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Buying Your First Diamond

It was a strange sight. A largely male audience, alert and listening intently to someone talking about jewelery was truly a situation that defies logic. Yet here they were last Wednesday afternoon, grilling jeweler Fred Feldmesser with questions ranging from how one can tell if a diamond merchant is trustworthy to tips on the best locations to buy diamonds.

For one preparing to buy an engagement ring, the process of selecting the gemstone, design and setting can be a nerve-wrecking process. Feldmesser, who was previously at Harry Winston and Cartier, and is now a private jeweler based in New York, has been lecturing at business schools like HBS and Columbia for the last 17 years. He educates students on the finer points of making such a emotionally significant purchase. Focusing on the ubiquitous gemstone used for engagement rings, the diamond, he gave a brief overview of the diamond market before plunging into practical advice for first-time buyers.

Despite over 4,000 types of gems and stones identified to date, less than 20 are hard enough to be made into jewelery. The four most popular are diamonds, rubies, sapphires and emeralds, but the diamond, particularly the white diamond, has emerged as the top choice and the gem most identified with love. Diamonds are prized for their beauty, rarity and durability, although Feldmesser pointed out that without proper care, diamonds could wear out over time. Although Feldmesser reminded us that diamonds are not necessarily good investment choices, diamonds are also prized as holders of stored wealth. The very portability of diamonds makes these gems convenient currency for smugglers, drug dealers and even those fleeing from wars and domestic turmoil in their countries.

Feldmesser sees the diamond trade as being characterized by three recent trends which could affect prices and supply. The first is the waning monopoly power wielded by the De Beers cartel. De Beers has seen its market share of rough diamonds reduced from 80 percent at its peak to around 50 percent last year. The second trend is the increasing dominance of Australia and Canada in mining of diamonds with the discovery of new mines, compared to places like Africa. Lastly, rough diamonds are increasingly being cut in China and India as diamond production firms capitalize on low labor costs in these countries.

Closer to home, the diamond certification agency, the Institute of America (GIA), was involved in a diamond grading scandal last year when a diamond dealer claimed that GIA upgraded diamonds for bribes. It eventually led to the dismissal of four employees at the New York lab, as well as new top management at the lab and the institute. Feldmesser drummed into the audience the need for knowledge and vigilance to avoid being defrauded. He said certification alone is insufficient. One needs to know what to look out for and to see the gem critically, one reason he counsels against buying diamonds online. Relying on the salesperson for expert advice will be inadvisable; one should walk in with some mistrust and come prepared to ask the right questions.

Feldmesser stressed the need to balance the desire for a gemstone of the highest quality and budgetary constraints, particularly for those still in business school. A diamond does not have to be perfectly flawless for instance; tiny imperfections, which are not visible even under a strong microscope, could potentially save a significant amount compared to a truly flawless diamond. However, he did caution against using price as the primary decision factor in the purchase. Ladies in the audience rejoiced when he encouraged the men to view it as an emotional purchase, which would get the marriage off to a good start.

“If it is important to her to have the blue Tiffany box with the Tiffany engraving on the inside of the ring, go to Tiffany’s,” counselled Feldmesser. “They may charge more, but it will be worth it.” Likewise, once you have chosen the diamond, don’t try to save on the setting. “Mounting is crucial,” said Feldmesser, adding, “it holds the stone in place and protects it.”

Feldmesser had one last piece of general advice. “Find out exactly what your fianc‚e wants and get that. She will be able to tell the difference and you will have to live with it for a long time.”

Fred Feldmesser’s Tips for Selecting a Diamond:
1. Color
Unless buying a colored diamond, look for a stone with a pure, white color. While D,E,F and G are the best color grades, H, I, and J grade diamonds are often used for commercial (non-engagement jewellery) and can offer great value if you prefer having a larger stone over a stone with a purer color.

2. Cut
Look at the stone and do not rely on just the certification of the cut. Facets must match at the correct angles or the stone could be up to 10 percent less brilliant.

3. Clarity
VS1 and VS2 are acceptable grades since imperfections are so tiny as to be almost invisible. Note that a flawless (FL, IF) or near flawless (VVS1, VVS2) diamond can be ‘bruised’ when mounted onto a ring, which is likely to introduce flaws.

4. Carat
Never buy a stone of exactly 1.0 ct or of other whole number of carats. When polished in the future, the stone is likely to lose some weight and you may end up with a stone of less than 1.0 ct.

5. Certification
Look out for nuances in the certificate.

6. Care
The ring should be polished and cleaned at least once a year to ensure that the brilliance is maintained.

February 21, 2006
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