Grading and Appraising Jewellery

The first thing that needs to be agreed upon is a definition of an appraisal and the difference between an appraisal and a grading certificate.

An appraisal gives a value to a gem or piece of jewellery along with a complete description of the item being valued. An appraisal can be issued for estate purposes, for insurance purposes or other reasons that may occur. An appraisal is not intended for selling purposes. It is my understanding and opinion that to place an appraisal with a value before a consumer is in some countries illegal and in all situations deceptive. (I also believe that terminology such as ‘manufacturers suggested retail price’ constitutes a form of appraisal and should be removed from the selling environment.) Given that in certain situations a consumer may need an evaluation or appraisal, every appraisal should have the name of an individual attached to it. An appraisal with no name or the name of a retail establishment can have only one use and that would be to assist in facilitating a quick sale with the distinct possibility of discounting from an arbitrary valuation that has little relation to the retail sales environment.

An estate appraisal is usually a realistic value or price that an individual named on that appraisal might realise for the quick disposal of the object in question. This price is always far below a normal retail selling price. An appraisal for insurance, which is by far the most common appraisal in the jewellery business, is usually an inflated price that takes into account price changes and inflation. The insurance appraisal protects the insured against what might happen in the future and thus allows for an unrealistic price valuation in relation to current retail market conditions. (This analysis does not allow for pressure from insurance companies to push for higher values in order to achieve higher premiums.) It is for this reason that appraisals are so often used as a selling tool by both manufacturers and retailers in the jewellery industry. The main mission of the CRP is to protect and educate the consumer and it is most important that members are not using these papers to their advantage in making a consumer believe that he is getting special pricing based upon a paper or statement with an arbitrary value.

A grading certificate, on the other hand, is a generic descriptive document, usually of a loose gem or diamond. What distinguishes a grading certificate from an appraisal is that the certificate is solely for descriptive purposes and does not have a value or reference to an individual attached (AGS and GIA certificates are examples of this type of paper). These papers assist the manufacturer, wholesaler and retailer in the day to day trading of the item described. There are an abundance of problems with this type of paper but generally they have a legitimate place in the market. Given that there is, at present, no standardization in grading in our industry, certificates are buyer beware, but at least with regards to grading certificates, the consumer can compare laboratory to laboratory without the direct illusion of arbitrary pricing. Standardization of laboratory grading is a major challenge that, I believe, is too ambitious for us to tackle in the initial stage of this working group. However, a consumer education campaign explaining the use and possible misuse of appraisals and certificates is not beyond the scope of our membership and this group.

In an attempt to regulate the difference between a certificate and an appraisal, I would think it would be most useful to apply the KISS principle (keep it simple stupid). Certificates are an appropriate selling tool and appraisals or implications of arbitrary value are not. Appraisals are for the specific use of end users and have no place in the supply chain from mine to retailer. Spelling it out, no members can use an appraisal or arbitrary value for any purpose other than to value an item (after purchase) for an individual named on the appraisal. The specific intent or usage of a particular appraisal must be explained within the text of the document. Any manner of presenting an evaluation higher than that of the selling price is deceptive and has no place in any company that boasts best practices. Laboratories that belong to the RJC should be warranted not to deliver any paper with a valuation on it without stating the name of the consumer and the purpose for which it was prepared. With a clear description of what is expected of the laboratory and an audited trail of the appraisals made by laboratory members, the RJC could make a major step in protecting the consumer and cleaning up a very messy situation in our industry. This is the basic standard from which the rest of the development of this supplement must be based. Without the adoption of these few basic precepts the consumer will remain confused and deceived by our industries practices.

The clear definition and understanding of the legitimate use of a certificate and/or appraisal for each stratum of the jewellery industry will allow for a more fluid transition to the delivery of specifics such as laboratory standards. Specific descriptive details are useless without the basic pillars that create a strong system. Our industry is continuously perfecting new documents describing the proper use of terminology and minimum standards but a multitude of scientific documentation without clear understanding of what is right or wrong procedure over the sales counter will affect no change in the current poor state of affairs nor will it encourage consumer confidence. Terminology can be constantly updated but to what affect if the basic delivery structure is flawed. Industry initiatives have been putting the cart before the horse. If you have a detailed description of a gem stone and you sell it in a misleading manner than what was the use of the proper description, procedure and nomenclature to the purchaser. This is the way our industry has worked in the past and the basic standard of proper delivery from retailer to consumer has never been approached.

So please, in this working group, don’t let us get caught up in the specifics and details of a system that is currently not working. The procedure of adopting a basic structure from which to move forward is of ultimate importance in proceeding in an orderly and fruitful manner. I most respectfully put these simple precepts forward as the bases for beginning the work that we have volunteered to do.