62: The Future of Diamonds with Phillip Yantzer VP of US Laboratory Operations

January 30, 2019

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Yigal Adato: 00:00 Hey pawn family, what’s up? It’s Yigal and welcome back to another episode of the Pawn Leaders Podcast. Today I’m in North Carolina, it’s a little bit wet but that’s okay. Hopefully I can make it outta here on my way to Virginia without hitting a snow storm of some sort, but I just, I get so much pleasure of visiting pawnshops and seeing how they work, seeing the great people who manage the shops and who work in the stores and the owners and just seeing this industry thriving and shops who are really implementing things I talk about on the podcast. Things like better leadership, better marketing and better strategy and to those of you who are responding to the emails and giving me great reviews about the content I’m producing, I just want to say thank you. If you’re not on my email list, go to pawnleaders.com download the goal guide. It’s called the three pillars of profitable pawnshops and you’ll be put on my email list. I promise I don’t spam. I just send you bits of information of my history in the pawn business and lessons I’ve learned to help you grow your operation. Speaking of reviews, my friends at podium are rocking it. It’s incredible. Every pawnshop that I walk into who is using podium, I checked their Google reviews beforehand and they are crushing their competition. I mean hundreds of reviews more than the pawn shop next door or across the street. If you’re not using podium, you’re losing out to your competition. So, I’ve secured a special discount for the listeners of the podcast, just go to podium.com/pawnleaders to get 10% off your monthly subscription. Once again, it’s podium.com/pawnleaders to get 10% off your monthly subscription. Now to the episode with me, I Have Phillip Yantzer who oversees Gia Laboratory operations in the U.S He’s a 38 year veteran of Gia and he is considered one of the world’s most accomplished diamond grading experts and a leading contributor in the development and maintenance of GIA’s international diamond grading standards. Now. So many of us have GGs, all of us are taking in diamonds and for the [Incomprehensible] was instrumental in the development of the GIA cut grading system for around brilliance. He’s also contributed to a number of research articles on the subject delivered by so many industry lectures and presentation and participate in the ongoing collaborations with the GIA cut grading research system. Ladies and gentlemen, this is my interview with Philip Yantzer.


Yigal Adato: 02:33 Hey everyone, my name is Yigal Adato and this is the Pawn Leaders Podcast, a podcast that help you make more money, stress less, and live an epic life all while working at the pawn shop.


Yigal Adato: 02:56 Phil, welcome to the show.


Phillip Yantzer: 02:59 Thank you. I’m glad to be here.


Yigal Adato: 03:00 No, my pleasure. Thank you so much for being here. I know you’re a busy man being the vice president of US laboratories in a GIA. I’m sure you have a lot going on. So thank you for taking the time to be on and giving the pawnbrokers some value.
Phillip Yantzer: 03:14 You know what, like I said, I’m happy to be a part of this. I’ve done other things with pawnbrokers in the past and I think it’s an important part, especially in the US now with, you know, this transition of wealth between the baby boomers. I think it’s a big deal and I think you guys are [Inaudible]


Yigal Adato: 03:29 Awesome. Love it. Thank you. So let’s start about, you know, how you start at GIA. Give us a little bit about your past and how you ended up as you know, the vice president of the laboratories of the US at GIA.


Phillip Yantzer: 03:42 You know, it’s interesting. Back in the, it’s all the way back to 1979 because I’ve been actually working at GIA 38 years. Back in `79, I was a college student. I had three brothers, actually older brothers that had already committed to work at GIA in all different divisions. And we were talking one day and they were talking about things and interested [Incomprehensible] and they told me about this company that was growing like crazy, very reputable company had been around for 50 years already. And I jumped on board and I started up to, I got my GG from GIA and then I went to work in the laboratories and I’ve stayed ever since 38 years, I’ve held pretty much every position you can hold from a entry level diamond grader to the vice president.


Yigal Adato: 04:30 Wow. So you started at the, not the bottom, I mean, you are a geologist essentially, and then now you’re the vice president of the laboratories. Overlooking that process, I’m guessing.


Phillip Yantzer: 04:40 Yeah, absolutely. I mean, when you talk about the diamond grading aspect and when our laboratories do, I started at the bottom, which we call the preliminary grader and there’s, you know, from prelims to doubles to supervisors, to manager, to directors, to senior managers, to vice president. I’ve held all those positions and in all different capacities from the quality aspect of [Inaudible] the quality department for about 10 years for domestically and then I moved more into operations.


Yigal Adato: 05:09 Nice. So how many people do you manage essentially in the lab? How many people are in the lab grading stones for GIA?


Phillip Yantzer: 05:18 So if you look at the two labs, so we have labs all around the world. So if you look at the total labs, including graders and support staff, you’re looking at I think over 2200 that were in the laboratory alone. In the US we’ve got about 515 and then in California another 280 and New York so you’re looking at about 800 in just the u s that’s another laboratory alone that’s not education or corporate, any of those divisions.


Yigal Adato: 05:46 Very cool. So my brother’s a graduate of the GIA up in Carlsbad, and he was always the one obviously taking care of the diamonds and the stones. And my brother always say, hey, if you have a stone over a certain carat we’re sending it to the GIA. It was super important to him to make sure that he got his stone’s graded so that when we sold them in the store, when we sold them to dealers, we wanted to flip and we knew exactly on what that stone quality was so that nobody can say otherwise. Now in your opinion Phil, what do you think is you know, you’ve given speeches at the pawn brokers associations. What do you think are some mistakes that pawnbrokers are making today when it comes to a diamond coming through their door and thinking that they’re able to grade it correctly if they’re not a gemologist?


Phillip Yantzer: 06:34 You know, when I started working at GIA it was pretty simple. There weren’t many diamond grading aspect of it was the same. We graded the same standards that we’ve had since we issuing reports in the 1950s. But what happened since pretty much the early 90s, is when a new treatment came out called HPHT processing, where they are able to take diamonds and de-colorize them. Identifying treatments that people are doing, few couple of treatments that they do to natural diamonds along with synthetic diamonds, which is now a big issue. A lot of people are talking about lab grown diamonds. I think the quality part is important. Don’t get me wrong, but the value of a diamond, if it is treated or synthetic is substantially less than a natural untreated diamonds. So to me, I think that’s where GIA is really out here to protect you and protecting to protect the public.


Yigal Adato: 07:34 So if I’m a pawnbroker, which I was for 16 years and a diamond comes through my door and I do the loop and the diamond testers and all those types of things, is there something else that a pawnbroker should know, you know, get some type of training from GIA so that they don’t get stiffed with something that’s synthetic as opposed to a natural diamond.


Phillip Yantzer: 07:57 You know, I think at a bare minimum, if I was out in the industry and I was purchasing diamonds from people I didn’t know, GIA actually has a new instrument that we’ve recently produced, which is called the ID 100 and it’s available through GIA. And the ID 100 is your first line of defense against synthetics and treatments. It will pretty much tell you whether a stone passes or needs further testing. And over 90% of stones are going to pass or at least you’re going to know that it’s a natural diamond, untreated diamond for 90% of the cases, the other 10% of the cases, you know, those are going to need further testing. And I would strongly suggest that you send them to GIA.


Yigal Adato: 08:41 Got It. So, obviously the GIA, you send it in, you get degraded, they send you back this incredible little booklet with what it looks like and the color and the grade and the cut, all those types of things. And I’m a big proponent of GIA. Like I said, my brother consistently sends stones over there. And he knows the value of the GIA. And now let me ask you this, in the industry today there’s a lot of synthetics, a lot of talk of synthetics coming through. The ID 100 that you’re talking about that will test for the synthetics, is that what you were saying?


Phillip Yantzer: 09:15 Yeah. What it will do is it will tell you so. And also [Incomprehensible] as well, which is a good thing, particularly in your field. They will going to use this prototype instrument that’s attached to the ID 100. You’re gonna place it on the diamond and it’s going to tell you if it passes that diamond that you knew now that that’s a natural diamond, it’s winded out the facts. If it refers it, it means that it could be natural based on the diamond type. And I don’t want to get way too much in the weeds on the science side, but we also could be synthetic. So I think knowing that and again when we look at just general data, 90% of the stone that are going to be tested that are going to be passed, I think that would be very cooperating to anybody who was out there buying diamonds on the market that you could use this device and no certainty that at least you have a natural diamond.


Yigal Adato: 10:05 Are you guys seeing a lot more synthetics coming through the doors of GIA? Like dealers sending in to get tested or pawnbrokers and they thought it was a diamond but it’s actually a synthetic.


Phillip Yantzer: 10:16 We have not seen a huge uptick in that. And I think that’s mainly because the majority of the diamonds that we see actually come straight from the manufacturers versus directly from the public or even from retail. But there has been an uptick and we have certainly seen them. And we’ve seen instances where people are out there attempting to deceive other people. They are taking stone that they know are natural diamonds with GIA reports on them and they are switching them with the synthetic stone and we inscribing a report number on the [Incomprehensible] to make it look similar. So, we do see these things happen. Thank goodness they’re rare, but it does happen.


Yigal Adato: 10:59 Got It. So let’s talk about that real quick. You mentioned a couple of things that people are doing to pass off as diamond into kind of trick the buyers, you mentioned. Go ahead and mention those again. If there’s any more, please let us know. What are some tricks that these con artists are using to try to get money from [Inaudible] that aren’t real


Phillip Yantzer: 11:19 Well, even if they’re not trying to duplicate an existing GIA report with the stone, there are so many different treatments that are happening in to diamonds that would, that one detected the value of the diamonds. So you’ve got synthetics or laboratory grown diamonds. That’s one aspect of it. You’ve got natural diamonds that have gone through with this HPHT process, which de-colorizes them. You’ve got diamonds that have fracture filling in them which hide the inclusions. You have diamonds have coatings on them that the color look different. There’s multiple treatments that people are doing unfortunately and I think it’s with any industry, but in our industry to try to deceive. So I mean, I think the key for somebody, if I was out there buying diamonds off the market, I would make sure that the diamond I had, I would clean it as best I could. I would look at it under a microscope. I make sure that it doesn’t have any coding on it. Something obvious. And then I would look further, when you’re looking for GGs would definitely know people have taken diamond grading classes would know to look for certain characteristics that tell you that diamond has been [Incomprehensible] which makes the appearance look better than the actual grade, but certainly we values of diamond. So there’s a lot of treatments out there that some are difficult to detect and some are easy if you get the education from GIA in particular.


Yigal Adato: 12:47 So let’s talk about education. We had about five managers at our stores and we had them go through the diamond essentials course and some of them went to GIA, on the campus to take some classes. How does the training work? A lot of people don’t understand that you can do some of the training online. You can do some stuff in person if they’re not close to a campus. Talk about kind of GIA’s training and how they can better an owner of a shop or a manager of a shop in order to be able to determine the value of stones and the four Cs essentially.


Phillip Yantzer: 13:23 Sure. So, you know, when you kind of look at what’s the best, you know, we have our graduate gemology program, which is, you know, typically a residency program. You’re onsite, you’re doing it, there’s a lot more hands on. You’re touching many more stones. You’re doing gem identification on colored diamonds and you’re learning a lot more about how to detect these treatments on diamonds I talk about. We also have online courses that are going to give you a lot of information not as much hands on. And then we’ve got specialized seminars at GIA does in particular, GIA launched a new seminar, I’m just grabbing my notes, that we have done very successfully this past year, which is an advanced synthetic diamond seminar. Typically it’s a one or two day event and we have offered them around the world and those are ones where you sit there and you just focus on detection of synthetic diamonds, a laboratory grown versus natural diamonds. So we have a whole array from, like I said, residency program to online. And then there’s courses, like you said, the essentials programs. So you kind of got, I’m going to dabble in it a little bit or I want to become an expert.


Yigal Adato: 14:38 Yeah. And my recommendation to those listening is if you have a manager or you’re the owner yourself and you don’t know this stuff, I think it’s important to take a course to familiarize yourself with the diamonds essentials. That way you’re not losing value in your stones. You’re not paying too much when they’re coming through the door or even when you’re trying to go to sell them. You’re not losing money and you’re not leaving money on the table. So, what’s the website? Is it GIA?


Phillip Yantzer: 15:06 gia.edu.


Yigal Adato: 15:06 Yeah. So check out gia.edu. Get some information from there. I’m sure I’ll post in the show notes that you guys can grab a link as well. So Phil, let me ask you this, and I’ve always had this question. You guys have GGs sitting there with multiple stones a day sitting in grading. And my question to my brother was always, don’t they get tired and make mistakes? Right? Like you’re looking at so many stones every single day. What does GIA do to kind of supervise that or how does that work? I’ve always been interested in that process.


Phillip Yantzer: 15:40 Well, I think one of the keys is to make sure that you’re certainly not overworking anybody. We set quality and production goals on all of our graders and they are very easily achievable by our graders. The last thing you want is people to be overworked or tired with any business you’re in. But we have multiple ways that we judge an individual’s quality, a laboratories quality and the overall quality of GIA as a whole. We do this to submitting stones to ourselves to make sure that the grading is correct. We do it blindly through all the laboratories. We have three different kinds of sets of quality things that we do on a daily basis that measures an individual person’s quality and an entire laboratory’s quality. Another thing that we do is all diamonds go through multiple grading steps. So you don’t have one person who could be having a bad day making that decision. And we have a system that we’ve developed, an I.T System within our laboratory that tells you when you have enough agreeing opinions versus somebody just saying, I think this is this, it’s going to say no. You have to get another person to agree or two more people to agree or three more people to agree depending on the size of the quality of the diamond. So we do our checks on balance of place.


Yigal Adato: 16:59 Gotcha. And another question that just came to mind, checks and balances the 4 Cs. There’s a history to that and I love to, if you can share it, if you know it, how did that start? When did that start? And how did it become such a worldwide accepted practice I guess or measurement metric?


Phillip Yantzer: 17:20 You know, so they came up with the 4Cs and it was our founding [Incomprehensible] who’s part of that back in the 1950s. In the 1950s, people were talking about the grading of a diamond very differently. You had people that were using all different terminology. You know, it was a blue white, it was a color. It was Wessington, there were all these different terms and nobody could put them together. There was no overlap. So there became a need for people to say, you know, we need a standard. So they developed that standard. They developed the 4 Cs. They developed the GIA diamond grading scale. The reason that color grades, for instance, started [Inaudible] people were already saying, it’s an A, it’s a AA. It’s a AAA. It’s a AAAA, it’s an AB. So Mr [Incomprehensible] decided, you know what, we’re going to start at D, D being the best color. We’re going to move it all the way down the alphabet, all the way down to z until we get in the fancy colors. They’d develop the clear grading. And then we started issuing reports around that time. I mean when GIA first formed, they were more about colored stone lab and then when the need for a documentary standard to be developed that’s when they developed and then it has been adopted and it is a universal diamond grading standard. There are other laboratories around the world that use GIA terminology, but I can’t tell you that they necessarily interpret the GIA standard as well as [Inaudible]


Yigal Adato: 18:59 Got it. So we’re coming up on 2019 and you know, the diamond industry, a meeting I went to a couple of months ago to a conference, the synthetics were coming in and people were kind of scared of that. What do you think is happening with the diamond industry in 2019, in the colored stone industry essentially? What do you think it’s going and what do you think is going to be, you know, what’s going to happen in the market in 2019?


Phillip Yantzer: 19:23 You know, the crystal ball, what’s going to happen? I think the synthetic topic right now, the laboratory grown topic is a big topic. But, you know, GIA doesn’t take a stance. I mean, I have no problem with manmade diamonds or laboratory grown diamonds. We just want to make sure everything’s disclosed properly and make sure the consumer knows what they’re buying. But I think this is going to be a theme for a couple of years, but I think it’s important to note that it’s not a new theme. There’ve been synthetic colored stones since the late 1900s. So the industry has gone through synthetic sapphires, synthetic rubies, synthetic emeralds, synthetic, pretty much everything. And the industry has to dictate exactly as is where do those fit? Where do they fit? And I think right now the industry is trying to figure out where do laboratory grown diamonds fit. I mean, there’s a lot of different opinions out there as to where they fit and how they’re going to be marketed. So I think they’re going to be a big team. I also think that there’s many statistics out there about this transfer of wealth in the US as the baby boomers start to age. And I think a lot of that’s going to in types of hard assets such as diamonds, colored stones, things like that. And going back to one thing that you said earlier about how could a pawnbroker particularly maximize what they’re buying is a lot of this jewelry that may be coming in maybe older jewelry and older cut diamonds and the cut has a huge factor when it comes to value. And I think that knowing easily how diamond could be re-cut to maximize its beauty and ultimately its value is another thing that’s really important. And I think that’s another reason that people should get that education. And that’s another reason to use GIA because we will tell you if a diamond can, clarity for instance, can be improved or cut can be improved and minor weight loss we’ll tell you that when you submit it to us. So it’s another benefit.


Yigal Adato: 21:38 And for those of you who ever thinking that, oh, shipping my stones and all type of stuff, Phil, I’m sure you get millions of dollars of stones shipped in from different companies and shipping’s coming out. So don’t feel unsafe. We did it for years at our pawnshop. We shipped you guys’ stuff and there was never an issue. So those of you listening, even if you’re across the nation, there’s different campuses that you can ship to and get these stones graded. Phil thank you so much for being on the show. If there’s any parting words please, sorry to interrupt you, but I think the GIA is an essential part of the pawnbroker’s life, especially when getting an education in at least diamond essentials. If you want to grow a manager, an employee to have them work in your store and maximize profit for you, they have to know what they’re talking about. One of the biggest things I believe is gaining some type of a GIA education, diamond essentials or going out to a campus, becoming a GG, whatever that is. So,


Phillip Yantzer: 22:37 I couldn’t agree with you more. I mean, I know that in your industry sometimes you’re on the spot. Somebody wants to sell something, you want to make a deal. And having somebody there with you that has knowledge to be able to weed out some of these questions that we’ve been bringing up, synthetics or treatments or whatever. So you can make that deal right there on the spot versus saying, Hey, you know what? Wait a week. I want to send it to GIA. So I understand that. So I think it’s imperative that you have people within your stores that have that knowledge.


Yigal Adato: 23:08 I do have one more question before we go. And this is because I’m not a gemologist. So the synthetic diamonds and the lab grown diamonds, do they have different grading scales or is it still kind of used with the 4Cs and it’s just on the report it says synthetic or lab grown.


Phillip Yantzer: 23:27 So currently the way we report on what we call currently a synthetic diamond grading report is we don’t give it a grade of such as a D, E, F, G, H on color or the clarity is. What we do is we give a range. We say it is a colorless stone. It’s a near colorless stone. We don’t go, we’re not grabbing on there. We don’t go down the individual grades. We do that because we haven’t seen that many to ensure that we have a spectrum across cause with synthetic diamonds, since they can be produced by man, you know, there’s a very good chance there could be a compression up in the higher colors because they’re making ’em, nature is making them. So, currently we do not report to the granular level of the four [Incomprehensible].


Yigal Adato: 24:16 Got It. Thank you so much, Phil. Again, thank you so much for your time. And those of you who want to check out some type of education when it comes to gemological services, go to gia.edu and Phil, appreciate you. Thanks for being on the show. And for those of you who want to continue the conversation jump on Facebook go to Pawn Leaders Podcast Community, let’s chat. Let’s see how you’re doing with diamond buying [Incomprehensible] and I’ll see you in the next episode.


Phillip Yantzer: 24:39 Great. Thank you.


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GIA Website Mentioned: https://www.gia.edu/


Yigal Adato

Yigal is a 3rd generation pawn broker, and is now a mentor, coach and educator with the pawnbroking industry.

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