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Zimnisky: Hard to protect lab-diamond price as production methods, economics improve

Paul Zimnisky, an independent diamond industry analyst and consultant, said it will be very difficult for the lab-diamond manufactures to protect price as production processes and economics improve. He told Rough & Polished’s Mathew Nyaungwa in an exclusive...

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The measurability of beauty

16 april 2018

Part 1. Weight

This article opens a series of popular science publications about rough and polished diamonds, their properties and characteristics, peculiarities of their origin, mining, cutting and polishing and evaluation. And we start with the latter – a 4C system widely used for describing the jewellery characteristics and for the subsequent polished diamond pricing. 

Such a natural phenomenon like a diamond, actually needs no special presentation. The bright luster, unique refraction of light, extreme dispersion of light, the highest hardness among all the natural materials, extraordinary chemical resistance – all these are not a full list of remarkable features of this mineral. It is used in the manufacture of a wide range of tools, in watch making, microelectronics, semiconductor instruments, in science when creating quantum computers and solving the tasks facing the nuclear industry. However, such a list of diamond applications, probably, is a surprise to many ordinary people: from time immemorial, diamonds have been taking on particular value and gaining in popularity in the jewellery industry only. When polished and set, a tiny piece of carbon immediately turns into a symbol of wealth, status, love, beauty and success. At a rough estimate, nowadays over 300 million women have diamond jewellery.

In general, if we use the unequivocal terminology, ‘rough diamonds’ are the crystals in their natural state and they look very much different from their jewellery versions. The optical properties of a diamond reveal themselves after cutting – it means, after the stone is given the right shape that ensures its full internal light reflection and maximum sparkling. A polished rough diamond is called a polished one.

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Figure 1. Rough diamonds.                                                                                  Image credit: ALROSA (PAO) 

A polished diamond evaluation is a complicated process with many aspects to consider. In many respects, it is somewhat subjective as most of criteria used (for example, colour, clarity, cut) cannot be expressed in absolute units and their evaluation is qualitative. In fact, the only parameter measured objectively is its carat weight.

The most common evaluation system is the ‘4C’ diamond grading one developed by the Gemological institute of America (GIA). Its ‘4Cs’ of a diamond are carat weight, color, clarity, cut (that is why it is dubbed ‘4C’). An expert evaluates a polished diamond weight, its hue, clarity from the point of view of internal abnormalities and the quality of cutting. Based on this analysis, the conclusion is made about how this stone stands out against other polished diamonds, which results in its price.

In Russia, all the technical specifications (TUs) for gem-quality polished diamonds and the polished diamonds to be sold in the national and foreign markets are regulated according to TU 117-4.2099-2002 and there is no one-to-one correspondence with the ‘western’ systems. In the national jewellery market, the ‘4C’ system is more frequently used.

So, the weight of a polished diamond. Its measurement is the easiest and most objective assessment parameter of a cut stone. From time immemorial, a carat (ct) is the measurement unit that equals to 0.2 g in the metric system of units. It is believed that the term itself came from the name of a Ceratonia plant, the seeds of which were from Bible days used as a measure of weight thanks to a wonderful feature of their constant mass – the weight difference between two Ceratonia seeds was less 0.003 g.

For rather long, there was no unified reference weight for a carat – for example, in Florence it was 0.1972 g, while in London – 0.2053 g. It caused a great confusion in the trade between the countries, and in 1871, the Paris Gem Traders Chamber made the first attempt to bring this metric to the international level. The attempt was not very successful as the measure of 205 mg set did not satisfy part of jewelers (the small-scale domestic traders unwilling to buy new weight pieces played a considerable role in this). It was not until 1907 that a compromise was reached after the meeting of the International Committee on Weights and Measures in Paris and a reference carat weight was finally defined. In Holland, the metric carat was put into effect from 1911, in the USA – from 1913, in the Great Britain – from 1914, and it became an official measure in the USSR in 1923.

In the jewellery industry, there exist one more carat (karat, kt) – a ‘gold’ one that does not show the weight but is a measure of the purity of gold or a percentage ratio of pure metal and inclusions (so called an ‘assay’ carat). When any piece has a ‘24 K’ hallmark – it means it is a 100% gold one. It is thought that this system of measures stemmed from a ‘solidus’ coin weighing 24 karats and circulating in the days of the Emperor Constantine the Great in the Rome Empire (however, many experts think it to be a mere coincidence). For example, semi pure gold is marked as 12 K, 2/3 pure gold is 16 K, and 3/4 pure gold is 18 K. Carat countersigns are widely used in the UK and USA – the countries that have not been accepting the metric system of measures for a long time. In Europe and in the former USSR countries, the metric system is used to assess the gold purity that shows directly the percentage of gold in a jewellery piece (i.e., the most common is a 585 hallmark, it means that the gold content in the piece is 58.5%).

But let's get back to polished diamonds and their weight. The stones fall into three groups:

• large – 1.00+ ct               

• medium-sized – 0.30-0.99 ct                

• small – up to 0.29 ct                         

• diamond powder – up to 0.01 ct           

Jewellery carat balances are used to measure the weight of a loose stone. The procedure itself is very simple but, probably, requires attentiveness, precision and compliance with the procedure. The electronic balances used in the diamond industry fix the weight with the precision of the 3d significand after a dot (i.e., the error in the weight does not exceed 0.001 ct). According to the generally accepted rounding-off rules, the weight is indicated in a measurement protocol with the precision of the 2nd significand after a dot, and the 3d significand is rounded if it is 9 and rejected if it is 8 or less. It means, that the weight of 0,999 ct is written in a protocol as 1.00 ct, while 0,998 as 0,99 ct.

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Figure 2. Weighing.                                                                                                 Image credit: ALROSA (PAO) 

Precious large and medium-sized stones are weighed by the piece. As for small and very small polished diamonds, it is possible to weigh them by parcels. In this case, the polished diamonds are sorted using a set of sieves to get size-groups (in this case, they are of the same clarity and colour) and are weighed ‘in bulk’. Often, small and very small polished diamonds are counted in quantity per one carat and sold as parcels. Table 1 shows examples of size-weight groups of very small polished diamonds. Also, a ‘pointer’ (equal to 0.01 ct.) is used in the global practice to describe the weight of a single small stone.
 
Table 1. Size-weight groups of small and very small polished diamonds 

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It is much more difficult to determine the weight of a diamond already set, that is why jewelers recommend to do this before it is set in a jewellery piece or after it is removed. If the jewellery piece as a whole is considered valuable (it's unlikely that anyone would agree to dismantle a family heirloom just to evaluate it), its weight is calculated using approximation formulas. For example, it is as follows for a standard round diamond:

М = D2*H*K,

where, М is an unknown weight, D – girdle diameter (the middle part of a polished diamond), Н – height, К – coefficient from 0.0061 to 0.0067 depending on the girdle width. The computational error for a classical cut could be up to 10%, and it is higher for the stones having a disturbed shape or for vintage ones.

Ideally, the cut is based on exact ratios of dimensions, facets angles and lengths of a polished diamond, that is why the carat weight of many stones can be approximately ‘determined’ by its size. The dependence of the linear dimensions of the polished diamonds having various cuts on their carat weight is shown in Table 2 (for full version, see Lumera Diamonds http://www.lumeradiamonds.com/files/size_chart.pdf ).

Table 2. The dependence of the polished diamond linear dimensions on their carat weight

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Traditionally, the rough diamonds and polished diamond value is in US$ per carat. The weekly pricelist Rapaport Diamond Report is the most popular price index in the world. For the first time, it was published in 1978, and although it still draws strong criticism, it is the basis for most rough and polished diamond deals. It represents the consolidated retail asking prices for polished diamonds in the New-York market that are received based on dealer surveys. In fact, the pricelist represents the opinions of the Rapaport Corporation’s experts on the price level but is not a buying or selling offer. It is issued individually for round diamonds and individually for fancy cut (pear, princess, oval, cushion, etc.) diamonds. It consists of 18 or 8 tables, respectively, grouped together into weight groups (0.3–0.39 ct, 1.0–1.49 сt, etc.). Within each group, the value varies with the diamond clarity and colour.

All other things being equal, the polished diamond value is the higher the more its carat weight is, which in general, is evident – large rough diamonds are very rare. Fig.3 shows the price comparison of the Ideal cut round polished diamonds similar in colour (Н) and clarity (IF, VVS2, SI2), available for buying in March-April 2018.

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Figure 3. The comparison of the polished diamond price with their dimensions. The data provided by Blue Nile, Brilliance, Brilliant Earth, Ritani, James Allen is compared.

The important thing in the Rapaport Pricelist is the transition between the weight groups – it increases the carat price on the average by 20-40 %. And while the sizes of stones - 0,99 ct and 1,00 ct – can look the same, their prices differ much. It may seem that one can ‘play’ and choose the stone close to the upper weight limit (0.49, 0.99, 1.49, etc.). However, it's not all that simple. Not so many such stones are offered on the market – from the diamond value point of view, often it is more beneficial to make small defects when cutting the stone to try and achieve the next weight category. Besides, retailers often use an additional premium for the ‘marginal’ diamond jewellery. In Russia, official prices for polished diamonds are set by the pricelist issued by the State Precious Metals and Gems Repository.

For the 10+ ct polished diamonds, there are no price indexes, and when pricing very large polished diamonds, the traders are guided by the international auction results or sell them at the price a buyer can afford.

Olga Tretyakova, Rough&Polished

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