• Industry Analysis: FinCEN Eases Rules on Foreign Dealers
• From Gems & Gemology: Lead-Glass Filling in Color-Change Sapphire
• Discover What You Know -- and What You Don't -- About the Luxury Market
• GIA Library Partners with Alumni to Distribute American Cut -- The First 100 Years
• Get the 'Buzz' at GIA L.A.'s March 27 Open House
• From GIA Education: Make Lifelong Learning Part of Your Business Plan
• Give Your Career a Springtime Sparkle

Industry Analysis: FinCEN Eases Rules on Foreign Dealers

The U.S. Financial Crimes Enforcement Network (FinCEN) slightly eased monitoring requirements for retailers and dealers working with foreign suppliers under new guidelines published March 10.

The FinCEN announcement said that U.S. retailers and dealers who work with foreign suppliers may not be required to implement a full anti-money laundering procedure, provided their suppliers operate in countries with strong anti-money laundering rules and the retailer obtains documentation from the supplier that he or she complies with all of its provisions. Previously, the agency exempted only domestic retailers and dealers who dealt solely with U.S.-based suppliers, since such suppliers already have to comply with strict anti-money laundering regulations.

U.S. dealers and retailers, however, even if exempt from establishing anti-money laundering procedures, are still encouraged to file suspicious-transaction reports for unusual payment methods such as large amounts of cash or traveler's checks, third-party payments or multiple money orders.

Thus far, FinCEN has received very few such reports, according to FinCEN director James H. Fries, who addressed a March 10 Jewelers Vigilance Committee seminar in New York on the new guidelines.

DIAMONDS: The power outages that crippled South Africa's mining operations for several days in January still loom large over the country's economy and may ultimately force cuts in diamond production. The root of the problem is that rapidly expanding power needs across the nation have collided with an aging infrastructure.

After the outages, the country's power monopoly, Eskom, mandated that large businesses, including mining operations, cut their electricity consumption by 10%. This has forced some mining companies to scale back operations. While the power shortages have not yet dramatically cut diamond production, they do threaten deep reductions in gold and platinum output, which is one reason the prices of these metals have soared to all-time highs.

De Beers (which supplies 80% of its own power needs) and other mining companies have made provisions to keep essential services going and are upgrading to continue operations. These measures, however, are adding to the already skyrocketing costs of mining, according to local press reports. De Beers noted that prolonged power cutbacks could eventually reduce its South African production by as much as 10%.

To achieve the power cuts imposed by Eskom, one of the country's largest gold miners, Gold Fields, reported that several shafts at its Driefontein and Kloof mines will be temporarily shut down, closed altogether, or scaled back, affecting 4,900 employees.

Although power has been restored to most of the country, the situation remains dire. Eskom claims it cannot meet current power needs with its existing capacity, and even if ground were broken today on new power plants, no additional power could be generated until 2012 at the earliest. Worse, unlike North America or Europe, Africa has no other comparable power-producing agencies from which South Africa could draw.

The country's problems are rooted in the mid-1990s, when the government refused to fund Eskom's proposals to build additional power stations. Late last year, Eskom began scheduling rolling blackouts as its power reserves were depleted.

Meanwhile, South Africa's State Diamond Trading Office (SDT) officially opened on Feb. 29 with newly appointed chairperson Linda Makatini at the helm. Formerly an executive with a small mining company, Makatini once worked on the staff of African National Party Congress President Jacob Zuma. The office is the centerpiece of the country's new diamond law, which is designed to increase local diamond manufacturing through Black Economic Empowerment (BEE) -- or beneficiation.

SDT will purchase its choice of 10% of all rough diamonds mined in the country for sale to emerging local entrepreneurs. To buy from SDT, companies must have a beneficiation license and a partnership with a BEE company in the mining industry, as required by South Africa's Mining Charter.

COLORED STONES: The government of Sri Lanka is proposing to ease import duties on rough gems so the island nation can enlarge its cutting and trading industry and better compete with Thailand.

The new proposals will lower taxes on polishing operations, ease currency exchange restrictions and set up a special banking and credit agency to serve the gem industry.

MACRO: U.S. consumers are growing ever more concerned about the double whammy of recession and inflation, recent surveys indicate.

Last month's consumer confidence figures fell to 15-year lows, as concerns about the slowing economy and job losses took their toll and recent press reports speculated that the nation has fallen into a recession.

However, the steep decline of the U.S. dollar -- which most economists acknowledge is a major cause of rising prices -- shows no sign of bottoming out, prompting fears of a return to the "stagflation" that crippled the economy in the 1970s.

Prices of precious metals, gemstones and most other commodities, including essentials such as food, have steadily increased over the past several months. These increases have been making their way into the retail market in a big way.

While the Federal Reserve did act to relieve the credit paralysis arising from the housing market crisis, its traditional remedies for inflation (higher interest rates) and recession (lower interest rates) are directly opposed, prompting concerns that the Federal Reserve may have to choose the lesser of two evils.

Russell Shor
Senior Industry Analyst

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This 3.76-ct. color-change sapphire (fluorescent light, top; incandescent light, bottom) proved to be lead-glass filled. Photos by G. Choudhary.

From Gems & Gemology: Lead-Glass Filling in Color-Change Sapphire

Gagan Choudhary of the Gem Testing Laboratory in Jaipur, India, submitted the following report to Gems & Gemology's (G&G) Gem News International section:

Lead-glass-filled rubies were first seen in the market in 2004. Much research has since been conducted to classify these rubies correctly, and the treatment is now well understood. We also know, though, that such fillings are now being applied to sapphires as well.

The Gem Testing Laboratory in Jaipur recently encountered a 3.76-ct. oval mixed cut sapphire with numerous eye-visible fissures. The refractive index and specific gravity values were consistent with corundum. The stone appeared brownish-green in daylight and fluorescent light (top image) and brownish-purple in incandescent light (bottom image). It fluoresced weak reddish-orange under long-wave UV radiation; it was inert to short-wave UV. Observation with a desk-model spectroscope showed a doublet in the red region (typically associated with chromium in corundum), a weak absorption in the orange-yellow region, and a strong band in the blue region at ~450 nm, probably due to iron.

With magnification, the surface-reaching cracks showed an obvious blue-to-violet flash effect, which changed to greenish-blue as the stone was moved. The fractures also contained large rounded and highly reflective flattened gas bubbles. In addition, white crystallites were observed in the filled cavities. These features are consistent with those reported in lead-glass-filled rubies (e.g. S. F. McClure et al., "Identification and durability of lead-glass-filled rubies," Spring 2006 Gems & Gemology, pp. 22-34).

The presence of a lead-glass filling in this sapphire was further confirmed by energy-dispersive X-ray fluorescence analysis, which revealed a strong lead peak. Other trace elements detected were chromium, iron and gallium, as expected in a color-change sapphire of natural origin.

This is the first lead-glass-filled sapphire seen in our laboratory, and we would not be surprised to see the treatment applied to other sapphire colors in the future.

For more on the latest gemological developments from around the world, read the Gem News International section in each issue of G&G. To subscribe, click here or contact Circulation Coordinator Debbie Ortiz toll-free at (800) 421-7250, ext. 7142. Outside the U.S. and Canada, call (760) 603-4000, ext. 7142.

G&G's 27-year index (1981-2007) is now available online. Download the free, searchable subject and author index PDFs by visiting www.gia.edu/gemsandgemology and clicking on the "G&G Indexes" navigation button.

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Learn more about the tastes of affluent consumers at GIA's GemFest Basel. Diamond earrings by Penny Preville.

Discover What You Know -- and What You Don't -- About the Luxury Market

Want to know more about what makes high-end customers tick? Then don't miss GIA's GemFest Basel, held in conjunction with BaselWorld 2008, on April 5.

Keynote speaker David Arnold, senior vice president and group publisher of CurtCo Robb Media LLC, will give an overview of some of the factors that shape the lives of this affluent and influential population in "Perceptions of Wealth vs. Reality." He'll also discuss worldwide trends in wealth, how to adapt sales and branding messages and offer a profile of the modern high-net-worth individual. What you learn may surprise you because according to Arnold, the public's perception of luxury buyers is often quite different from the reality.

A panel discussion on recent trends in the luxury diamond market will complement Arnold's talk. Topics will include how goods are sold, supply and demand, and future outlooks. Panel members include: François Curiel, chairman of Christie's, on the auction house perspective of the large diamond market; Amit Dhamani, managing director of Dhamani Jewels, representing the luxury diamond manufacturing point of view; Tom Moses, GIA's senior vice president of the Laboratory and Research, on the Laboratory outlook; and Jean-Marc Lieberherr, general manager of Rio Tinto Diamonds N.V., with the mining perspective. Each panelist will speak for 5-7 minutes with a question-and-answer period following.

GIA GemFest Basel will be held from 4-6 p.m. Saturday, April 5, in the Hall Montreal at the Basel Convention Center. A reception will follow.

Alumni who attend GemFest Basel 2008 will receive six carat points.

RSVP by March 31 for this free event: call (760) 603-4205, e-mail events@gia.edu or visit www.gia.edu/alumni.

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April Matteini stands in front of the Boca Raton Library with her book donation. Photo courtesy of April Matteini.

Al Gilbertson, G.G., spent years researching the evolution of the round brilliant cut diamond. Photo by Kevin Schumacher/GIA.

GIA Library Partners with Alumni to Distribute American Cut -- The First 100 Years

GIA's Richard T. Liddicoat Gemological Library and Information Center is partnering with alumni chapters and individual graduates to donate 1,000 copies of Al Gilbertson's new book, American Cut -- The First 100 Years, to public libraries around the U.S.

"Throughout GIA's history, it's been important to promote the professionalism of our alumni members and graduates in their communities, and we're happy to be able to give them an opportunity to do that through this book distribution," said Dona Dirlam, director of the GIA Library. "We hope this partnership with the Alumni Association will help promote the value of GIA and its graduates throughout the country."

Gilbertson's book examines how the round brilliant cut evolved in the United States and documents the development of the "ideal cut." A major focus is on Henry Morse, a 19th-century Boston diamond cutter who, with the help of his shop manager, developed the first bruting machine to shape round diamonds. This, along with Morse's development of the first gauge to measure the angles of a diamond, paved the way for cutting factories around the world.

April Matteini, a GIA Graduate Gemologist from Boca Raton, Florida, was among the first alums to donate a book to her local public library. She grew up in the Boston area and learned of Morse and his contributions to the development of diamond cutting through her work in the jewelry business there.

"I believe that any GIA program aimed at educating the public is beneficial for the industry," Matteini said. "American Cut -- The First 100 Years is a beautiful book that any library should be pleased to add to their collection."

GIA's Library will provide any interested alumni chapters or graduates with a copy of American Cut for distribution. Each book will contain a book plate to document the name of the chapter or graduate and the date of the donation; a press release about the donation will also be available to alumni donors to distribute to their local press.

If you would like to participate, simply notify your local library and then send the name of the library and the librarian who will receive each donated book to the GIA Alumni Association. GIA will then package and label the book for distribution. Chapters and/or graduates are not limited to donating to one library.

For more information on how you can help distribute the book, e-mail alumni@gia.edu, call (800) 421-7250, ext. 4145, or visit www.gia.edu/alumni.

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Dr. Tim Malone will present "What's All the Buzz About?" at the L.A. Open House. Photo by Melissa Jacobs.

Get the 'Buzz' at GIA L.A.'s March 27 Open House

Stay in the loop and don't miss Dr. Tim Malone's free seminar, "What's all the Buzz About?" on the latest trends in word-of-mouth marketing. Dr. Malone, associate professor in GIA's School of Business, will present his perspective at the GIA Los Angeles Open House on March 27.

Dr. Malone's presentation will cover some of the following points:

• How word-of-mouth marketing can be a powerful force in the jewelry marketplace
• How to promote your jewelry expertise more effectively
• Current consumer market research and trends
• Understanding the power of referrals in the jewelry industry

The Open House is an opportunity for jewelry professionals, prospective students or anyone interested in the gems and jewelry industry, to find out more about GIA L.A. and what it has to offer. Attendees will tour the campus, meet GIA President Donna Baker and network with the Southern California jewelry community.

"Our Open House offers people an opportunity to ask questions to established professionals in the industry, as well as GIA instructors, all in a relaxed, social environment," said Veronica Clark-Hudson, director of GIA L.A. "The event also allows guests to see and appreciate the broad opportunities a gemological education can provide."

The GIA L.A. Open House will be held from 5:30-8:30 p.m. Thursday, March 27 and includes a reception prior to the "What's all the Buzz About?" seminar.

For more information or to RSVP, call (310) 670-2100, e-mail laedu@gia.edu or click here.

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From GIA Education: Make Lifelong Learning Part of Your Business Plan

The push to make companies "leaner, faster, smarter" has greatly reduced the number of middle management jobs in larger organizations and reduced the number of these "stepping stone" positions in smaller companies. That's why, when faced with a lack of vertical growth opportunities, it's critical that you and your employees expand your knowledge and expertise horizontally. To avoid doing so puts job satisfaction, individual performance and overall company performance at risk.

The pursuit of lifelong education used to be optional. Many would contend, however, that it's a requirement in today's business world. You need to constantly grow, both in personal and professional terms, but also in specific and general areas, to get ahead.

Training and development provides some of this growth (time and experience provide the rest). Take the example of a new machine in the factory. Everyone who needs to work with it gets trained in its proper use and is shown the best way to maintain and troubleshoot it. This is defined as task-specific education. In order to adequately prepare our staffs (and ourselves) to use new systems (like a new point of sale, security, accounting or e-mail/computer system), we need to make sure they have proper, specific training.

Development, on the other hand, is usually not so task-specific; it's more general in nature. Sending one of your employees to a word processing class is an example of development. Perhaps a current need would be to create business letter formats, but after a few successes, the employee is churning out vacation request forms, memo templates, employment applications and so on. While the software itself is specific, its uses are unlimited.

Since managers are dealing with so much change -- yearly, monthly, daily -- you and your employees need to be ready to deal with the unknown situations of the future. Here are some tips for training and development at your business:

• Provide anyone who needs training with it as soon as possible. Explore cross-training employees so staff has some flexibility to respond to changing conditions (vacations, illnesses, etc.).
• Look at your development opportunities. Not all companies have educational reimbursement (because it's expensive), but community colleges regularly offer business courses at reasonable rates.
• Since going back to school is not for everyone, managers need to consider other areas where development can occur. Seminars are a great option. An employee can learn something new, meet new people (from within and outside of the industry), and be better prepared for the future in just a few days. Seminars can almost seem like a "mini-vacation" away from work for a few days. Employees who don't get to go to seminars all the time tend to feel special as a result.
• Trade shows are also an excellent source of material. There are lots of talks and presentations, tons of information to pick up and thousands of knowledgeable people. Again, a few days away from the office at a trade show breaks up the routine.
• Trade publications -- even casually thumbing through them -- can inspire managers and employees. They help you keep up with popular designers, styles and materials and often contain great articles written by managers for other managers.
• Finally, read the business news daily. Not necessarily every article, but every headline to make sure you don't miss something important and/or relevant. Reading about how other companies perform (and what influenced that performance), lawsuits, stock sales and merger activity rounds-out your knowledge. Yes, jewelry is a unique business, but it is part of the much larger business world.

Whether formal (school) or informal (newspaper), education has to be part of your lifelong journey. A musician can practice and play every day for the rest of their lives and still have countless new songs to learn and ways to play better. Someone who has surfed for 30 years might catch a lot of waves and ride them well, but could spend the rest of their life surfing every day and still have countless ways to get better. Our professional life is no different -- we will never be so good that we can't improve.

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Sometimes just keeping up with the demands of a job can be a full-time job. There doesn't seem to be time to pursue hobbies or interests, let alone learn new skills to make your job easier and your career more rewarding. But with spring in the air, it's time to dust off the cobwebs and take action -- not just to catch up, but to leap ahead.

If you've dreamed of becoming a GIA Graduate Gemologist, do it now -- a class begins in Carlsbad on April 3 and in just six months you can have the industry's most sought after diploma. Or, if you've ever wanted to develop your talent as a designer and craftsman, consider GIA's Applied Jewelry Arts Program. Beginning on March 20, the Carlsbad AJA program will take you through every step of the pre-production process, from traditional design, to wax carving, mold-making and CAD/CAM.

And if you're looking for an edge that will propel you into a leadership position in your organization, then GIA's Executive Training Program is for you. Offered at GIA campuses in London (April 7-11), Los Angeles (April 14-18) and New York (May 5-15), the Executive Training Program is an intensive boot camp for jewelry industry managers. You get a top-down view -- from today's global trends that shape your business, to strategies designed to improve market share, to tried and true techniques for inspiring excellence in your staff.

Last but not least, consider enrolling in a GIA Lab class. Whether you're a newcomer to gems and jewelry, or need a quick and convenient way to update your skills, or if you're a GIA distance education student on your way to a Graduate Gemologist diploma, GIA Lab classes are a must. Offered year round at GIA campuses and in major cities in the U.S. and Canada, these classes provide the perfect opportunity to acquire highly marketable gemological skills.

Check out these GIA Lab classes offered through mid-April 2008:

So what are you waiting for? It's time to put a spring in your career! 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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