Many Facets of Gem Purchases Are Confusing

For all their lack of expertise, many people who have just bought a diamond ring are fairly comfortable with their decision, sure they got "the nicest-looking stone," or "the best price," or "the salesman didn't try to deceive us." But they're not really sure.

Diamonds, many in engagement rings, account for a third of the $18 billion worth of jewelry sold annually in the United States. These are a substantial purchase, costing hundreds, even thousands of dollars, although probably few buyers really know what they're doing. "For the majority," says jeweler Nelson Holdo, vice president of Troy & Co. in Pasadena, "the diamond engagement ring is their first major jewelry purchase."

There's a lot to know. Diamonds are not mysterious, but they're complicated, specifically described as to color, clarity, cut and weight in carats (1/5th gram) and points (100 per carat).

"The No. 1 determinant of value is color," says James Lucey, manager of education projects at the Santa Monica-based Gemological Institute of America, a nonprofit facility for the education of jewelers, and operator of independent grading labs. Graded from D to Z, the rarest diamonds appear white or colorless, while most have yellow, brown or gray tints, easily visible from grade K on in larger stones. In a "major" stone of a carat or more, says Lucey, "one or two color grades can mean literally thousands of dollars."

Clarity Highly Prized

"Clarity" refers to the stone's freedom from "inclusions" and surface "blemishes"--individual structural characteristics that can be diagrammed for each gem. A "flawless" (clarity grade "Fl") diamond has none, even under 10-power magnification. Gradings then proceed through several categories, from "Very, Very Slightly Included" (VVS) to "Imperfect" ("I"), which has inclusions visible to the naked eye.

More complicated, and probably inaccessible to the layman, is "cut," not to be confused with shape (round, oval, pear). The cut, says Lucey, is the "proportioning and finish of the stone," involving defined measurements and angles that affect the diamond's light and sparkle. Less complicated is the carat weight, which consumers immediately understand, but, like everything else, take on faith.

Unfortunately, "in most cases, if a stone was represented as a diamond, even if it wasn't, (most consumers) really wouldn't know," says James Gordon, chief operating officer of the Houston-based chain of 600 Gordon's-owned jewelry stores. They rely, he says, on "the confidence factor"--trusting in a retailer recommended by friends, or with good credentials (years in business, membership in professional associations, gemological degrees and certificates, almost all from the Gemological Institute), or apparent honesty.

Industry members themselves offer certain warnings. However vendors advertise themselves, "wholesalers" sell to retailers for resale, and "retailers" by definition sell to the public, with a markup from wholesale. Trade-named diamonds--"Diamonstone" perhaps, or "GenuDiamon," or maybe "CZ Diamond--are usually synthetics. And when either the "regular price" or "appraised value" of a stone is much higher than the selling price, "ask yourself why they should give you such a good deal, except to make you feel that it's valued at more than you paid?" says Joel Windman, general counsel at the industry-supported Jewelers Vigilance Committee in New York.

Some jewelers stress the "investment" value of any stone. "When you buy jewelry, it may be good 'value,' " says Cosmo Altobelli, a North Hollywood jeweler, "but it's not necessarily an 'investment,' which is something you buy to make money." Indeed, unless it's a signed work of art, or old and fine, or includes "significant" stones, jewelry should be "purchased to be worn and enjoyed and maybe someday sold for what you paid or a little more," says Russell Fogarty, jewelry specialist for Christie's in Beverly Hills. "Most things you should hope to live long enough to get back what you paid."

Some jewelers don't explain the usual measures of a diamond's worth, preferring to use general terms like "finer" and "more brilliant." Some let it "depend on the customer," says Gordon. "If they want to get into the technical part, our people are trained to do so, but if not, it would only confuse them." Some make grades part of their sales pitch, tossing out carat weights, color letters and "VSs" (rarely lower, of course) right and left.

Grades Not Always Used

Many jewelers don't publicly use the Gemological Institute's grades but their own grading system, because appraisals are subjective and may differ, and they want to make it hard to compare directly with someone else's product or appraisal. If challenged, of course, they'd have to say where their grades fall on a Gemological Institute scale.

For the consumer, the danger is that grade claims may misrepresent the gems, says a well-known appraiser who recently shopped diamonds with a reporter. "In many cases, the price wasn't bad," he says, "if the stones had been what they said."

But outside appraisals, he said, would have been much lower, and even without an appraisal, most retailers would have known the given grade couldn't be sold for the given price. "They'd have paid a minimum of $500 a carat wholesale," he said of one bracelet, "or $2,500 for the five-plus carats total weight. Add the bracelet and the labor of setting, and it would be over $3,600; how could they sell it for $2,250?"

Even assuming valid claims, the consumer probably needs help making a choice. "We try to give them the tools to make an educated decision," says Nelson Holdo, who presents a number of stones with various qualities, and lets customers "decide where the trade-offs will be."

It's the fifth "C"--cost--that makes trade-offs necessary. "To keep the price down," says Lucey, "the consumer could buy a stone with more body color perhaps, or less weight, or lower clarity." Cut, too, is sometimes sacrificed to attain a larger stone.

Whatever his choice, a customer should leave with more than the jewelry. Few stones come with a prepared Gemological Institute report, but all should leave the store with "quality claims stated in writing," says Lucey, "in an appraisal or on the sales receipt." That way, says Windman, "if there's a problem later, it won't be 'they told me,' but 'they wrote me,' and here's what they wrote."

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