Issue Two March / April 2008

diamon

rofile

Here are several tactics you candeploy to help you navigate theeconomic waters of the next twelvemonths. Also, check out the chartof publicly traded companies in theretail business grouped into threeclassifications: Low to Moderateincome brackets, Moderate to Highincome and Luxury. Remember,stock prices are about a six-monthleading indicator.

Low to Moderate

–Tack left andright into the wind. This will be thehardest hit group but you can stillbe successful. Focus a specialvalue for an item each week,picking a price point or maybeseveral price points from $50 to$150. Use inexpensive emails toyour customers (if you don’t havethem, get them and offer a monthlynewsletter or some other benefit)and in-store flyers and counter topsigns. Think like WalMart-specials to pull them in.

Moderate to High

– Make stops atthe islands. These “affordableluxury” markets will want a little bitof luxury in what will be otherwise achallenging sea of small storms.Create a monthly “Luxury Corner”and put several mid range productsat price points of $100 to $500.Make the selling area feel like acomfortable luxury haven withcouches and even buy an espressomachine from Starbucks, servinglattes and cappuccino—think likeBarnes and Noble.

Luxury

– Ride on top of the waves.These customers will expect evenmore service and customizationsince they know they are on top ofan otherwise confused market.Survey your customers for prefer-ences, birthdays and specialoccasions and keep a database onthese dates. Assure your customersthat you want to help them providebeautiful, life-long and memorablegifts suitable for the event. Mostimportantly, keep customer contactand service levels high andcustomize - think like theRitz-Carlton.

How to Sail Through the Economic Waters

Economic Forecast from Collectors Universe CEO Michael Haynes

Feb07Mar 07Apr 07May07Jun07Jul07Aug07Sep07Oct07Nov07Dec07Jan08Feb0812011010090807060

LuxuryMod to HighLow to Mod

Indexed Share Performance of Publicly Traded Retailers In Three Consumer Groups

Published by: GCALPublisher: Donald A. PalmieriEditor: Pamela PalmieriCreative Director: Matan SellaContributors: Michael Haynes,Sharrie Woodring, Angelo Palmieri,Dan Gillen, Halina KabanProduction: Linda Osofsky580 Fifth Ave LL New York, NY 10036212-869-8985|dap@gemfacts.comwww.gemfacts.comIf you do not wish to receive thesenewsletters, simply fax the mailinglabel to 212.869.2315 marked “Cancel”Or email us at info@gemfacts.comasking us to cancel.If you have questions or suggestions,please send directly to me –dap@gemfacts.com.

Bring Your

Business Into 2008

Did you know that Amazon.com’sdiamond sales increased more than100% in the fourth quarter 2007from fourth quarter 2006? More thanever, customers are flocking to theweb to make purchases that wereonce only made at bricks and mortarstores. Now might be the time tomake online sales part of 2008 inorder to not only attract newbusiness, but to stay in closercontact with your customers.Even if you aren’t ready to commit toa purchasing feature, creating asimple website with your store’sinformation and featured product willget you noticed. Registering withsearch engines like Google andYahoo will also put more eyes onyour site.

If you want to build your own site,here are four steps you need to taketo get online:1. Purchase a good web designprogram (about $50) that isWYSIWYG (What You See Is WhatYou Get). This will eliminate yourneed to learn confusing computercode.2. Find a reliable web host. Impor-tant things are customer service andupload time.3. Splurge on a digital camera. Thiswill make it a lot easier to take andload your own images onto the site.4. Come up with a catchy URL.The simpler, the better.

Jewelry websites are becoming valuable property

Need another reason to sign upfor CDE? With registration you’llalso receive this complimentarygift: You will be eligible tobecome a full member of the IDEXOnline Diamond Trading Networkfor 90 days. This $210 valuesubscription includes access to

IDEX

Incentive

the largest diamond inventoryavailable at

www.idexonline.com

as well as a complimentarysubscription to IDEX Magazine, aleading industry publication.

*To become a full member of IDEXOnline call 212-382-3528 or emailusa@idexonline.comwww.CDEdiamonds.com.

As the U.S. dollar continues toweaken, the entire world shudders.Precious metals have skyrocketedto all-time highs, while high qualitylarger diamonds are wildly inflatedand selling offshore in Hong Kongand other bastions of mega wealthymarkets. The U.S. economy ischaotic, heading for recession.Luxury goods are being shunned,except by the very wealthy.Bankruptcies, buyouts, mergers,consolidations and liquidations areall occurring in our market at thismoment. Some large chains on thehigh end and the low end filed forbankruptcy protection within the 1stquarter of 2008. Other chains havereported miserable decreases insales during and since Christmas.While all this is taking place, majorU.S. cities are being overrun byEuro-wielding visitors buying

luxury brand jewels, watches andother goods as though they werehalf-price. Some New York shopseven limited the number of brandeditems per customer, in order toprotect their brand from overseasdiscounting. Expect this year to beone of highs and lows, and one ofthe most challenging for Americanjewelry wholesalers and retailers.We can expect more consolidation,and some real opportunities beneaththe rubble.

Diamond Market Analysis

By Donald A.Palmieri

Make sure the diamond iscompletely clean and absent of lint.

Dirt particles can interfere withviewing and finding tiny inclusions.

Always be careful to check the culetarea for inclusions.

Hold diamondgirdle to girdle and inspect culetarea from the pavilion side.

All possible grade setting inclusionshave to be loupe-able with a 10power loupe.

Do not make the finaldecision with a microscope look.A pinpoint visible with the micro-scope at 10 power but unable toloupe with a 10 power loupe isconsidered to be Internally Flawless.

It does not matter how manypinpoints are callable at 10 powerthrough the pavilion, for the grade tostill be VVS1.

One pinpoint or 1000pinpoints visible only through thepavilion are both VVS1 clarity grades.

Making the Grade

High clarity diamonds are difficult to grade. Use these Clarity Grading Tips from the experts at GCAL to enhance your skills.

Naturals and extra facets anywhereon the diamond will receive a gradeof Internally Flawless.

When anatural is indented, then it will beconsidered to be less then anInternally Flawless Grade.

White lines, scratches or pits areoften incorrectly called gradesetting inclusions that lower a gradebelow Internally Flawless.

The keyto making the correct decision is toview the depth or lack of depth fromthe opposite side of the blemish at10 power.

January was an exceptionallybusy and successful month forCertified Diamond Exchange.The site continues to add bothbuyers and sellers at a stunningrate. January saw the addition offour premiere diamondcompanies as sellers:

Julius Klein Diamonds Leo Schachter DiamondsWaldman Diamond Company Z. Kor Diamond Corp

Be on the lookout for theaddition of many features thatwill be invaluable to our buyers,both enhancing the experienceand providing a more efficientmanner in which to find theperfect diamond. A siteredesign is currently in theworks that will take all of theguesswork out of your nexttransaction.www.CDEdiamonds.com

CDE Sees

Exceptional Growth

Don’t forget to stop by and seeus at both JA-New York Winterand JCK-Las Vegas. GCAL isproud to be the OfficialDiamond Grading Laboratory ofboth prestigious shows, andCertified Diamond Exchange(CDE) is making its debut asthe Official Diamond Exchangefor each show. Internationally,in April come see us atBaselworld or following at theCIBJO Congress in Dubai.

IT’S SHOWTIME!

From Israel to Dubai to Geneva to Arizona, GCAL's worldwide mission is to improve consumer confidence indiamond grading.

Shimon Peres and Donald A. Palmieri at the WorldDiamond Council 5th Annual Meeting,Jerusalem, Israel.Mooketsi W. Jongman - Minister of Minerals,Republic of Botswana with Howard Pomerantzat the Rough Diamond Conference in Israel.Howard Pomerantz, Gaetano Cavalieri, President ofCIBJO; Michael Haynes, and Donald A. Palmieri atthe October 2007 CIBJO Meeting in Geneva,Switzerland. GCAL will be a sponsor of theupcoming 2008 CIBJO Congress in Dubai.Donald A. Palmieri at the 19th International IJT2008 Jewellery Tokyo Show in Japan.

GCAL

Circles the Globe

December saw

Joe Kassab

fromJoe Kassab Jewelers in PortlandOregon become CDE’s second$1,000 monthly winner.

Robert Ramsey

from Ramsey’sJewelers in Metairie, LA becameCDE’s third $1,000 monthly winnerfor January 2008.At the Centurion show in Tucson, AZ,GCAL drew three $1,000 CDEReward Card winners, giving theselucky winners a head start on theirfirst purchase of a GCAL GuaranteedCertified Diamond.

You Have to Play To Win

You could be the next big winner—just register for CDE and you could be reading your name here next month.

The winners are the following:

Bill Jones

Sissy’s Log Cabin

2319 Camden RoadPine Bluff, AR 71603

Victor Willis

(Left Image)Willis Fine Jewelry2845 Ridge Road, Suite 201Rockwall, TX 75032

Damon Gross

(Right Image)Hyde Park3000 E. First Avenue, Suite 243Denver, CO 80206

Are You Smarter than a

Diamond Grader?

Whether you’re new to the world ofdiamonds, or an old pro who couldstand to brush up on the basics,our easy-to-use eLearning programwill get you up to speed. You cananswer questions at your leisureand save your progress (no timelimits here!) so even a few minutesare well spent building yourknowledge.

Want a sneak peek?Try this question:

The Optical Brilliance image onGCAL certificates shows:

a. An approximate representation ofthe diamond’s brilliance

b. A direct assessment of eachdiamond’s light return vs. light lossc. A static photo used on all GCALcertificatesd. How much light reflects off thetable facetFind out the answer to this question and more at

www.gemfacts.com/elearning.

This series of free online courses providesan in-depth understanding of the many exclusive features of a GCAL guaran-teed certificate. Log on today to watch videos of diamonds being cut,polished and graded. Each section wraps-up with a quiz question so you canprove how smart you are.

GCAL’s eLearning program is a fun way to learn about how diamonds are graded in the laboratory.