The volatility of world financial markets continued this week despite attempts by the Federal Reserve and European Central Bank to calm the situation. One reason cited for this turmoil is that problems in the U.S. mortgage market have spread internationally, as these loans were bundled and sold worldwide.

At the core of the disruption is rising interest rates in the U.S. and Europe. Although the Federal Reserve did not order an increase this month, rates have been pressing upward for a variety of reasons, among them the fact that banks and financial houses are taking steps to cushion themselves against potentially riskier times ahead.

For diamond and colored stone dealers already squeezed by rising debts, diminishing profits, and a declining U.S. dollar, interest rate increases can only exacerbate their woes. Unfortunately, economic forecasters see little relief in sight, as the prevailing opinion is that U.S. consumer demand will be sluggish this fall and the dollar will continue to remain depressed in relation to most other major currencies.

Certainly, business at the July 30–Aug.1 Jewelers of America (JA) Show in New York reflected both concerns.

Diamond manufacturers there reported that retail caution was keeping business 5–10% below last year’s levels for most commercial-quality goods and even for better goods under two carats. Demand was strong for large goods, dealers said, but these were hard to get because the depressed dollar gives European and Asian dealers an advantage in bargaining. In addition, several major dealers of large diamonds noted that manufacturers are reluctant to sell such goods right now, because rising prices mean they can make more money sitting on them.

The colored stone trade was hit by the controversy over irradiated blue topaz, which erupted shortly before the show.

In July, the U.S. Nuclear Regulatory Commission announced that it would phase in a requirement that all blue topaz be treated or tested by an NRC-licensed facility. Although such a requirement had already existed for gems treated by neutron irradiation (which usually produces the deeper colors), there was little or no compliance, and now gems treated in a linear accelerator will be covered by the same rules. The ensuing controversy prompted many retailers to stop selling the material. As a result, there were few buyers for blue topaz at the JA Show. Most U.S. gem dealers were aware of the issue and brought little or no material, but dealers from Hong Kong and Thailand had carried large stocks to New York, only to find no takers.

Matthew Runci, executive director of JA, worried that the new regulations might put retailers and blue topaz dealers in a difficult position, especially if neither side is willing to pay the additional costs for testing and licensing such an inexpensive product.

Runci estimated retail sales of blue topaz at about $1 billion yearly.

DIAMOND PRODUCTION: Rio Tinto may be putting the Argyle diamond mine up for sale. Argyle, in Western Australia, produced just over 29 million carats last year, making it by far the largest producer by volume. The Argyle production consists of 5% gem and 70% near-gem, with the remaining 25% being industrial diamonds. The gem and near-gem diamonds account for more than 95% of the value of Argyle’s rough diamond sales. The average size of Argyle’s rough diamonds is less than 0.10 ct.

The fate of Argyle could profoundly affect the hundreds of thousands of workers in Ahmadabad, India, who process these goods. It could also affect the mass market for diamond jewelry in the U.S., where the majority of such goods wind up.

The reason for the possible sale is likely that the cost of redeveloping the mine to an underground facility has nearly doubled from an estimate of $800 million. Current projections place the value of the remaining ore at around $1.2 billion, meaning that the underground mine may no longer be economically feasible.

Far to the north, Russia’s diamond mining and marketing arm, Alrosa, announced that it had discovered three new diamond-bearing kimberlites near its existing sub-Arctic operations in Yakutsk. However, the three pipes are reported to be much smaller than the existing mines.

RETAIL: The two largest U.S. retail jewelry chains announced sales results in line with a slowing retail environment. Signet Group, parent company of Kay Jewelers and Jared the Galleria, reported that same-store sales in the U.S. rose 2.2% for the second quarter ending August 4. Signet same-store revenues for the first half rose 2.7% in the United States and 4.6% in the United Kingdom. These figures are less than half the growth the company had seen in recent years.

Zale Corporation reported that its fiscal 2007 revenue remained flat at $2.44 billion while same-store sales fell by 0.2%. Fourth-quarter sales ending July 31 fell $3 million to $488 million. Same-store sales fell 0.5% during the period.

Meanwhile, Internet diamond retailer Blue Nile reported that its second-quarter (ending July 1) sales rose 27% to $72.1 million, surpassing the company’s forecast by about $5 million. Second-quarter profits increased 21% to $3.8 million. International sales (Canada and the United Kingdom) rose 15% to $3 million, according to a company statement.

MOSHE SCHNITZER (1921–2007): The world diamond community is mourning the death of Moshe Schnitzer, who passed away Aug. 17 at the age of 86.

Mr. Schnitzer was not only one of the founders of the Israeli diamond industry, working as a diamond cutter six years before that nation’s independence in 1948, but he was also its best-known advocate. In the 1950s and 1960s, before world travel became commonplace, Mr. Schnitzer spent much of his time visiting the diamond centers of Antwerp and New York; later, he included Hong Kong and Tokyo. Operating under the belief that if everyone prospered, he would also, Mr. Schnitzer promoted the entire Israeli diamond trade, not simply his own business, and the goodwill he engendered made him welcome everywhere.

From 1967 to 1993, Mr. Schnitzer served as president of the Israel Diamond Exchange, during which time polished diamond exports rose from $200 million to $3.4 billion a year. Mr. Schnitzer served as president of the World Federation of Diamond Bourses from 1968 to 1972 and again from 1978 to 1982, at which time he was voted lifelong honorary president. He was voted lifelong honorary president of the Israel Diamond Exchange in 1994.

Moshe Schnitzer received the Order of King Leopold of Belgium for his contributions to the international diamond industry, and especially to the development of ties between the two major world diamond centers, Israel and Belgium. He also received many honors from the industry and within Israel.

Russell Shor
Senior Industry Analyst

GIA’s West Coast Laboratory recently received an 8.54-ct. dark blue oval gem (figure 1) for a corundum report. The stone had a striking visual resemblance to blue sapphire and some features supported this initial impression, such as its inclusions and visible spectrum. However, refractive index values of 1.710–1.730 and a specific gravity of 3.68 ruled out corundum and instead indicated kyanite.

The inclusion scene contained several elements that are commonly present in blue sapphire, such as rutile and clusters of zircon crystals (both identified using Raman spectroscopy; figure 2). A large transparent quartz crystal (again, see figure 2) was the only inclusion that would be uncharacteristic for blue sapphire. Growth tubes resembled those seen in corundum; however, these could be distinguished by the intersection angles. Corundum growth tubes intersect at 60°/120°; in kyanite, they intersect at 90°. Angular blue zoning confined above a colorless zone in the bottom half of the pavilion also resembled that seen in sapphire, but it did not show corundum’s characteristic hexagonal growth features.

In the visible spectrum, the kyanite displayed red transmission and corresponding lines in the desk-model spectroscope due to chromium content, which can also appear in Cr-rich blue sapphires. The 450, 460, and 470 nm iron lines that are occasionally present in blue sapphire were absent, but weak 430 and 445 nm lines caused by Fe³⁺ substituting for Al³⁺ (see Spring 2002 G&G Lab Notes, pp. 96–97) could have been mistaken for corundum iron lines.

Advanced testing using UV-Vis spectrophotometry further highlighted the similarities between blue sapphire and kyanite spectra. This was particularly evident in the 380–385 nm and 430–450 nm regions, where Fe³⁺ substitutes for Al ³⁺, as well as the presence of a broad 610 nm band, which is responsible for the blue color and caused by the Fe²⁺–Fe³⁺ charge transfer for both kyanite and blue sapphire.

The many similarities had led the client to believe the stone was a blue sapphire. However, the RI, SG, and closer examination of the inclusions provided a correct identification as kyanite.

This entry was prepared by Alethea Inns of the GIA Laboratory in Carlsbad, Calif. For the latest findings from the GIA Laboratory, read the Lab Notes section in every 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.

GIA announced this past week that the Institute will open a laboratory in Johannesburg, South Africa, and expand its educational offerings there.

Tom Moses, senior vice president GIA Laboratory and Research, said that starting in September, GIA will begin absorbing the laboratory operations of the Jewelry Council of South Africa (JCSA). The JCSA will continue to operate its other interests, but GIA will take on the JCSA’s laboratory functions.

“Our international laboratory business has grown significantly in the last decade and we intend to be more accessible to our clients," Moses said. "By being in key producing and consuming regions, we can better promote GIA standards, and make ourselves more available to our customers.”

JCSA’s current executive director, Leslie (Les) Milner, will become the director of GIA South Africa.

In September, the JCSA lab will begin operating as a "take-in window" for GIA and its customers, thereby joining the GIA Lab Direct Network. Submissions will be invited from Botswana and Namibia as well as South Africa.

In October, an experienced team of JCSA laboratory diamond graders will visit the United States for intensive training in GIA grading and standards. They will then return to Johannesburg in late 2007, to be joined by veteran U.S. graders and management from GIA to establish full laboratory services.

In early 2008, GIA will formally open GIA South Africa. Although the Laboratory will offer services for all sizes and types of diamonds, colored stones, and pearls, initially service on site in Johannesburg will be limited to the GIA Diamond Dossier® Report, which covers stones ranging from 0.15 ct. up to 1.99 ct. While other services are under consideration, those items GIA is not presently prepared to service in Johannesburg will be shipped to the U.S.

Moses added, “We believe GIA’s Education offerings can be valuable to the manufacturers and retailers here, and will provide additional opportunities for the local population. We currently offer classes locally; however, we want to expand those offerings. We will also be working with organizations here to find opportunities to provide scholarships for deserving candidates.”

“We are very pleased to be joining the diamond community here in Johannesburg. Southern Africa is an important location in the diamond industry, and we believe GIA should have a Laboratory presence here, as well as Education, in order to better serve our customers.”

GIA will host GemFest Asia – Hong Kong 2007: State of the Global Jewelry Industry on Sept. 27 from 8:30 a.m. to 10:30 a.m. The event, sponsored by the GIA Alumni Association, will take place at the Hong Kong Convention and Exhibit Centre in conjunction with the annual Hong Kong Jewellery and Watch Fair.

Industry leaders will discuss the latest research and trends in gems and jewelry. Presentations will be given by Dr. Mink Stavenga, dean of the GIA School of Business; Tom Moses, senior vice president of GIA Laboratory and Research; and Ken Scarratt, director of research of the GIA Laboratory Thailand.

Stavenga said he will provide an overview of current global jewelry conditions and how they are changing. “We plan to discuss increased competition from other luxury product categories, the changing patterns of consumer consumption, and the impact of different financing methods and distribution channels in the jewelry industry,” Stavenga said.

In addition to Stavenga’s presentation, Moses and Scarratt will provide a GIA Laboratory Update addressing new pearl treatments, recent developments with beryllium-diffused corondum, the latest in diamond treatments, and the Laboratory’s International Expansion services. 

GemFest Asia – Hong Kong 2007 will also commemorate the 25^th anniversaries of the Japan and Hong Kong GIA Alumni Association chapters, honoring them with recognition plaques. 

GIA alumni who attend GIA's GemFest Asia will receive six Carat Points in the Alumni Circle of Achievement. Admission is free; however, space is limited and will be filled on a first-come, first-served basis. To register for the event, visit www.gia.edu/alumni, e-mail events@gia.edu, or call 760-603-4205 by Sept. 14, 2007.

The Summer 2007 issue of The Loupe: GIA World News commemorates the award-winning magazine’s 60^th anniversary with a cover story detailing its history at GIA and in the industry. The story charts The Loupe’s progress from its first, four-page issue in 1947 to the 36-plus page magazine it has become, and reviews important coverage, columns, and notable people featured in its pages over the years.

This issue also introduces a new section – “Laboratory News” – that includes updates and changes to GIA’s Laboratory services. This section will connect readers to important developments in this fast-growing area of the Institute.  

Another piece reviews the collection of Bernd Munsteiner’s jewelry and gem sculptures now on display at GIA’s Carlsbad, Calif., campus in a new exhibit titled “Reflections in Stone: The Art of Bernd Munsteiner.” Details about the exhibit, the artist and Si and Ann Frazier’s opening lectures are featured.

“Colorful Jaipur” marks the magazine’s second photo spread on India's growing gemstone market. You can also find information on how podcasts help GIA’s Course Development team offer educational updates even faster, and read about instructor and student experiences in the Graduate Jeweler program.

Rounding out the issue: coverage of industry events including GemFest Basel, the recent ICA Congress, the Sinkankas Symposium, and GIA involvement in JCK Las Vegas; updates to GIA’s career search engine; and information on how to establish a new alumni chapter with the Association’s new “Quick Start Guide.”

To sign up for a free subscription to The Loupe: GIA World News, e-mail LoupeSub@gia.edu.

It’s that time of year again when the deadline for GIA scholarship applications is right around the corner. For those interested in applying, the deadline to receive all applications is Oct. 15, 2007 for classes beginning in 2008. 

A total of 96 scholarships, valued at $431,000, will be available for 2008, a record high thanks to the many generous donors who support the program. Six of these scholarship opportunities are outside the United States. This is the first time in GIA's history that international scholarships have been offered. 

The six international scholarships, which cover full tuition, were created by GIA’s Board of Governors in response to the increasing need for gemological education worldwide.  One scholarship is offered for the Distance Education Gemologist Diploma program, two for the On Campus G.G. program at GIA London, and three for the On Campus G.G. program at GIA India.

“We are thrilled to offer these significant financial resources to deserving and talented students,” said Bev Hayes Berthoty, Institute Relations manager for GIA. “We are especially excited about adding international scholarship opportunities at this time. This is a great milestone for GIA as we continue our efforts to serve the worldwide gem and jewelry industry.” 

All of the scholarships being offered range from $500 to full tuition.

For Carrie McGrath, who received the 2007 Robert Kammerling Scholarship, learning of the award was one of the happiest moments in her life.

McGrath said, “I am confident that my future career in the jewelry industry will benefit from this wonderful gift. I will work my hardest to do the very best I can and uphold GIA standards, because it means so much to have GIA behind my name.”

Applications for 2008 scholarships are being accepted until Oct. 15, 2007 and can be downloaded from GIA's website. Qualifications differ for each scholarship. For more information about GIA scholarships, click here, call 760-603-4175, or e-mail financialaid@gia.edu.

For more information about making a donation in the name of a scholarship, contact Bev Berthoty at 760-603-4170.

The July 27 GIA Jewelry Career Fair in New York was packed with nearly 1,000 attendees including recruiters, speakers, coaches, and staff. Present were the largest and most diverse group of recruiters Career Fair has ever hosted.

Representing many different areas of the industry, recruiters ranged from large organi