A significant rise in interest rates could force many major American retailers into a showdown with diamond manufacturers, said several leading industry bankers at a forum hosted by Martin Rapaport, publisher of the Rapaport Diamond Report, June 4 in Las Vegas.  

The bankers explained that low interest rates have encouraged the greater use of credit to finance memo deals and inventory holding. This has created an oversupply of certain (commercial) qualities of polished diamonds. However, as interest rates rise, the carrying costs of memo deals increase accordingly, as do the costs of holding inventories and servicing debt. This squeezes margins to the point where many diamond manufacturers can no longer absorb the costs of having inventory out on memo.  

“The result,” said one banker, “will be a major restructuring of such deals.”

Because major U.S. retailers are not likely to accede to such restructuring easily, and many of them have been adept at playing manufacturers off against one another, the bankers believe memo business will be increasingly vested in larger players who can absorb its high costs. Jewelry manufacturers may have a particularly difficult time, squeezed between strong Diamond Trading Company (DTC) sightholders tightening their payment terms and retailers demanding product on memo.

Several also believe that a reduction in memo programs might cause an increase in inventory turnover, “because those who own their products will have a stronger incentive to sell more quickly.”

The bankers noted that they have been assisting their clients in compliance with PATRIOT Act requirements.

They also stressed that industry banks remain supportive of their gem and jewelry customers, though rising debts and shrinking margins remain a concern.

DIAMONDS: Supplies of smaller diamonds for low-priced jewelry pieces may be drastically reduced after 2008 if Rio Tinto executives decide not to convert Australia’s Argyle mine to an underground facility. The mine will reach the end of its open-pit life that year. A senior Argyle executive said a decision was still pending over whether the underground project would be economically feasible. A recent report estimated conversion costs at U.S. $800 million.

Closing Argyle could create a crisis in India’s diamond manufacturing industry, because the mine’s 30-million-carat yearly production sustains hundreds of thousands of jobs in Gujarat state, particularly in Ahmedabad. In addition, Argyle is the world’s only consistent source of pink diamonds.

In the aftermath of the DTC’s reordering of its sightholder roster, existing clients were relieved to find that none had been dropped. However, a number are wondering why the DTC will be adding 11 new clients in January when it has been having difficulties meeting current supply requirements of some firms. Although the market has cooled sharply for some goods, particularly low-quality smalls, speculation in rough remains, especially in India.

Phumzile Mlambo-Ngcuka, South Africa’s minister of minerals and energy and the point person for black economic empowerment in the country’s diamond industry, has been named deputy president by President Thabo Mbeki. Mlambo-Ngcuka was a participant in a number of diamond conferences during the past year and spoke forcefully about the country’s desire to generate more local benefits from its diamond resources.

COLORED STONES: Colombian President Alvaro Uribe has set forth a proposal to revive the country’s emerald production, which totaled $452 million a decade ago but reached only $74 million last year. The initiative will create a new federation of miners, exporters, dealers, and retailers that will establish treatment standards, disclosure rules, and other procedures to boost the reliability of the product. The federation will charge a 1% levy on emerald exports to invest in technology, education, and infrastructure.

RETAIL: De Beers LV opened its first U.S. retail store on New York’s Fifth Avenue June 23. A lush red carpet greeted shoppers and celebrities, but protestors captured much of the media attention. Survival International, which has criticized De Beers over the resettling of Bushmen from the Central Kalahari Game Reserve (CKGR) in Botswana, established a picket line across the street from the store. The group claims that De Beers was involved in the resettlements because it wants the land for a diamond mine. However, De Beers and other companies such as BHP Billiton have yet to find any economically justifiable diamond deposits in the area in question, and no mining is currently taking place. Although De Beers does hold a retention license just outside the CKGR, it states that no mining is planned. Nevertheless, Survival International has managed to attract considerable publicity at its protests.

MACRO: This week’s economic news has been dominated by speculation over the future of the housing market. Economists from investment houses and think tanks believe that low interest rates have created a situation in which home prices have soared well beyond growth in personal incomes in most areas of the U.S.

They also agree that the housing boom has been a primary sustainer of U.S. economic growth during the past several years. Where economists differ is whether housing prices will simply level off or decline slightly, bringing a minor slowdown, or whether they will fall rapidly and precipitate a recession. In the early 1980s, a similar hard fall in the wake of a steep rise in interest rates cut deeply into sales of luxury goods.

Russell Shor    
Senior Industry Analyst

G&G’s influential series on diamond cut analysis is now available as a free download. These three articles, the product of a major GIA research effort that began in the late 1980s, tackled an extraordinarily complex issue and challenged some of the diamond industry’s most widely held perceptions about cut proportions.

To view these PDF files, you need to have the free Adobe Acrobat Reader software installed on your computer.

The first article from GIA’s research on diamond cut is “Modeling the Appearance of the Round Brilliant Cut Diamond: An Analysis of Brilliance”, which appeared in the Fall 1998 issue. T. Scott Hemphill and co-authors created a three-dimensional computer model to examine the interaction of light with a standard round brilliant diamond. They used this “virtual” diamond to generate a numerical measurement of brilliance, defined as the amount of white light returned through the crown. The study revealed how a wide variety of cut proportions (crown angle, pavilion angle, and table size) can maximize the overall brilliance of a round brilliant diamond.

Second in the series, from Fall 2001, is “Modeling the Appearance of the Round Brilliant Cut Diamond: An Analysis of Fire, and More About Brilliance." In this article, Ilene M. Reinitz and colleagues explored another diamond appearance factor: fire, the visible extent of light dispersed into spectral colors. Again using the three-dimensional model, the authors presented a numerical measurement of fire and computed its value for more than 26,000 combinations of round brilliant proportions. These variations in fire were compared to variations in brilliance, re-emphasizing the proposition that a variety of proportions can create an attractive finished stone.

The third installment, published in Fall 2004, is “A Foundation for Grading the Overall Cut Quality of Round Brilliant Cut Diamonds.”  Thomas M. Moses and co-authors turned to visual observation testing on actual diamonds for brightness, fire, and overall cut appearance in order to check previous metrics and develop new ones. On the basis of their findings, the team constructed the foundation for the GIA Diamond Cut Grading System, which will provide a single overall grade for cut quality for standard round brilliants. This system will be incorporated into the Institute’s educational programs and diamond-grading services.

To order the issues in which these articles appeared or to subscribe to Gems & Gemology, click here or contact Circulation Coordinator Debbie Ortiz. Call toll-free 800-421-7250, ext. 7142. Outside the U.S. and Canada, call 760-603-4000, ext. 7142.

Chalcedony is one of the oldest, most abundant, and most popular gem materials. It was named for the ancient Turkish seaport of Chalcedon (now Kadikoy). It is relatively affordable and comes in a very wide range of colors and patterns – two factors that make it popular with gem and mineral collectors. In jewelry, it is most often seen in beads, cabochons, tablets, and carvings.

Chalcedony is cryptocrystalline quartz that can range from semitransparent to opaque. Its many varieties are based on differences in color, color distribution, transparency, and phenomena.

Jasper is a general variety name for semitranslucent to opaque chalcedony of any color or combination of colors other than solid black chalcedony or specially named varieties like bloodstone. Also called heliotrope, bloodstone is semitranslucent to opaque dark green with red to brownish red spots.

Chalcedony is an aggregate with a spot refractive index (RI) of 1.53 or 1.54. Its birefringence, which is usually not detectable, is 0.004. Chalcedony is generally inert to UV radiation, but might fluoresce a weak to strong yellowish green. Its specific gravity (SG) is 2.60, and its fracture is normally conchoidal but sometimes granular.

Once a material has been identified as chalcedony, its variety must also be determined. Chrome chalcedony, dyed green chalcedony, chrysocolla-in-chalcedony, chrysoprase, and prase are all chalcedony varieties that come in green hues.

Chrome chalcedony is rare, intensely green, and, as its name implies, colored by chromium. It sometimes contains tiny black chromite crystals, which help distinguish it from dyed green chalcedony. Its slightly higher SG (usually around 2.60, but sometimes above 2.62) might also help separate it from dyed green chalcedony.

Chrome chalcedony’s spectrum has a vague band around 645 nanometers (nm) and a distinct line at 684 nm. The spectrum for dyed green chalcedony has a similar appearance. Also, both materials can look pinkish or reddish through a color filter.

Chrome chalcedony resembles green jadeite, but jadeite’s RI and SG are both much higher.

Chrysocolla-in-chalcedony is translucent to semitranslucent and a light blue or green-blue color. The gem is colored by inclusions of the copper mineral chrysocolla. With enough chrysocolla inclusions, it can resemble fine turquoise, though chrysocolla-in-chalcedony is usually more transparent.

Distinct differences in RI and SG will separate chalcedony from turquoise. Chalcedony’s RI is 1.54, and its SG is 2.60. Turquoise’s RI is 1.61 to 1.65, and its SG is 2.76. If there is a high chrysocolla content, chalcedony takes on the characteristics of pure chrysocolla, with a Mohs hardness of 2–4 and an SG near 2.20.

Chrysoprase chalcedony’s natural color is light to medium yellowish green. It is colored by nickel-rich clay inclusions. It is possible to confuse chrysoprase with jadeite, jade substitutes, prase, opal, translucent emerald, bowenite serpentine, dyed green chalcedony, and glass. Chrysoprase’s 1.53 or 1.54 RI and its SG (usually greater than 2.62) separate it from most of these look-alikes. Prase has a grayish green hue that sets it apart from chrysoprase.

Chrysoprase shows no reaction to a color filter, while dyed green chalcedony usually appears pinkish or reddish. In addition, dyed green chalcedony shows vague lines at 645 and 670 nm, while chrysoprase might show only a cutoff between 660 and 700 nm. Also, the color of dyed green chalcedony often looks unnatural. It is generally strongly bluish green, while natural chrysoprase’s green is much more yellowish.

Step-by-step procedures to identify natural, synthetic, and imitation gems are taught in GIA’s Gem Identification course. Click here for information on this course and other GIA programs.

The allure of color and the beauty of diamonds have a powerful appeal for the gem-buying public, and demand for fancy-colored natural diamonds has increased sharply in recent years. Their availability, however, has remained very limited, especially in the highly prized pink-to-red color range. Natural-color diamonds with a dominant red color are some of the most sought-after and typically achieve very high per-carat prices when they come up at auction. The highest price ever paid per carat for a diamond at auction was the 0.95-ct. Hancock Red, which achieved an extraordinatry $924,000 per carat.

Even the expanded supply of pink diamonds from the Argyle mine in Australia has not satisfied the public’s growing appetite for these fancy-colored diamonds, and reds have remained just as scarce and sought-after as ever. As a result, a variety of attempts have been made over the years to impart a pink-to-red color in diamonds. This has ranged from rather low-tech coatings to the application of more sophisticated combinations of treatment techniques involving irradiation with low-energy electrons, followed by annealing. Most recently the application of high-pressure/high-temperature (HPHT) technology has provided an additional method to create such color.

Christopher P. Smith, director of Identification Services at the GIA Gem Laboratory in New York, gave a presentation on the identification of treated-color pink-to-red diamonds at a conference organized by the Accredited Gemologists Association (AGA) on June 3 in Las Vegas. The conference was chaired by Antoinette Matlins, a well-known gemologist and author.

Lucent Diamonds of Denver, Colo., a longtime producer of HPHT-grown synthetic diamonds, has dealt extensively with the application of HPHT treatments to modify the color of natural and synthetic diamonds. Working in partnership with New Diamonds of Siberia and their Research and Development Manager, Dr. Victor Vins, Lucent has developed a unique multiple-step procedure to treat natural, type Ia diamonds. The result is color that ranges from brown to purple and pink-to-red through HPHT annealing, irradiation, and low-pressure annealing at relatively low temperatures. Those diamonds that result in a pink to red color are sold under the trade name “Imperial Red Diamonds.”

Lucent President Alex Grizenko began the conference with a briefing on the history and evolution of the treatment process, covering future production capabilities and marketing plans. Grizenko pointed out that all Lucent-treated diamonds (other colors besides red are produced) will be fully disclosed, including a laser inscription. Grizenko was joined by Vins, for whom he interpreted, in answering questions about the technology behind the treatment.

Both Grizenko and Vins described some of the complications involved with their treatment procedure as a result of the HPHT conditions – temperature above 2,150ºC and a pressure of 70 kilobars – so Lucent primarily uses higher clarity stones. Those that survive end up with clarity grades in the VS²–SI¹ clarity range, said Grizenko. “Color is usually created at the expense of clarity.” He added that the treated diamonds are cut shallow to maximize their color.

Several of the Lucent diamonds were available for viewing by conference participants, along with natural pink diamonds supplied by Argyle Diamonds. Joseph Casella, Argyle’s senior sales executive for Europe and the U.S., led the team of company representatives at the conference.

Smith co-authored an article on these diamonds that appears in the Spring 2005 issue of Gems & Gemology (“Treated-Color Pink-to-Red Diamonds from Lucent Diamonds, Inc.”). It provides a detailed scientific report on the treatment process, including charts and many photomicrographs illustrating characteristics resulting from the treatment that are used in identification. Grizenko provided Lucent diamonds for use in researching the article and was consulted, along with Vins.

Smith explained the distinguishing characteristics of the Lucent Imperial diamonds, based on GIA’s research, which he illustrated with side-by-side photomicrographs and spectra comparing treated-color and natural-color diamonds. These characteristics include etched surfaces, graphitized coating on mineral inclusions, color zoning, strain patterns, fluorescence, visible luminescence, and various spectra. Click here to read a detailed discussion of how these characteristics are used to identify these HPHT treated-color diamonds.

Smith said the GIA Gem Laboratory issues a GIA Gemological Identification Report, not a GIA Diamond Grading Report or Diamond Dossier®, for Lucent treated-color diamonds.

Following Smith’s presentation, conference participants examined natural-color and treated-color diamonds using microscopes, a spectroscope, and a UV lamp provided by GIA Instruments. Smith, Grizenko, Vins, and representatives of Argyle assisted and answered questions. All of the diamonds used in the hands-on part of the conference were provided by Lucent and Argyle.

Making great hires is one way to boost a company’s assets. Employees can be a source of innovation and renewal and hold the potential for growing a business.

Yet finding the right person for the job is not easy, particularly in the jewelry industry. In addition to just the right mix of highly specialized training, experience, and all-important “people” skills, the ideal candidate has passion – the factor that separates good from great. An outstanding employee absolutely loves the product and communicates that love and enthusiasm to the customer.

So how do you reach this unique job candidate without spending a lot of time and money on advertising, recruitment firms, and waiting for word of mouth to pay off?

One important hiring resource available is GIA’s Jewelry Career Fair, the industry’s annual recruitment event. Employers who are looking for a targeted audience of trained job seekers who are passionate about gems and jewelry – this is the place. The event, which will be held at the Jacob Javits Center in New York on July 29, draws upwards of 1,000 job seekers from all over the country. From seasoned professionals to recent graduates, companies are sure to find just the right person to fill that opening in sales, management, or customer support.

Firms that recruit at Career Fair meet an audience of job seekers who have already expressed a commitment to gems and jewelry. Career Fair gives firms the opportunity to screen, conduct on-site interviews, and even prospect for future openings. Those who recruit also get free advertising in the Career Fair Resource Guide, job openings listed on GIA’s Jewelry Career Fair website, and exposure in pre-event publicity.

Companies already registered for this year’s event include Tiffany & Co., Fortunoff, Lux Bond & Green, Iridesse, Steven Singer Jewelers, Diamonds International, and Zale Corp., just to name a few.

Catherine Berey, who recruited for Lux Bond & Green at the 2004 New York Career Fair, said, “It’s a pleasure to spend the day talking with candidates who have a passion for jewelry and want to be in the business.”

“From a hiring standpoint, Career Fair is almost too good to be true,” said Kathryn Kimmel, GIA’s vice president of Marketing and Public Relations. “There are so many talented, qualified, and enthusiastic applicants to choose from.”

Firms who want to recruit may contact GIA’s Career Services office at 800-421-7250, ext. 4195, or e-mail Kimberly Northup.

Career Fair was founded by GIA and The Jewelers 24 Karat Club of Southern California. Prime sponsor for the New York Career Fair is The VNU Jewelry Group, and the JCK Publishing Group is the prime sponsor for the Carlsbad event. Job seekers can call GIA’s Jewelry Career Fair hotline at 800-421-7250, ext. 4100, click here, or e-mail Career Fair.