Posted by: rasmussen
November 13th, 2016

Diamond “certificates” Just what are they?

I get asked about diamond certificates almost daily.  They are so commonplace in the jewelry industry today, but unfortunately, diamond certificates have become more confusing and misleading than they are helpful. In this article, I will try to cover just about every aspect of a diamond certificate including the reasons that they even exist and who can prepare them. I will try to keep it concise and certainly worth your time, but bear with me – there is a good deal to cover.

First things first – let me clean up the terminology. A diamond “certificate” is not actually a certificate; it is simply a “diamond grading report” and they are most certainly not all created equal. The reports are not and never were designed to be a warranty, guarantee or proof of value. This is sadly the most misunderstood part of a diamond certificate and one of the most important bits of information that I hope you will get from this article.  In fact each lab, somewhere on their grading report includes disclaimers and limiting conditions to that effect.  At the end of this post I’ve included some images of the disclaimers from the major labs.

In order to fully understand today’s grading reports, it’s best to understand how they came to be. Prior to the 1950’s, diamonds were not sold with these reports or any standardized grading. There were a lot of descriptive words used to describe a diamond’s quality, but it was a confusing maze of letters, numbers, Roman numerals and even terms to indicate where the diamond was mined (e.g. Wesselton. River). “His diamond is an AA quality? Well this one is an AA+!” Then in 1953, the Gemological Institute of America (GIA), a gemological school that was founded in 1931, developed a consistent and simplified combination of Arabic letters and numbers to describe the qualities of a diamond. This system is still in use and has become the most widely used grading scale in the world. Color grades range from D-Z (D representing a colorless diamond) and clarity grades range from flawless (F) to included (I3). While much simpler to understand, I still like to refer to this as the “alphabet soup” of diamond grading.

What makes this even more confusing is that, while identification of gemstones is an exact science, the grading of a gemstone is not. There is some subjectivity. Each quality grade represents a range only. Because no two diamonds are alike, not all diamonds within a range are alike. Not all SI2 clarity diamonds are identical, but the size, location, or amount of inclusions put them all within that range. Enter the gemologist, a trained diamond grader, and the advent of the diamond grading report. The laboratory of the Gemological Institute of America was the first major organization to provide “certificates” on a diamond. Graduate Gemologists, trained by the GIA and using the GIA established methods of grading​, prepared documentation that offered their opinion, or observation of the quality of the diamond. These documents represented the observations of a diamond as graded by that gemologist, at that time. As I mentioned earlier, there is some subjectivity to the grading, so it is possible for that grade to vary slightly. The industry accepted variance from one gemologist to another is one color and clarity grade in either direction. For example, gemologist 1 might grade the color of a diamond as a “G” and gemologist 2 might grade it “H”. That is an acceptable variance. Remember, it’s an opinion.

As with any opinion, people will disagree from time to time. When we consider that a diamond’s value is based on the combinations of cut, color, clarity and carat weight, it stands to reason that if I have a diamond that I think is a “G” color and someone else feels that it is an “H” color, we might disagree on the price. So what do we do? We send the diamond to a laboratory for an unbiased opinion of the quality. Sometimes that settles the dispute, but what if you weren’t happy with the findings of GIA? Perhaps, like an unfavorable diagnosis from your doctor, you seek a second opinion. Well, where are you going to go for that second opinion if GIA is the only lab? You start your own lab!

Over the years, many other gem labs have sprung up around the world. Using the same grading terminology, these labs had their own gemologists (many trained by the GIA) and prepared their own reports,  based on their own opinions. ​As time went by, the various labs and the “strictness” of their grading varied. Today, it’s an unfortunate but common occurrence for the diamond grading reports of labs to vary in some cases well beyond the industry accepted standards of one grade difference. I’d like to interject here and say that I have nothing against diamond reports when prepared and used properly. In fact, they can be a useful tool when buying a diamond, but on today’s market, the inconsistency of diamond reports is leading to major confusion about what a certain grade range should look like and what the diamond’s value should be.

Today, I visited the website of a very popular seller.* I searched for a diamond with identical characteristics as you would find on a grading report. SI1 clarity, H color, Ideal cut and exactly 1.00 carat. I found 87 diamonds that fit the criteria, all graded by the same lab. The retail prices that I could buy them for online ranged from $4,538 all the way to $7,707! A difference of more than $3,000… on diamonds that are identical based on their “certificate”. A little more research and I was able to find more “identical” diamonds ranging from $3,541 up to $10,154! This time, the diamonds were graded by different labs. So why such a difference? And what is the real value of a diamond with those quality characteristics?

It’s not so easy to answer those questions. We know that grading is subjective, but who is checking these “certificates” for acceptable accuracy? Unfortunately, there are no licensing laws, governing body or enforcement agency when it comes to diamonds and jewelry. You could start your own lab tomorrow if you really wanted to! There is no requirement for the people grading the diamonds to have any gemological knowledge to do so. The problem lies in that there is a tremendous emphasis put on the “importance” of having a diamond certificate, (regardless of its accuracy).

I’m reminded of friend’s visit to a diamond office.  After quite a while of looking at diamonds, he selected one and asked that they have a grading prepared for it.  Their next question had him simply speechless and quite honestly a bit puzzled.  “What would you like the report to say?”  What?  I thought a grading report was an unbiased, third party opinion of the quality of the diamond?  My friend’s response you ask?  “Well I want it to say what the grade is of that diamond.”  “Sure, but what do you want the grade to be, we’ll send it to the lab that will give us that grade.”

Sadly, this is not a one off situation and happens more than I care to admit. Now please don’t jump to the assumption that every jeweler and every lab around the world is dishonest. Far from it. I bring this up simply to point out how important trust is when buying a diamond. Through experience, I know that a diamond certificate is only as strong as the reputation and expertise of the lab. The same goes for the jeweler that sells the diamond to you. Don’t be afraid to ask questions. What are the seller’s credentials and where were they trained? Do they have to retest for their titles? What grading standards do they use?  As I mentioned before, diamond certificates can be a good thing when prepared and used properly and this is where trust and reputation come into play.

 

The inconsistency of diamond grading reports also brings up the question of the true value of a diamond. When you have a price difference of more than $3,000 on “identical” diamonds graded from the same lab, what is the real value of that diamond? Based on the information we’ve discussed so far, we can surmise that there will be a great variance between these “identical” diamonds, but quality characteristics alone cannot determine a diamond’s value. Diamonds are not a commodity. The value of the diamond goes far beyond a grading certificate. What other services, guarantees or lack thereof are provided when buying the diamond? Can you trade the diamond in? Are you paying for a nationally advertised brand name?

The other, and arguably the most important part of a diamond is “how does it look” Do you think it looks incredible? Does it sparkle? No diamond certificate in the world can show you that. Most certificates do have a comment about the diamond’s cutting – ideal, excellent, very good, etc. While these words attempt to describe how it SHOULD look, they simply fall short. Unlike the uniformity of the color and clarity scale, “cut” criteria varies from lab to lab. One person’s “excellent” cut might be someone else’s “very good”. And trust me, a diamond graded “fair” can be far from it! In the combined 50 years of diamond buying experience, my father-in-law and me, neither of us have EVER bought a diamond simply by looking at a grading report. We are professionally trained gemologists and appraisers. We re-certify our titles yearly, and are 2 of only 400 people in the country with these high credentials. We buy hundreds of diamonds a year, never once letting a certificate tell us if the diamond is pretty. Why should you?

A grading report can also affect you as a consumer in the price you pay.  Not only can a poor report impact the retail price for the diamond, you have to pay for the report itself.  A grading report can add a few hundred to a few thousand dollars to the price of a diamond.  The better and stricter labs tend to charge a bit more, but you get a better, more accurate product.  The cost of the grading report is often included in the price of the diamond.

So to recap…

What is a diamond “certificate?”  Well, it’s not a “certificate,” it’s a “diamond grading report”. It is a printed opinion on the quality of a diamond by a specific diamond grader at a specific time, under specific conditions.

Why do they exist? (originally)  To provide an unbiased third party opinion and as a way to identify one diamond from another using a unified terminology

Why do they exist? (today) A document prepared as a way for the overly cynical consumer to feel confident about the price they paid on a particular item.  An assumed “apples to apples” comparison of a product that simply cannot be looked at as a commodity.

Who can prepare them? Anyone.  There are a handful of well known labs that are commonly seen by the consumer.

  • Gemological Institute of America (GIA) **
  • American Gem Society Laboratory (AGS or AGSL) **
  • European Gemological Laboratory – USA (EGL-USA)
  • European Gemological Laboratory – International (EGL-INTL)
  • International Gemological Institute (IGI)

 

Thanks for reading! Have questions?  I’d love to hear from you.  Stay tuned for my next two posts! The next one will talk about “value” in a diamond and the second one will talk more about our credentials and our onsite gem laboratory.

 

 

*As of the writing of this post (1pm on 11/11/14)   ** GIA and AGS are the labs that we choose to use here at Rasmussen Diamonds.  They are the most respected and accurate labs in our industry.  They created the terminology that the rest of the industry uses.  They are also where we choose to get our credentials and education.

 

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