TABLE OF CONTENTS PART ONE

THE EMERALD CONTROVERSY: DATELINE'S "ROMANCING THE STONE"

By Robert Genis

In June, 1997 a jury in Washington, DC found for Dorree Lynn against her jeweler, Blue Planet Gems. She purchased a 3.65 Colombian emerald for $38,500. The jury found the jeweler failed to disclose the emerald had been treated and decided the jeweler had to buy back the emerald plus pay her legal fees of $182,000. Blue Planet's legal fees were $160,000. Without getting into the merits of the case, it is fair to say this decision has caused shockwaves throughout the jewelry industry.

With this as background, NBC's Dateline aired the program "Romancing the Stone" on national television November 21, 1997. This was a hidden camera investigation by Lea Thompson.

The program discussed how colored stones are the rage in America and consumers are spending $321 million a year on emeralds and rubies. Lea Thompson interviewed Dorree Lynn and her husband and briefly discussed her case against Blue Planet Gems. After her emerald was returned to the jeweler to be remounted, a major inclusion became readily apparent. Presumably, this was a result of the heat involved in resetting the stone. NBC then explained the Opticon process. The "reversal" of the Opticoning process resulted in Dorree Lynn's emerald dropping in value from $40,000 to $5,000.

Cap Beesley, President of American Gemological Laboratories, spoke as an advocate for industry reform and stated, "70% of all emeralds are fracture-filled." Beesley noted that if the process reverses, the value of an emerald will drop between 25-40%.

NBC did state that the heat treatment of gemstones and the oiling of emeralds is acceptable in the trade. The FTC does require full disclosure if a gem has been fracture-filled. The AGL stated its position for full disclosure to the ultimate consumer.

NBC next went on a $17,000 shopping spree with hidden cameras. They bought a $5000 emerald from Diamond Quasar on 47th street in New York. They asked the salesman, a man identified only as Jacob, if the stone was totally natural. He said it was and sent them to an appraiser for confirmation. The appraiser stated the emerald was not filled or treated with chemicals.

NBC then purchased a $1600 emerald from Bailey, Banks, and Biddle, a $3300 ruby from Macy's, a $1500 emerald from Fortunoff, and a $4000 emerald from Tiffany's. All of the jewelers stated the stones they were selling were natural, untreated gemstones.

NBC then took the gems to the AGL. Cap Beesley concluded all the emeralds were treated with artificial resin and/or oil. The ruby from Macy's was heat treated and fracture filled with a glass-like substance. (ED note: It was probably a Mong Hsu ruby.)

It was noted that Tiffany's is a client of the American Gemological Laboratories. NBC asked Beesley, "What does this say about the market today?" Beesley responded, "The market is in serious trouble. They do not understand enough about their own product to do a reasonable, rational job to represent it." NBC then sent all the stones to the SGI laboratory in Switzerland. This lab confirmed AGL's results.

What did the jewelers say when NBC returned? Bailey, Banks, and Biddle and Fortunoff both stated they did not know the stones were treated and they have strict policies not to buy treated stones from their suppliers. Further, they stated these stones must have slipped through the system! Tiffany's said they require their suppliers to provide only natural gemstones, but detection is difficult. Macy's said they did not even know about fracture-filling. As a result of the program, Macy's will now require suppliers to disclose if the gemstones have been treated and they will disclose this information to consumers. Diamond Quasar implied he might have been duped by his supplier and said he was going to stick to buying and selling diamonds. (ED note: I find this comment interesting. Since he could not tell if the emerald was fracture-filled, how can he tell if a diamond is lasered or fracture-filled?)

What about Diamond Quasar's supposedly independent appraiser? Unbelievably, he admitted on national television that he knew the stone was treated when he examined it for NBC. However, he said he had to lie to make a living and pay the rent!

NBC then returned to AGL and asked if these excuses were good enough. Beesley responded, "No. It is their business to know about this." Further, "If we tamper with the interests of the ultimate consumer, we have a long term credibility problem. Lets deal with it now."

The program ended with NBC recommending that if you buy a stone, obtain a written guarantee the stone has not been treated. Also, if the filling reverses, you can have the stone retreated for $200. Finally, an independent appraiser can send you to a reputable independent laboratory.

Conclusion
It has been National Gemstone's experience that 99% of all emeralds we see are treated with some kind of filler. We have always felt that it is the job of the jeweler or gem dealer to explain this to the consumer . Since 99% of the colored gems we market have AGL Colored Stone Grading Reports, our clients are definitely aware if a stone has been treated or not. Consumers deserve to know that the stone they are buying is what it is being represented to be. Many jewelers and gem dealers subscribe to The Gemstone Forecaster and I understand you may fear you will lose sales if you disclose treatments. However, it has been my experience for almost 20 years that you can create long term clients by educating them and practicing full disclosure regarding treatments.

Consider this scenario: You go into a car dealer and buy a new Porsche. Later, you discover the car has a Volkswagen engine. Will you ever buy another car from the same dealer? Is this good for the car industry? Of course NOT! The safest course, if you are a consumer buying or a jeweler selling a colored stone over $1000, is to make sure the stone comes with a grading report from an internationally recognized laboratory.

AUCTION REPORT (OCTOBER SALES)

Christie's
At the October sale, Christie's sold $28 million or 74% of lots. A 30.21, D-IF, emerald cut diamond sold for $63,800 per carat. The 26.14 carat, D-VS2, Raja diamond went for $64,000 per carat. A one carat, pear shaped, purplish red diamond fetched $215,500 per carat. Two Old European cut, grayish blue diamonds with SI clarities sold for $67,360 per carat. A 1.80, circular, light blue diamond, VVS1 sold for $78,610. A 5.89, intense yellow, VS1, rectangular sold for $25,975 per carat. A 1.94, circular, vivid yellow, VS fetched $33,500 per carat. Christie's also sold a cushion, 5.15 Kashmir for $19,700 per carat, a 9.18, Kashmir cabochon for $13,750 per carat and a 12.18, cushion, Burma sapphire for $15,100 per carat.

Sotheby's
Sotheby's sold $37 million or 74% of lots. The 5.54, fancy vivid orange, the only vivid orange ever graded by the GIA, went for $238,718 per carat to Ronald Winston. He only bid once after intense bidding on the diamond. He immediately renamed the gem the "Harry Winston Pumpkin Diamond" and plans to mount the stone with two blue diamonds.

Also up for sale were two special diamonds. The Jonker Number 7, a 19.74, emerald cut sold for $827,500 and the President Vargas Diamond, Number 4, at 28.03 sold for $745,000. The gem was found in Brazil in 1938. Rough it was 726 carats before Winston cut it into 29 stones.

Sotheby's sold an 11.75 carat, vivid yellow, oval diamond for $160,850 per carat. A .31, purplish red, radiant diamond went for $185,484 per carat. A 2.23, grayish blue, VS1 (potentially IF) sold for $149,103 per carat. A 1.00, oval, deep pink fetched $85,000. A 5.04, intense yellow, VVS2 brought $31,052 per carat. A 2.16, vivid yellow brought $39,352 per carat. Also, a 8.68, emerald cut, Colombian emerald sold for $26,901 per carat.

A BOOK REVIEW: BY ROBERT GENIS

"Fancy-Colored Diamonds"
By Harvey Harris
Copyright 1994
DeBeers mines tens of millions of carats of white diamonds every year vs. several thousand fancy colored diamonds. In addition, the vast majority of colored diamonds are melee (diamonds from 1-17 points). It is connoisseur money that is attracted to fancy colored diamonds. Fancy colored diamonds are viewed by collectors in a manner similar to those who quest after famous sculptures and paintings.

History
India was the all time leading producer of large colored diamonds. These mines produced from 400 B.C. to 1725. Some of the most famous Indian colored diamonds include the 242 carat, faint pink Great Table, the 185 carat, light pink Sea of Light, the 139 carat, citron Grand Duke of Tuscany, and the 112 carat French Blue (later recut to the Hope diamond).

Brazil became the world's next producer of diamonds and is known for its green diamonds. The most famous being the 41 carat Dresden Green, the 40 carat Green Brilliant, and the 33 carat, greenish/yellow Maximilian Two. Also, Brazil produced the 128.80, pale pink Star of the South.

In 1867, in South Africa, the diamond rush began when Erasmus Jacobs found a 21 carat yellow. South Africa is known as a producer of yellow, blue, pink, and brown diamonds. Finally, the only other producer of fancy colored diamonds is Australia, where pinks were discovered in 1979. These stones were the first find of colored diamonds in 113 years.

Causes of Color
The main reasons for color in diamonds are:

  1. Presence of impurity atoms.
  2. Atomic structural defects.

Yellow diamonds are created by nitrogen. It is a scientific mystery what causes the color in orange diamonds. It was thought to be nitrogen but recently disproved. It is now believed it must be a structural defect. Red is probably caused by a structural defect. Pink color is caused by structural defects, as evidenced by graining. Brown is caused by the the stress zones in the crystal. Green is caused by the natural irradiation of the earth, probably uranium ore. This is why the green color is only a few micrometers deep. Blue is caused by the presence of boron. The new Australian blues are colored by hydrogen which causes a blue-gray color. Interestingly, green and pink diamonds change color after the crystals are formed and all others are colored at creation.

Cutting
The purpose of cutting white diamonds is to produce highly brilliant gems. This is accomplished by shortening the optical light path that is reflected through the diamond. White diamonds are cut according to Marcel Tolkowsky's precise mathematical formulas. However, these precise mathematical formulas tend to "wash out" fancy colored diamonds. This is why cutters utilize fancy shapes such as marquises, pears, etc. In 1976, Henry Grossbard invented the radiant cut. The purpose was to give an emerald cut the life of a round brilliant diamond. An unexpected benefit was fancy colored diamonds tended to face up a deeper color when cut in this manner. This is why we see numerous radiant cut fancy colored diamonds.

Treatment
For every 100,000 carats of diamonds that are cut, only 10,000 carats are colorless, and 1,000 carats possess fancy color. In reality, 90% of white diamonds have yellow, brown, and gray, although these colors are virtually unnoticeable when a diamond is mounted.

For centuries people have been trying to alter the color of their gemstones. In the 16th century, jewelers used reflective tinted foils when they set stones. Also, jewelers used paint, vegetable dyes, and inks. In the last three centuries we have been using chemicals and optical coatings.

The main way to induce color in diamonds today is irradiation. In 1905, an English chemist buried colorless diamonds in radium-bromide salts. Rind-like layers of blue, green, and yellow formed around the diamonds. Today, the stones are still too radioactive to wear! In 1942, a scientist at the University of Michigan used a cyclotron accelerator to safely and permanently color diamonds. Diamonds can now be colored green, blue, brown, yellow, and black. These diamonds are easily identifiable by major labs.

Color Grading
Although much in this section is obsolete due to the new GIA Colored Diamond Grading Report, the discussion of the spectrophotometer and the colorimeter are interesting.

Fancy Colored Diamond in Jewelry
For centuries, diamonds were symbols of adornment that signified rank, status, and prosperity. Only the extremely wealthy could afford diamonds until the 18th century. The discovery of diamonds in Brazil brought smaller, less perfect diamonds to the middle class. Few were enamored with colored diamonds, and for centuries people coveted white and clean diamonds. It was not until the 1980s that fancy colored diamonds became noticed by the general public.

Why do we see such few pieces of fancy colored diamond jewelry? According to the author, if you wanted to make a piece with 15 carat size D-IF diamonds, you could probably find all the stones you needed in a week. if you wanted 15 fancy yellow diamonds (VS) you might wait years!

Auction Prices
By 1991, 19 of the top 20 per carat prices of gems sold at auction were held by colored diamonds. By the 1990s, 43 of the 58 items that sold for over $100,000 were colored diamonds. With the exception of 1979-1980, colored diamonds have consistently beaten white diamonds' per carat prices at auction.

Of course, the record holder is the .95 purplish red that sold for $926,315 per carat. The presale estimate was $150,000 per carat. Many Christie insiders believed the stone would never sell. Bidding began at $250,000. Why did the stone sell for such a high price? According to the author, 1986 was a period of vast paper wealth and buyers were searching for protection by acquiring high grade assets as a hedge. Further, the .95 red is the gemological equivalent of the Mona Lisa. The stone had value simply because of its rarity since it had no provenance. Further, the stone was not purchased by the Sultan of Brunei, but a private collector.

Fancy Diamonds Through the Ages
Probably the second most famous colored diamond, after the Hope, is the Tiffany. This yellow diamond was bought by Tiffany's in 1877. It was from South Africa and weighed 287.42 carats. It was recut into a 128.51 cushion shape. It was displayed at Tiffany's in New York, Paris, and London.

In 1984, Zales Corporation bought an 890 carat rough. It was cut into a 407.48 brownish-yellow kite shape. It was put up for sale at Christie's in 1988. Bidding stopped at $12 million, short of the $20 million reserve.

In 1967, the Baumgold Brothers purchased a 248.90 South African brown. They cut the stone into a 111.59 orange-brown pear named the Earth Star. It was sold to a Florida private collector in 1983 for $900,000.

Historical and Noteworthy Colored Diamonds
Red
The earliest known red diamond was the one carat Halphen Red owned by a London gem dealer. It was sold in the late 18th century for 800 pounds. It has since disappeared and many speculate this stone is the .95 red recut or repolished. According to the author, recent information disputes this and in fact the .95 red is a new Brazilian diamond.

This book also has a fascinating section on how Argyle of Australia found a 7.48 octahedral rough in 1988. The book describes the cutting process and how the stone ended up a 3.16 purplish-red.

Pink
In 1642, Tavernier, the famous gem dealer, bid on a 242 carat, light pink diamond. The seller refused his bid. In the 1730s the diamond was looted from India and taken to Iran. In 1834, the stone was damaged and recut into the 175-190 carat Sea of Light and the 60 carat Nur-Al-Ain. The Nur-Al-Ain was eventually set by Harry Winston and sold to the Shah of Iran.

The Duke of Brunswick bought the 41.75 Agra in 1884. The Duke considered this stone the center of his colored diamond collection. The stone was recut in 1880 to improve clarity and in 1990 to improve color. The stone is now 21.06 carats. It sold at Christie's in 1990 for $7 million.

Orange
The most famous orange diamond is the 24 carat Peach Blossom that was part of the French Crown Jewels that was stolen in 1792. An 8.93 orange diamond was sold at Sotheby's for $215,000 per carat. (Ed note: Of course, the 5.54 Harry Winston Pumpkin Diamond probably belongs on this list. See Auctions.)

Brown
In 1657, Tavernier saw the 137.27 Florentine which was probably a brown although he described it as citron. Another famous brown diamond is the 109.26 Cross of Asia.

The two most famous collectors of brown diamonds were Cardinal Jules Mazarin, the Chief Minister of France (1602-1661), and the Duke of Brunswick. Of the 18 colored diamonds owned by the Duke, 9 were brown.

Yellow
Interestingly, the white diamond rush in South Africa was started by the Eureka, a 21 carat yellow diamond. As mentioned before, the most famous yellow diamond is the Tiffany. In 1990, the "Golden Drop", a 18.49 intense yellow diamond, sold at auction for $3.7 million.

Green
The most famous green diamond is the Dresden Green. It is apple green and weighs 40.70. The stone was displayed from 1768 to 1942 in the Dresden castle. The Russians took the stone during World War Two, but returned it in 1958.

Blue
Of course, the most famous blue diamond in the world is the Hope Diamond. Follow these links to read about the Hope:
GFN, Fall, 1997
GFN, Summer, 1997
GFN, Winter, 1996

Purple
There are no historical large purple diamonds. A 1.04 sold for $89,00 per carat in 1990 at auction.

Gray
Cardinal Mazarin reportedly owned a 17 carat square cut gray. The stone has disappeared. In 1989, a 17.79 Fancy Gray sold for $641,100 at auction.

Black
The most famous black is the 67.50 Black Orlov, which was owned by Harry Winston. In 1969, the stone was sold for $300,000. It was resold in 1990 at auction for $99,000.

Conclusion
This is the first book strictly devoted to fancy colored diamonds. This book is worth buying simply because of the photographs. Since most of us only get a chance to see a few colored diamonds, this book is the next best thing. It is 184 pages with 150 color photographs. Strongly recommended!

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