A review of the “foundation” of GIA’s new cut grade system

The issue of the effect on pricing of diamonds was not mentioned in the GIA Foundation article, however I feel that this is one of the most interesting aspects from most readers perspective. This is my opinion; the market currently has a comparatively narrow band of price differentials for variations in cut quality. For instance dealer to dealer 1.00 ct round brilliant Rapaport pricing can range from ‘list’ down to 50% discount; put simply a good cut can cost twice as much as a bad cut. Compare this to Clarity and Colour Rapaport pricing; the average difference between IF and I3 is 9 times and for D to M the figure is 4 times.

What will the market do with this new information? It is likely that over time a new market pricing will evolve. During the year after GIA’s system is released I predict that the gap will widen to 2.5 times. Over a longer period 3 to 4 times (67-75% discount) could be common as poor graded goods become more difficult to sell. Consumers will become more aware of the need for a grading report with a reliable and respected cut grade.

Possible GIA terminology	Discount to the next lower grade				Short term prediction
Possible GIA terminology	10%	15%	20%	25%	Short term prediction
Excellent	100	100	100	100	100
Very Good	90	85	80	75	75
Good	81	72	64	56	60
Fair	72	61	51	42	50
Poor	63	52	41	32	40

Finally, it is our opinion that the foundation of the GIA system is not built on rock hard science. This most recent article is verbose and vague in many areas. But it appears that by and large the GIA is moving forward.