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The
Jewelry Appraiser
a publication of the national association of jewelry appraisers
Serving the Professional Jewelry Appraiser With Pride©
July/August/September 2019 Vol. XIII, No. 3
ADA Compliant Website? Really? Advisory Against Using an
“Expiration Date” on Appraisal
Terry Davis brought up to the attendees at the Dallas Conference a situation in his area Reports
regarding jewelers are being sued for not having an ADA compliant website. Terry When an appraisal is created, it is a snapshot in time
referenced an news article in USAToday newspaper that illustrated the entrepreneurial of the condition, content, and market value of the
spirit. There was a group inhale and resulting confusion. Apparently, there is an individual items listed in the report. It is never a forecast of
in Florida with too much time on his hands, scours websites for ADA non-compliance and, future value and only in certain situations may reflect
with a lawyer, sues the non-compliant jewelers’ websites and neatly settles for five figures the value of a previous date, an “effective date,” of
to stop the proceedings. a tax related event such as a gift, donation, or a
After some research, this has turned out to be true! Title III of the Americans with decedent’s date of death. Even tax reports may fail
Disabilities Act is being interpreted to include websites as “places of public accommodation.” to detect hidden accidental or intentional changes
Websites with significant inaccessible components can be seen as discriminatory against in condition, or content that may have been made
persons with disabilities, in violation of Title III of the ADA. The ADA is a strict liability law since the effective date to the date of the appraisal.
which means there are no excuses/defenses for violations (e.g. ignorance, web developer Obviously, an appraisal looking back at a particular
is working on it, etc.) date for a tax related issue applies solely to the date
The law that primarily governs accessibility is the Americans with Disabilities Act listed on the report and will never expire. Having
(ADA). Even though it doesn’t mention websites anywhere, Title III of the ADA has been an effective date on a report clearly makes such a
interpreted by U.S. courts to apply to websites. For our websites to be ADA compliant, report valid only for the date listed. No expiration
they need to be accessible. Website accessibility can mean two things depending on the date should be on such reports.
context: The larger concerns all other reports, such
1. the process of making your website so that its content and functions are accessible as retail replacement valuations, marketable cash
to those with disabilities, or valuations, and liquidation reports. Although they do
not need to have an “effective date” declared, such
2. how accessible your website is
reports are still simply a snapshot in time on the date
The ADA is the legal side, are you in compliance with the law? And accessibility is the
of the appraisal and not a valid forecast of future
technical or developmental side, how well can persons with disabilities access your website?
value. The appraiser is never liable for alterations
Burning question: how do we make our websites accessible?
of content , condition or market forces beyond the
The answer is to make it so people with disabilities can enjoy the full use of your date of the appraisal. Any one or a combination of
website; they can access content, navigate your website successfully, engage with different these three elements may invalidate the conclusion
elements, etc. U.S. courts and the Department of Justice (DOJ) have frequently referenced of value without warning. While most of the time
the Web Content Accessibility Guidelines (WCAG) 2.0 Level AA success criteria as a a report remains valid for months or years, there is
standard to gauge whether websites are accessible. The WCAG 2.0 AA success criteria no specific way to predict an expiration or change in
are comprised of 38 requirements, individually referred to as success criterion. value.
No current legal prescription exists for web accessibility but WCAG 2.0 AA has been All those who are users of appraisal reports
commonly referenced as a guide. Newly published Web Accessibility Standards (WAS) must set their own limits on how long to rely on
make accessibility easier. https://accessible.org/Web-Accessibility-Standards-WAS-2.pdf reports which may have become invalid due to
changes of condition, content or market forces. The
appraiser’s sole responsibility is to be correct on
the date of the report. Placing an expiration date
on an appraisal report implies that the appraiser has
a responsibility for use of the report “as-is” until the
expiration date. If the appraiser states in their report
that values, condition and content may be subject to
change before the stated expiration date, then what
does such an expiration date mean? “Nothing” would
be the resulting conclusion. We suggest that users
of reports set their own parameters for how old a
report must be to be invalid or no longer acceptable.
Appraisers may recommend re-evaluation based on
a blanket suggested time frame of their choice or
state “unforeseen changes in market values may
invalidate an appraisal value at any time” but using
a definitive “expiration date” is not a recommended
practice.
David Atlas, GIA GG
Chair of Ethical Issues
1
Calendar of Events
53rd ACE© It Annual
Winter Conference
Tucson, AZ
Now Hiring February 2 - 3, 2020
Heritage Auctions is expanding and seeking additional qualified Jewelry specialists 54th ACE© It Annual Mid-
in various offices. Potential cities include Chicago, San Francisco, and Dallas.
Year Conference
Consignment Director, Fine Jewelry, Chicago
Consignment Director, Fine Jewelry, San Francisco
Location TBD
Consignment Director, Fine Jewelry, Dallas August 8 - 11, 2020
We welcome your articles and photos for The
Jewelry Appraiser. Acceptable file formats for
photos include JPG, PDF, TIF or EPS files.
Hertiage Appraisers Now Hiring
Steve Lott, GIA GG, founder of
Heritage Appraisers, is looking for
NAJA appraisers in the following
areas:
• New Hampshire
• Maine
• Utah The
• Oregon Please contact Steve @ Jewelry Appraiser
• Washington “Stephen Lott” or Gail Brett Levine, GIA GG
• Iowa 216.591.0685. Executive Director
Publisher/Editor
David Atlas, GIA GG
Associate Director
NAJA Exhibit Dates Chair of Ethical Issues
Deborah Finleon, GIA GG
Associate Director
AGTA Atlanta Jewelry JCK Chair of Education
Tucson Convention Show Sands Convention
Center Cobb Galleria Center Rakel Hall
Tucson AZ March 7 – 9, 2020 June 2-5, 2020 Office Associate
February 4 - 9, 2020 Atlanta, GA Las Vegas, NV
Booth G-11 Loupe Section Bob Mitchell
Webmaster
Carmen Contreras
Conference Associate
PUBLISHED BY
National Association of Jewelry Appraisers
P.O. Box 18, Rego Park, NY 11374-0018
718.896.1536 • fax 718.997.9057
naja.appraisers@netzero.net
www.NAJAappraisers.com
©2019 National Association of Jewelry Appraisers
All Rights Reserved
2
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52nd ACE© It Mid Year EducationConference Dallas, TX
It was a huge Texas sized welcome from Jill Burgum, the Heritage Jewelry Team
and Heritage Auctions for the 52nd Mid-Year NAJA Education Conference! Heritage
sponsored goody bags were handed to you with your badge and conference
proceedings as soon as you walked in on Saturday morning ending with a
champagne reception at the close of day. More was in store for attendees in the
following days with the Texas BBQ lunch, Mocktion with live bidding. The Howard
Rubin Educational Foundation silent auction which garnered over $2,500 for future
scholarships. Heritage also sponsored the coffee from the opening to the closing
– every day! Over $2 million of upcoming Heritage auction goods were on display
to charm and seduce!
This was the first time we had a conference south of the Mason-Dixon line. Dallas
weather did not disappoint. It was hot. Actually, it started at hot but there was plenty
of air conditioning.
It takes a village!
It takes a village of our generous host Jill Burgum and Heritage Auctions and talented
presenters, NAJA staff, exhibitors, and supporters to put together a conference of this
magnitude:
Grateful Appreciation to our Sponsors and Supporters:
Jill Burgum, GIA GG,
Heritage Auction
Tammy Cohen
Almod Diamonds Limited Group
Crown of Light
Kassoy
Leah Sensenbrenner
Jewelers Mutual
Seth Holehouse and
George Callan, GIA GJG
Fortuna Auction
Victor Hugo Garcia GIA AJP
Kassoy
Stephen E. Lott, Sr., GIA GG
Heritage Appraisers, Inc.
Suzanne Martinez, GIA GG
Antique Jewelry University
Thom Underwood, GIA GG
Quantum Leap
Raphael Boivin
Instappraise
NAJA’s Dream Team: Special Thanks: We are starting something new –
Gail Brett Levine, GIA GG Lauren Abramovitz,
Executive Director GIA GG for being the
instead of slices of reactions from
official Conference attendees, we have synopsis of the
Dave Atlas, GIA GG Photographer
Associate Director & Chair of Ethical most important first day – AHA!
Issues (Appraisers Helping Appraisers)
Deborah Finleon, GIA GG straight from the presenters
Associate Director & Chair of Education Remember to support themselves! NAJA feels that these
Rakel Hall
those who support synopses need to be shared with
Office Associate
the entire membership!
Carmen Contreras NAJA!
On-Site Associate
4
Summaries of Saturday’s AHA! (Appraisers Helping Appraisers) Presentations
What’s Up With USPAP?
It was my pleasure, at our Mid-Year the Competency Rule. This phrase originally a jewelry appraisal example to offer advice
Conference in Dallas this August, to present appeared in Standard 7-1 (c), but was on whether or not a personal inspection of a
a brief overview of the updates to USPAP for moved for broader applicability across all of subject property is required.
2020-2021. Although there were relatively USPAP, rather than just within a development Advisory Opinion 3 includes new
few changes which affect personal property Standard: language relating to the update of a prior
appraisers, those changes that have been “Perfection is impossible to attain, and appraisal, specifically linked to the Ethics
made are important and, in one case, will competence does not require perfection. Rule, Confidentiality: “Assignment results and
require an update to the wording of our However, an appraiser must not render confidential information from a prior appraisal
appraisal reports. appraisal services in a careless or negligent or appraisal review may only be disclosed to
Revisions were made to the Scope of manner. This Rule requires an appraiser to the client or parties authorized by the client.
Work Rule, the Competency Rule, Standards 7 use due diligence and due care.” Thus, when incorporating a prior report by
and 8, Restricted Appraisal Reports, Advisory The individual sections of both Standards reference or attachment, if completing the
Opinions, and Definitions. A new Advisory 7 and 8 have now been labeled for easier report for a different client, the appraiser must
Opinion, AO-38, was added, and there were accessibility. For example, Standard 7-4 receive authorization from the original client.”
several new Definitions added. is now titled “Approaches to Value” and Advisory Opinion 38 is entirely new and
USPAP definitions are intended to clarify Standard 8-1 is called “General Reporting replaces AO-11 and AO-12. It addresses the
the meaning of words or phrases in USPAP Requirements.” changes to Standard Rule 8-2, Restricted
that differ from, or are not found in, popular The majority of changes to the Standards Appraisal Reports. Among other details, it
English dictionaries. The vast majority of were, again, semantic and mostly for clarifies that a Restricted Appraisal Report is
the revisions made to the Definitions were clarity. Sections were split into more easily appropriate when the client understands the
semantic, for clarity. In those definitions which understandable single items, and comments limited utility of the option, when the intended
were modified by a comment, that comment were moved up into the Standards themselves. use is appropriate for a report which may
was frequently moved up into the definition Unfortunately, USPAP seems to believe not contain supporting rationale for all of
itself, and the definition reworded for simplicity. that the commonly accepted definitions of the opinions and conclusions set forth in the
The following definitions are new: “summarize” and “state” are reversed. These report, and when the client does not need the
two terms are used extensively throughout level of information required in an Appraisal
Assignment Elements: Specific information USPAP, but particularly when explaining Report.
needed to identify the appraisal or appraisal the differences in reporting requirements Finally, FAQs offer further guidance in
review problem: client and any other intended between an Appraisal Report and a Restricted response to questions posed not only by
users; intended use of the appraiser’s opinions Appraisal Report. So, please be aware that appraisers and other industry members, but
and conclusions; type and definition of value; when USPAP uses the word “summarize,” also by the general public. They illustrate the
effective date of the appraiser’s opinions and they want a full explanation with all possible applicability of USPAP in specific situations,
conclusions; subject of the assignment and relevant detail. When they use the term and they offer advice from the Appraisal
its relevant characteristics; and assignment “state,” they’re looking for a brief summary. Standards Board for resolution of issues.
conditions. At multiple points throughout the updated They comprise nearly half of the written text of
USPAP, “date of value” has been replaced by USPAP, and can be an excellent resource for
Physical Characteristics: Attributes of a “effective date,” and the phrase “consistent the appraiser.
property that are observable or measurable with” has been substituted with “appropriate The Summary of Actions for USPAP 2020-
as a matter of fact, as distinguished from for.” 2021, as well as the full text of the updates
opinions and conclusions, which are the result Perhaps the most noteworthy change can be found at www.appraisalfoundation.org.
of some level of analysis or judgment. for the new year is to the intended users of
a Restricted Appraisal Report. According Deborah J. Finleon, GIA GG, CMA (NAJA)
Relevant Characteristics: Features that may to current USPAP, the client may be the Chair of Education
affect a property’s value or marketability such only intended user of a Restricted Appraisal
as legal, economic, or physical characteristics. Report. As of January 1, 2020, however, as
long as an any additional intended users are
Effective Date: The date to which an appraiser’s identified by name, there may be more than
analyses, opinions, and conclusions apply; one. This change is reflected in new language
also referred to as date of value. and updates to Standard 8-2, specifically.
There has been a change to one element
Misleading: Intentionally or unintentionally of the Certification of Appraisal Practice, as
misrepresenting, misstating, or concealing seen below. Please update the Certification
relevant facts or conclusions. as listed in your reports accordingly: “I have
performed no (or the specified) services, as an
A change noticeable throughout USPAP is appraiser or in any other capacity, regarding
that, as they were in the Definitions, many of the property that is the subject of this report
the comments were moved up into the Rules within the three-year period immediately
or Standards to which they refer. The standard preceding the agreement to perform this
used by The Appraisal Standards Board to assignment.” The phrase “agreement to
deem when such movement was necessary perform” has been substituted for “acceptance
was: when comments include requirements, of.” The ASB believes that “agreement”
that language is moved into the Standard or implies a fuller understand of the Scope of
Rule itself; comments were maintained where Work than “acceptance.”
needed for better understanding of Standards Advisory Opinions are not technically
or Rules. part of USPAP. They offer advice, do not
One of the more prominent changes establish new Standards, and do not require
52 ACE© IT Mid Year Conference
was the addition of the following phrase to public comment. A revision to AO-2 now uses
ND 5
Summaries of Saturday’s AHA! (Appraisers Helping Appraisers) Presentations
Synopsis of Town Hall
Among the many topics discussed...
Mined Diamond and Lab Diamond Grading His concept is partly based on creation breach of contract, breach of fiduciary duty
Standards of a software package which would restrict and two counts of fraud. Moradi’s lawyer said
Making choices on how to grade Lab descriptive terminology to broad categories he intends to file an appeal.
Created diamonds. where we might become more repeatable The case is sticky for the jewelry industry
Let’s see if we have a reasonable and consistent. Sounds like a good goal if it in a host of ways. For instance, Brees’ case
consensus before we look at the positions were not for the fact that broader descriptive states that because the jeweler was advising
major labs are taking. terminology leaves a potentially wide spread Brees on which stones to buy, he went
In your own practice will you grade Lab of value in its wake. beyond his role as a jeweler and became an
Created diamonds using the same grading What sort of appraisers can be recruited? investment advisor—a role with ethics and
scale that you use on Mined diamonds? Will Will such appraisers be qualified to do the work trust at stake. There are a host of reputable
you grade differently? or simply willing in spite of their shortcomings? retailers out there who are also advising their
Most of the diamonds I get to grade are Which of us don’t have areas of expertise clients on which stones would be a great
already set. Whatever grade I might call them and other areas where we have somewhat investment. Does this need to end?
on my own is likely not to be exactly the grade less knowledge? Who is competent to grade According to Roberto Chiapelloni, owner
GIA assigned. If it is most any other laboratory diamonds and also ready and able to properly of Manfredi Jewels in Connecticut, “Using
document, it Is even somewhat more likely my describe a wide array of colored gems? the word investment when selling a diamond
opinion and the lab report will not agree. Treatments, enhancements, origins, lab or puts you on a very shaky limb. We have no
If we know a diamond is Lab Created, how do mined all play major roles in assessing value. idea how the market for diamonds will go.
we properly hope to grade it any differently What is going to be the level of liability and We are selling something that will always
than we currently do with mined diamonds? responsibility? have intrinsic value –but honestly we can’t
How can we explain this to clients fairly? Is I posed these questions months ago in predict the market. In my humble opinion it is
there some reason anyone might volunteer for a conference call and have not heard much unethical to sell a diamond as an investment
grading such stones with even less accuracy? back for some time. It is possibly a tempting because you can’t guarantee its future value. “
If we use other terminology for color grading situation for some appraisers to increase their In fact, just like the stock market, diamonds
with wider spreads of color definition, we will income and their visibility to consumers. At have an up-and-down cycle, especially given
still have gray cross-over areas. Will we then what cost, one might ask? I have asked that today’s growth of lab-grown diamonds that
be split grading between 5 or 6 color grades, question in an indirect way, but everyone in are disrupting the diamond market and their
or do we need to further create cross-over NAJA has the potential to be recruited. It retail prices. Says Chiapelloni, “When we
range indicator? I believe our choices are sounds like an elite group, but the mechanics sell a diamond, there is not one word about
obvious and rather limited. of it all have been very slow in coming. investment; it is a jewel that will give you a
The labs meanwhile have powerful and lifetime of pleasure and a retention of a good
important customers who would much prefer The Fallout of the Drew Brees Affair portion of its value.”
Lab Created diamonds to just go away. Can Jeweler, CJ Charles Jewelers, who he claimed
we develop a sympathy for their position sold him lower-grade colored diamonds. Now, Appraising Items Illegal to Trade. Will
without losing our objectivity? I believe we according to CBSNews.com, the San Diego Insurance Companies Pay Up in case of
can and must seek to practice such actions, court granted Brees a $6.1 million judgment Loss?
so we find the right balance. against the jeweler. Insurance companies will not cover such
The same applies to clarity, UV According to the original complaint, Brees items in the USA. Don’t offer such services
fluorescence, transparency and cut grading. and his wife Brittany claimed that the jewelry without a thorough understanding with
Are there any contrary opinions? We ought store owner Vahid Moradi continually sold potential clients.
to understand all sides of the situation, but it them colored diamonds as an investment.
looks to me that NAJA ought to understand A variety of sales took place throughout a David Atlas, GIA GG
BEFORE we take any position on a group four-year period from 2012 to 2016. In 2017, Chair of Ethical Issues
level. though, Brees had the diamonds appraised
and was told that their value had been over-
Rapaport Now Loves Appraisers estimated, with some of the stones being sold
What’s does Martin Rapaport want with a to Brees for anywhere from about 40 percent
relationship with highly qualified appraisers? to a few hundred percent markup.
With Martin Rapaport, the ideas of In an article published by JCK Magazine
business creation, making money while stated that among the stones Moradi had
benefitting workers and consumers is purchased and then marked up significantly to
omnipresent. It is a very good group of sell to Brees was a Harry Winston diamond
concepts, but the devil is always in the details. ring. Moradi had paid $565,000 for it at a
Do we struggle to properly describe many Sotheby’s auction and sold it a month later to
items? Brees for $1.6 million.
What would need to be clearly Brees filed suit, with his attorney stating
communicated to every potential user of that the jeweler intentionally misled Brees
a report we might make on items that are and his wife about the value of the stones.
to be sold and widely publicized using our In total, according to Fox 5 San Diego, Brees
descriptions? had paid about $15 million for diamonds that
Will twenty appraisers be able to describe were appraised at $6 million. Throughout
rather complex or items of important value in the court case, Moradi argued his right to
a consistent and repeatable manner? Can mark up jewelry and said his markups were
we do this today? Do we expect to do this not extreme. Still, the court found that Brees
52 ACE© IT Mid Year Conference
tomorrow? prevailed in the four main causes of action:
ND 6
Summaries of Saturday’s AHA! (Appraisers Helping Appraisers) Presentations
Death & Taxes: How to Make Friends with the IRS
First, let me state that I do not work for the their photographic requirements and their of the Appraisal Foundation.” Thus, it is a very
IRS, nor I do have any authority to speak on preferred individual item description format. good idea to prepare IRS appraisal reports in
their behalf. My suggestions for best practices There are several resources you should compliance with the current edition of USPAP.
are based on my own experiences with writing read thoroughly and consult for estate tax, In conclusion, the IRS wants appraisers
appraisal reports for the past ten years at gift tax, and non-cash charitable contribution to submit well-written appraisal reports. I
Heritage Auctions, as well as my work as appraisals. have found the Art Appraisal Services team
Director of Education and instructor for the • 26 CFR § 20.2031-6 – Valuation of to be very friendly and open to questions.
International Society of Appraisers. household and personal effects My best advice to appraisers submitting
The IRS is concerned with appraisals for • IRS Form 709 and Instructions – Gift Tax appraisal reports to the IRS is to be sure to
the intended use of estate tax, gift tax, and Return read and follow the directions outlined in the
non-cash charitable contribution. All three • IRS Form 8283 and Instructions – Non- regulations and publications, as well as the
of these functions require the appraiser to Cash Charitable Contribution Form suggested requirements for photographs and
determine fair market value of the property • Publication 561 – Determining the Value of descriptions. I notice that many appraisers
being appraised. And, a quick reminder Donated Property tend to overthink and make things more
to everyone that fair market value always • Publication 526 – Charitable Contributions complicated than they need to be. Don’t fall
includes the buyer’s premium. See Technical • Final Regulations T.D. 9836 (replaces into that trap. Use common sense and don’t
Advisory Memorandum 9235005 (May 27, Notice 2006-96) panic! Help is always available.
1992). A note about USPAP. The IRS does
If the taxpayer is selected for audit, and not specifically require appraisers to be in Meredith Meuwly, ISA CAPP
if the tax return includes an appraisal report compliance with the Uniform Standards of Vice President, Director of Appraisal Services,
with an individual item valued over $50,000, Professional Appraisal Practice. That said, Heritage Auctions and ISA Chair of Education
then the appraisal is automatically referred the final Treasury Regulations passed on July
to the IRS Art Appraisal Services (AAS) team 30, 2018 defined who is a qualified appraiser
for review. The AAS team is composed of and what is a qualified appraisal. The term
experienced appraisers who are incredibly qualified appraisal means an appraisal that
knowledgeable and helpful in all fields of is conducted by a qualified appraiser in
personal property – jewelry, art, antiques, accordance with generally accepted appraisal
and other collectibles. For more information standards. And, generally accepted appraisal
about their department, visit https://www.irs. standards are defined as the “substance
gov/appeals/art-appraisal-services, or contact and principles of the Uniform Standards of
the Director at 305-982-5364. They also have Professional Appraisal Practice [USPAP], as
links to two important documents describing developed by the Appraisal Standards Board
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Summaries of Saturday’s AHA! (Appraisers Helping Appraisers) Presentations
Appraising Spinel, Tourmaline, and Garnet in The Current Market
This article is written following the presentation the refractive index of black spinels are much The unquestionably vivid colors were due
of the same title at the NAJA Mid-year higher than of gem spinels and read OTL on to copper and this color agent was not
Conference in Dallas on August 3rd and the refractometer. documented in tourmaline ever before. Fast
includes excerpts from some of the author’s Burma is known to be the oldest source forward two decades, the Paraíba tourmalines
previously published articles. of pink and red spinel. Other notable sources are still selling and at thousands of dollars
Appraising gemstones that are of the include Tajikistan, Vietnam, Sri Lanka and per carat. In 2001, we witnessed another
popular varieties and commonly traded sizes Madagascar, which produce spinel in various discovery of an almost identical material but in
is a general practice of the experienced gem colors and qualities. But it was the more Mozambique, Africa. The debate over naming
and jewelry appraiser. However, the increasing recent deposit discovered at Mahenge in this exciting gem has yet to come to an end.
popularity of once standard or common gems Tanzania that produced some sensational Mozambique cuprian tourmaline is
has resulted in dramatic prices increases material unlike any spinel seen before. mined in much larger amounts compared
for a number of these varieties in to Paraíba and the price points are
recent years. Once regarded as distinctly lower. However, since the two
semi-precious by traders, today many materials overlap mineralogically, origin
spinel, garnet and tourmaline varieties, determination has presented some
among others, are highly sought by challenges for the labs. Although it is
gem aficionados. Latest discoveries, accepted by LMHC, purists disagree
country of origin trend and increasing that Mozambique cuprian tourmaline
prices make appraising these gems should be called Paraíba. The price
challenging especially within the points of African cuprian tourmalines
context of the rarer, fine and extra are clearly lower than Paraíba, so
fine categories and larger sizes. This why confuse the consumer? Fine and
article will explore some of the current extra fine Paraíba in true “windex blue”
trends in spinel, garnet and tourmaline colors can exceed $250K p/c in 3 to
from the appraisal perspective. 5 ct. sizes, while the same category
Mozambique material wouldn’t exceed
Spinel $20K.
Failure to recognize that spinel The vivid purplish red tourmaline,
was distinctly different mineral from rubellite, has been one of the favorite
Demantoid Garnet, 4.22ct. Courtesy of Pala International. Photo by Mia Dixon.
ruby and sapphire had damaged tourmalines in the market in recent
its reputation for centuries. Many gem The Mahenge material is credited by many decades. Popularity of this color has increased
professionals are made to believe that if not dealers with generating increased excitement parallel to the ruby market. As an affordable
for modern gemology, we wouldn’t know and awareness of spinels the market sees alternative to ruby, rubellite enjoyed a high
the difference between red spinel and ruby. today. The color intensity associated with the demand especially in the Chinese market,
However, eastern cultures have revered red Mahenge material fundamentally changed the where prices peaked at more than $1,000 p/c
stones for their beauty and used specific price structure and popularity of spinel. Red to earlier this decade. It has been a very popular
names for spinel, ruby and garnet for millennia. pink spinels were sold below $1,000 p/c in 3 stone, mainly due to its availability in large
Their popularity and trading were defined by to 5 ct. sizes a decade ago. Today the same sizes. Today, however, demand for rubellite
their own merits. sizes are traded between $3,000 to $6,000 p/c has returned to typical levels and prices are
For decades, spinel has also been at wholesale level. well below their highs. As the buying power of
synthetically produced in vast quantities to Blue spinels vary in tone and the Eastern market weakens, rubellite prices
imitate other gems. Unfortunately, the majority saturation due to their Cobalt content as have settled back at more realistic levels. In its
of consumers would eventually regard natural the chromophore. The rarest and the most Fine and Extra Fine grades, rubellite demands
spinel as a simulant. Recently there has revered example is the bright blue spinel from $350 to $600 p/c in 5 to 7 ct. sizes. On a similar
been a strong reversal of that perception Vietnam. Vibrant cobalt blue commands three note, seafoam and mint colored tourmalines,
and the popularity of spinel has gained more to five times more per carat price compared to the most popular of green category, demand
recognition in the global gem market as a other blue to lavender spinels in fine and extra the same price.
beautiful, rare gemstone. Consumers are fine category.
more aware of the beauty and rarity of fine Recently, various tones of transparent Garnet
quality spinel and appreciate the gem for its gray spinels have been offered to buyers Modern mineralogy identifies garnet as a
own merit, whereas previously it was often and celebrated by collectors. Gray is a very mineral group containing 24 related species.
marketed as a more affordable alternative to desaturated blue and violet, so these stones Of these, fewer than 10 are known as
ruby or sapphire. Despite the few heat-treated come with some color flashes. Dealers report gemstones. Due to their complex structure,
samples that have been reported in trade smaller sizes of 2 to 4 ct. as common at $200 garnets are one of the most intriguing mineral
journals, the vast majority of spinel on the to $500 p/c Anything over 7 ct. is uncommon groups. Structurally similar, gem garnets differ
market are believed to be natural. and individually priced. Gray spinels typically from one another by interchanging chemical
Spinel is a solid solution series mineral. have eye visible inclusions but clean stones compositions through solid solutions. Garnet
Gem quality transparent spinel occur in a are also available. Burma and Tanzania are group minerals possess high refractive
range of hues with reds, pinks to lavenders reported to be main locations for this unusual index and display high vitreous luster that is
and blues being particularly important to color of spinel. unmistakable to the trained eye.
the trade. Other spinel species are better Red garnets generally contain fissures
known for industrial use such as chromite Tourmaline and fractures due to their formation. The
and magnetite. During the past few years, Discovery of vivid blue, green, and purple-to- irregular structure of these fissures and
due to increasing popularity of black gems, violet tourmalines, a.k.a., “Paraíba” in Batalha, fractures also creates weakness in the stone.
black spinel species have been fashioned in Paraiba State Brazil in 1982 changed the
52 ACE© IT Mid Year Conference
as gems too. However, it must be noted that way the gem market perceived tourmalines. continued on page 24
ND 8
Pricing Factory Grown Diamonds
Summaries of Saturday’s AHA! (Appraisers Helping Appraisers) Presentations
Pricing Factory Grown Diamonds
The diamond market is currently experiencing
a number of challenges that are negatively
RapNet Diamond Index (RAPITM)
impacting demand and pricing across a broad June 1H2019 Year on year
Jan 1 to July 1 July 1, 2018 to July 1, 2019
range of qualities and sizes. Although diamond
jewelry still dominates the market by volume RAPI 0.30 ct. -3.1% -12.2% -20.9%
and value, per carat prices for diamonds
RAPI 0.50 ct. -1.8% -4.7% -7.9%
have decreased virtually across the board in
2019. As a result, the average price point for RAPI 1 cy. -1.4% -3.1% -5.6%
an engagement ring is also down from a year RAPI 3 ct. -2.5% -12.1% -16.1%
ago.
Price declines have also been observed © Copyright 2019, RapaportUSA Inc.
in the GemGuide for the same period as
shown in the chart below. A changing appetite
for jewelry among younger consumers in the RBC 0.30 - 0.36 2019 2018 2019 2018
USA is one factor contributing to the decline. VVS2 VVS2 VS1 VS1
Another more significant issue, however, is
D 2,100 2,490 2,000 2,400
political and economic uncertainty occurring
in major markets in Asia, Europe and the E 1,900 2,230 1,800 2,175
Americas. F 1,820 2,120 1,725 2,050
Also challenging the natural diamond
market is the increasing marketspace occupied G 1,700 2,070 1,675 1,910
by lab grown, (or what are actually factory H 1,590 2,000 1,550 1,860
grown) diamonds. It is true that factory grown I 1,520 1,950 1,460 1,800
diamonds (FGDs) represent a small minority of Prices in USD GemGuide July/August Issues
the diamonds sold in the jewelry market today.
However, the rate at which their production is
increasing suggests they comprise the fastest this space with retail price points of $800.00 cut. This is not surprising as the cost of the
growing segment of the diamond industry. To per carat since the FGD market was already starting material is less of a concern than when
put this in perspective, during the period from achieving price points more than 200% higher cutting a natural, mined diamond. In general,
2006 to 2016 the production of factory grown than the Lightbox pricing. the pricing was approximately -60 to -65% off
diamonds rose from 18 million carats to 10 Pricing factory grown diamonds follows the GemGuide actual wholesale prices. Only
billion carats annually in China alone. This, of the same rule of other gem materials, you FGDs in the colorless to near colorless range
course, includes both industrial and jewelry must know what the item is before you can were included.
grade diamonds. China is believed to be the accurately price it. Although some are sold
largest producer of FGDs with approximately with disclosure, the significant price differential The following charts reflect wholesale pricing
56% market share. Of this number, jewelry between factory grown and natural mined for FGDs as of July 2019. All prices are in
grade FGDs are a fraction of a percent. diamonds may be exploited by some reselling USD.
The sharp rise in FGD production caught these stones.
many in the natural diamond trade by surprise. At this point, the price structure is not 0.50Ct IF VVS1 VS1 SI1
Today, it is estimated that the growth rate as well established as it is for natural mined RBC
of FGD production is 22% per year. This, at diamonds. Factory grown diamond prices are
D 1,540 1,265 1,170 960
a time, when natural diamond production expected to fluctuate further as competition
is declining. The full potential for altering in this space increases. Expansion of FGD E 1,220 1,125 1,090 910
consumer spending decisions on diamonds is producers will not be uncontrolled. There is F 1,075 990* 1,040 870
unknown. However, in spite of the marketing an economic floor to entry at which point it G 1,000 960 925 840
hype, so far market research suggests that will not make financial sense to operate FGD
demand for FGDs is almost solely price production. That floor is, however, much lower * VG cut grade not EX
motivated. At retail, the price of a factory grown today than it was a decade ago. Producers will
diamond is approximately 70% below the price also have to compete against the marketing
of a comparable natural diamond. Five years prowess of De Beers in regards to both natural 1.00Ct IF VVS1 VS1 SI1
RBC
ago, this difference was approximately 40% and Lightbox products. For this reason alone,
below, 10 years ago, it was about 15%. This one can anticipate FGDs prices will be under D 4,500 3,540 2,650 2,150
assumes FGDs of SI2, I or better quality. pressure. E 3,600 2,550 2,420 1,965
Factory grown diamonds are viable FGDs sell for a substantial discount
F 3,200 2,465 2,240 1,895
products that appraisers are increasingly compared to natural, but the profit margin is
going to encounter in the marketplace. This also higher. Appraisers should also keep in G 3,100 2,400 2,220 1,860
year 54 companies exhibited FGDs at the JCK mind that demand for FGDs on the secondary
Las Vegas show. Exactly where FGDs will market is very weak. Unfortunately, the Stuart Robertson, GIA GG
ultimately be positioned in the market is not yet greatest margin comes from selling OTC Member NAJA
clear. One can argue that the Lightbox brand undisclosed.
launched by De Beers will reshape not only The following wholesale price charts are
the pricing of FGDs, but also the perception of based on factory grown diamonds offered
the product at the retail level. It is conceivable for sale in dealer inventories and on trade-
that shifting the perception of factory grown restricted B2B trading platforms. The research
diamonds to high-end costume jewelry may be was conducted on the 25th and 26th of July. All
De Beers intention. The author believes this were accompanied by IGI grading reports and
52 ACE© IT Mid Year Conference
is the primary reason that De Beers entered the vast majority were graded as having ideal
ND
9
Summaries of Saturday’s AHA! (Appraisers Helping Appraisers) Presentations
Messages sent post-conference
Thanks Gail Dear Gail,
It was such a joy and pleasure to meet you!! I really enjoyed the Thanks so much for organizing this wonderful conference! Jill and
conference. Job well done!! Heritage outdid themselves to make us welcome, take care of all our
needs and entertain us.
Thank you for all of your hard work!!
For me the high points were:
Best wishes, *Duncan’s talk
Lucy Steele *Gina’s talk
*Believe it or not, Deborah’s USPAP discussion (?!!!)
*the Mock auction that demonstrated how well we collaborate with
each other
Hi Gail! *the Panel discussion. I hope we spend time on this at every conference.
Thanks for all your hard work on the conference, it was really amazing! It was extremely helpful to hear from the experts how they approach
I learned so much, met great people and really enjoyed connecting and tricky circumstances.
being part of the group :-) Marcia and I are already looking forward to
Tucson! For all your attention to detail, all your time and late hours, for the
logistics you managed that we’ll never know about and for your
Thanks! dedication to providing quality content, I am extremely grateful. I feel
Stacy Summers that NAJA is a support network that I can always rely on. The friends I
have made here are invaluable.
Looking forward to seeing you in Tucson!!
Hi Gail,
I feel so lucky to have attended- it seems that Heritage went above and Safe travels, my Queen!
beyond for a wonderful weekend of learning. I feel like Dallas lit a fire Best,
under me! Merrill Essex
Respectfully,
Meghan Keefe, GJG (GIA)
Another great conference in the terrific space of Heritage Auction
house- thanks to all the organizing by Gail, Dave, Deborah and, of
course, Carmen!!!! Where’s the next one in August 2020???
Hi Gail,
I really felt that this conference was a great value for my appraisal Barbara Nevius
business! I met so many people that are so kind and giving of their
guidance and suggestions! I’m so glad to be a part of this community!
Thank you!
Conference was indeed great! Great job to Gail and Staff.
Thank you again!!
Susan Barnett David Rotenberg
Hi Gail, Just wanted to say what a wonderful conference. Gail Brett Levine
Hope that you are recovering from the trek to Dallas. I just got a 7 piece always out does herself. Another special thank you to Jill Burgum and
appraisal in as she found me through NAJA web site. And it is for the Heritage Auction team for hosting us. To all the lecturers, thank you
USAA for which I now have the guide lines from the conference. All this for your wealth of knowledge. And to all the attendees, thank you for not
does work together. Just wanted you to know. throwing tomatoes during my lecture! I hope to see you all again, and
to those who did not attend, I hope to see you all soon.
Patricia Ann Cole
Travis Lejman
Gail,
Thanks so much for passing along the color vision test results, very Dallas NAJA conference- Thanks Gail Brett Levine
interesting test!!
Aimee Berrent
I also wanted to thank you for putting on such a fabulous conference.
I can’t imagine all the hours and coordinating that goes on to make
such an event take place, but as a attendee of the conference I so
appreciated all your work that went in to make it happen! The amount
of information, learning and networking that occurred in Dallas was
unbelievable, thank you!!
Safe travels back home,
52 ACE© IT Mid Year Conference
ND
Rebecca Schoenherr
1011
Education Notes
Come to Conference!!
Our recent Mid-Year Conference in Dallas, alive! Every one sat down and took the time
Texas was absolutely terrific on many levels. to answer my endless questions, for I found
The quality of the speakers was, as usual, any shyness evaporating in the atmosphere
excellent and provided a broad range of of sharing. These days, I am lucky enough
interesting topics, from Dave’s ever-popular to have been in the business for a while, and
Town Hall, to Sindi Schloss discussing to have new appraisers ask me questions,
symbolism in ethnic jewelry, to a mock but I still learn so much from each and every
auction that had everyone out of their seats conference I attend. There is always a
applauding. Our hosts, Heritage Auctions, session which teaches me something I didn’t
provided a very special venue with incredible know, always a new contact with expertise in a
previews of upcoming sales, excellent food, specific area who comes along a just the right
two wine and champagne receptions, and time, always a new friend in a different part
state-of-the-art audio and technical support of the country whom I can ask about pricing
throughout our stay. The hotel was first class, trends in their area. I have returned home
included a full, hot American breakfast every from each and every conference I attend with
day, and was conveniently located close at least one new skill and something, be it a
to terrific restaurants and nightlife for post- new piece of equipment or newly acquired
session amusement. knowledge, which makes my appraisal
However, the very best thing about this practice better. Every conference.
trip to Dallas was the reminder of what an The opportunity to reconnect with old
opportunity conference attendance provides, friends, make new, meet industry leaders, and But the connections made on these trips have
one not equaled over a dozen webinars earn those necessary continuing education been the most meaningful of my career, and I
– personal connection. I have mentioned points can’t be underestimated. If you haven’t encourage you to explore the possibilities.
before in this column that it wasn’t until I been to an NAJA conference in a while, you’re NAJA works very hard to hold conferences
attended my first NAJA conference that I felt a missing a lot. Every year we are working in each third of the country, alternating each
part of the greater community of appraisers. I to improve the member experience, while year, so if we’re not close by this year, we will
had no idea there were so many of us. And I bringing you the knowledge that is so important be next! If you’ve never been to a conference,
certainly had no idea what a dynamic, collegial to staying on top of the latest innovations in consider joining us in February or August next
group I had joined in NAJA. Everyone was our industry. year. If you haven’t been in a while, you don’t
so generous and friendly, willing to freely But it’s not just NAJA conferences, of know what you’re missing. And if I saw you in
share their insights and knowledge with a course. Attend anything that strikes your Dallas, you already know how fantastic it was,
new appraiser who had little idea of the larger fancy. There are dozens of opportunities each so – see you in Tucson!!
industry outside of the small family jeweler for year, and not only in the U.S. Take the family
whom she worked. and write off half of your vacation by attending Deborah J. Finleon, GIA GG, CMA (NAJA)
At that first conference, I met people a conference in Bangkok or Spain first! I Chair of Education
who had been in the business longer than promise you won’t regret it. The financial and
I – in some cases longer than I had been time commitment can seem daunting, I know.
Computer Testing Quantifies Color Performance in
NAJA Members
In the recent NAJA Conference in Dallas, findings which agreed well with FM 100 Hue
TX, Drs. Julie Lovell and Jeff Rabin of the results. The research team is formalizing
University of the Incarnate Word Rosenberg their findings for presentation and publication.
School of Optometry, San Antonio, TX, It is hoped that the final analysis will help
provided color vision testing for certification standardize and refine NAJA color vision
which included our standard test (FM 100 Hue testing and certification.
cap arrangement test), as well as a computer- The FM 100 Hue test involves arranging
based color test which provides red, green and the colored caps in logical order. As shown,
blue scores representative of the red, green there are four trays of caps and 85 caps total
and blue sensitive cone cells in the human requiring up to 30 minutes to complete. A
retina (https://innova.systems/eye-disease- total error score is computed which indicates
management/rabin-cone-contrast-test- how well the individual can discriminate slight
overview/). A major intent was to determine if differences in color.
the computer test, which takes much less time The 5-minute computer-based Cone
(5 minutes) than the FM 100 Hue (10 – 30 Contrast Test (Innova Systems, Inc.) presents
minutes), provides comparable results which a colored letter (red, green or bluish) in
may help refine the NAJA requirement for the center of the display and the test-taker
periodic color vision certification. uses a mouse to select the letter seen from
The researchers found that most NAJA the adjacent matching display. The letters
members performed quite well on the FM 100 decrease in visibility as the test proceeds
Hue, in some cases better than age-matched and the lowest visibility (color contrast) is
norms. They confirmed that the FM 100 Hue determined for red, green and blue color
can require up to 30 minutes to complete vs. vision. A PDF automatically saves with a red, Julie Lovell, MS, PhD and Jeff Rabin, OD, MS,
the computer test, which is easily done in 5 green and blue score on a 100-point scale. PhD
minutes, and that the computer test yielded
12Woe To Those Who Appraise What They Sell!
Court Ruling Affirms Appraisal Profession
The 9th Circuit Court of Appeals recently ruled one. It did not include data supporting the distinct categories. We had separate business
that an appraisal from an esteemed auction value opinion and had no comparable market cards, separate locations, and unique flyers for
house is not adequate assurance of appraisal sales. (It should have stated it was using the each aspect of the umbrella business.
proficiency or competence. This ruling sales comparison approach and then provided The argument could be made that this
came in the case of Estate of Kollsman Vs. all the supporting data that assisted in reaching possibility of conflict is just for estate appraisals
Commissioner and upheld the US Tax Court’s the value conclusion.) I am assuming it did not and the IRS, but that is not true. Appraisals
opinion. contain a certification, as required by USPAP, for re-sale, confirmation of value, or even
The case revolved around the “appraisal” which would have listed any financial interests, insurance coverage may hold the same pitfalls.
done for the Estate of Eva Kollsman by the past, present, or future in the property being The USPAP definition of an appraiser is the
Co-Chair of Sotheby’s Old Master Paintings appraised. If it had included all these elements, following: one who is expected to perform
Worldwide, who claimed the fair market value the outcome may have been different. valuation services competently and in a manner
of two paintings the estate possessed were The appraiser for the IRS met the that is independent, impartial, and objective.
worth $600,000. This amount was attached to qualifications of the Appraisal Qualification Therefore, the following points should be
their US Estate Tax Return which formed the Board and completed an appraisal that was remembered by those seeking to do appraisals
basis of any taxes due. for any intended use or for any third
The IRS had their own party, including another jewelry
appraiser value the two firm, auction company, gallery, or
paintings, stating that the even your own store.
total was a great deal more. 1. F o l l o w U S PA P i n y o u r
This created a deficiency assignments. Make sure you
in the estate’s tax amount, follow Standards 7 & 8, as well as
sending notice to the estate including a complete certification
they needed to pay. This with signature. Make sure you are
resulted in the estate current in your USPAP classes.
petitioning the US Tax Court 2. Always be objective, impartial,
for redetermination. They and disinterested. We are not
used the appraisal done fiduciary agents, advocates, or
by Sotheby’s to back up salesmen attempting to “get the
their claims. The IRS used sale of the item”-even if our work is
an appraisal done by an done for a contractor.
independent and credentialed 3. Any fee structure should not
fine arts appraiser, arguing be contingent upon the sale of
at the Court that the the piece, future disposition, or
values should have been outcome. Fees should be based
$2,600,000. The IRS won the case and it was compliant with USPAP. It was considered a on fair terms, by the piece, by the hour, or by
appealed to the 9th Circuit, which has now “qualified” appraisal by a credentialed and contract for the assignment.
upheld the decision. unbiased appraiser-one that did not have a 4. Appraisers must be comprehensive and
The amount differences are staggering, conflict of interest or personal interest in the show the justification for values, depending on
but the real conclusions reached by the outcome. the intended use of the appraisal. Just relying
court are even more monumental for us as Although there were other parts to this upon personal reputation and “I say so” is not
a profession. They claimed there was a story, the point to us as appraisers as that enough, it doesn’t matter. An appraisal is only
distinct conflict of interest with the Sotheby’s we should be particularly careful if there as good as the recorded data and the logical
appraiser, particularly because Sotheby’s was are any potential conflicts of interest in our analysis that supports it.
simultaneously attempting to contract the sale assignments. That would include appraising We have a right and a responsibility to
of the works at auction. The appraiser sent a jewelry that might be bought or sold by a firm uphold our appraisal profession. We are not
letter agreement proposing the exclusive right you have connections with or any past or future here to service any auction house (even our
to sell the paintings over the next five years, potential interest. own), consignment shop, or jewelry firm. As
which the executor signed. When I was an auctioneer and gallery John Brenan, vice-president of appraisal
The Court said that Sotheby’s stood owner, I constantly encountered problems of issues at The Appraisal Foundation has stated:
to earn significant commissions from the perception with potential appraisal clients. Even “Consumers are the biggest beneficiaries of this
anticipated sales and that the appraiser “had a though we sought to keep our appraisal hats on ruling. Personal property assets will be better
direct financial incentive to curry favor with [the during a valuation, it was often still perceived protected when a qualified and independent
executor]” by providing “lowball” estimates that as being done by the auction company. appraiser is retained to value one’s personal
would lessen the Federal estate tax burden to Of course, as we all know, many auction property assets.”
the estate. (Sotheby’s subsequently sold one companies use their appraisal departments So be it!
of the paintings for $2,434,500.) to garner in items for their sales and often try
The Court said the Sotheby’s appraisal to soften up the clients by offering low fees, Note: Leon Castner, ISA CAPP, Senior Partner,
was “unreliable and unpersuasive,” and discounts, or incentives to sell those items with NAC
had serious deficiencies in competency as the company. This is not necessarily true of all Seven (7) hour USPAP given on Wednesday,
well as independence. An article written by auction companies, galleries, or jewelry stores, November 20, 2019, 9:00AM – 5:00PM Eastern
Jeffrey Marks and Amelia Brankov for Wealth but it does present a problem when a third and Monday, December 9, 2019, 9:00AM
Management states that “estate administrators party is seeking confidence that the appraisal – 5:00PM Eastern Learn more at: www.
should proceed with caution when considering was done accurately and competently, without USPAP7.com
for estate tax purposes the use of appraisals undue influence of any sort.
prepared for merchants simultaneously seeking In my auction days we choose to open
to sell the same property.” a separate office which handled appraisal
Of course, the estate appraisal prepared assignments. We made it very clear that
for the Kollsman’s was not a USPAP compliant appraisals and auctions were two different and
13You can also read
