(via Gemological Digest, Vol.2, No.4, 1989) Bernice Backler writes:
Introduction
Very regrettably, over the years many so-called valuations emanating from around the world have proven to be nothing but worthless bits of paper, due to the fact they have been performed by persons holding an I.B.A (Incompetent Bumbling Amateur) Diploma. These valuations are incomprehensible, inaccurate, incomplete and inadmissible in court, all due to incompetent ignoramuses trying to do something they know not one iota about.
This brings to mind a photograph in a recent jewelry magazine showing Joe Soap, expert jeweler, assessing a valuable gem. Joe Soap was shown standing in a ridiculous position, his ample stomach pushed out, holding a something up to the heavens and viewing it through a jeweler’s glass, with the glass held the wrong way around. Or was he seeking divine inspiration?
As gemologists with reasonable international standing, we (my firm) decided some years ago that we would specialize in valuations, doing them the way they should be done, as distinct from the expensive thumbsucks (of which we have a very large file). One such example of a thumbsuck appraisal was given as follows: “ two round diamonds in a gold band”—this from a self-styled manufacturer/faceter who has never manufactured anything or ever cut a stone in his life.
The client who wishes to know what his jewelry is worth, for whatever reason, puts his trust—his entire trust—in the jeweler, and pays good money for what he thinks is a proper valuation, only to discover later that the appraisal is not worth the paper it is written on. Should not the client be entitled to a fair, honest and thorough valuation? Remember, it is the mug who sits on the other side of the counter who pays our salaries.
I will attempt to set out hereunder exactly what the client should get for his/her money in the way of proper valuation/appraisal/assessment.
What is a valuation?
A valuation report is first and foremost a legal document which sets out in full detail all the important points of the piece of jewelry concerned.
Creation of this document must be carried out with the scrupulous degree of care required by law. The art and science of valuation shows the jeweler/gemologist/appraiser at the highest pitch of his faculties; all his knowledge is summoned and focused on the subject in question. His appreciation of what is beautiful, his eye for fine color in gems, his experience of what the market regards as highly valued and sought after—all of these skills are critically exercised.
A true expert is obliged to reach his decision impartially and scientifically, to substantiate it and issue it written (usually typed) form. The issuing of an accommodating valuation (where the client required the actual value to be altered to suit his/her requirements) is contrary to moral principles (in fact, fraud could possibly be proved), as is also the issuing of an irresponsible or careless valuation.
Why do you need a valuation?
There are two main forms of valuation:
1. Insurance: which gives details of full replacement value on basis of like for like according to the values current at the time.
2. Probate: this is a valuation for death duty purposes where the valuation is based purely on materials, i.e. weight of gold and/or value of gems without taking into account workmanship, or applicable taxes or mark ups.
There is, very regrettably, one more form of valuation peculiar to the jewelry trade and it causes considerable damage to honest reputations and generates much bad feeling. This is brought about by a client who goes to a professional appraiser first, and then (usually) goes to a retailer for reassurance that the valuation is correct.
Unfortunately there are unscrupulous persons in every country who will deliberately undervalue goods, either to discredit the competition or because they wish to buy the article (s) in question. This practice is called poising among the jewelry trade, for obvious reasons.
What is a valuator/appraiser?
The appraiser must be a member/graduate of a recognized gemological and/or appraisal body, such as the Gemological Association of Great Britain (GAGB), the Gemological Institute of America (GIA), or any other foreign association or institute. By so being he constantly receives updated information on the gem and jewelry scene, like new techniques, new stones, new fakes (of which roughly one a month rears its ugly head). He must also keep himself informed by getting magazines, trade publications, etc. from as many sources as possible and, importantly, keep his price lists up to date.
An appraiser must reveal openly and fairly al he knows about the stone in question—after all, his primary responsibility is to the person to whom he is giving the valuation. It goes without saying that if he is a member of gemological and/or appraisal association, he will understand the need to have all the relevant instrumentation to help him sort out the various stones and fakes, such a microscope, refractometer, polariscope, spectroscope, photometer (or colorimeter), high intensity (fiber optic) lamp, konoscope, diamond grading light box, and all the other instruments, etc. ad nauseam.
In plain English, he has to keep his nose to the grindstone to keep up to date in this rapidly changing world. If he does not, he is forever lost. I know of one so-called gemologist who proudly states that after he got his piece of paper 19 years ago, he has not since opened a book because I know it all. This gentleman’s knowledge was not worth the ink on his diploma six months after he got it. To have a piece of paper hanging on the wall does not qualify one to be an appraiser; a professional appraiser is constantly studying and thus is qualified by continuing experience. In a nutshell, an appraiser never finishes training because he is always learning new concepts, ideas, etc.
What an appraiser needs to know
Obviously, the first prerequisite is a sound fundamental knowledge of gemology, backed up by a good library for reference purposes. The second item is a diamond price index. A very good service is provided by a New York firm (Rapaport) who issues a weekly sheet giving not only current diamond wholesale prices covering the entire color and clarity range in sizes from 0.01 to 5.00 carats, but also other relevant market information. The service is considered by some to be rather pricey, but to the professional appraiser it is worth every penny.
Colored stone prices—ruby, sapphire, emerald, opal, and other lesser gems—can be obtained also from sources in the States. Again the subscription price is not exactly cheap at first glance, but represents a wise (and essential investment) for the professional appraiser.
So much for the obvious. As nearly all prices used internationally are given in US dollars, the appraiser has to be able to work his currency in relation to the dollar; diamonds all have base prices quoted in dollars at a wholesale level. He also must take into account inflation rates, import taxes, surtaxes, excise duties, sales taxes, labor costs, and know the various mark-ups from manufacturers to retailers. Additionally, he must also follow the daily fluctuations of precious metal prices and keep a register of these fluctuations, as well as have knowledge of metal testing and assaying so that he can accurately describe the gold/silver/platinum content of a piece. Of major importance is the ability to fully describe the piece in terms that will satisfy both other appraiser/gemologists to whom the report might be shown, while at the same time being understandable to the layperson/customer for whom the report is prepared. Detailed worksheets should be used to jot down the appraiser’s findings and these must be kept on file for reference in later years. The appraiser must also be prepared to stand up in court and support his valuations to everyone’s satisfaction, especially the courts’. This is one place where the keeping of accurate records pays off.
In doing any appraisal, the appraiser must always remember that, next to one’s house, one’s jewelry is probably the biggest investment that a person will ever make. If you were ill and needed a doctor you would not go to a plumber, but strangely, people are always prepared to go to any Tom, Dick or Harry who says he is an appraiser and end up with a worthless piece of paper which states two round diamonds in a gold ring.
Length of training
1. Professional appraiser: Usually two to three years, either in-house or home study, and then constant updating of this knowledge for the rest of one’s life (which, incidentally, costs quite a whack of money).
2. Retail jeweler: Usually three to four days (based on worldwide examples) and then many consider themselves fully trained, often never taking any more courses or doing very little further updating. But, because they are called jewelers they think they have a god-given right to do valuations, and this is where the majority of our thumbsucks come into the picture.
Cost of training
1. Professional: Over the years many tens of thousands of dollars when one takes into account the cost (ever increasing) of instrumentation, books, magazines, fees to professional bodies, fees to institutions, updated price lists and all of the many other items which go into making his job top of the line.
2. Retailer: A three to four days course on jewelry appraisal which costs between $200-500 today, from various teaching establishments.
Ethics of the jeweler/appraiser
When a person goes to a jeweler/appraiser, he goes because he has confidence in that person. This confidence is the jeweler/appraiser’s most precious possessions and a very high ethical standard must be maintained in a profession where the client is at such a disadvantage (through ignorance of the nature, properties and value of gems and metals). This ethical code involves truth in all directions, especially in the description of the goods. It is a responsibility which cannot and must not be taken lightly.
Disclosure of treatments
There is a moral and legal obligation on the part of the appraiser/gemologist/jeweler to disclose to his client the fact that his stone has been treated (and so is no longer totally natural), if, in fact, such is the case. Some of the most common treatments we see today are:
a. Oiled emeralds, to enhance color and clarity.
b. Glass-filled (surface repaired) rubies, to fill in surface pits and cavities.
c. Laser-drilled diamonds, to burn out clarity defects.
d. Dyed gems, such as lapis and turquoise, to enhance color, or plastic impregnation.
e. Heat treatment of ruby, sapphire, aquamarine, tanzanite, etc. to enhance color and/or clarity.
f. Irradiation of blue topaz, to enhance color.
This list could go on forever because there are so many different treatments used today to improve the appearance and salability of gemstones. Gems & Gemology, the official organ of the Gemological Institute of America, as well as other gemological journals, contains details of the various treatments in use today. The gemologist’s bible on the subject of gem treatments is Gemstone Enhancement by Dr Kurt Nassau. Any appraiser worthy of his salt should be able to detect treatments quite easily.
Loss to client and insurance company due to poor appraisals
Let us assume that you have a poor valuation on a ring and the value is given as, say, $1000. The insurance company charges, say, 4% to cover your ring, so you pay them $40. You lose your ring and then it is discovered that to replace like with like would cost you $10000, and the insurance company’s premium would have been $400. You, the client, carry the onus, so you would be under insured. The insurance company brings in their average clause and you get $100. Not a very pretty picture, is it? Maybe the insurance company will not even offer you $100; they may just cut the claim entirely.
How a physical valuation should be performed
The ideal way is to perform the valuation in front of the client where he can see each step as it is being done. Not only does this impress him with the amount of work which goes into a valuation, but it also does away with the oft-seen charge that he changed my stone, which could be difficult to prove or disprove if the appraisal were done in a back office, away from the customer.
It must be borne in mind that some rings and other pieces of jewelry are brought in such a dirty condition that after cleaning, the piece may appear totally different compared to the lifeless object that it once was.
Legal position of the professional appraiser/retail jeweler
First we will discuss the oft-heard phrase he changed my stone. If this charge cannot be proved and the person so charged has been brought into disrepute by false claim, he can then sue the person who made the claim, and could perhaps take them to the cleaners.
Stones do get changed by unscrupulous traders from time to time—remember we are dealing with one of the world’s costliest items—and the only way to sort this out is to have a full and factual appraisal, where the parameters of one can be checked against the other.
Both the appraiser and the retail jeweler can be legally sued for the same things—these are normally fraud, misrepresentation, incompetence, negligence, etc. where appraisals are concerned.
An example of how an appraisal should be done
Recently, a diamond dealer I know sold a diamond at a little above the current wholesale price to a friend of his to have made up into an engagement ring. The cost of the stone was $1800, it weighed 0.63ct.was of H color (top commercial white), and of SI (slightly included) clarity. The ring, and a wedding band with three small diamonds therein, was subsequently made up by a manufacturing jeweler (not my firm) and was then taken to a so-called expert retail jeweler for appraisal. His appraisal took ten minutes, covered three lines, was handwritten (apparently no copy was kept) on a cardboard certificate and stated:
“Round brilliant diamond, 0.53ct, color H, P2 (second pique) plus 3 x .03 side stones in gold wedding set.”
He the offered to buy the diamond for $1200. In his thumbsuck appraisal he lost ten points on the diamond’s weight, gave it a second pique (which is one step away from reject) and a worthless description. His offer to buy the diamond smacked of misrepresentation in that he saw he could get a reasonably good diamond for virtually nothing. To say that the client was no impressed would be putting it mildly.
The dealer immediately telephoned us to say that he would bring his client out, and we did an appraisal as it should have been done.
John Doe
1. One yellow gold solitaire engagement ring stamped 18 karat, weighing 4.35 g, set with one modern round brilliant cut, SI clarity, top commercial white (H color) diamond estimated to weigh approx. 0.64ct, measuring 5.41mm, of good polish with pointed culet, and unpolished light to medium girdle, very slight fluorescence, Okuda angle 80%+ (very good); and one modern round brilliant cut, SI clarity, weak commercial white (J color) diamond in each bow-tie shaped shoulder, estimated to weigh approx. 0.03ct each, measuring approx. 2mm each, of medium polish with pointed culet, unpolished girdle, and non-fluorescent. All claws new and in good condition. Identifying marks: 18 karat. All clarities determined at 10x. Diamond colors photometrically confirmed.
Appraised value = $4150.00
2. One yellow gold ladies’ matching wedding ring stamped 18 karat, weighing 2.8g, set with one SI clarity (at 10x), weak commercial white (J color) diamond, estimated to weight approx. 0.03 ct, measuring approx. 2mm, of medium polish with pointed culet, and non-fluorescent. Identifying marks: 18 karat. All claws new and in good condition.
Appraised value = $313.00
Shank widths:
Engagement ring: 4mm – 2 mm
Wedding ring: 4mm
Shank thicknesses:
Engagement ring: 1mm
Wedding ring: 1mm
Accolade
I recently appraised some jewelry for a lady going to Great Britain. Regrettably, she lost our valuation certificate, did not realize we kept copies of all appraisals done, and had her jewelry revalued in England. On her return she stopped in and we saw the British appraisal. After making allowances for the two different taxing systems, we discovered we were within £1 of the British appraisal. If one can’t call that spot on, I do not know what is.
Conclusion
In conclusion, let me aim a barbed dart at the people who load the market with thumbsuck valuations, guesstimates, and whatever other names apply. These people are mainly retailers. Let me say the following: “Know your limitations. Do not try to do everything. Succeed at what you can do, and do it very well indeed.”
We are all in the game to make money and it does not matter whether we make money selling jewelry products, or in the case of appraiser, selling knowledge. What does matter is that we do it with integrity.
In all fairness, it must be stated that there are certain retail jewelers who, because of their limitations, refuse point blank to do appraisals.
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