Your best customer enters the store a month before his 25th wedding anniversary and wants to get his wife a diamond of around 5 carats - "the finest he can get." You obtain on memo a $55,000 4.64-ct. emerald-cut diamond with a grading report from a major lab saying it's D color, SI1 clarity. You sell it for $65,000 and tell the customer the lab report is a guarantee the diamond is as good as you say it is.

Two months later the customer returns with a report from another major lab. This report says the same diamond is E color, SI2 clarity, worth at least $15,000 less than he paid.

Hypothetical?

The example is drawn from actual differences in grading reports on a 4.64-ct. diamond that JCK acquired on memo in February and sent to the major U.S. gem labs: the Gemological Institute of America's Gem Trade Lab, which has locations in Santa Monica, Cal., and New York, N.Y.; the International Gemological Institute in New York; and the European Gemological Lab in Los Angeles, Cal.

This is not an isolated case; grading discrepancies are all too common, say jewelers polled for this report. Lab reports often vary by one grade and sometimes two, they say. Therein lies a potential time bomb: while the trade may accept the situation as a fact of business life, most consumers believe a grading report is a guarantee that a diamond is exactly what the report says it is. A few well-publicized stories that this is not the case could explode into a credibility and public relations crisis for the entire industry.