Colored Gemstone Grading…Friend or Foe?

RAPAPORT… One of the most interesting seminars at the Tucson Gem Shows this year was held by Collectors Universe (CU) and American Gemological Laboratories (AGL) at the American Gem Trade Association Show. The seminar was titled “Colored Gemstone Grading…Friend or Foe?” The main topics discussed included: Why is the colored gemstone industry not using colored gemstone grading reports? and Are colored gemstone grading reports good or bad for the industry? Cap Beesley opened the debate; the panel consisted of Alfredo Molina, Doug Hucker, Arthur Groom and Michael Haynes. Abe Nassi and Antoinette Matlins responded from the audience. Here is a sampling of the comments from the major players.

CAP BEESLEY, PRESIDENT, AGL

“The problem with buying and selling colored gemstones starts at the retail jewelry counter between the sales person and the prospective customer. Sellers have anxiety about what they are selling and buyers have anxiety about what they are buying. An independent grading report of the material will calm these anxieties and allow more buyers and sellers to function with faith in the colored gemstone market.

“The objective of the industry is to sell more color, but until now, there have been too many roadblocks. We now have a new landscape with Collectors Universe (CU) and AGL. CU is an expert in grading high-value assets. CU has five other entities and they bring a new level of experience and money to the table. The new plan is to bring these services down the pipeline — to provide the tools to market more colored gemstones at all price levels.”
 
ALFREDO MOLINA, OWNER OF MOLINA FINE JEWELERS, PHOENIX, ARIZONA

“The biggest challenge of selling color is creating trust with the public. Colored gemstone grading is necessary and wonderful. It creates an opportunity so the buyer has confidence in what he is buying. Today, 90 percent of the retail jewelry industry doesn’t sell color because they have no knowledge or confidence.

“Amazingly, 60 percent of our net profit comes from colored gemstone sales. No one selling diamonds is making money in this business. You can still make money in colored gemstones because it is very difficult to compare gemstones.

“The perception in the diamond industry is that you can buy a diamond from the paper. For example, it is believed all F-VS2s look the same. In reality, this is not true and all F-VS2s will fit into a range. What the colored gemstone industry needs is a system that is repeatable like diamonds.”

DOUG HUCKER, CHIEF EXECUTIVE OFFICER (CEO), AMERICAN GEM TRADE ASSOCIATION (AGTA)
 
“What we are doing is trying to improve sales of colored gemstones by making consumers confident. People love color, whether it is in fashion or in gemstones. How do you make the consumer confident?

“The problem is colored gemstone reports are relatively new. Diamond grading reports, on the other hand, are widely accepted. Colored gemstones are complex and there is no standard grading system. Clients want to know if they are getting value for their money, and if the stone they are buying is really as advertised. We have to follow the lead of the diamond industry. They give the consumer an independent third-party document with the transaction, allowing the buyer to make an informed decision. We need to do the same to help consumers make an informed decision when buying a colored stone.

“One major problem with the industry is the lack of young people coming into the colored gemstone business because they lack confidence in colored gemstones. It is easy to learn diamonds, gold and watches. However, it is difficult to learn about colored gemstones. Color can be scary. If you give them a document, it helps all the way around.”

ARTHUR GROOM, CEO, ARTHUR GROOM & COMPANY, RIDGEWOOD, NEW JERSEY

“I am very passionate about this topic. I want you all to know I have never lost a sale by practicing full disclosure or with a grading report. Naturally, it is easier to sell a diamond because of grading reports. Many people in the business and many consumers don’t trust anyone who sells colored gemstones. The more widespread use of colored gemstone grading reports will restore this trust and allow the industry to expand.”

MICHAEL HAYNES, CEO, COLLECTORS UNIVERSE

“Collectors Universe is about helping markets grow. When we enter a market, our independent grading increases the enjoyment of people who buy these assets. This tends to also increase values and liquidity in the markets. However, we have learned from the other markets, true independent third-party certification matters in terms of value. The jewelry market is presently growing at 3 to 8 percent per year, depending on who you believe. This is not acceptable. We need to grow faster. Some of the markets we are in are growing at a compound rate of 28 percent per year.

“Selling more colored gemstones is really a marketing problem. The market needs reports that are inexpensive, and, therefore, more widely available. Further, they must prove value to the dealers and the report must have meaning. We plan on reaching more consumers with our new reports that start at $25. You have not seen anything yet in our marketing efforts toward promoting the colored gemstone industry.”

ABE NASSI, COLORED GEMSTONE DEALER, NEW YORK

“We all want to promote colored gemstones. We need an educational system for colored gemstones like they have for diamonds. The truth is AGL has been doing colored gemstone grading for over 20 years. AGL has always promoted colored gemstones with reports and has always tried to get Gemological Institute of America (GIA) and AGTA involved. It is a brilliant idea to educate consumers and dealers with grading reports. However, most dealers don’t want reports. They want to hide the truth.”

ANTOINETTE MATLINS, AUTHOR, WOODSTOCK, VERMONT
 
“If you walk around the AGTA show, you do not see many AGTA grading reports. Who is getting these reports? It is not the dealers, but often the consumers. They invest in the stones and send them to grading labs to verify what the dealers have told them.

“The colored gemstone dealers in this industry are not educated. They often represent material as natural and not heated when, in fact, the goods are heated. Dealers don’t understand the science of gemology but simply tell their clients whatever they have been told. The dealers know they have been making money this way, so why change? The trade in general has not accepted its responsibilities to the final client and most do not provide proper documentation. I have offered to provide gemological services and educational seminars free of charge to AGTA members. They never call me.”

CONCLUSION

The majority of the people who attended the seminar were in favor of colored gemstone grading reports. No dealer argued colored gemstone grading reports were bad. In essence, the people in the room were speaking to the choir.

The colored gemstone industry is steeped in tradition and many groups have different agendas. It is easy to point fingers in this market. Many people accuse the dealers of not wanting to market their stones properly. The colored stone laboratories argue among themselves about everything from grading to nomenclature. Collectors Universe contends all these issues will sort themselves out if they become the dominant player in the industry. Of course, only time will tell if this is true.