"It was with profound disbelief that I read your press release today entitled: "Rapaport Launches New Investment Diamond Grading Report". In all honesty, my initial response to this press release was simply: Has Rapaport totally lost their f----g minds? It’s not enough that the “Rap Sheet” ruined the profitability of the retail diamond markets, or that the effort to “commoditize” diamonds was such an incredibly absurd (read: failed) idea. Now Rapaport wants to promulgate the selling of diamonds to consumers as “investments” like stocks and bonds? YIKES!" So begins President of the International School of Gemology Robert James' open editorial to Rapaport, and he makes some solid points. James itemizes the problems with the Rapaport press release:
Rapaport says: “The new report conservatively grades diamonds based on Gemological Institute of America (GIA) standards.” The reality: The GIA has no standards, they have nomenclature. There are no standards of GIA grading. This is a totally absurd claim for Rapaport to make and one that may inevitably cause great harm to consumers who believe that diamonds can be graded as investments based on “GIA standards” that do not exist.
Rapaport says: "The Rapaport Investment Diamond Report is designed to identify the best diamonds in the market." The reality: Based on WHAT? Who determines what the “best diamonds in the market” are supposed to be? Rapaport? If it’s Rapaport who decides then Rapaport Investment Diamond Report will become a monopoly market manipulator, and can dictate unilaterally what is or is not the “best” diamond in the market. Rapaport can have an unfair impact on the market regarding which diamonds are getting sold as “investments,” including which cutter’s or dealer’s diamonds are considered “investment grade” and which are not! Who gave Rapaport the right or authority to make that decision regarding what is the “best” diamond on the market? And, what is to keep Rapaport from throwing unfair advantage to one diamond producer over another? If Rapaport was touting an investment stock based on the above criteria, they would certainly be subject to the US Security and Exchange Commission scrutiny.
Rapaport claims to issue Grading Reports that “…enhance the ability to trade diamonds electronically and enable new highly liquid and efficient investment diamond markets." The question: So exactly where is the SEC in all of this? How can Rapaport have such a monopolistic and collateral influence over the “investment diamond” market without any oversight by the SEC?
Finally, who oversees Rapaport? Who determines that Rapaport is not committing fraud by manipulation of the investment diamond markets, grades or trading? The answer: Nobody. I want to be very clear with consumers out there: Diamonds are not investments like stocks or bonds. This kind of dog and pony show that Rapaport is trying to pull has been done by them before with diamonds as “commodities” and it failed then, as this will now.