Steve: We’ve talked a lot about different things on Tradio jewelry wise and we’ve talked about diamonds quite a few times. The funny thing is there’s a learning curve when it comes to any kind of a business if you’ve just started out. When I first started, I didn’t know a whole lot about diamonds. We bought them, we would sell them and you learned along the way. You learned by the seat of your pants and I would say, after realistically three years, I started learning the diamond industry pretty well. As I’ve gotten older and we’ve done more and more stuff, you’re constantly learning. If you don’t, you sort of fall by the wayside.
I’ve talked about different types of treatments on diamonds and things like that and just recently when I came back someone called and their son wanted to buy a diamond. I had sold the father his diamond, I sold his son a diamond and now his other son was getting married and they said let’s go to Steve and see what he’s got. I happened to be out of town, so they ran around and hit some other different jewelry stores, came back and said look, I told my son before he actually bought the diamond to come and see you. Here’s what we were looking at and here are the prices we got.
I said it sounds awfully cheap for that particular diamond. Then he kind of raised his eyebrows and said well, I told my son you’d be able to beat any of these prices. I said well, I don’t have the diamond in stock right now. I did before Christmas, but I don’t know. I’m redoing my inventory as far as diamonds and watches go, but let me get out there, make a call to some of my suppliers and see what we can come up with. It was amazing to me and I’ve been doing this almost 40 years now, the variations in diamonds and the different sales pitches that I got from different suppliers.
Now, we were looking for a G color diamond and, just to go over colors and clarities with you real quick, there’s a color scale for diamonds. It begins with D and it goes all the way down to Z. The less yellow it is the higher up it is in the color scale. So when we talk about a D color diamond, this is basically a diamond that if you dropped it in a glass of water you won’t see it. That’s how little color it has in the body. So when we talk about a color G, we have D, E, F, G, so it’s four shades off of perfect, which is a very high colored, very good color diamond. They wanted something that was in a VS range, which means we go from internally flawless which would be the highest quality. This refers to all the internal characteristics inside the diamond.
Basically, a flawless diamond is not anything you put in jewelry. It’s something where you’ve got money and you want to put into something, on a hard asset. You’re not sure about gold and silver, but you like the fact that a diamond is so small. It could be $100,000 diamond and you could put it in your pocket and walk around with it and nobody would even know it. So there are a lot of people who invest in diamonds and put their money in these small hard asset things and a lot of them will buy an internally flawless diamond. The reason you don’t use it for a piece of jewelry is if it was a one carat stone and it was high grade, it could be a $60-$70,000 diamond. If you put it in a piece of jewelry and you just happen to tap it wrong and you got a little bit of a chip in it, it now went from a $60,000 stone down to a $30,000 stone. That’s why you don’t normally wear any kind of internally flawless stuff in jewelry.
The next level down is what we call a VVS stone, very, very small inclusion or very, very small internal characteristic. When we’re talking about small, under 10 power magnification using a loop, which is your magnifier, you might see a little pin point or something like that in it. I mean you’ve got to work really hard and have a fairly decent trained eye to be able to spot any kind of inclusions or internal characteristics. The next one would be a VS quality. Again, you’ve got to work pretty hard to tell if there’s any kind of internal characteristics.
Then we drop into what we call an SI (slight imperfect) stone or a small inclusion. This is the type of stone that I tell people you know what, if you’re buying a diamond because you love somebody and you want to show them you love them, you’ve got a budget that you’re working with and you want to get the biggest bang for your buck then you go with an SI stone. It’s a slightly included stone, which means it’s going to have some small internal characteristics in it. Under magnification you’ll be able to see it, but to the naked eye it looks great. So if you’re working on a budget and you want to try and get the biggest bang for your buck, that’s the type of diamond you go with. If you want something a little nicer, then you want to go with a VS quality stone.
Well, a lot of people will look at the Internet. They read about the proportions a diamond should be cut. They read about how many facets are on it. They read about the color and the clarity. I’ve always told you, knowledge is a wonderful thing to have. Sometimes people overdo and they say I’ve got to have a VS quality stone and this is what I want. That’s fine, but they’ve never sat there with a magnifier or a microscope and looked inside of a diamond, other than the pictures they’ve seen on the Internet.
Sometimes the Internet is great for educating, but sometimes you get on somebody’s site who specializes in VS quality stones and they sit there and tell you how terrible all these other qualities would be. The sales pitch sounds wonderful, they sound like they’re very knowledgeable and you’re hooked on that higher-quality diamond. That’s not a terrible thing. I’m not sitting here telling you that you don’t want to buy that quality if you can afford it, but sometimes the difference in quality between a VVS stone to a VS stone is that very, very small inclusion.
They have categories of VS1 and VS2. VS1 means it may have one small, little inclusion. It’s probably on the edge somewhere and not in the center of the diamond and this is why it gets a VS1 rating. It might have a VS2 rating because the inclusion or the internal characteristic is more to the center of the stone. It’s a little easier to locate when you’re looking at it under magnification. It might be a white inclusion as opposed to a little darker inclusion. A lot of different things come into play, but the difference in money is dramatic.
As I went shopping for this customer, it was amazing all the different diamonds that friends and dealers sent me that were in the price range they wanted. I got one diamond that was a beautiful stone, I mean a gorgeous diamond. It was an F color, which is grade higher, but it was a stone that we call HTHP treated, which means there’s a process out there that was started by Philips probably 20 years ago. It wasn’t really that popular because most people didn’t understand what it was, but it’s sort of come into play right now.
Basically, what they do is take a diamond that starts life as what we call a cape stone. It’s got more of a brownish tinge to it. When you look at it it’s not something that you would call a chocolate diamond or a cognac color diamond, but it’s an off-color diamond and it’s got a brown tinge. It’s got to be a very, very clean stone, it can’t have internal characteristics. You’ll see a lot of brown diamonds out there, but without getting real scientific there’s only a certain type of diamond they’re able to do this treatment with. What they do under extreme heat and extreme pressure is treat this diamond and, basically, it bleaches out that brown tone to it and changes it into a much whiter diamond.
So they sent me this diamond and when I looked at it it would have been somewhere in the $40,000 price range, but because it was an HTHP treated diamond it was now $22,000, basically, half of what it should normally be. In the diamond industry, I don’t care if it’s your brother, your sister, your father or your mother, for some strange reason people are not going to sell you a $50,000 diamond for $20,000 bucks, even when they’re your relatives. I hate to say it, but usually relatives are the worst ones. Here’s this diamond and it’s like there’s a problem here. It doesn’t make sense, so I called back the salesperson. I looked at it and there was just something that looked strange to me.
Supposedly, any of the companies that deal in these HTHP treated diamond – again, that’s heat treated, high-pressure treated diamonds – are suppose to put an engraved mark on the edge of the diamond or what we call the girdle of the diamond that says HTHP. It’s lasered onto the diamond. As I’m looking at the diamond trying to figure out why this is going to be such a great deal, I start thinking about all the things that I’ve learned over the years and I go wait a minute, let’s look. I look on the edge of the diamond, I look on the girdle and here’s a little HTHP. Well, this had the certificate with the diamond, but it doesn’t say anything about it being a HTHP. The certificate is what we call an in-house certificate and this is something you need to find out about.
Some diamonds will be independently graded from large laboratories. GIA is the most accepted laboratory that does diamond grading independently and when I looked at the certificate it wasn’t a GIA certificate, but an in-house certificate. In-house means the diamond house that is selling it is supplying you with the certificate and, generally, if it’s a good diamond house they’re going to be pretty close on the color and the clarity. I say pretty close because if they’re selling it to you it’s going to be a better color. If you’re buying that stone it’s probably going to be a little less color. So you have to really be knowledgeable or know who you’re dealing with; you know, someone who’s knowledgeable who’s dealt with diamonds.
I buy thousands and thousands of carats of diamonds every year and we have to color grade them and clarity grade them and, yes, I did go to GIA School and learn how to grade diamonds. I like to think that I’m pretty sharp on that, but there was just something wrong with this and when I finally realized what was going on I called and said you guys didn’t even bother telling me that this was a treated diamond. They said Steve, you wanted a high color and a good clarity and this is the only way we could give you a diamond that was in your price range for your customer. I said I appreciate that, but I would think that you’d go out of your way to make sure you told somebody that this has been a treated diamond. They said well, if you can use it, let us know.
Saturday I’ve got a customer coming in who’s looking at this diamond and I’ll explain, like I’ve told all you folks out there, about this treatment. I don’t see anything wrong with the fact that man has been able to give you a much better looking diamond for a whole lot less money.
Ken: Sure, but just be forthcoming with that knowledge.
Steve: Exactly. Like I say, if any kind of enhancement has been done to whether it’s a colored stone or a colored diamond, it needs to be disclosed to you. You shouldn’t have to go pry it out of somebody. You know, why can you give me such a good deal on this diamond? They should be forthright and tell you about it. The other thing was the fact that I got another diamond which was pretty much a G color VS2, which is what they wanted and it was a great buy.
Actually, I take it back. It was an E color, so it was one shade off of being perfect, it was the right clarity grade and, again, it was in the price range, which didn’t make sense.If somebody is going to sell you a dollar bill, they’re going to sell it to you for a dollar. They’re not going to sell it to you for $.80 cents or $.75 cents and the same thing is true in the diamond market when it comes to suppliers. They’re not going to sell you a $50,000 diamond for $20,000 bucks. That’s not going to happen because this is what they do day in and day out. Yeah, you can work the price with them a little bit, but not 50% of what it should have sold for. So I said all right, send me this diamond and let me see what it is.
Now, this one had a GIA certificate. So this was done independently by GIA, which is the biggest worldwide known lab, but when I looked at there was a little line that you could see from the side.
Ken: Like a crack?
Steve: Not a crack. It was internal, inside this diamond and it was on the edge of it. It was less than a 32nd of an inch large. I mean it was minute, but in nature you don’t see any kind of just straight type of lines inside of a diamond. Now, you’ll see straight lines of color in rubies and sapphires and things like this. This is the way they grow so it’s normal to see lines of color, but not in a diamond. The more I looked at it, the more I delved into it. I sat there and looked at it for a while under my magnifier just using my loop and then I stuck it under my scope.
What it was is there’s a process of enhancement if a diamond may have a little, small, black inclusion in it. What they’ll do it take a laser, hit it with a laser and burn that little black inclusion out. Now, sometimes the black inclusions are going to be in there and they’re a little bit more noticeable so it’s lasered out and now the diamond stays very white and bright. Sometimes I’ve seen diamonds that looked like a piece of Swiss cheese they had so many laser holes in them, but this had a little laser and it wasn’t done from the top, it was done from the bottom of the diamond and it was very, very minute.
In the old days when GIA used to grade these diamonds, they were graded as an I1, an imperfect diamond, where lots of times the inclusion was visible to the eye. Or they would call it an SI2, which meant that it had a small inclusion, but it was very easy to see it with magnification and that would be great. I certainly had no qualms about selling those kinds of diamonds because, like I said, you got a great value for your money, but now this was a diamond that was graded as a VS2.
It’s all of a sudden like somebody changed the rules, so I called GIA and I just said I need clarification on this. We went through it and I talked to the fellow who’d done it for a lot of years, more years than I have, and he said yeah, I understand. The grading has changed over the years. I said well, why? He said well, because the jewelry industry has changed over the years. We still have our standards of grading, but as long as the inclusion or the laser wasn’t done from the top of the diamond, it was done from the bottom, it wasn’t a visible type of thing, it was on the edge or it was off to the side of the diamond, we give it a VS2 rating.
I’ll show this diamond to the fellow, too. It’s in his price range and it gives him a bigger diamond, a better color diamond, but I still have the problem that this never used to be a VS2 and now it is. I have a quandary, do I say to him it’s a bigger diamond, it’s a better color, it’s been lasered, but it’s got a GIA certificate and it qualifies being in this category. So I guess it boils down to the fact that I’ve got probably six or seven diamonds I’m going to show him and I hope that he’s not going to be lost by the time I’m done showing him diamonds and explaining what he’s looking at on each one.
Sometimes I’ll just sit back and ponder. At the end of day when you look at all these different stones and diamonds and things like that, what’s the ethical thing to tell people? What do you explain to them because there are other labs that will grade a diamond. They’ll grade a diamond that’s probably as bad as a J or a K color. When I say ‘bad’ it’s just further down in the color scale. It’s not a bad looking diamond, but they’ll call a K color diamond a G color. Pretty much every jeweler that’s dealing in them understands that this isn’t graded properly, but this lab put their name on this piece of paper and it said this is the color and this is the clarity of the diamond. Now the jeweler has to sit there and say to his customers this is a G color diamond, even though they know that it’s not.
My nephew sort of started in this business, as well, and he called me up and said unc, what do I do? I’m trying to sell this diamond to these people and I’ve got a certificate that says it’s a G and it’s a K. I said, Evan, you’ve to do whatever you want to do. The thing you’ve got to realize, like I’ve taught you over the years, is we’re one of the few jewelry stores out there who will sell a piece of jewelry and buy it back when it’s time for them to dispose of it. Now, if you’re going to sell it to them as a G color and they’re going to come back to you and want to sell it to you and you’re going to sit there and say well, this is a K and they say I’ve got a certificate here that says it’s a G and you sold it to them as a G, what are you going to do?
I said if the price is right and it’s priced as a K and this piece of paper says it’s a G and you explain to people look, I understand you want a G, it’s not in your price range, this piece of paper says it’s a G, I’m going to sit there and tell you it’s not a G color and I’m not going to sell it to you anywhere near the price it would normally cost you. I feel that’s fine. That’s ethical. You’re not the one that printed that piece of paper, but I think you have to inform your people what it really is and that’s the important thing.
Steve: I had some folks that had bought an engagement ring from me. They upgraded and it had what we call a natural. It had a little chip on the side of the diamond and the reason it was there is it was in the piece of rough, the diamond before it was cut. If they had cut that and removed that little, small-looking chip, it would have been less than one carat. Well, the cutter wasn’t going to do that because he gets a lot more money for a one carat than he does a 99 point diamond so it was left in there.
They were up in Orlando and they went to a Kay’s outlet and, unfortunately, I’m not picking on them, but that’s where they took it. Like I said before, sometimes a guy selling you a diamond was selling shoes last week and now he’s a diamond expert because he’s working at a jewelry store. Their jeweler looked at it and said this diamond is worthless. It’s got a chip in it and it’s got no value whatsoever. Well, that’s an idiot.
I mean whether I sold it or somebody else sold it, the fact that it’s got a natural in it and they didn’t have any idea what it was doesn’t make the diamond worthless. If you really wanted to, I can take it to one of my cutters. He could polish that out, it will be slightly under one carat and it would be a perfect stone. So when somebody tells you that, take your diamond, walk out the door and take it to somebody who really knows what they’re talking about.
Ken: That would be Westchester Gold in the Bear Plaza behind ABC Liquor, Port Charlotte.
Steve: And I would like to think we do. We’re just about out of time and I appreciate you for listening. We’re coming into another year and if there’s anything you’d like to hear me talk about, at the end of the hour I’m always happy to listen. If there’s some special topic you’d like to hear, I’d like to shed some light on it for you if I can. If you haven’t been to Westchester Gold & Diamonds, we do all kinds of jewelry repair. We specialize on Rolexes. We can do any kind of watch repair, as well, and we’d love to have you come in. We’re in the Baers Plaza behind ABC Liquors. With that I’m going to say goodbye to everybody until next week.
Have Questions about your antiques, estate jewelry, collectibles or old treasures?
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Westchester Gold and Diamonds is one of the largest buyers of gold, silver, diamonds, Rolex watches, antique and estate jewelry in southwest Florida.
As the premier jewelry store in Port Charlotte since 1974. We do custom design and we are able to duplicate many designs that you may have seen in your travels; often at a fraction of the price.
We accept your old diamonds and jewelry in trade, the same as cash.