Declining liquidity has created concern throughout world diamond centers. The February price increase levied by De Beers’s Diamond Trading Company (DTC) has encountered strong resistance in the secondary market and among retailers, further squeezing profits of diamond manufacturers.

The DTC move, announced as a “rebalancing” averaging 2%, was concentrated in goods in the highest demand, which were up well over 5% in some categories, according to sightholders. Despite the strong demand for rough that will polish out to 2+ ct., or better-quality melee, buyers have been extremely resistant to paying higher prices, forcing diamond manufacturers to absorb the increase. Dealer-sightholders reported that premiums on sight boxes sold in February dropped sharply across the board.

“Bad timing,” noted one industry executive. “The American market is slowing, Asia has gone soft, and dealers all over are stuffed with inventory.”

While there are pockets of strong demand in the U.S., retail sales have been fairly soft because of poor weather in much of the country, climbing energy prices, and uncertainty about the economy. Worse, much of the demand from retailers is being fed by existing inventories at pre-increase prices, which will create a profit squeeze for dealers when they have to restock at higher rates.

Diamond sales in China were dampened by the fact that last year was considered bad luck for marriage in traditional Chinese astrology. China is one of the fastest-growing retail markets, showing double-digit increases each year. Although the current year, which began Feb. 9, is considered auspicious for marriage, business at the March 6–9 Hong Kong International Watch and Jewellery Show was still spotty, particularly for diamonds.

COLORED STONES: Demand for color remains uneven except at the extreme high end, where the record prices achieved for several top rubies has created a scramble among dealers and wealthy buyers for similar gems. In that Feb. 16 sale, London jeweler Laurence Graff paid $3.64 million, or $425,000 per carat, for an 8.62 ct. cushion-cut Burmese ruby. 

On a more down-to-earth level, demand for color has quieted worldwide, with the exception of pieces by popular designers.

TRADE: The Council for Responsible Jewellery Practices (CRJP) has produced a draft of its Code of Practices, which seeks to establish a worldwide standard of corporate conduct. The CRJP would also appoint a monitor to review members’ compliance with the standards set by the Code. The proposed code, released on Feb. 10, 2006, covers three basic areas:

• Business ethics: Forbids member companies from engaging in bribery and corruption, requires full and accurate disclosure of all the products sold by members, and stipulates full adherence to all laws regarding money laundering and Kimberley Process participation.
• Social: Requires adherence to all fair labor standards, workplace health and safety regulations, and nondiscriminatory hiring and pay. Also forbids the use of child labor, with the exceptions noted by the International Labor Organization.
• Environmental: Requires that business be conducted in an environmentally responsible manner and that regular assessments be made of possible adverse effects arising from commercial activities.

The CRJP is a foundation formed by a number of large mining and retailing firms and industry organizations to harmonize various corporate governance codes. Currently the London-based organization is only seeking members in the gold and diamond sectors.

RETAIL: Last year’s acquisition of Harry Winston by publicly traded Aber Resources, a Canadian diamond mining firm, has resulted in the first official reporting of Winston's sales performance. Sales for fiscal 2006 were $191.2 million, a 44% increase over the previous year. Earnings were $11.8 million, representing a 162% increase from 2005.

The figures include results from two new stores in Florida and Hawaii and expansion of Winston's Beverly Hills salon. Winston also increased its advertising and marketing activities during the year.

MACRO: The U.S. Department of Commerce reported that February retail sales fell 1.3%. Auto sales led the decline, but apparel and specialty stores, which include jewelry, fell 3.3%. Analysts blamed poor weather for the showing and had expected worse. However, some economists worry that the slowdown of the housing market and rising interest rates may dampen consumer spending in the second half of the year.

Russell Shor
Senior Industry Analyst

Recently, GIA’s East Coast laboratory received for identification a grayish blue oval cabochon displaying asterism. The stone measured approximately 12.35 × 10.25 × 6.45 mm and was set in a white metal ring (figure 1). Standard gemological testing revealed a spot refractive index of 1.54 and a bull’s-eye optic figure, which identified the stone as quartz.

The GIA Laboratory has reported on star quartz many times over the years, discussing the typical colors, cause of asterism, and sources of the material. Because this stone contained oriented needles, which caused the star, the laboratory concluded that the asterism was natural. What was unnatural, however, was the apparent color. When the bottom of the cabochon was viewed with magnification and a combination of overhead and darkfield lighting, a slightly uneven blue coating was clearly visible. In fact, two small chips near the stone’s edge revealed colorless quartz underneath (figure 2).

Coating is one of the simplest ways to change a stone’s color and is frequently used on a variety of materials, including diamond, beryl, topaz, cubic zirconia, and, of course, quartz. What made this particular ring interesting was that the color of the coating on the natural star quartz cabochon created an extremely convincing imitation of a star sapphire. As noted above, this is hardly a new material. GIA reported on a nearly identical stone – a star quartz with blue backing added to imitate star sapphire – in the Summer 1938 G&G (p. 168), which shows that no matter how many new treatments come on the market, gemologists must still be on guard for simple ones such as this. (Click here for links to the Summer 1938 G&G and all other pre-1981 issues, available in PDF format.)

This entry was prepared by Wendi M. Mayerson of the GIA Laboratory in New York. For more of the latest from the GIA Laboratory, read the Lab Notes section in the upcoming Spring 2006 issue of Gems & Gemology. To subscribe, 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.

IR spectrometry measures a gem’s absorption of energy in the infrared region of the electromagnetic spectrum, which has lower energy than the red region of the visible spectrum and occurs at wavelengths greater than 700 nanometers (nm). This region of the spectrum is highly valuable for analytical testing because the energy of infrared light matches the energy of a wide variety of chemical bonds. Since the energy bonding two atoms together is quite specific, IR spectrometry can be used to identify those atoms if prior research has provided a correlation.

Fourier-transform infrared (FTIR) spectrometry, a refinement of IR spectrometry, was developed in the 1980s. FTIR spectrometers use a system of moving and stationary mirrors to split the infrared radiation transmitted through a gem into two halves. When the two halves of the transmitted radiation are recombined, they interact to produce a stronger, better-defined reading. A computer interprets the reading and transforms it into an absorption curve that is shown on the monitor. (Click here for a more detailed explanation.) The unit by which infrared energy is usually measured is the wavenumber (number of waves per centimeter), which is expressed in reciprocal centimeters (cm-¹) rather than nanometers (nm). The absorption curve plots wavenumber versus intensity of absorption, and the intensity of the absorption can provide some indication of an impurity’s concentration.

One of the major advantages of FTIR is that it can provide results in a fraction of a second, whereas older technology takes 20 minutes or more to record a single spectrum. Thus, FTIR can provide quick identifications for many materials. Since spectra are collected much more quickly, many scans can be taken for a sample, which increases the technique's sensitivity over older IR spectrometers. Today, nearly all IR spectrometry is performed using FTIR technology.

IR spectrometry can easily separate amber from the plastic simulants that are often hard to identify with conventional gemological techniques. It can also help gemologists separate natural emerald from flux-grown synthetic emerald, and natural alexandrite from pulled or flux-grown synthetic alexandrite. Natural gems often contain small amounts of water, which has a very distinctive IR absorption, while synthetic gems grown by melt or flux processes do not.

The method is so sensitive that it can even distinguish between natural emeralds and hydrothermal synthetic emeralds, and sometimes between the products of different manufacturers. This is possible because of the different ways that water molecules, other molecules, and elements such as chlorine, sodium, or lithium are held within beryl’s crystal structure depending on the growth process. IR spectrometry detects the distinctive absorptions these impurities produce.

For a gemologist, one of the most important applications for IR spectrometry is the detection of gem treatments. Often, the materials used to enhance gems do not have characteristic absorption patterns in the visible range of the spectrum and thus cannot be detected by visible spectrometry. However, substances such as resin fillers in emeralds and the polymers used to impregnate jadeite, turquoise, and opal do show characteristic patterns in the IR range, so IR spectrometry is especially useful for detecting those treatments.

Another important use for IR spectrometry is the detection of artificially induced color in some yellow-to-brown diamonds. In the past, a distinctive absorption line at 595 nm in the visible spectrum of a yellow or brown diamond meant that the color had been enhanced with a combination of irradiation and controlled heating. Treaters discovered that they could make this line disappear by annealing the diamond at high temperatures, making its visible spectrum less diagnostic. Fortunately, these treated diamonds typically show two sharp peaks in their IR absorption spectra that prove their colors are not natural. Naturally colored yellow-to-brown diamonds never show these features.

Additionally, IR absorption spectra are the principal basis for determining diamond type. Type Ia, Ib, IIa, and IIb diamonds have very different absorption spectra because of their characteristic nitrogen and boron impurities.

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

Gary Hill, community development director for GIA, was awarded two civic leadership awards within two days this month.

The Carlsbad Chamber of Commerce recognized Hill with its Community Leadership award for his long-standing work as a “civic-minded individual who has made Carlsbad a better place to live, work or visit.”

Ted Owen, president and CEO of the Carlsbad Chamber of Commerce, said, “Gary Hill was cited for his extreme devotion to bettering our community. He is involved in many volunteer projects and organizations. His dedication as a concerned citizen makes him a role model for all of our citizens to emulate. His work at the Chamber alone is amazing – he sits on three committees, and is a past chairman of the board of directors. His actions make him a man to be admired and a leader to follow into community service.”

The 12-inch tall crystal award was presented to Hill and fellow honorees on Friday, March 10, in a formal event attended by more than 600 people at the Four Seasons Resort Aviara.

The day before, March 9, the California Park & Recreation Society (CPRS) District XII presented Hill with its 2005 Recognition Award.

The CPRS honor was given to Hill for his “volunteer contributions to the recreational health and enjoyment by the public of open spaces and trails and providing a safe facility for those who care to exercise, walk, run, hike or study nature.” 

Liz Ketabian, the City of Carlsbad Recreation Department’s park planner, said, “This award to Gary is long overdue. He has contributed thousands of hours toward the construction, management and planning of trails. His advocacy extends beyond Carlsbad, and he is known county-wide for his trail advocacy. Because of his time and efforts, the City of Carlsbad can provide the benefit of clean, safe, and sustainable trails for the future recreational needs of the community.”

Hill said that his greatest accomplishment in business was relocating the Institute's world headquarters to Carlsbad in 1997.

Once he was part of the Carlsbad neighborhood, Hill continued to build on that first step by working to preserve its open spaces, support the arts, help education and workforce development, and promote corporate citizenship, among other endeavors.

“There are so many good people in Carlsbad, all actively making the community a better place,” said Hill after receiving the awards. “It’s an honor to work alongside such dedicated residents and leaders.

"This year is my 28^th year with the Gemological Institute of America. GIA is a nonprofit public benefit institution and throughout the years has instilled in me the desire to serve the public worldwide. I would like to thank GIA for giving me the opportunity of helping Carlsbad become the best that it can be.”

Earth spins at 900 miles per hour, depending on where you are standing. And the worry is, if you stop suddenly – even for a second – your world would continue to zip around; and just about everything not attached to bedrock would be wiped clean.

Truth is: it would. That’s why at Symposium 2006 we’re not slowing down for anything.

For three days, the industry’s best-known executives, researchers, and other visionaries will share their insights and perspectives on the industry’s most important topics. Things are going to move fast – but you’re used to that.

Don’t miss the Monday morning presentation, “Luxury Retailing: Going for the Bling.”
Today, the rich and famous are wearing, endorsing, and even designing jewelry. They’re leading a luxury lifestyle that everyone else wants to follow. And from Hollywood to Hong Kong, the luxury market isn’t just getting bigger – it’s getting younger. Graff’s Henri Barguirdjian, François Curiel of Christie’s, “Jeweler to the Stars” Martin Katz, and upscale magazine publisher Jason Binn will share their views on this shifting market and shifting attitudes. 

And after you break for lunch, “Identification Technology: The CSI Factor.”
Every day, more complex treatments and natural-appearing synthetics are entering gem laboratories and markets worldwide. Diamond expert Dr. Alan Collins, IDMA president Jeff Fischer, noted gemologist Bob Kane, Cal Tech’s Dr. George Rossman, and respected diamond authority Dr. Chris Welbourn will provide an in-depth overview of new techniques for identifying colored stone treatments, synthetic diamonds, and diamond treatments – and how synthetics and treated stones can affect your business.

JCK Magazine is the prime sponsor for Monday’s all-day program. For a day-to-day schedule of Symposium events, click here. To register for Symposium and the pre-Symposium Gemological Research Conference (Aug. 26–27), e-mail igs@gia.edu, or click here for more information.

GIA's School of Business will begin the spring quarter of its On Campus and online courses April 10. The spring quarter will end on June 16 and the next two quarters will start on July 10 and Oct. 9.

“GIA’s School of Business is unlike any other – it pairs business education with issues and practical skills specific to the jewelry industry,” said Dr. Mink Stavenga, dean of the GIA School of Business. “Through our courses and programs, students will acquire the business knowledge necessary to succeed in the jewelry industry.”

During the spring quarter, students can attend four of the five classes required for GIA’s Jewelry Business Management (JBM) diploma program: Accounting Basics, Ethics and Law, Fundamentals of Marketing, and Principles of Management. These required courses, along with the elective course Managerial Economics, can be taken online or on campus in Carlsbad.

In addition, students can register to attend the elective courses of Finance, Marketing Management, and Sales Management on campus in Carlsbad. GIA’s Managerial Accounting, Merchandising Management, and Retail Management electives are only offered online during the spring quarter.

“Our JBM students gain an executive’s perspective of what it takes to achieve long-term success in the jewelry industry and develop the ability to think creatively, act strategically, and lead effectively.” said Stavenga.

Students can also apply for GIA’s online Bachelor of Business Administration (BBA) degree completion program. Although the new BBA program officially starts in October 2006, students can begin working toward their degree by taking Jewelry Business Management courses now. Taught online through the Institute’s Distance Education curriculum, the BBA program offers a comprehensive business education with a specialized focus on the jewelry industry.

Students who have already completed coursework through the GIA School of Business can apply their credits toward the BBA degree. Each of the JBM-required courses, and many of the elective courses, fulfills requirements for the BBA degree. The BBA degree completion program consists of 20 courses, and students must have an associate’s degree or its equivalent from an accredited college, university, or institute to be eligible for admission.

“We teach the business curricula one would expect from any business school, but so much more is offered. Cases unique to the jewelry industry amplify the regular content of the classes and provide relevance,” explained professor Eric Carstensen. “Most of our classes have a ‘take away.’ For example, the project in Human Resources Management consists of developing an Employee Handbook, which students can use once they leave the academic world and start their careers.”

For more information about the GIA School of Business and a complete schedule of its courses and programs, click here, or call 760-603-4000, ext. 4001.