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The other day I wrote an article called “How to Become A Diamond Smuggler Without Trying.” In this article, I detailed how an otherwise innocent, honest person could fall into the traps of the con artists preying on the unwary, inexperienced rough diamond buyer. I am not going to reiterate what I wrote. I write this follow up because after writing the smuggler article, I received several calls from gentlemen who are currently engaged with so- called sources in Namibia and South Africa.
As a rough diamond gemologist, one of my services is to verify sources on the ground in Africa. My first call came as a request to verify a seller in Namibia. The following is pretty much the actual conversation between the gentleman and me.
“Hello Mr. Pearl, my name is Joe Inharmsway (not his real name). I would like to talk to you about my source in Namibia. I read your recent article and I actually heard the warning bells in my head. I would like to hire you to investigate my source and tell me if you think they are legit.”
“Thank you for the call sir. Please tell me about your source and I will see if I can help.”
“Thank you Mr. Pearl, my source has Angolan stones in Namibia and he says they were removed from Angola legally because he has a license to sell diamonds all over Africa.”
“So, he has Kimberley certs on the goods?”
“No, he said he will arrange the certs in Namibia without problem.”
“I see,” I said. “Let’s put that aside for now. What is it he has to sell? Is there anything of real value?”
“He has one stone that sounds great. It is a 23 carat E color internally flawless stone.”
“Wow! That must be a great stone. Do you know what shape it is?” I asked.
“Well, I am not an expert on rough diamond shapes, but he said is a nice shape.”
“Okay, how much does he want for the stone per carat?”
“One thousand dollars per carat, just over $23,000 for the stone.”
“Mr. Inharmsway, have you ever seen a rabbit’s horn? It is really quite rare and those who have seen one, say the beauty of a rabbit’s horn is without equal. As you can imagine, they are extremely valuable and almost impossible to find.”
“Mr. Pearl, I have called you about serious business, why are you talking about a stupid rabbit’s horn. Even an idiot knows there has never been and never will be a rabbit with a horn.”
“Perfectly correct sir! There is no such thing as a rabbit’s horn. The idea is preposterous and I would not expect you to believe it. However, I find it interesting that you do not believe in a rabbit’s horn, but you are willing to believe you can get a 23 carat E color internally flawless white rough diamond for one thousand per carat.”
For my readers who have access to the Rappaport Diamond Report, you can look up the value of this stone with some simple math. For those of you who do not have access to a Rap sheet, or do not know the value of this stone I will explain. The Rappaport divides stones into different sizes, shapes and qualities. It is basically the ‘Bible’ of the polished diamond industry to determine the price of polished diamonds.
When most buyers purchase rough diamonds, they often choose stones in shapes that will present the greatest yield. These four shapes are called Sawable 1, Sawable 2, Makeable 1, and Makeable 2. Of these four shapes, the least expensive is Makeable 2 because It will yield the least desirable polished stone shape and weight. A 23 carat Makeable 2 will have about a 30% yield depending on its shape, depth, diameter and any inclusions and or stresses on the stone. Generally, it will come out to be about 6.50-7.50 cts. If the stone is one of the other three shapes it will have a greater yield and will be worth substantially more money.
If for the sake of argument, we say it is the least valuable shape, a Makeable 2, and will cut into a pear shape, or marquise, we can use the pear shape list to see its value. The list is divided into weight ranges and this stone falls into the 5.00 carat and above range. (The actually range is 5.00 to 9.99 carats) Let us say it is not internally flawless, rather it is one clarity grade lower. A E-VVS1. The Rap on an E-VVS1 from the pear shape list is about $64,000 per carat. If a dealer wanted to get a G.I.A. certificate on the stone and it was graded by G.I.A. as an E-VVS1, he could sell it instantly to another diamond dealer for 55-60% back of the Rap list. If he waited until he had a ‘call’ for the stone he could sell it for 40 back of Rap.
For our purposes, let us assume, the stone has a weight of 7.00 cts. And after discounting the Rap, we sold it $25,000 per carat. 7X25=$175,000! This would mean an investment of $23,000 and a couple thousand in cutting and certifying the diamond would give us an approximate profit of $150,000.
I have never met an African diamond seller who is stupid, maybe somewhere one exists. However, all the ones I have dealt with have been pretty darn sharp. Now, either this seller is as dumb as…Well, you know what I mean. Assuming our seller is not an idiot, then, the only other conclusion we can reach is, he has just offered to sell you a rabbit’s horn. Free your mind of greed and it will be difficult to cheat you. Verify. Verify. Verify.
Louis Pearl G.G.
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