Diamonds — Out of Africa . . .
or out of a lab?
One of the world’s largest gem-grading labs recently announced that it received a parcel with hundreds of synthetic diamonds that were being passed off as naturals.
Alarm immediately shot through the gem and jewelry industry: How many lab-made gems have not been “caught” and are out in the marketplace being sold—and priced—as natural diamonds?
That question also impacts jewelry insurers, since lab-made diamonds have a substantially lower value than mined diamonds.
Diamond synthesis has been in the works for over 60 years. The earliest attempts produced diamond dust suitable only for use on cutting and grinding tools. Later efforts created gem-quality stones, but the time and electricity required made them more expensive than mined diamonds.
A decade ago labs were using HPHT (high pressure high temperature) to turn out yellow diamonds, which could be further treated to adjust their color, but colorless synthetic diamonds were still not possible. A different technology, chemical vapor dispersion, changed the game.
Chemical vapor deposition (CVD) passes a cloud of carbon gas over diamond “seeds” in a heated vacuum chamber. The diamond literally grows as carbon crystallizes on top of the seed. The process produces colorless gem-quality diamond that is extremely difficult to distinguish from mined diamond.
The diamonds that prompted the International Gemological Institute’s industry alert were all CVD synthesized. The diamonds were all of good color and clarity, with inclusions strikingly similar to the kind found in natural (mined) diamonds. Observations through a loupe or microscope, tools found in the average gem lab, could not recognize the stones as lab-made.
Gemological laboratories are continuously being challenged by rapidly evolving technologies. The IGI gemologists turned to DiamondPlus and DiamondView to examine the stones. These sophisticated instruments, designed by DeBeers specifically to distinguish between natural and synthetic gems, are priced beyond the reach of most appraisers and jewelry retailers. Generally, only large gem labs can afford them. These expert tools revealed the fluorescence and phosphorescence typical of CVD diamonds. The gems also showed striations characteristic of the CVD process.
Labs in Antwerp, Mumbai and China all received synthetic diamonds about the same time. Because the stones all had similar characteristics, they may have had similar origin.
The IGI alert noted one other important fact: none of the diamonds was laser-inscribed.
The World Federation of Diamond Bourses and similar international organizations require members to identify lab-made diamonds. The U.S. Federal Trade Commission guidelines also require disclosure. A laser inscription on the diamond’s girdle, though easily polished off, is the best way of assuring that this disclosure makes its way all through the selling chain. For example, Gemesis inscribes all its lab-created diamonds over one-quarter carat with the Gemesis name and the stone’s certificate number, and all the company’s promotional materials clearly identify its stones as lab-made.
Either these stones were never inscribed or the inscriptions had been removed. Apparently someone intended to fraudulently pass them off as natural. The question is, Who?
The diamonds originated with the manufacturer, were sold to a diamond company, and were purchased by the dealer who submitted them to IGI for grading. The dealer was under the impression they were natural diamonds, and he says they were priced as such. The dealer, not having the necessary equipment, cannot distinguish natural from lab-made stones, so he may be the first victim. Or perhaps the diamonds had already changed hands several times, which would not be unusual, and there are more victims.
IGI suspects that a volume of unidentified synthetic diamonds is already making its way to the marketplace. The jewelry industry is doing its best to prevent this, as such large-scale fraud undermines consumer confidence in the diamond market as a whole.
Consumers have no easy ways to determine the quality of a diamond or whether it originates in the ground or a lab. It is the responsibility of the consumer—and the insurer—to be sure diamonds come with reliable appraisals and certificates.
FOR AGENTS & UNDERWRITERS
Synthetic diamond is real diamond (not imitation, like CZ), but its value is far less than for a natural diamond of similar quality.
A synthetic diamond should always be so described on the appraisal — not just on the sales receipt, and not just on a diamond certificate. The appraisal should explicitly state either than the gem is natural or that it is synthetic.
Labs can afford the instruments needed to distinguish natural diamonds from their less valuable counterparts that are lab-grown. All diamonds of significant value should have a certificate from a reliable lab. We recommend the following labs and suggest that you use these links to verify reports you receive.
As synthesizing technologies evolve and become more prevalent, ever more sophisticated equipment is needed to distinguish natural from synthetic, and swindlers come up with new ways to fool the equipment. We may be approaching a time when we are able to insure only diamonds certified by reliable labs.
Most important, know that synthetic diamond is worth significantly less than natural diamond. You may want to review our earlier issue on insuring tips for synthetic diamonds.
If less expensive lab-made stones start slipping in as naturals, the potential for overpayment on claims is enormous.
Check the appraisal and other documents for words that mean synthetic, such as lab-grown, man-made, lab-made, created, or cultured. If there are terms you don’t understand, it may be worthwhile to consult a jewelry insurance expert.
Also look for brand names, such as Gemesis, Chatham, etc. Reputable makers of synthetic diamonds attach their names to their products. Recognizing these names, or working with a jewelry expert who does, could save you tens of thousands of dollars on a claim.
In replacing a diamond of high value, never assume that the stone is natural simply because the appraisal doesn’t say it’s synthetic. Use every means possible to determine whether it is natural or lab-made.
For a damaged diamond, get a lab report. By doing so you will not only verify the quality of the stone, but you may learn that there is no damage. For instance, a diamond claimed to be chipped may turn out to be an indented natural and not damaged at all.
Carefully read all documents on file. Insurers have overpaid claims by thousands of dollars because they missed — or thought unimportant — a piece of crucial information on the appraisal, such as the mention of color and clarity treatments.
For a lost diamond, try to get the selling jeweler’s records, as well as the sales receipt and appraisal. The jeweler may not be forthcoming with this information, but it is worth the effort for high-priced jewelry, especially if there is any question as to whether the stone is natural or synthetic.
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