The re-occurring case of the disappearing Rolex

Watches can be the easiest or hardest jewelry to appraise. Take, for example, the price of a current Rolex model that a simple phone call or catalog check reveals – pretty easy. But take another Rolex example – one that is discontinued and therefore unavailable new in an insurance replacement scenario. What are our options? Well, usually we research the used watch markets for a same model replacement in a secondary market approach. With a plethora of internet sources, we can see the availability of a certain model, recent transactions and current dealer or auction offerings. We weigh this with retail estate department prices and arrive at a fair value for insurance purposes. This methodology needs to be referenced on the document as being comparable through the secondary market.
For Rolex watches, there are comparables for many, many models, but available too are those with non-Rolex modifications. There are companies that specialize in making diamond bezels and dials that “customize” one’s Rolex. That not only voids the Rolex warranty and their further servicing of the watch, it changes the market value. While many people (and some appraisers) think that adding an aftermarket diamond bezel to a Rolex wristwatch enhances its “value” the opposite may be true. Take a look at offerings in the marketplace and the original un “enhanced” model may sell for the same as one with an added bezel bearing two carats of diamonds. A diamond bezel that’s original from Rolex however, is a different story so one must make sure to find the proper comparables.
Rolex has also replaced many models with slightly different ones, again leaving an appraiser without an exact replacement option. Using a closest available model approach identifies a “comparable” newer model and is another appropriate method of replacement if properly referenced in the appraisal and agreed upon by the parties involved.
Case-in-point Recently, a client brought us his Rolex, and a newly updated appraisal from the jeweler who had originally sold it to him. He had been insuring the watch for over fifteen years with adjustments for Rolex’s periodic price increases, but now the provided appraisal reflected a much lower value. Rolex had recently “updated” his watch with a slightly different base model and had totally discontinued its diamond bezel. Since the jeweler could no longer appraise the watch for identical new replacement, they chose the closest new available model value and referenced such on their appraisal. That new watch value was some five thousand dollars less than the older model, hence the client’s distress. Using the secondary market approach would reduce the insured value even more, but since the client wanted to insure his model watch this was the only method to reflect exact model replacement.
There was however, a third appraisal option - the last published price method. Handy when an article has been recently discontinued, it covers a lapse of time before the market sells out of the discontinued model or insures for a dollar amount rather than an actual watch. This is fine if agreed upon by all (especially the insurance company) and a clear statement of methodology is on the appraisal.
While the jeweler’s appraisal approach was certainly justified and reasonable, the client’s desire to list his particular model led us to cite both the secondary market value and the last available price from Rolex. This gave the client and his insurance company an option as to what level of coverage to use.
However, if the client were using the appraisal as a sales aid, the last published price method would not be acceptable because it gives a false impression of value. NGL will not provide this type of appraisal for jewelers or anyone other than the owner and then, specifically for insurance documentation only.

But you said it would appraise for "double"

“We guarantee it will appraise for double what you pay.” What’s wrong with this picture? Are appraisers supposed to reflect what things sell for in the marketplace or appease the jeweler by making everything sound like a steal of a deal? When avenues for discounted jewelry became prevalent in the marketplace several years back, this half-of-retail scenario held up for the discounters for a while. However if the retail markups in this industry have dropped – which they certainly have, so shouldn’t the apprised values? So why do some appraisers keep appraising sky
high even though the industry margins keep getting smaller? Because the “half price” jewelers want them to, that’s why.
The consumer does not appreciate hearing that their insurance company is offering them half of the appraised value in a settlement after paying premiums on the full amount, but guess what? The insurance companies are shopping through brokers and discounters for their replacement, and usually get better prices than consumers do. In establishing the original coverage they have to rely on the appraiser’s information and use that value portion to set premiums. If that value is way over a realistic purchase price it only inflates premiums and sets up a future confrontation with the client. Yes, appraisals need to reflect the overall marketplace and give the consumer options for replacement, but they also need to be realistic and not merely a “feel-good” value the jeweler wants “their” appraiser
to reflect.

Postcard from Tucson!

Last February’s Tucson Gem and Mineral Show was the most enjoyable in my twenty years of attendance. While the vendors gave mixed reviews, our attendees seemed to find everything on their wish lists. This educational trip is gemology’s best classroom, but yes, we do let our students buy gemstones and jewelry from vendors who come from throughout the world. This makes any local gem show pale by comparison. Actually, the Tucson show is a collection of a about three dozen venues with dealers from every corner of the world. It is where many retail jewelers (even internet and TV jewelers) buy inventory, establish business relationships and keep up on trends in the marketplace. Most venues are set up only for the industry - not the public, ensuring true wholesale prices. We bring interested students who have completed Gemstone Identification and Gemstone Evaluation and then sign up for Ted’s Tucson Tour. Will we see you in Tucson next year?

NGI Students Exercise Their Passion For Gemology

Wow! We have never had so many “dedicated” gemology students. By that we mean those taking multiple classes or even starting GIA diploma courses. Our Spring classes saw an almost complete turnover of Diamond Grading students into our Gemstone ID course and then to our Gem ID II course. From those classes four NGI graduates were already or about to be enrolled at the G.I.A. (Gemological Institute of America). Having taken our classes, they will be able to utilize NGI equipment and cruise through their studies (saving thousands of dollars in the process) as they complete their G.I.A. Graduate Gemologist program.

Discount Tuition Packages
In 2006, we will bundle multiple classes for discounts so those interested in more than one can get a tuition break. Although our single class rates have finally been raised (still half of G.I.A.’s
comparable class), applied discounts make them similar to those of ’05. To obtain these rates you must register for multiple classes as a package.

Registration advice.
Classes are intentionally small so early enrollment is recommended. Several sold out in 2005. Also note that Gemstone Identification II or Gemstone Evaluation courses require taking Gemstone Identification first. Ted’s Tucson Tour requires you to take Gem ID and Gem Evaluation. All of our classes may be viewed at http://www.nwgem.com/

Laser-ed Out of Flawless

A couple of newsletters ago we spoke to an instance where laser-inscriptions could lower a diamond’s clarity grade and guess what? A pending sale between a local buyer and Internet jeweler brought us a GIA certified Internally Flawless one carat diamond for verification and value. The diamond checked out to the GIA documentation with one exception – a laser
inscription not there at the time of certification had been added by the seller, with their name and ID number on the girdle. Unfortunately, the process used had entered the diamond and was visible at 10X in the face-up position. The diamond now graded VVS and would require re-cutting to bring it back to flawless, potentially making it less than a carat (that’s thousands of dollars). While most inscriptions are not intrusive, this case-in-point shows us the need for caution in such procedures. It also points out the need to have third-party verification before a purchase. Had the buyer not done this, it may have been
years before its detection.

Speaking of Synthetics...

The flame fusion process of making corundum in a lab has been around for over one hundred years and is usually easily spotted by anyone with some basic gem ID knowledge and a decent microscope. The colors are usually too good to be true and without strong zoning or prominent secondary hues. So when we received a classic “Ceylon” color sapphire – that saturated soft violetish-blue with apparent color zoning when tilted, it was a surprise to see copious amounts of gas bubbles inside (that means synthetic). It was also the second such stone we have had in a short period of time, indicative of a new source in the marketplace.
That source is often from the internet, with false assertions by those who are in the business and know full well what they are selling. Don’t base a purchase on an unknown source, appraiser or “feedback” rating without a trip to NGL and full return promise if not fully satisfied. Caveat Emptor!

Gem treatments confuse consumers and jewelers alike

It seems like there’s another gem treatment around every corner these days. While gemologists have to stay on their toes to keep up, a curious consumer just gets more confused over what is natural, synthetic and treated - and their jeweler may not know.
As gemologists we have seen inclusions (what we need to identify origin) change over the years to make the identification of treatments more challenging than straight synthetics. So when Tom Chatham, (Chatham Created Gems) was speaking at a recent GIA Alumni presentation about the history of his company’s “creations” and the properties of these new inclusions in natural gemstones, he asked the question “Where do we draw the line between natural and synthetic?” A very good question since more and more natural stones are altered with synthetic foreign material. Is a glass-filled ruby still a natural ruby? The material may be red corundum (ruby) but with synthetic features including flux residues. Flux residues are a major characteristic of synthetic flux-melt rubies! We might think the stone was of a synthetic origin. Well, part of it is. Of course, a ruby may owe its color entirely to treatment to begin with. What used to be a venerable gemstone has definitely been tainted due to these treatments.
While the industry allows “traditional” treatments to gems it tends to shun radical means of color enhancement until enough people are doing it to add that treatment to the tradition. As long as the consumer wants purer color in their gems, there will be a market for whatever treatment brings it to them. Every day, consumers at the supermarket buy artificially enhanced
produce over organic because it looks better, so it’s not surprising.