The following article is a collaboration with this author and the owner of diamondsbylauren.com.

This Article deals with GIA Diamond Grading Reports & lab reports in general. If you are shopping for a diamond, or own one and are curious about it's value, the diamond's grade is critical.Two diamonds that might look similar can have vastly different values. When it comes to high dollar diamonds, even slight differences in appearance (grades) can create HUGE price differences.

The GIA does NOT "certify" diamonds or put appraisal values on their reports

We'll just make that clear right off the bat. If you see an "estimate" on a gem lab report, it's not a GIA Lab report. They do not appraise the value, the GIA grades the color, the weight, depth, table and so on. They do not issue certificates, they issue GIA Gem Lab Reports. They do not certify diamonds, they issue a lab report. So if you see "Certified by the GIA", just know it's not. Diamonds are GRADED by the GIA, not certified.

The price difference between two diamonds that look similar to the naked eye

We'll take two hypothetical diamonds and assume both have been graded by GIA. Both are really well cut. One is a D Internally Flawless 2.00ct Round Brilliant worth in the range of $70K+. The other is a E/VVS1 2.00ct Round Brilliant that weighs in around $46k+. The imperfection which constitutes a VVS1 is microscopic- yet it can cost the cutter $24,000 in this hypothetical example.

To prove a D/IF is actually Internally Flawless (IF), no dealer will accept anything short of a GIA Lab Report. How much would a dealer pay for the same D/Internally Flawless Diamond prior to GIA grading it? Based on our market experience, dealers might try to buy it for the price of an F/VS2. Let's assume the highest price a dealer might pay would be the price of E color VVS1. At least 35% less- which can amount to well over $20k. For this reason, cutters need to use GIA - there's a lot of money at stake. For the same reason, as a buyer, a GIA Gem Lab Report is essential.

Should you buy a diamond without a GIA Lab Report?

A GIA Report backs up the claims of the seller regarding the diamond grade. There's simply no reason to risk buying a "high grade" diamond without a GIA Report. When I say "high grade" that means top dollar diamonds in any particular range. For example: A 1.00ct diamond for $2500 versus as .50 carat diamond for $2500. The 1.00ct is an inexpensive stone, the 1/2 carat, "high grade". If we are speaking of colorless diamonds, I'm talking about I color and better- SI2 clarity and better.

Color grades of J-K-L-M, and imperfect diamonds are more feasible without GIA (or with lesser reports). Again, an $8000 two carat diamond is actually "cheap". Remember, a well cut H/SI1 2.00 Round diamond with GIA report can cost $20k. Now, if it was a 1.00ct at $8000- then it had BETTER have a GIA report. But if you are talking about a lower grade, many times the cost of the GIA Lab Report represents too high a percentage of the potential selling cost.

What about other reports?

If you go to sell any valuable diamond back to a dealer, his/her first question will be, "Is there a GIA Report?" The main danger is the representation of a diamond with a lesser report as equal to a diamond of the same grade issued by GIA. It's widely reputed that some of the non GIA labs are more lenient than GIA. Some sellers may suggest that grades issued by one of the main non GIA labs is simply "one off". Their contention might be that an EGL G/VS2 is equivalent to a GIA H/SI1. That assumption overlooks the facts.

Ethical dealers won't use any such formula. Dealers will ONLY pay top dollar for any given grade, if that grade was issued by GIA. It seems that there is a problem with sellers that understand the difference between the labs purposely blurring the lines.

Take a hypothetical diamond. It's legitimate grade is K/SI1. GIA gives it K/SI1. Another lab gives it J/VS2 (or I/VS2). If both dealers were charging the same price, a buyer unfamiliar with the information in this article might reasonably assume the guy selling the I/VS2 was less expensive. When the lesser reports are used in this manner, it smells like misrepresentation. After all, if the seller knows all this stuff, and we must assume that as a dealer they do, why not tell the buyer?

More Information:
GIA Diamond Grading Reports Tutorial with photos