Diamond Grading And The SI3 Debate

(via Gem & Jewellery News, Vol.13, No.1 March 2004) Harry Levy writes:

It is amazing how little those who use grading certificates understand exactly what they are using. Laboratories, amongst the other work they do, produce two types of certificates. The first is an identification report, telling one whether it is a natural stone or a synthetic one, some identify whether the stone has been modified by treatments other than cutting and polishing, and some may give an origin of the stone, where the stone has been mined.

The other type is a grading report, usually for diamonds, which gives a grade for the color, clarity and other relevant factors to identify the stone, such as its dimensions and shape, as well as comments on cut and proportion, and an indication of fluorescence should this exist. Sometimes these reports are called grading certificates, which is an incorrect description. The grading reports may now include comments on treatments, a topic on which there is yet no universal agreement. Some identification reports are now trying to give comments on the amount of treatment a stone has undergone, for example the amount of oiling or resin-filling an emerald has been subjected to.


Why use reports?
The question to ask is why do we need grading reports and the simple answer is that they are used to put a value on a stone. It makes it simpler to compare stones, both for matching and for pricing. I recall when I first started trading in diamonds I would get a phone call with the question: “How much is a 1 carat diamond?” No matter what answer I gave I was told that they could get it cheaper and it was only after a second discussion could I tell them the price was dependent on the quality and thus give myself a chance of selling a stone.

Today I still get similar calls, although the enquiries seem to be more specific. I am now asked to quote for, say, a one carat diamond of color G and clarity VS1, again when I give a price I am told they can get it cheaper. The potential buyer thinks that by giving the parameters of color and clarity he has totally identified the stone. If I can get back to the caller I ask him he has such a stone and can he measure the diameter of the stone. If he can, I tell him his stone is of diameter of about 6.1mm. I am often asked how did I know and the simple answer is that a well-proportioned carat stone is of diameter 6.5mm and if he is being offered a stone below market value then there is a reason for this in that the stone is too deep or too flat, he has not considered the cut. Price is affected by the amount of fluorescence and the proportion of various facets. Price is also affected by the quality of the rough from which the stone is cut. Grading reports capture as many parameters as they can, but ultimately the final factor determining value is how the stone appears to the eye. One needs much experience to make these subtle judgments.

I have written much in the past about how we have come to have the terminology we use in diamond grading. The most popular system is that used by the GIA of letters for colors and terms such as VVS1 and SI2 for clarity. Other systems are used, using more descriptive terms but some such reports may have a chart showing how their system relates to the GIA one.

All this looks well to most traders, but unfortunately the comparison is not so simple. The main problem is that the sets of master stones used to determine color in different laboratories are not identical. Color is determined by using a trained eye to compare the stone with two adjacent master stones.

In some laboratories a stone that falls between the G and H master stones (i.e. worse than G but better than H) is considered to be G, whereas in others it is the stone between the F and G master stones (i.e worse than F but better than G) that is graded as G. Superficially these two systems seem to contradict each other, but if the G master stone in the one system is the same as the H in the other system then they are both seemingly coming up with the same answer. Thus when determining a master stone set the laboratory can claim that their master stone G, say, is a bottom G or a top G. But how these master stones sets compare to each other is something that is somewhat unknown. A similar problem exists for grading clarity.

The international diamond community tried to reconcile these problems by setting an ISO standard for diamond grading. An analogous problem could be for giving the weight of a stone. It is like some taking two stones of almost the same weight and saying that anything that falls between these two weights is identified as the weight of one of them. Thus if this was the method of determining weight, one could buy a stone in one place and be told that it weighs one carat, and when taken home and weighed again it was found to weight only 0.95 carat. Such ambiguity would be intolerable and, by convention, we have internationally recognized standards for weight. The ISO standard tried to achieve a similar convention for grading diamonds, bringing together the main systems used in the world. After 15 years of hard work the proposed system was not accepted.

Many in the diamond community would like to see such a standard adopted. This would help remove ambiguity and make the comparison of diamonds much easier. Unfortunately trade laboratories do not want to have their system replicated for outside use. Different centers use their own systems for grading and in order to buy and sell in these places one has to use the local grading report, and if one the goes to another center the stone may have to be regarded locally for the traders there. Imagine if one had to do this for weight! This was indeed done for many years from the early 1900s until the metric carat became standard. In many diamond centers one had to obtain an ‘official weight’, either through a local laboratory or a local trade organization. This problem no longer exists for weight, as most dealers now have accurate weighing balances, although the weight in a grading report still has a degree of being more official and thus acceptable than the weight given by the trader.

Thus the most pertinent question, whenever one is given a grading on a diamond, is to ask “Who says so?” Internationally some reports are more acceptable than others, although this can vary locally. If you have followed the arguments so far, you will probably see the need for one acceptable world standard. But I will try to show that even adopting a world standard we will still have ambiguity within the system.

Let me talk about the SI3 debate. The clarity grading for diamonds is accepted to be:

IF: Internally flawless
LC: 10x Loupe clean
VVS1 and VVS2: Very very small inclusions
VS1 and VS2: Very small inclusions
SI1 and SI2: Small or slight inclusions
P1, P2 and P3 or I1, I2 and 13: Visible inclusions

Many traders think that the band classified as P1 is too wide. That is, too many stones of different clarity appearance fall within this grade. One must remember that the grades determine the price and some stones within the P1 band look much better than others within that grade. Thus stones within the same grade could sell for significantly different amounts and traders wish the grading report to somehow show this differential. Some traders began to call the better P1 stones SI3. This new classification has been accepted by bodies such as the World Federation of Diamond Bourses (WFDB), many laboratories use it and it is shown on the Rapaport price listing grid. Other trade organizations and some of the major laboratories refuse to recognize this new grade.

The laboratories who refuse to use it claim that an SI stone has inclusions which are not visible to the naked eye, whereas P stones (pique stones) have inclusions which are visible to the naked eye. Bringing stones which have visible inclusions into a classification for stones with inclusions that are not visible will introduce a contradiction into the term SI. Further they argue it will be difficult to define the term SI3 for international use. Then there are those within the trade organizations who feel any changes in the rules will only confuse the trade and the public. They fear retrospective complaints. Thus a stone given a grade at one time could obtain a different grade if it is graded again. Although giving a stone a SI3 grade may be better than calling it a P1 stone, then some stones graded as SI2 may now be graded as SI3.

The reason that the terminology SI3 is being used is that for most traders it is easier to sell a stone with an SI grade than a P grade. This is because we have degraded the stones that have visible inclusions and there is a reluctance to buy a stone with a P grading. In fact very few stones with visible inclusions are graded as the report in most cases will hinder rather than assist a sale. Many dealers will not pass on a report which has a P grading. Thus they are opting for an SI, thinking that this will make it easier to sell the stone. What in fact is the case is not that it is called an SI stone but that it is no longer P1. Not being a P1 is the important criterion. We can call these stones anything we want, for example we could call them VI stones—visible inclusions.

I said above even if we come to agreements to have an ISO standard for diamond grading there are inherent problems within the system. Our grading system has all the trappings of being a scientific system; it has well defined terms, it is subject to measurements and we make use of scientific instruments, and work is done in laboratories by people with scientific qualifications. But at best it is a pseudo science. It is this because it does not really have well defined terms. Linguistically terms used in diamond grading are vague terms. The colors D, E, etc, have all ill-defined scientific basis. They indicate color but are based on only a vague concept of absorption of light. The whitest stone, i.e. the one with the least color, was taken to be D, a stone with a perceptible difference in color was taken as the next stone and called E, and so on for F, G, etc. There is no scientific relationship between the colors D, E and F. We can do this with weight. A 3 carat stone is three times as heavy a 1 carat stone. Also the color scale is no linear. The colors D, E, and F are closer together than the colors J, K and L.

A similar problem exists for clarity grading. The term ‘clean’ seems unambiguous, but in reality it is only clean because we can see no inclusion with a 10x loupe. Put this stone under a microscope and with sufficient magnification one will eventually find inclusions. So grading a diamond is more of an art than a science. Similarly, the terms VVS, VS and so son are again randomly chosen terms. The International Diamond Council (IDC) tried to put some science into the system by measuring the sizes of inclusions in microns. But for grading stones it was not only the size of the inclusion that determined the clarity grade but where it was positioned in the stone. This again brings the art into grading and not just a science of measurement.

Vague terms have no absolute values. Thus a very small elephant is much bigger than a very very large rat, and a spoonful of sugar varies from one time to the next. We understand these terms, we can use them correctly, but not in absolute terms such as grammes, meters or minutes. Those who argue that we cannot define an SI3 term fail to realize that they have defined, in an arbitrary way, all the terms that are used for diamond grading, other than measurements of size and weight and proportion, and introducing one more vague term into a system of vague terms is not beyond our means or imagination.

Those who argue that introducing such a term would make it easier to sell a pique stone have failed to realize that laboratories and grading reports are there to help the trade and not hinder it. Recent developments in the distribution of rough diamonds by organizations such as the Diamond Trading Company (DTC) and the shortage of better quality stones is going to result in more stones of lower grades being offered in the markets to satisfy demand for diamonds. It seems strange to degrade the quality description of such stones.

Another argument espoused by those who do not wish to change the terminology is that the change would confuse the trade and the public. I have used the term VI; this is an arbitrary term I have chosen, it is not a term I am necessarily advocating. It is somewhat provocative on my part in that some will say it is too similar to VVS and VS. The trade is remarkably adept in accepting innovation and anyone who cannot understand the terms we use should not be in the trade. As for the public, it is totally fallacious to say they will be confused. The average member of the public has absolutely no idea what a G/VS1 diamond is. It is not a terminology we are taught at school, but if a graded diamond is sold with a certificate it will have a glossary that explains exactly to him what these terms mean and how they relate to each other. Our trade is far more transparent than almost all other trades. When we look at the ingredients of a foodstuff we think we know exactly what we are eating but how many of us know what E145 is an additive?

Problems such as this and all the new treatments now being done to diamonds to improve their appearance, such as high pressure high temperature (HPHT) and the appearance of synthetic stones is causing consternation within the trade. The subject was discussed at the CIBJO Congress held in Bangkok at the end of February, and will no doubt come up at the World Diamond Council (WDC) meeting in Dubai at the end of March, and meetings being called by smaller groups in other localities. If history is anything to go by, little will be resolved, the conservatives will prevail, they will fear change and find themselves being retroactive instead of proactive. We do not want to resolve problems until they are imposed on us through forces beyond our control.

A final story will illustrate our unwillingness and inability to act. CIBJO allowed only the term ‘treated’ to be used for stones that had been processed by means other than cutting and polishing. White topaz was being irradiated to change its color into various hue of blue. CIBJO was asked to introduce the term ‘irradiated’ to describe such stones, but the term was not accepted and was banned; they had to be designated as treated. The US government brought in legislation that anything that had been irradiated had to be so declared when being imported into
the United States. This was to ensure that such stones would be tested for safety before being distributed. Declaring such stones as treated was inadequate. So CIBJO was forced to allow the term ‘irradiated’ into its lexicon, as otherwise there would not have been trade between the USA and the rest of the world in white topaz artificially colored.

I hope to report back in the next issue of Gem & Jewellery News on any changes, if any, that will be advocated by the trade in these Congresses.