How experience and close observation can save you money

by charlene_voisin | February 1, 2013 9:00 am

By Hemdeep Patel

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Every day, we use our five senses to observe and interact with the world around us. In most cases, the interaction is passive. Take the simple act of driving down the street—we use our eyes to see the traffic around us and our hands and feet to manoeuvre the car safely.

If you were to place a professional race car driver behind the wheel, they would likely perceive their surroundings in a completely different way. For instance, they would feel any slight change in the tire pressure through the steering wheel; their eyes would inform them about traffic conditions four or five cars ahead; and their ears would be able to tell them how well the engine is running.

While the scenario might be the same, it is the way in which the senses have been trained to manage and observe the environment that differs. This was a lesson I learned early in my professional life, and am reminded of every day.

Experience and keen perception are a must in the jewellery industry. Since the scale of the object is most often very small, this is a good place to start training the eyes to see things that can truly make a difference in value and price. These differences range from the obvious, such as a diamond’s grade as described by its clarity and colour, to factors impacting price that are not overtly explicit but which are learned through experience.

At first glance

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As in all industries where products are bought and sold, first impressions are always key. Though my father taught me how to buy gemstones and diamonds, I’ve found the best and sometimes most expensive lessons were learned from the mistakes I made during my first buying trips. Gemstone and diamond dealers have long known the initial impression a stone or parcel makes on a buyer is perhaps most critical. To ensure the stone’s best characteristics are on display, the choice of colour where parcel paper is concerned is very important.

It has been a long-standing tradition—and one I learned in my early teens—that rubies are parceled in yellow paper, as this intensifies their red colour and masks any undesirable pinkish and purple hues. Given that, I knew quite well to remove rubies from their parcel and evaluate their colour when placed on a white background. Unfortunately, I also failed to grasp another important lesson during those early trips, which is to always examine sapphires in direct light, as well as diffused light. Direct light highlights any unwanted greens or greys in the stone, while diffused light provides a better sense of how dark a sapphire can look in day-to-day wear.

The more I honed my skills as an effective buyer, the more I realized everything I had learned as a student of gemmology at the Gemological Institute of America (GIA) only served as a mere foundation for the vast amount of information I accumulated through my trips. That was proven true when I first started buying diamonds in Mumbai.

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In the mid-1990s, the North American jewellery industry experienced very rapid growth in the understanding of gemmology, particularly the use of GIA’s diamond clarity and colour grading scale. However, at the same time, Indian diamond manufacturers were still using a ‘homegrown’ clarity and colour system. Specifically, this clarity scale used the colour of inclusions as the primary classification system. Stones would be identified as either naats or white-based. Naats are diamonds where primary inclusions are black. They are also less expensive than white-based, which are stones with mostly white inclusions. Within each classification, the inclusion’s location further divided each group. The general rule of thumb was the cleaner the stone’s table, the better and more expensive the diamond.

Every combination of clarity and colour is matched with a particular paper colour that hides a stone’s undesirable traits and emphasizes their key features. For instance, a group of white naats would be sold in a grey parcel, thus hiding black-coloured inclusions, while emphasizing the white colour and overall brilliance. Similarly, a yellow stone with white inclusions was sometimes placed in a medium-blue paper, which masked the diamond’s tint. Further, a dark-blue paper was used for stones with heavy white inclusions, a yellow colour, and/or strong fluorescence that caused a hazy appearance.

Though India’s traditional grading system might seem a duplicate of GIA’s clarity scale, it is, in fact, nothing like it. In many instances, it was possible to find a wide range of GIA clarity gradings within a single grading on this homegrown scale. The challenge was to source the parcel with the fewest stones with less-than-desirable grades. This was a lot easier said than done. In many instances, completing a purchase meant accepting these lower-end stones.

Changes in colour

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Colours were also organized in a very obvious manner in India, but that system bore no resemblance to the GIA scale that I had been taught. In India, the colour scale was divided into three sections: white, yellow, (also known as light colour [LC]), or light brown (LB). The colour’s intensity could be identified by how many ‘Ts’ were added ahead of LB and LC, which were stones at the lower end of the scale. So ‘TLC’ would mean ‘top light colour,’ while ‘TTLB’ stood for ‘top top light brown.’ Of course, the next logical question would be, what is ‘TTLB’? Well, no one knows, since one manufacturer’s ‘TTLB’ was not the same as another’s. In addition, there were always manufacturers who looked to identify their stones as something special, hence descriptions like ‘NW’ for ‘next to white,’ which defied the logic of GIA’s colour scale. Suffice to say, there is a general consensus of what these colours look like, but normally this grading nomenclature is reserved for diamonds bought and sold in parcels.

While this traditional grading system has been phased out for diamonds larger than .30 carats and in the better clarity range, it remains in use for smaller-sized diamonds and for larger stones in lower colours and clarities. Of course, if these stones were graded according to GIA standards, the resulting certificate would make them less than appealing. By adopting the GIA grading system, cutters and wholesalers in India have been better able to sell their goods internationally based only on the stone’s certificate.

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A keen eye is also required when dealing with smaller diamonds. For example, a parcel of diamonds weighing less than 10 points requires that each stone be examined to determine if there are any grading variations. I have made expensive mistakes when buying a parcel of one- to two-point diamonds, and subsequently realizing the grades of the one-pointers were much lower than the rest of the stones. Worse yet is discovering there are no one-point stones in the parcel, and instead, there is an abundance of 1.25-point diamonds that no one wants.

These may seem like unlikely scenarios, but I assure you they’re not. Although dealers and manufacturers know how to organize and present their inventory to a buyer, the client is usually at an advantage, since they tend to have a wish list in mind and are in a position to make a better deal for themselves. Further, since the dealer is working with a grading system that downgrades a particular inclusion or stone colour, it is possible the resulting cost may be lower than normal and beneficial to the buyer. I have taken advantage of many of these gaps to gain access to a wide range of goods that have sold very well in Canada. Of course, these gaps are constantly being narrowed, as gemstone and diamond manufacturers closely examine what inventory is being bought and sold.

One such gap exists in the grading of princess-cut diamonds in India. With rounds, stones with inclusions localized to the outside of the table are priced higher than those with flaws in the centre. This method of grading works well amongst traders and dealers, and is an effective way of accurately sorting round diamonds. However, there is an inherent problem with this system when it comes to princess cuts, as diamonds with feathers along the outside edge are prone to breaking when set, making centre inclusions the preference. In this particular scenario, it is a gap that works in the buyer’s favour.

Band together

Although coloured stones have neither a formal grading system nor general price structure, gaps in how gemstones are assorted can make for some good buying opportunities. Most gemstone manufacturers group together blue sapphires with visible colour banding at the lower end of their pricing scale. However, in many cases, stones with an excellent face-up view are still priced lower than those with a slightly hazy appearance, but with no visible colour banding. This is due to the fact the better-looking stones have a strong colour band that is visible from the bottom but cannot be seen from the top. Stones like this can be mounted with an excellent face-up appearance and overall presentation at a fraction of the cost of a stone that looks equally good, though without the banding.

One key fact I always keep in mind whenever I buy overseas is that the real profit is made at the point of purchase. It is here a buyer must bring together a wide range of resources and experiences to make an effective and successful purchasing decision. Details and factors that are unknown or overlooked by the seller might serve as an excellent opportunity for buying a true diamond in the rough.

[6]Hemdeep Patel is head of marketing and product development of Toronto-based HKD Diamond Laboratories Canada, an advanced gemstone and diamond laboratory with locations in Bangkok, Thailand, and Mumbai, India. He also leads Creative CADworks, a 3-D CAD jewellery design and production firm. Holding a B.Sc. in physics and astronomy, Patel is a third-generation member of the jewellery industry, a graduate gemmologist, and GIA alumnus. Patel can be contacted via e-mail at contactus@hkdlab.ca[7] or sales@creativecadworks.ca[8].

Source URL: https://www.jewellerybusiness.com/features/how-experience-and-close-observation-can-save-you-money/

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