Editorial: Is the GIA Really a Monopoly?

Here is a great article from one of our main and trusted jewelry industry educational companies ISG.

Is the GIA a monopoly that is doing DeBeers-level damage to the gemology industry?
It’s a simple fact that the modern day jewelry industry was founded on an illegal monopoly: DeBeers control of diamond markets. Diamonds are the heart of the jewelry industry, and for many years the world diamond markets were controlled by this London based monopoly, which was legal in the UK but highly illegal in the United States where most of DeBeers profits were generated. This monopoly existed to the point that corporate executives from DeBeers could not enter the United States for fear of being arrested on charges related to their monopolistic control of the diamond markets dating back to World War II. Even when the American Gem Society had a DeBeers executive speak at one of their conclaves, the meeting had to be held in Canada since the executive was subject to arrest if he set foot inside U.S. borders. This monopoly was so ingrained in the industry that no one wanted to discuss all of the nasty little secrets that went along with the DeBeers monopoly, such as undue interference in local governments, disregard for environmental issues, and the knarly issue of conflict diamonds.

As always happens with these kinds of operations, what goes around eventually comes around. Today, with the decline of DeBeers, the diamond market is no longer controlled by a monopoly, (although a strong case could be made that Rapaport has replaced DeBeers in the monopolistic control of the diamond markets.)

It seems our industry is OK with monopolistic controls of our markets, as long as they make us profits.

Given the nature of the DeBeers monopoly and the potential for others to exist in our industry, the question comes to mind: Is the Gemological Institute of America really a monopoly?

Dictionary.com defines a monopoly as “The exclusive control by one company of a service or product.” Let’s review some issues surrounding the GIA and see what we find…
GIA claims to be the “Official Gemology School” of the jewelry industry.
The Gemological Institute of America has anointed themselves as the “Official Gemology School” of the jewelry industry. Seriously. I am not kidding. The “Official Gemology School”. Below is the actual Google Ad run by the GIA throughout the internet claiming to hold a legal and certified position as the jewelry industry’s “Official Gemology School”. Of course this was a major news event for all of us smaller gemology schools since we were not aware that the GIA had been bestowed this title, or by whom it was bestowed. As it turned out, this action was a false and malicious claim by the GIA in an effort to take exclusive control of the gemology education industry, thereby damaging the reputations and market value of other gemology schools in the industry.
GIA controls the jewelry industry media?

The Tibet andesine fiasco was financially the largest fraud perpetrated on consumers in the history of the jewelry industry, and required 4 years of litigation ending in a land-mark decision in the California Appeals Court. It involved over 150,000 consumers and over an estimated US$140 million in fraudulent sales.

How many of you read anything about this in the JCK, InStore Magazine or National Jeweler? I can answer this for you: None of you. Why? I asked the same question and was told that the whole thing was washed over because of the GIA involvement in the fiasco. The advertising revenue paid to the publications by the GIA is such that the GIA controls the industry media.

Based on my direct involvement with the situation, I found that this is also why you never read news of events with any other smaller gemology school covered in the US jewelry industry media. Its the GIA Show Folks, and it is a media wall generated by the GIA! No one has the advertising revenue to crack that wall open. The news you hear is what the GIA wants you to hear.

Bear in mind that the GIA is a 501(c)3 non-profit, so the situation is compounded by the fact that it is the jewelry industry contributions that make the actions of the GIA possible. Think about that.
GIA fraud cover-up?

It is a well documented fact that diamond graders at the GIA have been caught selling higher certificate grades to large diamond dealers who use their services. The GIA certificate system world-wide is so porous that there are stories on record of their certificates getting changed by internal employees to give higher diamond grades to select dealers using the GIA lab. To this day, those four GIA New York diamond graders caught selling high grades to dealers have never been exposed and never been prosecuted.

A few years ago when this newsletter reported on a case of a negligent error in a GIA diamond report that cost over $100,000.00 in litigation action, even I was subjected to threats of retaliation for having reported the situation.
Conclusion

“Exclusive control by one company of a service or product”. (dictionary.com)

False claims of being the “Official Gemology School”, using non-profit donations to influence the industry media, covering up fraudulent practices: To me this all adds up to the GIA trying very hard to sustain what appears to be their monopoly of the gemology industry.

Here is the quandary this puts us all in: Is the GIA monopoly sustainable? We have all seen what happened to the diamond markets when DeBeers lost control and Rapaport took over…pure, debilitating anarchy. The overwhelming domination of the diamond markets by DeBeers was so complete that when the DeBeer’s monopoly finally fell apart it left an industry that is still crashing to the ground in total free fall.

The GIA has so deliberately and venomously controlled the gemology industry that the very existence of high-quality, smaller gemology schools is in dire threat.

Think about what has happened to the diamond industry…now apply that to what could happen to the gemology industry.

Next time you interview a candidate with a gemology diploma from a smaller, lesser-known gemology school, take some time to learn what that candidate knows, what kind of gemology knowledge and training they have, rather than just looking for the GIA name in the diploma.

In the end, you may have a far superior gemologist in front of you. It would be extremely unfortunate if you made a decision based on the efforts of a monopoly to control your thinking…and not on the actual knowledge and training of the candidate sitting in front of you.

Make your decision based on the actual gemological knowledge of the candidate. Judge the applicant, not the name on the diploma.

Robert James FGA, GG
President, International School of Gemology Inc.