August 21, 2016

Certificates

Certificates

Certificates and certification are often used as a marketing device and can be quite deceptive.

Certificates

Certificates (Grading Reports)
A diamond of any notable value will be sold with a Certificate or Grading Report from a grading laboratory. This document will describe the diamond’s carat weight and basic measurements and give an assessment of its color, clarity, and other details.

Important Information
“Certificate” is a misnomer. These documents clearly state: “This report is not a guarantee or valuation.” Nothing is being certified, so the proper term is Grading Report. A grading report is an absolute document, so called certificates leave a lot of room for interpretation. Thus certificates are often used to gain a larger margin than what the item deserves.

No Legal Standards
There are no legal standards enforced for diamond grading in the USA. A diamond’s Grading Report is not a legal document. In fact, it can pose the opposite problem by bringing false confidence:

Overgrading
A diamond given E Color by a soft lab could actually be F, G or lower at a strict lab.
A diamond given VS2 Clarity by a soft lab could be SI1 or lower if sent to a strict lab.
A diamond given a cut grade like “Ideal” by a soft lab might never be Ideal at a strict lab
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Certain stores and discount outlets have huge contracts with soft labs  for so called certificates because overgrading is lucrative to everyone involved, except for you. Some labs even print a “suggested replacement value” on the report which is high above the price the store intends to charge. Sales people may present the diamond to shoppers as if it is a great deal. This type of arrangement goes against the purpose of a reputable independent lab, which should be there to protect consumers.

The Hustle
That slippery seller offering an E VS2 Ideal Cut to you at some unreal bargain-price could be ripping you off. Why? Because that diamond will really be graded G SI1 Good Cut by any reputable lab and pros know it. Mr. Slippery bought it on that basis but is presenting it to you as something better, and undercutting all the reputable vendors offering you a true E VS2 Ideal Cut at a fair price. You give the scoundrel your business because his price is lower, thus it seems like he’s doing you a favor. He is not. He is laughing all the way to the bank because you were fooled by a soft “Certificate.”

Overgrading has become institutionalized. EGL International, in particular, has been singled out as a lab guilty of overgrading, and and banned from major trading platforms. You can read more about Overgrading, “Lucky Certs”, Cut Depreciation and Undisclosed Issues on our Avoid Pitfalls page.

GIA and AGSL Grading Reports
The Gemological Institute of America (GIA) and the American Gem Society (AGS) were both founded by Robert Shipley in the 1930s and undisputedly employ the most strict and consistent standards. Diamonds with reports from the AGS or GIA command a higher premium and hold their value better than diamonds from softer labs. The world’s best diamonds are typically sent to these labs.

The Gemological Institute of America (GIA)
has the strongest worldwide reputation for independence and consistency. The world’s largest and most valuable diamonds have been sent there for decades thanks to their constant color and clarity strictness. GIA added a two-dimensional cut grading system for round brilliant diamonds in 2006. While this raised global cut-consciousness, many consider their top grade quite wide, permitting a wide range of visual character and quality. We urge you to read our page: Why GIA Excellent is Not Enough.

The American Gem Society Laboratories (AGS or AGSL)
is the world’s elite cut grading laboratory. Smaller in scope than the GIA, they enforce the same color and clarity standards while focusing more strictly on cut craftsmanship and scientific light performance. From 1996-2005 they employed the only cut-grading system for round diamonds. That two-dimensional system was replaced in 2005 with a three-dimensional light performance metric that works for several diamond shapes including round and princess cut.

Grading Reports and Cut Quality
Most soft labs use unproven systems to assign (typically liberal) grades. The vast majority of grading reports seen in mainstream markets are issued by these labs.

The AGSL
boasts the only cut grading system recognized by the science community. Published by SPIE, the international society for optical engineering, it is the only system that is diamond-specific; evaluating angular spectrum in three-dimensions and takes different distances and tilt into account. Requirements enforced for their top cut grade in polish and symmetry stand above all other lab standards. Fewer than 1 in 20 round diamonds are capable of earning the AGSL Ideal grade, and this number falls to 1 in 100 for princess cuts. Only 2% of all diamonds in the world are sent to the AGSL for grading. Diamonds that cannot succeed there are sent elsewhere.

The GIA
enjoys a long-standing reputation as the global diamond grading authority. Their cut grading system, introduced in 2006, relies on a two-dimensional proportions system based on human observation studies. Their top grade of “Excellent” is in large agreement with the AGS system, though it is far wider and ranges into a steep/deep area that does not result in high performance. Approximately the best 15% of round diamonds will earn the top grade in the GIA system. Many reputable sellers carry diamonds graded by the GIA. The GIA does not yet grade cut in fancy shapes.

Tongue-In-Cheek Comparison

Grading labs can be compared to universities. A diamond manufacturer sends each diamond (student) to the place that diamond will have most success. The most average go off to big universities with common standards (EGL USA, IGI USA). The more elite ones with the ability to score high are sent to the Ivy League (GIA). A few that will be worthy of passing the rigors of rocket-science will go to MIT (AGS). And a few at the bottom of the pile get sent to city college (Joe’s Gem Lab and hot dog stand) or sold with no report at all.

This comparison is meant as humor but there is a parallel logic. The path a diamond takes from cutter to lab to seller is chosen on-purpose, based on a number of factors which include the target market and knowing how well (or not) a diamond will score at one lab vs the next. Diamond professionals know this and can use this proprietary knowledge to protect their clients, or to take advantage of them.

Call our appraiser today at (303)223-4944 for an appointment or inquire right now by email.

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