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Beyond the 4 Cs
Julie Tripp - THE OREGONIAN

6/10/2003

Enhancing the stone At the Yehuda Diamond Co. in New York City, Dror Yehuda fixes flawed diamonds in a process called clarity enhancement, replacing imperfections with resin-like material that "fools the light and makes the diamond look clear and beautiful." "I could tell you how we do it, but then I'd have to kill you," joked the diamond fixer. "Our diamonds cost 30 percent less, so people can save money or go bigger," he said. "Most people go bigger." His sales of 2-, 3-, 4- and 5-carat diamonds have ballooned, he said. "There's no such thing as a diamond that's too big," he said, adding that he had just sold two 5-carat diamonds for a pair of earrings.

Whether you're buying an engagement ring or an anniversary present for your mate or a glittering bauble for yourself, there's more to learn about diamonds than the traditional 4Cs of cut, clarity, color and carat. (Start with the accompanying sidebar if you need to brush up on those basics.)

Big changes are occurring in the way diamonds are produced and marketed. With the entry of wholesale retailers such as Costco into the diamond trade and online sites hawking the stones as well, competition for customers is fierce.

The U.S. retail diamond jewelry business accounts for nearly half of the $56 billion in worldwide annual sales. Americans bought $4.3 billion worth of diamond engagement rings alone last year.

During a three-day show in December, the Tigard Costco store sold $300,000 in high-quality diamonds of varying sizes to shoppers on a budget as well as those of means, the store reports.

"I don't know where all the money's coming from," says Megghan Harruff, a Costco diamond buyer. But her sales are "growing, growing, growing," she reports.

Along with more ways to buy diamonds, there are more brands and signature cuts; more ways to enhance a flawed diamond (or fool an unsuspecting buyer); more emphasis on bigger diamonds, at least in some quarters; and finally, more controversy about diamonds that are sold to finance civil wars in Africa.

With all that to think about, no wonder some of the best advice we heard in interviews is to find a good jeweler who knows diamonds, and trust him or her to guide you. A good one will be credentialed from a professional gem organization such as the Gemological Institute of America and will have been in business for many years.

"Talk to several jewelers," advises Elizabeth Stephens at Michael Nutter Ltd. in Vancouver. "And remember that the person behind the counter may just be a salesperson selling jewelry." If you're serious about buying a diamond, you want to deal with the resident expert.

Robert Hensley, a student of diamonds in Fairfield, Iowa, runs two Web sites designed to help people research the gems before they buy. At Diamondhelpers.com, visitors can take tutorials to become grounded in the basics and more. At FindMyJeweler.com, he helps people find trustworthy jewelers, he says. (He does not yet have any Oregon jewelers registered at the relatively new site.)

Hensley says he searches out and recommends smaller shops that offer "expert guidance with integrity and that give the consumer honest, helpful information."

Only a small percentage of people buy diamonds on the Internet, he said. Among those who do, the average sale is $5,000 for stones of 1 carat and larger.

"I would encourage people to educate themselves on the Web, select a jeweler and then buy locally," he said.

Here are other trends in diamond sales: Brands and shapes As competition heats up and profit margins "are down to ridiculous amounts," Hensley says, more jewelers have begun to develop their own brand or premium cuts to distinguish their products.

A Hearts on Fire diamond, for example, is a trademark for a round brilliant diamond cut with extraordinary precision that is said to optimize the play of light in the stone and make smaller carat stones flash the way bigger ones do.

"Branding allows the cutter and the retailer to make just a little more money," Hensley says, by offering something that is unique.

As for shapes, the traditional round brilliant still outsells all the others. But a recent jewelry show in Las Vegas also featured a trend to more fancy shapes, such as the ovals, pears and marquise.

Enhancing the stone At the Yehuda Diamond Co. in New York City, Dror Yehuda fixes flawed diamonds in a process called clarity enhancement, replacing imperfections with resin-like material that "fools the light and makes the diamond look clear and beautiful."

"I could tell you how we do it, but then I'd have to kill you," joked the diamond fixer.

"Our diamonds cost 30 percent less, so people can save money or go bigger," he said. "Most people go bigger."

His sales of 2-, 3-, 4- and 5-carat diamonds have ballooned, he said.

"There's no such thing as a diamond that's too big," he said, adding that he had just sold two 5-carat diamonds for a pair of earrings.

Costco also confirmed the trend toward bigger diamonds, but a New York spokeswoman for Tiffany & Co., which has a store in Portland, said it is not seeing a big swing in that direction.

Tiffany, of course, has built its reputation on cutting for brilliance rather than size since, in 1877, the company cut the 128.54-carat Tiffany Diamond out of a 287.42-carat rough stone. Much was left on the cutting floor, but what emerged was a drop-your-jaw diamond with 32 more facets than the traditional brilliant cut.

Changing the color Colorless and near-colorless diamonds are the most valuable. But the "fancies," colored stones that occur rarely in nature, also command top prices.

Now, however, "We help Mother Nature," says Roger Basile of Grafstein Diamond Corp. in New York. By irradiating a stone, using electron acceleration, that doesn't score highly for color, Grafstein can create a diamond in pink or blue or green or other hues.

When stones are enhanced for clarity or irradiated for color, the seller must disclose the treatment to the buyer. The certificates that come with graded diamonds will say the stone is natural or has been treated. Some certifiers won't grade enhanced stones, and top jewelry stores don't sell them.

"Conflict" diamonds Because as much as $200 million of the $8 billion-a-year market in rough diamonds goes to finance civil wars in Africa, controversy has erupted over bloodshed that has occurred in the name of the diamond trade.

To stem the controversy and the flow of money into "conflict diamonds," the international diamond trade launched the Kimberley Process, an agreement to stop the flow of diamonds that finance African wars. The United States and 44 other nations joined with companies such as DeBeers, the industry giant, to adopt the certification rules.

The certification system tracks every rough diamond shipment before it is exported. Last week, the U.N. Security Council ended a three-year embargo on the export of diamonds from Sierra Leone after the war-torn African country improved its controls. Julie Tripp does not give financial advice. For questions, call her at 503-221-8208 or e-mail julietripp@news.oregonian.com. For reprints of this or a previous column, call 503-221-8242.

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