The Rapaport Corporation’s Raplab is announcing a new diamond grading report – the Rapaport Investment Diamond Report (IDR). This report will only be available for round brilliant diamonds above 0.50ct that meet very strict guidelines. All diamonds submitted must have a GIA grading report. Only diamonds graded D-H, IF-VS2, EX-EX-EX will be considered. Borderline grades will be rejected.
The diamonds must meet Rapaport Specification A1 to be labelled as investment quality, at least in the opinion of Rapaport and his gemmological team. According to Martin Rapaport, “The Rapaport Investment Diamond Report is designed to identify the best diamonds in the market while providing the trade, investors and consumers with the highest level of confidence in quality. It will enhance the ability to trade diamonds electronically and enable new highly liquid and efficient investment diamond markets.”
Calling this document a “diamond grading report” is somewhat misleading. It relies on a GIA Report to set the grade. The IDR does contain additional information concerning tint, location and colour of inclusions. It also contains high resolution images. But most important, it becomes Rapaport’s stamp of approval.
Let’s call it what it is. It is not an independent evaluation, it is a BRAND.
This is another step toward Martin Rapaport’s goal of turning diamonds into a commodity to be used as an investment vehicle. Stones with an Investment Diamond Report are not intended to be worn as jewellery. Many of these diamonds will spend their life in a vault while only their reports are traded in the market. Since they are Rapaport branded A1 diamonds, the price should match the Rapsheet without discount.
Commodities are typically consumable products, traded in a free-market driven by supply and demand. Diamonds have never been a free-market product. The degree of market manipulation in the diamond industry has always been too much to ever be a free-market. The supply was controlled to create the illusion of scarcity and the price of rough continually increased to provide a feeling of rising value. The Rapsheet supports the values with a list of prices on polished goods.
Rapaport has too many fingers in too many pies to be an objective, third party observer and reporter of the diamond market. When a company is involved in the selling, and auctioning of diamonds as well as running an online trading platform; it seems to be a conflict of interest to also be the one to set the market prices.
Inevitably, most of these branded “investment” diamonds will find their way to the retail counter. Under the provenance of “Certified Investment Quality Diamonds,” they will be sold at a premium retail price like any other branded luxury product. This is where the scheme falls apart and may become dangerous, at least to the consumer.
Paying retail for a diamond is never a good investment. There is little liquidity at a retail price. To liquidate quickly, the diamond will need to priced below wholesale. The consumer will discover the true value of their “investment” when they try to sell it, Our industry lost the faith and trust of a good portion of the baby-boomers and GenXers as they attempted to cash in on family heirloom diamonds to survive the last recession. We can’t afford to lose another generation to disillusionment when their “investment” turns sour.
If we want the diamond industry to have a future we need to base the product on emotion, beauty, and lifestyle. The return on value must be based on the experience of enjoying diamond for what it is or what it means, not on the illusion of a financial investment.
Martin Rapaport recently accused DeBeers of running a Ponzi Scheme. I guess he doesn’t want the competition.