and larger diamonds have risen sharply (gold and platinum both reached record highs on Jan. 9 as investors flocked to precious metals as a hedge against inflation), even these substantial decreases may not reflect the full picture. Unit sales probably fell by an additional 5% or more, even though most retailers absorbed some of the materials increases at the expense of their profits.

Tiffany, however, noted that its decline in unit sales was partly offset by an increase in average transaction price, meaning that it either passed more of its increases on to customers or customers looking for high-ticket items went for higher-ticket items, or both. Meanwhile, Signet announced plans to raise U.S. prices after Valentine's Day to cover increasing commodity expenses. "These results are disappointing across all brands," said Neal Goldberg, Zale Corp.'s newly appointed president and chief executive officer. "It is clear that retail is facing a number of challenges currently, but I do believe this focus on the key drivers will generate long-term value for shareholders."

Major department stores had a similar tale for the season: Nordstrom's was down 4%; Macy's dropped 7.9% for December (but only 1.1% for combined November to December); JCPenney was off 11.4%; and Target was down 5%. Only Wal-Mart, by discounting from its already low prices, showed a slight increase (2.4%).

Blue Nile will not issue a full quarterly report until Feb. 12, but CEO Mark Vadon noted that the company had a "great year," and added "over the past week, a number of large jewelry retailers have reported negative same-store sales results for the holiday season. We are extremely pleased with our fourth-quarter sales results, particularly given concerns about the macroeconomic environment. In addition, we anticipate reporting strong profitability for the fourth quarter in our upcoming earnings announcement."

Fortunately, diamond manufacturers around the world had prepared for the slow season in the U.S., which accounts for 48% of world sales, and will not have excessive inventories to fund nor boatloads of memo returns. A number of them, particularly Israelis, turned their sales efforts toward China and Eastern Europe, while Indian manufacturers have redoubled their efforts to sell domestically and in the Middle East. Still, while strong sales increases in India, China and the Middle East have compensated somewhat for the U.S. slowdown, these markets remain small in comparison.

Although analysts blame the lackluster holiday season on the slowing U.S. economy and rising prices for necessities - particularly heating oil and gasoline - jewelry sales were also hit hard by the electronics industry, which generated huge excitement over new gadgets in the $200 to $1,000 range. These items - third-generation iPods, iPhones, other multi-use cell phones, and the like - have become must-haves for younger consumers and now many middle-aged buyers, male and female.

Unfortunately for jewelers, that situation will only get worse in coming years - until Apple and cell phone manufacturers run out of imagination.

DIAMONDS: The weak holiday season did not prevent the De Beers Diamond Trading Company (DTC) from announcing an average 3.5% price increase for rough diamonds, effective with the Jan. 14-18 sight. The company said the increases would be skewed toward the larger stones "and others which are in strong demand."

The DTC measures price increases by their average effect on overall sales, and it's certain that many categories of rough diamonds will actually decrease in price because of the slow market. Large stones over 3 carats - especially high-quality goods over 10 carats - and fancy-color diamonds increased strongly in price during the latter half of 2007.

Shortly before the end of the year, the DTC announced it would drop 23 firms from its client roster, leaving a total of 75, when the new 30-month sight term begins in April. Four other firms will be added to the roster of diamond manufacturers receiving special allotments from diamond productions in Namibia and Botswana.

For the first time ever, India was a net loser in the sight roulette game - eight firms dropped, three added - which touched off a wave of concern and angst in Mumbai and Surat. India's largest industry trade organization, the Gem and Jewellery Export Promotion Council, warned that the DTC action would lead to "massive layoffs," while one Indian manufacturer quoted in local press reports claimed it was the beginning of a process that would eventually see a majority of Indian jobs migrate to African cutting operations.

Closer to reality, it is probable that the companies affected by the loss of DTC allocations may have to cut some staff, but there will be little impact on India's industry as a whole. After all, it employs 900,000 to 1 million workers, and the five companies affected in total have fewer than 6,000, most of whom will probably keep their jobs.

MACRO: The New York Times reported Monday that consumers have pulled back spending more sharply than at any time since 1991. Citing end-of-year sales results as well as credit card spending, the paper said it is likely that consumer spending will show the first quarterly decline in nearly 20 years. Indeed, the U.S. Department of Commerce reported that retail sales were off 0.4% in December, compared to 2006, while the Labor Department noted that wholesale inflation, led by fuel prices, rose 6.3% for 2007.

The weak holiday sales caused a number of the major U.S. financial houses, including Merrill Lynch, Goldman Sachs and Morgan Stanley, to declare that the U.S. economy was officially in recession.

The Winter 2007 issue of G&G will mail Jan. 18.

From Gems & Gemology: Winter Issue Features Newest CVD Synthetic Diamonds, Zambian Tourmaline

The Winter 2007 issue of Gems & Gemology (G&G), which mails to subscribers today, reports on the newest commercially available chemical vapor deposition (CVD) synthetic diamonds, plus vivid yellow tourmaline from Zambia and much more.

In the lead article, "Latest-Generation CVD-Grown Synthetic Diamonds from Apollo Diamond Inc.," Dr. Wuyi Wang, GIA's manager of Research projects, and a team of researchers report on the properties of these new products. Now marketed in colorless, near-colorless and fancy-color varieties, they show significant improvements in size, color and clarity over the samples examined by GIA in 2003. The article describes the unusual internal graining and birefringence, complex fluorescence zoning and spectroscopic features that characterize the material.

"With recent advances in CVD synthesis, Apollo's latest lab-created diamonds are comparable in color and clarity to natural diamonds in the marketplace," said G&G editor-in-chief Alice Keller. "This article by Dr. Wang and colleagues is an essential guide to consistent identification of CVD synthetic diamonds."

In "Yellow Mn-rich Tourmaline from the Canary Mining Area, Zambia," Brendan Laurs and co-authors explore the world's most important source of this vivid elbaite. They present a gemological characterization and geologic investigation of the "canary" tourmaline, which is notable for its high manganese and low iron content.

Next, Dr. Sally Eaton-Magaña et al.'s article, "Fluorescence Spectra of Colored Diamonds Using a Rapid, Mobile Spectrometer," examines the application of fluorescence spectroscopy to help characterize fancy-color diamonds. In this study, the fluorescence spectra of the natural-color diamond samples tested generally corresponded to bodycolor. The article also illustrates the potential of the inexpensive, portable charge-coupled device (CCD) spectrometer for characterizing fluorescence and phosphorescence in diamond.

The Winter issue lineup also includes "An Examination of the Napoleon Diamond Necklace," which provides the history and gemological characterization of this historic necklace, given by Napoleon Bonaparte to Empress Marie Louise of France on the birth of their son in 1811. The high proportion of type IIa colorless to near-colorless diamonds with good clarity indicates that the standards for a fine diamond 200 years ago were similar to those used today.

The Lab Notes section presents recent discoveries from the GIA Laboratory, such as apatite inclusions in spessartine and a diamond with large etch channels filled with iron sulfides. Highlights from Gem News International include Namibian diamond mining by Namdeb, a new locality for copper-bearing Paraíba-type tourmaline from Nigeria and a synthetic beryl that simulates Paraíba tourmaline.

To purchase a copy of the Winter issue or to subscribe to Gems & Gemology, click here or 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.

New Retailer Support Kit Includes Essential Diamond Info

GIA's new Retailer Support Kit is now available to order online. Each kit includes tools you and your sales associates can use to help explain essential diamond information on the 4Cs and the value of GIA's grading reports. The kit is complemented by a new Web site just for retailers that includes the latest information on GIA Laboratory services and Education offerings.

The kit, which was created as part of GIA's first ever public outreach campaign, contains the following tools:

• GIA crystal display for your case
• GIA window decal that shows you carry GIA-graded diamonds
• "4Cs of Diamond Quality" brochures
• Take-home diamond detail pocket cards that will help your customers understand the 4Cs of the diamond they may buy
• "How GIA Grades Diamonds" DVD to play in your store
• Counter pad that explains how to read a GIA Diamond Grading Report

Al Gilbertson, author of American Cut -- The First 100 Years, will be available to sign copies of his book from 2-6 p.m Sat. Feb. 9 and Sun. Feb. 10 at the main GIA booth on the Galleria Level of the Tucson Convention Center.

Pick up a free 2008 Museum Collection poster at Booth No. 1900 in the AGTA GemHall.

Tucson 2008: GIA Offers Seminars, Presentations and Special Events

New! GIA Colored Stone Lab Services in Tucson

You'll be able to access a variety of GIA colored stone services for the first time at Tucson. GIA gemologists and colored stone specialists from the Lab will be on hand to provide gemstone identification; ruby, sapphire, emerald, alexandrite and tourmaline reports; and country of origin report services. Find out more about the Lab's new show service.

Classes and Seminars

The 2008 Tucson trade shows are rapidly approaching, and this year GIA is offering four exciting classes and seminars to give attendees hands-on experience and practical information to help increase their gemstone grading and identification skills.

Space is limited. To register, call (800) 421-7250, ext. 4001, or visit http://tucson.gia.edu for more information.

Kick up your heels at the GIA Alumni Association's annual dinner dance and auction, which will be held at the Marriott University Hotel on Feb. 8. This long-time favorite event features a live and silent auction, dancing and acknowledgement of the 2008 Alumni Award winners and Richard T. Liddicoat Scholarship recipients. There's still time to donate an auction item. Simply fill out the donor form and send it along with your donation to Jan Tilton.

Learn more about GIA's Education programs, Research projects and Museum Collection, or see a demonstration of the new GIA FacetScan^TM optical scanner, and more when you stop by GIA's booth on the Galleria Level of the Tucson Convention Center during the AGTA Show. When you subscribe to Gems & Gemology at the booth, you'll receive the new Winter 2007 issue (a $19 value) free with your one- or three-year subscription. Find out more about GIA's show specials and events.

GIA will have booths at five different trade shows this year: the Centurion Jewelry Show, the American Gem Trade Association GemFair, Worldwide Gem and Jewelry Show, Rio Grande's Catalog in Motion, and the Tucson Gem and Mineral Show. Click here for the dates and locations of GIA booths at these events.

2007 Staff of the Year Award winners (above, from left): Art Cabuang, Amanda Luke, Wendy Shelechi, Michelle DeVore, Sergio Espinoza, and Claudia Kramm (below). Photo by Valerie Power/GIA.

GIA Presents Annual Staff of the Year Awards

GIA recognized six exemplary employees with the 2007 Staff of the Year Award; each honoree received a plaque and special recognition among the entire Institute. The award is presented annually to individuals whose dedication and loyalty to GIA's operations and strong commitment to personal and professional integrity have helped the Institute achieve its public benefit mission.

The 2007 Staff of the Year Award winners included: Amanda Luke, senior communications manager and editor of The Loupe: GIA World News, GIA Insider and alum.connect (Carlsbad); Art Cabuang, payroll assistant (Carlsbad); Claudia Kramm, Laboratory business analyst (New York); Michelle DeVore, Distance Education instructor (Carlsbad); Sergio Espinoza, grading assurance supervisor (Carlsbad); and Wendy Shelechi, quality assurance gemologist (Carlsbad).

GIA President Donna Baker announced the honorees and highlighted how each of them has contributed to the Institute through their specific roles during the Institute's annual holiday party in Carlsbad.

"I was flattered and surprised to receive such an eminent award from the Institute," DeVore said. "I am grateful to join this prominent group of honorees and to be part of the overall GIA team that consists of such talented and extraordinary individuals."

Tom Moses, senior vice president of Laboratory and Research, presented Kramm with her award before fellow staff members in a separate ceremony in New York.

"I am tremendously honored to be recognized among my colleagues," Kramm said. "It's a delight being a part of such a wonderful organization like GIA that supports and professionally fosters its employees."

Baker said she was proud to honor these six individuals with this award, which has been given to a total of 112 employees since its establishment in 1985.

"Their team spirit, creativity, diligence and professional approach have significantly advanced GIA's mission and long-standing leadership in the field of gemology," she said.

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Common language terms are frequently used to describe the color of gems in sales presentations, like "midnight blue" for dark, violetish-blue tanzanite and "sky blue" for lighter color blue topaz. Photos by Eric Welch.

Left: The term "semi-precious" should not be used in reference to any gemstone and especially makes no sense in the case of a rare and valuable gem like Paraíba tourmaline. Right: Terms like "pure vivid red" to describe the color of a ruby can help emphasize the quality and rarity of it to your customers. Photos by Eric Welch.

From GIA Education: Colored Stone Grading Terms Will Help Your Sales

Colored stones are evaluated with the same quality factors - the 4Cs - as diamonds. A universal grading standard for them has not been accepted, however, because the many varieties of colored stones make it more complex and difficult for wholesalers and retailers to implement.


As a result, most retailers do not feel comfortable explaining the quality factors of colored stones to their customers and are not as eloquent at working those descriptions into their sales presentations.


GIA offers a Colored Stone Grading System that can be used to describe the quality of all colored stones. Once you understand it and its terminology, you will find it an invaluable tool for your sales presentations. Color grading descriptions are a very effective way to explain quality and value differences to your customers, and will make them feel more at ease about receiving a good value. And, you will make more sales, whether from economical stones like amethyst and blue topaz, or the highest-priced rubies, sapphires and emeralds.

Here are some tips:

• Incorporate descriptive terms from GIA's Colored Stone Grading System and adopt a conversational style when you talk to your customers. Remember, you don't have to describe the color of a gemstone in the same matter-of-fact way you would quote the grade of a diamond. There are a lot more descriptive and accurate terms you can use to sell colored gemstones and to explain quality differences and how they affect the gem's value. A top-quality ruby, for example, has an extremely high value based on the pureness of the red hue and the intensity or vividness of the saturation. The terms "intense" and "vivid" are easy for a customer to understand.
  
  
• Intersperse colored stone grading terms with "word pictures" to paint a more vivid and romantic description of the gem. Terms like "midnight blue" convey a rich, dark, violetish-blue color, while "sky blue" implies a lighter color. These types of terms, used in conjunction with grading terms, can provide an accurate description that does not sound like a laboratory grade. By explaining that violetish-blue is a rich, deep color that is coveted because it is not too dark and has a strong intensity, you separate it from lighter, darker and less-saturated colors that are less expensive.
  
  
• Always stress the rarity of fine-quality colored stones. By adding source, mining and market knowledge to your quality descriptions, you will have an irresistible sales presentation, especially if you add a little gemstone lore to create an even more romantic impression.
  
  
• Remember that your customer's preferences are more important than trade preferences. If your customer likes the color of a green-blue aquamarine over the trade-preferred color of a more pure blue, then that is the color you should promote.
  
  
• Never use the terms "precious" or "semi-precious" to refer to gemstones with your customers. Precious has traditionally referred to ruby, sapphire and emerald, while semi-precious referred to all other colored stones. This makes no sense at all when you consider the rarity, beauty and cost of gems like alexandrite, tsavorite garnet and Paraíba tourmaline.

For more information on colored stones, refer to GIA's colored stones courses and Labs, including Colored Stone Essentials, Colored Stones and Gem Identification courses, and the Colored Stone Grading Lab and Gem Identification Lab classes.

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GIA's 2008 Education Viewbook

GIA 2008 Education Viewbook and Catalog - Available Now!

Get your copy of GIA's 2008 Education Viewbook, which overviews all of the Institute's program offerings and details ways to start your jewelry career. GIA's 2008 Education Catalog, which includes a complete 2008 class schedule, course descriptions and application requirements, is also available. Request your copies and an application for admission today by calling (800) 421-7250, ext. 4001, emailing admissions@gia.edu or visiting the GIA Web site.

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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. GIA Lab classes offered through February 2008 are as follows:

For more information, see Gemology and Jewelry Manufacturing Arts Lab class descriptions. You can also e-mail GIA Education, apply online, or call (800) 421-7250, ext. 4001, for more information. Outside the U.S., call (760) 603-4001.

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