← Miss Understood with Rachel Uchitel
Miss Understood with Rachel Uchitel
The Secret Business Behind Diamonds | Miss Understood with Rachel Uchitel #360
00:58:55
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- [00:00]
Rachel Yukatel
RingCentral's AI receptionist uses Voice AI to answer on the first ring so you'll never miss a call again. In just a few minutes, you can personalize your own AI receptionist to answer questions, route calls, schedule appointments, and even send texts in multiple languages. Plus, it's easy to scale Create unlimited AI receptionists across any phone system. It's all powered by one reliable platform for effortless AI communications. See for yourself at ringcentral.com ringcentral Voice
- [00:29]
RealReal Advertiser
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- [01:28]
Chris D Gatto
Sam
- [02:02]
Rachel Yukatel
Chris, thank you so much for joining me today on Misunderstood.
- [02:04]
Chris D Gatto
Thank you for having me. It's a pleasure.
- [02:06]
Rachel Yukatel
So I had a guy on the watch King NYC a couple months ago, and you know, everyone kind of went bananas over everything that he was talking about. So I figured I had to have someone like you, come on. Who has a completely different background and insight maybe to these things because I wanted to hear your perspective. But before we get into that, I really want to hear about you because you're a fascinating dude. So can we talk about, like your childhood and where you came from and how you even got into this?
- [02:36]
Chris D Gatto
No. Absolutely. Born and raised in New York City. Grew up in Manhattan. Went to school in Manhattan.
- [02:44]
Rachel Yukatel
Where'd you go to school?
- [02:45]
Chris D Gatto
Went School at St. Francis Xavier on 16th Street.
- [02:47]
Rachel Yukatel
Okay.
- [02:48]
Chris D Gatto
Yeah, 16th street and 6th Avenue. So I kind of grew up running around the Village and all of that.
- [02:52]
Rachel Yukatel
So.
- [02:52]
Chris D Gatto
Real New Yorker.
- [02:53]
Rachel Yukatel
Amazing. I went to Nightingale.
- [02:55]
Chris D Gatto
Oh, okay. Yeah, There you go. There you go. We Had a cousin I was never my. Usually the diamond and jewelry industry, as most people know, they're usually family owned businesses and again went to a Jesuit military high school. A lot of my friends went to Ivy Leagues or Annapolis or West Point, et cetera. And because we had a cousin in the jewelry industry who had a jewelry store, I used to as a little kid sometimes go in with my dad and see them kind of buying and selling diamonds in the back and opening up these little I envelopes with diamonds inside. And the industry, as people on the inside know, has its own lexicon, its own vernacular that sounded all really mysterious and James Bond like to me. And so I've, and I always am someone that's very aesthetic minded. I love beauty, architecture, art. So diamonds and jewelry kind of art that you can touch and feel that's tactile appeal to me from a really young age. So I decided to study to become a gemologist. And so I remember when everybody was putting down colleges at Xavier, which is this really good New York high school, I'm like, what? Gemological Institute of American. It's like that, completely, you know, befuddled. So I did, I studied to become a gemologist when I was 17 years old.
- [04:08]
Rachel Yukatel
Wow. Is that a four year program?
- [04:10]
Chris D Gatto
No, it's actually, it's a two year program that's condensed and intense into a six month, kind of Monday through Friday, nine to five, really intense program that if it was in a regular kind of college format would be much longer. So it's intense and it teaches you not only diamonds, but gemstones of all sorts, tons of stones that you never hear of that have nothing to do with jewelry really. And then after that I apprenticed as I begged my way into an apprenticeship as a diamond cutter. And that's how I started on kind of New York's legendary diamond district in 47th street, which especially back then, this is 1987, 88. It was a microcosm, you know, in and of itself a whole different culture of that industry. You know, deals were done in the middle of the street on a handshake. Just this whole culture that was very much appealing to me.
- [04:58]
Rachel Yukatel
Right, so as a cutter, what did you learn? Like, what were they teaching you?
- [05:03]
Chris D Gatto
I was a terrible cutter, so I didn't learn much. It's funny because the company, who by the way, they're still in business, I eventually became a partner in that company. As a cutter. You start with what they call bort, which is like industrial diamond. So you can't really make a mistake. Or if you do make a mistake, it doesn't mean anything. And so they teach you how to start to put angles on the stone. Diamond cutting is done on a large wheel that spins, and then you have an arm and there's diamond dust with oil on the wheel and the friction. Only diamond can cut diamond, as everybody knows. So the diamond dust starts to wear down, that rough diamond. And based on how you want to make the stone, round diamond, marquise, diamond, et cetera, you start to. You start to work on that wheel.
- [05:46]
Rachel Yukatel
So as a gemologist, as you're studying in school, are they teaching you about cutting or how do, like, what are you starting to learn that these stone, where they come from, what they look like? Because what we see in a box or on our finger is obviously not what you're starting with.
- [06:00]
Chris D Gatto
Correct. Gemology doesn't teach you about cutting. It teaches you about the type of stone, the properties of every stone. If a diamond or a colored stone in particular is treated or heated, to look at an emerald and look at the inclusions and know that it's from Colombia or it's from Africa, to look at a ruby and know if it's from Burma or if it's treated or heated or synthetic. And that's really the kind of roll up your sleeves in the nitty gritty of gemology. And then of course, diamond grading, you know, color, clarity, cut, all the stuff that people know.
- [06:33]
Rachel Yukatel
Okay, so then after that, because I know you've done a couple other things, so after you're doing the cutting and you realize you're not very good, what happens? What do you do?
- [06:42]
Chris D Gatto
So the owners of the company saw something in me. I think I had a better head even back then for business than I did for cutting. And I eventually became a partner in that company. The company since then has morphed into a really powerful player in what we call the fancy diamond curler industry. So pink diamonds, blue diamonds, yellow diamonds, that's what they specialize in. But I became a partner. I was there for a couple of years, and then in the late 90s, I had an idea to create a brand myself and my co founders at the time on the buy side of the jewelry industry. So what that meant is, is that everybody knows the big brands when they want to buy something, be it the fancy brands like Cartier, Tiffany, et cetera. But when people want to sell diamonds or jewelry, it's an asset class. And there was never before the company I formed a place to go where people who were selling because they had an item and maybe didn't want it any longer. Maybe they were trading up to something bigger. Maybe there was divorce, death or inheritance. Where do I go, where I'm going to be treated really fairly, get a great price, et cetera. And that didn't exist. You had pawn shops on one end, you had the auction houses on the other, which could be intimidating, expensive, et cetera. Also very selective in what they wanted. So I founded a company in 2001 with my co founders called Circa C I R C A and over a 10 plus year period, we became the largest buyers of diamonds and jewelry from the public in the world. We had offices all over the United States, open throughout Europe and Hong Kong. And Then in early 2011 I believe I sold to private equity. And so that was so from being a gemologist and a diamond cutter as a teenager, when I left the diamond cutting business, everybody said, you're completely insane. That came from fairly humble circumstances and said, you've gotten into the industry. But I said, well, I see an opportunity in the industry. People aren't being treated correctly when they sell a piece of jewelry or a diamond. They didn't have a place to go that were really invested in making sure they were taken care of and given the right price. And so that was really the revolution of circa back then. And also it was highly stigmatized back then. People selling jewelry, it was like, oh, you're selling, you need the money. And that I knew from being inside the industry is not the case. People had things just like if you have art or anything else that you want to sell because you're not using it, it's not that you need the money so you want to be treated.
- [09:06]
Rachel Yukatel
So I want to talk about that secondary market for a second because when you think about or me as someone who's not in the business, you think about art and reselling it. It doesn't seem like that's a secondary thing. It seems like that's an asset that you have and you're making money and somebody else can have that asset in luxury, in diamonds or watches or whatever we're talking about in luxury, it almost seems like the value and cars or whatever, right? It seems like you drive off the lot and that car goes way down. Even if you've bought a car for $800,000, a super luxurious type of car. So in diamonds, how does that secondary market work where you still see the value in it and it doesn't go all the way down? Because I know for the layperson, when they're trying to sell their engagement ring when it doesn't work out or whatever it is, they're getting like nothing for it. And then there's a whole conversation about lab grown in that as well. But talk about that secondary market.
- [09:57]
Chris D Gatto
Sure. So when Circa was at its height and we were buying a huge amount of diamonds and jewelry every single month, you know, you would get people that would come in and we always used to say kind of the formula of an expectation when someone was selling something was, I have an appraisal for $100,000. I'd like to get about 30% of it. That was kind of like the private person's expectation on average. The answer to your question really is it depends when they bought it and where they bought it. Right. So. And also what the item is. Right. Because there are items like a large GIA certified diamond that has almost a quasi commodity type value to it. And there are items like colored stones where the profit margin for the retail jeweler is much larger because you can't comparison shop like you can with a diamond. Right, right. So the more something is like a commodity, like a diamond, the narrower is the profit margin. So if somebody bought a four carat round diamond in 1970 and was coming to us in, you know, 2005, very often they got more than they paid for it. And sometimes they would even say, oh wow, I paid 20,000, I'm getting 25,000 today. I thought it would have gone up so much and I said it has. But here's what you're not realizing. When you bought it for 20,000 in 1970, if you went to go sell it the next day, you'd have gotten maybe 4 or 5,000. So it's gone up from the 4 or 5,000 that you would have gotten the day you bought it to the 25,000. But now the good news is what other luxury item holds value really, except like a needle in the haystack car, like you said, a classic car. Most luxury items that people buy hold value, but they're okay with it. Diamonds and jewelry, for some reason, people seem to have a higher expectation in terms of, oh, why am I not getting all my money back? The fact is, if you're buying a great item, either a certified diamond or a signed piece of jewelry, and typically, I mean jewelry from Cartier or Tiffany or Van Cleef and Arpels or Bulgari, and you're holding it over a period of time, it is a store of value. Is it an investment? You shouldn't be buying it as an investment, but it's a store of value. And so it depends what you bought and it depends when you bought it.
- [12:05]
Rachel Yukatel
So, but what about, let's say, the love bracelet that everybody has from Cartier? Right. So it would seem like, by the way, when we went to buy another one the other day, they're all gone, which I thought was weird, and you can't get them and they've made a new one that's a class now. So. But my question is, if there's a surplus and everyone has them, how are they holding their value?
- [12:27]
Chris D Gatto
Well, it's not really a surplus. Well, first of all, things like the love bracelet, the Alhambra even, everybody knows today, especially guys know who like watches, try to buy a Rolex Daytona in a store. First of all, we're not even selling it to you. You wait two or three years. So there's this supply demand imbalance that the luxury brands are all using. I'm not saying it's a marketing strategy, because there are tremendous demand for some of these items, like the love bangle, so they hold value in the secondary market. If you had to buy a certain stainless steel Rolex today, you're going to pay more in the secondary market than retail because you can't get it at retail.
- [13:01]
Rachel Yukatel
Right.
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Chris D Gatto
Same thing with many other watches. Same thing with lots of jewelry.
- [13:05]
Rachel Yukatel
Right. Okay, but let's talk about the emotional component to it. Like, people don't want to think that they've had gotten something used. Right. They want to say it's brand new, I bought it, or my husband bought it or whatever. Like, do you feel like emotion has a lot to do with buying?
- [13:18]
Chris D Gatto
I think jewelry is a very personal purchase. The fact of the matter, if you were to ask me what holds its value more than anything else, it's going to be vintage signed jewelry. In terms of jewelry, nothing about diamonds for a minute.
- [13:32]
Rachel Yukatel
So when you say signed, what do you mean by that?
- [13:35]
Chris D Gatto
Anything made by one of the great houses, Van Cleef and Arpels, Cartier, Tiffany, Harry Winston, Graff, when you look at Sotheby's and Christie's, the magnificent jewelry sales and items from anywhere from the 1920s up to the 1980s, 90s, and if you were to look at prices, they just continue to rise year over year. So if you're buying, first of all, when you're buying vintage, in many cases you're buying craftsmanship that just isn't replicated today.
- [14:00]
Rachel Yukatel
Got it.
- [14:01]
Chris D Gatto
You're buying very often the best of the best. Because what kind of filters through and gets the auction are the pieces that are Iconic. So Cartier, Panther jewelry, Van Cleef and Arpels mystery set. These are kind of the best of what every house did that really survived and that really brings a huge price and that the auction houses want. So it's like saying of every car that was ever sold, I'm buying only the certain year for Ferrari that I know today is a classic. Right. So those things continue to go up in price. So if anybody were looking just that value, you should buy what you love in jewelry, first of all, most important. But if you're looking just at value, if you're buying vintage, because again, you take away the sticker shock of retail, you're not paying the labor when you buy vintage. And all that stuff that was paid for already and signed jewelry because the supply demand imbalance, collectors and the luxury buyers want things from the major brands.
- [14:51]
Rachel Yukatel
How do people, when they're trying to buy vintage, how do they know that they're really getting something? Because there's so many knockoffs.
- [14:57]
Chris D Gatto
Yeah.
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Rachel Yukatel
And you know, how do you, how do you know who to trust?
- [15:01]
Chris D Gatto
It's like anything else. Do your research. The auction houses are a great place to start, but there are great jewelers out there, great, you know, great dealers that will work with the public. But it's like anything else. If I'm looking for a vintage car myself, you ask your friends and people that you trust and know and you
- [15:18]
Rachel Yukatel
go by reputation and you guys, well, you're not a jeweler. But do jewelers know what to spot on certain things so they know that it's real?
- [15:25]
Chris D Gatto
Not all. Because they're, you know, most modern jewelers today, they're not, you know, they're not well versed in vintage. Some are, some have, you know, from my last company at Circa, we used to work with retailers all over the country as well. And some modern jewelers have had vintage departments in their store for many years and they've become really well versed. But some jewelers that are just selling engagement rings, all rings all day, or watches, they, they have maybe very limited knowledge of vintage.
- [15:50]
Rachel Yukatel
What's your opinion on 47th street right now? Because I know that I can walk in there and they'll say, don't go to Cartier and buy the love bracelet. I can make you the exact same one. Or don't go buy this vintage piece of panther or whatever, we can do the same thing. How do you feel about that?
- [16:08]
Chris D Gatto
My feeling is, again, it's really personal. So you're gonna pay more when you buy something from a major brand. But at the end of the day, long term, you're gonna get much more value out of that if and when you ever want to sell it.
- [16:20]
Rachel Yukatel
Right? So it's about the resale.
- [16:22]
Chris D Gatto
So it's like Hermes bag and Hermes Birkin bag or an Hermes Kelly bag. I mean, you can buy fabulous bags that look great, that don't cost 15, $20,000, that you don't have to go through all the headache of trying to get on an Hermes list or even buy it in the resale market. That's become such a big thing. But you want the real thing. Hermes wouldn't be successful. People didn't want the real thing. That could go into the lab, grown conversation or anything else. It's not about that. This doesn't look okay or look comparable or even look very close to identical. It's about when you're buying luxury, most people want the real thing. Most people are willing to pay for the real thing.
- [16:58]
Rachel Yukatel
Right? Well, the people in that market know how they feel when they're carrying it. And going back to what we were just talking about before, why is a diamond that is the same quality, whatever on the papers at graph different than the same diamond you're getting on 47th Street?
- [17:16]
Chris D Gatto
No. So that's not. So it's a great question because I would argue that, and again, general decision, if someone's buying signed jewelry, have something made up, better buy signed jewelry. I would make the opposite argument if you have a Great Jeweler on 47th street or anywhere else, that if they're selling you a round diamond, 5 carat GVS2, and it's kind of an identical GIA certificate, I may get a lot of blowback from this. But you don't have to pay the additional premium from a brand. If you trust your jeweler, absolutely go with that jeweler and you're going to get a better value on average because they don't have the same overhead, structure, et cetera, of those big brands. However, many clients want to say, I have the Tiffany blue box. I bought it from Tiffany, I bought it from Cartier. And they're not wrong. Like either is not wrong. I keep saying jewelry is, again, I've said it a bunch of times, really personal. So if you don't mind that your engagement ring isn't branded. Personally, I wouldn't, not for a diamond ring, because it's really. The value is in the diamond, then maybe there's not the need for the brand. But if you're buying a great piece of jewelry that you're saying a you have to love it, love the brand and what they do design wise and say, okay, I'm gonna get some added value of that brand if and when one day I want to sell it.
- [18:27]
Rachel Yukatel
What do you think is most misunderstood, though, about diamonds in general? Because again, there's so much argument about what you have to have. Big, small, nicer stone, but smaller, you know, what do you think is most misunderstood?
- [18:40]
Chris D Gatto
To me, the most important thing is that people don't realize is the cut of the diamond. Right. So at the end of the day, and again, as an X cutter, even though a bad one, as an X cutter, diamond ultimately reflects light. It's this mirror that reflects light. And so if the symmetry isn't right, if the dimensions aren't right, the way what they call the pavilion, the underside of the stone, it leaks light and the diamond looks. You know, you have people that look at some diamonds and say, it always feels like I have to clean it. Like stone's not cut. Right. Or it has a lot of fluorescence, one of the two. So you can buy a D flawless diamond. It doesn't mean the diamond's gonna have optimal sparkle and dispersion, et cetera, because it's not cut. Right.
- [19:18]
Rachel Yukatel
So it may say on the paper that it's the most beautiful.
- [19:21]
Chris D Gatto
Well, it may say that it's D flawless, but if you look at the specifics in cut, it should say excellent polish, excellent symmetry, etc. Right. So cut is really important, and that's something that often gets lost in the conversation. And so you could have a diamond that may not be a D color, but it's a G or an H or an I color. Perfectly fine, by the way. It may not be flawless, but maybe it's an SI one, also perfectly fine. But it's cut beautiful. And it's still a beautiful diamond and a worthwhile diamond. It's not only about the color and clarity.
- [19:49]
Rachel Yukatel
Okay, you brought up these letters, and you see this a lot. The G, the D, the VV, 1, 2, 3, whatever. Can you break those down and then tell us, tell us what they all mean. But tell us what is the sweet spot really for diamonds?
- [20:03]
Chris D Gatto
Sure. So DEF is technically completely colorless and transparent. Then as you go down the color G, H, I, J, you start to get a little bit of a tinge of color. Color could be yellow, could be slightly brown. And so that's. You go all the way down and then till you get to the point of xyz and then fancy color, meaning a fancy yellow. And then you start to go into the category of fancy color diamonds, be it yellow, pink or anything else, flawless, is clarity the best. And then next is vvs, which is very, very slightly included. And that's broken down into two categories. VVS1VS2, then VS1 and 2, which is very slightly included. Then it goes SI slightly included. And I one imperfect. Again, what I would tell you is there are people over the years, clients that have come in and said, I want a large diamond and I want a five carat stone. And after that, the next thing that's important to me is color, because I don't want it to look very yellow. And the least thing that's important to me is clarity because no one's taking a loop and looking at my diamond. So that's one perspective. Other clients over the years, friends of mine, that say, I want a deflawless and this is what I have to spend. And so what's the biggest D flawless I can get for this budget? Are any of those people wrong? Not really. If you were to say, well, what's the most commercially viable? Then a white, cleanish stone, you know, it could be D to H. You know, VS and better are on average the most commercially viable. And then there are different markets. So the market in the Far east wants usually whiter, cleaner, what they call US stones can go down lower in color, even to SI clarity. And that's more the US consumer, especially not at the really high end, is more tolerant of a little more of an included stone and a little more color. So markets change around the world.
- [21:49]
Rachel Yukatel
I'm curious about your opinion on the different, is it called cuts, the radiant, the cushion, whatever, whatever they all are. Can you explain what they all are and if there's one that really we should be looking at as opposed to others?
- [22:02]
Chris D Gatto
Sure. So the classic cuts are round. The emerald cut, the marquise, the pear shape, the oval cuts that have been around a long time, but not as long are kind of the radiant. And the princess cuts, they're seen as newer cuts. Of course, there's also the heart shape. Historically, round diamonds are what's sold most often, and so they trade at a little bit of a premium right now as we speak. Actually, fancy shapes are actually a little bit more in demand, especially larger size pear shapes, ovals, ovals, incredibly popular right now. So there's a little bit of a trend to it. You know, years ago, like especially when we were buying a tremendous amount of jewelry from the public, it seemed like every engagement ring from the 1950s or 1960s was a marquise, like the football shape or a pear shape. And then as time has gone on, you think everything from the 80s, like most engagement rings, are round stones or some are square cuts. But it's either usually a round or square cuts. So marquises or pairs, especially in let's say average sizes, are looked at as a little bit of a throwback. As you get larger, you see more of them.
- [23:09]
Rachel Yukatel
RingCentral's AI receptionist uses Voice AI to answer on the first ring so you'll never miss a call again. In just a few minutes, you can personalize your own AI receptionist to answer questions, route calls, schedule appointments, and even send texts in multiple languages. Plus, it's easy to scale create unlimited AI receptionists across any phone system. It's all powered by one reliable platform for effortless AI communications. See for yourself@ringcentral.com RingCentral Voice of your business At Vrbo, we understand that even the best of plans sometimes need a little support. So we plan for the plot twists. Every booking is automatically backed by our VRBO Care Guarantee, giving you confidence from the very start. Whenever you need help, it's ready before your stay, through the moments in between and after your trip. Because a great trip starts with peace of mind and maybe a good playlist. But we've got the peace of mind
- [24:05]
RealReal Advertiser
part covered, so you're running out of closet space. The good news? You don't need to stop shopping. You just need to start selling with the RealReal. The RealReal is the world's largest and most trusted resource for authenticated luxury resale. Whether it's that mini bag that can't even fit your phone or those boots you never fully broke in, the RealReal handles everything from photography and copywriting to shipping and pricing. So you can just sit back, get paid, and make room for things that actually feel like you. And with 10,000 new arrivals every single day from top designers like Prada, Celine, Louis Vuitton, and Loewe, all for up to 90% off retail, you're bound to find something perfectly on brand to fill that extra closet space with. Plus, right now you can get an extra $100 to shop when you sell for the first time. Make room for what feels like you go to therealreal.com to start selling and get your extra hundred dollars to keep shopping@therealreal.com that's therealreal.com terms apply.
- [25:10]
Rachel Yukatel
What if I told you that the idea that you only get parasites when you travel to some exotic country is flat wrong? Millions of Americans carry parasites right now, often without symptoms. For example, it's estimated that millions in the United States have been exposed to Toxicara, a parasitic worm, yet even know it. Parasites do not need a plane ticket. They can enter through tap water, sushi, undercooked foods or contaminated produce. Some strains live in all stages. Eggs, larvae, adults hidden in your gut, releasing toxins that sabotage your energy and digestion. That's why I'm excited about parafi. Kim Rogers 30 day full spectrum parasite cleanse. The kit works by clearing parasites, worms, candida and heavy metals, targeting parasites in all life stages, supporting gut health, detox path and toxin removal. It's taken orally daily for 30 days with precise dosing. I'm actually doing it myself right now. I started with the lymph cleanse, then I'm doing the parafi. Want to dive deep? I did a full interview with Kim Rogers, the worm queen herself, where we expose all the myths, understand the facts, and show how to protect your body. Listen to that episode if you haven't already. Meanwhile, go to rogershood.com and use the code Rachel to get 10% off of your order. That's R A C H e L for 10% off. Off. Give it a try. Maybe your body's missing link is hiding inside. Let's do this together. Again, it's rogershood.com r o g e r s H-O-O d.com and use the code Rachel for 10% off. If you've ever been through a divorce or you're in one right now, you already know it's not just emotional, it's chaotic. It's paperwork, deadlines, financial disclosures, custody schedules, legal filings. And half the time you don't even know what you're supposed to be tracking until it's too late. That's why I want to tell you about Splitify. It's an AI powered divorce operating system designed to turn divorce from drama into data while saving you time and money. Splitify helps you organize all of your documents, evidence, custody details, communication, finances, everything into one secure platform. It can even help flag high conflict behavior, track custody schedules, map assets and debts, and generate court ready files so you're not walking into a legal battle completely unprepared. Whether you're working with an attorney, going through a mediation, or or doing it on your own, Splitify helps you stay organized, informed and strategic because divorce is expensive enough without wasting time and money on confusion. So if you want to protect yourself, protect your kids, and walk into this process with clarity and control, go to mysplitify.com use the code Rachel for 50% off your first three months. That's my splitify, my S P L I t I f I.com promo code. Rachel, can you take, maybe this is a dumb question. Can you take someone's former marquee cut, whatever, and change it into a different cut? Or it changes the stone completely and it's not.
- [28:19]
Chris D Gatto
No, on occasion you can, it does change the stone. You're obviously going to lose a lot of weight. Some stones that aren't cut really well. So you may have a poorly cut large marquise cut. You can kind of shape off the top of the stone and make much more beautiful pear shape if you don't mind losing the weight. And if you've bought it at a price where it still justifies making that change in the stone and losing the weight. So, yeah, it's done sometimes.
- [28:42]
Rachel Yukatel
Okay, so now let's get into this whole conversation about lab versus real. First of all, in your opinion, are they both real or is one fake
- [28:51]
Chris D Gatto
and one real, one synthetic? One's a tech product, right? So as you know, we manage a fund that we're the largest non bank lender to the diamond and jewelry industry. So I finance everyone from publicly traded mining companies to some of the largest wholesalers in the world, meaning the companies who Supply Cartier, Tiffany, etc. To important retail jewelers, et cetera. And the reason I'm able to finance is because there's a liquid global secondary market for diamonds. Diamonds, like gold, are a store of value. There's a reason they're a store of value. There's genuine scarcity, right? There's genuine scarcity. There's genuine demand. There's genuine demand because for tens of thousands of years, human nature is such that we fall in love. I want to celebrate with something real. If someone's made a lot of money and wanted to celebrate their success, or show my wife can walk in with this big necklace that's real, the same reason why someone will spend $20,000 on a leather bag, because it signifies to all that lady's friends, this is who I am. This is where I belong. Right? Does Anyone need a $20,000 headband? No. So unless human nature changes and people say, I don't care about, you know, if it's the real thing or not the real thing, because you can buy identical Hermes bags, you can buy, you know, all that stuff. Unless human nature changes, the demands for diamonds aren't going to change. When we refinance, a lot of these large wholesalers who, when lab grown started to become really popular Asked us both to invest in their Lab grown businesses and also would I finance Lab Grown. And my answer was no, because Lab grown is a tech product by definition. What's the kind of. One of the immediate things you know about a tech product is that over time it becomes cheaper and cheaper to produce. Think about what a flat screen TV cost when they first came out and what you can get them for today.
- [30:50]
Rachel Yukatel
Right.
- [30:51]
Chris D Gatto
So I knew over time Lab Grown would get cheaper and cheaper to produce. We knew over time, as the lab grown market grew, you would have players going from online direct to consumer. All of these things that would create downward pressure on an item that can be made in unlimited supply. So what's happened when lab grown first started to get marketed? It was marketed as an alternative. Same thing, ESG friendly. Complete nonsense, by the way. Not ESG friendly.
- [31:18]
Rachel Yukatel
What does that mean?
- [31:19]
Chris D Gatto
Esg meaning that it's not necessarily any more environmentally safe than natural. Completely untrue. The diamond industry is one of the most stigmatized, maligned industries in the world. And in the past, there were some good reasons for it. But the diamond industry is so highly regulated today, what most of the major mines do and where they mine, in terms of giving back to the local community, schools, hospitals, it's really incredible to see what they do.
- [31:43]
Rachel Yukatel
Okay, that's what I was going to ask. You mean because people were saying it hurt the earth, hurt the ocean.
- [31:47]
Chris D Gatto
Correct, Correct. And that lab Grown all of a sudden was free from all that. And it's not true for a whole host of technical reasons, that is just not the case. Having said that, you've seen lab Grown prices go from what originally was say, a 30% discount for at retail to today. I just was. Somebody asked me for a price on a 6 carat lamb grown $125 per carat, you know, maybe a year and a half ago to two years ago, that was thousands of dollars per carat, even in the wholesale market. So the point is, is lab grown okay? Sure. Just like costume jewelry is okay?
- [32:20]
Rachel Yukatel
Yeah.
- [32:21]
Chris D Gatto
Right. It has its own market and it's a big market. I always joke, I say my wife loses things. I would only get her Lab grown studs because I know where a natural diamond stud, one of them's gonna disappear. Would I buy a lab grown ring for her? No, absolutely not. And I know plenty of women and plenty of guys say I would never give my, you know, you're good enough for the next best thing, you know, kind of. No. That doesn't really fly for a lot of people.
- [32:43]
Rachel Yukatel
Right.
- [32:44]
Chris D Gatto
However, is There a market for it? Absolutely. This, you know, it's fine.
- [32:47]
Rachel Yukatel
So. But do you think that Lab Grown is as is like is it Z Gallery or something? Z Jewelers? What's the like the fake stuff?
- [32:56]
Chris D Gatto
Swarovski is going to do fabulous with Lab Grown.
- [32:59]
Rachel Yukatel
Okay.
- [32:59]
Chris D Gatto
Swarovski. They're going to. Because they have a brand, they're going to charge a premium for it. Their cost basis is going to be little and people are going to say it's a diamond. It wouldn't surprise me if you know, Gucci sneakers do a collaboration where Lab Grown are on your sneakers. And LVMH has a brand called Fred, which is a brand that has been really a non performer for them for a long time. And I had said to a number of people, years, I said this would be great for Lab Grown. They just made it a Lab Grown brand because it really didn't compete in luxury. So it's not like there's not a market for it or it's bad or anything like that. It's not a diamond in terms of the property that it's natural. A Lab grown diamond was made yesterday. A natural diamond is hundreds of millions of years underground. You have to move 1 ton of earth to get a 1 carat natural diamond. There's real scarcity to it. Most people don't realize that.
- [33:47]
Rachel Yukatel
Okay, wait, let's get into that because I want to understand. We get it in the box, but let's circle back to where it actually came from.
- [33:54]
Chris D Gatto
Sure.
- [33:55]
Rachel Yukatel
So diamonds are found where?
- [33:58]
Chris D Gatto
Africa, Canada, Russia, Brazil, Australia.
- [34:02]
Rachel Yukatel
Wow. Okay.
- [34:03]
Chris D Gatto
Not in Kentucky somewhere actually in Arkansas. There's a national park in Arkansas that once in a while they find little diamonds in. But it's not.
- [34:11]
Rachel Yukatel
And how are they even knowing that it's down underground?
- [34:15]
Chris D Gatto
Geology geologists know there's something called kimberlite, which is a type of soil material that is highly indicative that there's. There's what we call a diamond pipe there, a kimberlite pipe, which produces.
- [34:26]
Rachel Yukatel
But is it like what we see, you know, in Landman, where you have to dig first? You have find a spot.
- [34:32]
Chris D Gatto
Geologist. Yeah. And at this point all of that study, all those studies have been done that most people know where the diamond bearing got it. You know, regions are in the world.
- [34:42]
Rachel Yukatel
Okay. But it's similar to oil that you have to pick a spot, you have to dig and then you have to search for it underneath.
- [34:48]
Chris D Gatto
There are areas that are what you call artisanal mines where the their light machinery where literally they can dig almost not with their Hands but with almost manual equipment. There's what you call alluvial mining. Alluvial mining is mining off riverbeds where because there's a diamond pipe upstream and kind of the diamonds get washed downstream. So there are alluvial deposits and then there's kind of serious open pit mining worth, you know, hundreds of millions of dollars in equipment, where they're going really deep down into the earth as well.
- [35:20]
Rachel Yukatel
And when they're finding it, is it, does it look like a rock? Is it a ton of stuff? Is it little?
- [35:24]
Chris D Gatto
Yeah, it looks like. I'll show you some pictures on my phone. Yeah, it looks like almost like broken glass. I mean, rough diamonds can look very different. Diamonds from Zimbabwe often come with this look like little pieces of coal black skin on it. Then there are some diamonds that look most is octahedron, like two pyramids joined at the base and kind of slightly frosted. So there's a lot of different.
- [35:45]
Rachel Yukatel
And is the goal to find a bunch of little pieces and cut them up into rings? Do they find a huge stone and cut it up? I mean, how does it work?
- [35:52]
Chris D Gatto
Most mines have kind of their own properties. So some mines have a propensity to deliver larger sizes. Some mines have propensity to do higher colors. Some mines are really a mix. At the end of the day, size matters with diamonds. Right. So where the mines get their value, huge value, is when they find something that's rare either because of size and quality, or sometimes because if it's a fancy color, if they find a pink or a blue diamond, that can be a large percentage of that mine's volume in dollars.
- [36:23]
Rachel Yukatel
So is it more rare to find something big or it's more rare that people are cutting it big? Because no one can afford that.
- [36:29]
Chris D Gatto
You have to find big to be able to cut big.
- [36:31]
Rachel Yukatel
Got it.
- [36:32]
Chris D Gatto
Right. So to wind up with say even a 20 carat emerald cut that's coming from a stone that's minimum 50, 60 carat in the rough, unless that rough is perfect because you're cutting away a lot of that diamond. You usually with a large stone, there's other satellite stones that have been cut with it. So it could be a hundred carat piece of rough and maybe you've cut a center stone of 25 carat and then you've cut a 5 carat, a 3 carat, a couple of 2 carat, et cetera. So the goal always is to find that large, high quality diamond.
- [37:00]
Rachel Yukatel
Got it. But explain though that when defining it, it doesn't look, I mean it Kind of looks dirty. And it doesn't look like what we see.
- [37:08]
Chris D Gatto
Yeah, it doesn't look like what we see. Typically they made them an asset afterward to get off all the dirt and get to see the real color of the diamond. Some of them have coatings, so it's hard to see what's really in that diamond or what you call skin, skin to a stone. And so when cutters start to look at how they're going to cut the diamond, they polish what you call windows into the stone so you can see where the imperfections are. And then the best way to take the diamond to create the large, you want the combination of the largest, cleanest diamond possible, because that's what brings you back the highest value.
- [37:40]
Rachel Yukatel
Right. Okay, let's talk about the fancy stones or the, the other colors. These are real diamonds. Pink. There's a pink diamond. What are the other yellow diamond?
- [37:50]
Chris D Gatto
Yellow, red, green, blue, orange.
- [37:55]
Rachel Yukatel
And that's different than a sapphire or amethyst and just explain the difference.
- [37:59]
Chris D Gatto
This is. So sapphire and ruby are the same. It's. They're called corundum. So the difference between sapphire and ruby, just our color, and the difference between a blue sapphire and a pink sapphire, again, it's just that color. Emerald is a stone called beryl. B, E R Y L Diamond is diamond. It's carbon. So if you have a blue diamond, you have a blue diamond because you have traces of boron in the stone.
- [38:23]
Rachel Yukatel
Got it. So the properties is diamond.
- [38:25]
Chris D Gatto
It's still that diamond, it's still carbon. Just has a trace element of something else in that stone that gives it this color that makes them unbelievably rare. So of the fancy colored diamonds, yellows are the most common, although rare, especially the intense yellows and the vivid yellows. Pinks and blues, incredibly rare. Reds even more so. And greens, incredibly rare as well. Orange also.
- [38:48]
Rachel Yukatel
Oh, wow. I've never seen an orange. And people are. And I've seen a push more that people are getting these as engagement rangers.
- [38:55]
Chris D Gatto
Yeah, absolutely. Didn't JLO have a pink or something back in the day?
- [38:58]
Rachel Yukatel
For a while.
- [38:58]
Chris D Gatto
For a while, yeah. Can't keep up.
- [39:00]
Rachel Yukatel
Right, Exactly. Let's go back to what you were talking about before, about what you do now. Why are banks or why did banks decide not to back these companies?
- [39:10]
Chris D Gatto
Sure. So after the financial crisis, the banks really relooked at how they treat credit. There was actually even some legislation called the Basel Accord. Most people are familiar with the finance industry. Kind of one of the fastest growing industries over the last 15 plus years is what we call private credit, meaning credit provided by funds and alternative lenders in industries that banks used to participate in. So the diamond industry, through no fault of its own, it's not something that's indicative just to this industry. It's just post 2008, 9 financial crisis, banks retreated from so many different industries. And I recognized early on that the diamond industry was one industry that was going to be really affected. And so I had the idea of creating a fund with my unique knowledge of understanding the underlying asset class and the value of that asset class, that we would be able to lend in a way that was safe because we actually take physical possession of pieces of inventory collateral that keep us safe as a lender. Most of these companies are using the money to buy new inventory. And so we're basically holding bits of collateral at 60, 70 cents on the liquidation value. But we're able to give them capital that they need and it works for these guys because most big diamond wholesalers have huge inventories, 200, $300 million inventories. And so we're able to play to their strengths in understanding the values of that inventory and be able to unlock capital for them.
- [40:37]
Rachel Yukatel
So you're not worried that in the future the inventory isn't going to be able to move because people are wising up to the fact, well, I can get something that's cheaper and then put money into something else like real estate or whatever. I mean, are you worried about that?
- [40:50]
Chris D Gatto
No. At the end of the day, the luxury market is growing. The diamond industry, believe it or not, as old a business as it is, is still growing. You've got markets like India that are driving growth. The U.S. i think, is still growing like 1% or 2% a year. 20, 25. It just came out that the average sale price for diamonds has gone up for the first time in a long time. So you've had a lot of talk about lab grown, etc. But people miss out that luxury has been strong. And there's more people with a lot of money than any time else in the history of the world. And all those people want brands, they want natural diamonds. And so we don't have a worry. First of all, when we finance, we finance short term. So we're in a contract for six months. We're not holding one asset for two years or three years. Diamonds as an asset class for the last 50 years have enjoyed something like US dollar level volatility. So really stable asset class, very liquid. Most people don't realize that and instead when they think about diamonds, they think of blood diamonds and lab grown. And yet when you really kind of roll your sleeves up and ask the questions, it's a unique asset class for a life.
- [42:01]
Rachel Yukatel
Okay, so, but you've, I'm sure you've seen it if you've looked on Instagram, I mean you have kids. I'm not assuming that you're scrolling Instagram. You know, even people like Bethany Frankel say, who has the money to buy is saying, oh, I'm getting rid of everything nice that I have. It doesn't matter to me anymore. You know, I would rather have the Walmart, Birkin, whatever they call it now and you know, the lab grown because that's just what I want now. And then people follow that, they think, well, why am I going to work so hard to pay for that? So I think that's, you know, but now as you're talking, I'm realizing that's just a different audience though, because I think the people that are buying luxury do not care about that.
- [42:43]
Chris D Gatto
So one of the big misconceptions is that young people aren't buying luxury. And if you look at LVMH's data, 55% of their sales are coming from Gen Z. So for every Bethenny Frankel or let's say for every woman at a certain stage of their Life, there are 20 young women that have never had. It's nice to say I'm getting rid of everything. And I'm not talking about Bethany saying in general. Right, yeah, it's nice to say I'm getting rid of everything when I've had the last 20, 30 years enjoying all the best of luxury. But for every one of those types of people, there's a hoard of young ladies that would love to have a big diamond, would love to have an Hermes bag, want to live that life for a long time and they'd love to get to the place where they're sick and tired of luxury.
- [43:24]
Rachel Yukatel
Exactly. That is very true. It's interesting though to see like, you know, you hear people going to St. Barts, let's say for New Year's or Christmas and it is the young kid.
- [43:34]
Chris D Gatto
I don't want to leave the house anymore.
- [43:35]
Rachel Yukatel
I don't want to go on vacation, stay home. I know, but it's like they're the ones and I don't know if they're taking their parents credit card or Gen Z is just making a lot more money than what we used to make way back when. But there is, you know, there's a lot of talk about how people are holding onto their money. But when you actually look at it, there's a lot of people spending a lot of money. And when I used to. For many years I worked in Vegas and I dealt with bottle service. I was the director of VIP operations and I dealt with the high rollers, and then I dealt with cultivating a customer. And when I first started, people were, you know, maybe we were getting $2,500 for bottle service at a table. When I left, my biggest customer was spending $500,000 in one sitting.
- [44:19]
Chris D Gatto
Think about that.
- [44:20]
Rachel Yukatel
Just to show off, just for an experience that's gone, gone and it doesn't happen anymore. But it was a time when that's when that was what you did. So it seems really interesting.
- [44:30]
Chris D Gatto
Well, nightlife is. We're going to a whole other subject. Nightlife has changed. Right. For when I was going out, I talk about this all the time. Like, young people aren't drinking the way we used to drink. They're not going out. They're much more health conscious. A lot of the new apps of meeting people are around health and fitness, which is a great. That's fine. I'm happy. I grew up and did it when I did it. But that's all well and good. At the end of the day, you look at social media, so much of it is about this brand and that brand and showing off and showing a car or showing. I mean, social media has driven aspiration on steroids because how else can you reach, like, you know, say, hey, look at the bag I got and reach thousands of people? The social media has driven a tremendous amount of it. So if anything, I mean, luxury is more at the forefront of, let's say, the person who can't afford luxury today than ever before.
- [45:20]
Rachel Yukatel
Got it right. So, I mean, you're a guy who's been around. You obviously are very chic. You have a chic wife. What are you guys into? Like, what. What do you see as luxury?
- [45:29]
Chris D Gatto
Well, for me personally, luxury is peace and time. With my family, my wife and kids and my friends, my loved ones, that's. That's the ultimate luxury, right? Because the one thing we all can be guaranteed is we all don't have an infinite amount of time. And we all take it for granted, especially living in America, and it's an amazing country that, you know, we have so much more than so many others. So you take things for granted. But at the end of the day, the ultimate luxury is peace. And that's what luxury, in a sense, should buy. I Work hard my whole life, seven days a week from, you know, very young age, in order to kind of have freedom to be with my family and have someone say, hey, you can't not spend that day with your kids.
- [46:08]
Rachel Yukatel
Right.
- [46:09]
Chris D Gatto
Or your wife. So to me, it's peace of mind is the ultimate luxury. Of course, we love travel, we're foodies, we love great food. My kids try to bring them up appreciating, you know, things that. From things that don't cost anything to, you know, beautiful place. So.
- [46:24]
Rachel Yukatel
Right. Okay, I love that answer, actually. Do you think. Let's see what other questions I ask you. Well, what still excites you? What are you looking forward to in this industry?
- [46:36]
Chris D Gatto
Beauty always excites me.
- [46:37]
Rachel Yukatel
Okay.
- [46:38]
Chris D Gatto
Rarity and beauty and beauty in anything excites me. I've always been that way. And so when I come across a special diamond, 20 carat blue, or a piece of jewelry, you know, a fabulous old 1940s Van Cleef item, especially when it has certain provenance that you get to hold that. So, you know, I always made fun of me. My staff always did, because usually always on my desk or my hand, I always had a large diamond. Always it would switch with a 20 carat stone in my pocket, in my hand. I just have an affinity to something like that. So I still, to this day, as much as I've done and the different things I've done in my career, I'm most excited when I'm. I always joke, playing with pebbles when I'm looking at a big diamond, be it rough or polished or a fabulous cashmere sapphire or Burma ruby. And that still, to this day, really, really excites me.
- [47:26]
Rachel Yukatel
What's the most beautiful stone you've ever seen?
- [47:29]
Chris D Gatto
Oh, my goodness. I can tell you a story. And it's a special stone. I got a call to go to Geneva, a really important family, aristocratic family that was selling an important diamond. And I spent two days with these people and we ultimately, in Geneva, below ground, in the bank and then Four Seasons and, you know, kind of negotiating price and all of that. And I got really friendly with the family and we agreed upon a price and we were to meet the next morning, kind of help conclude the deal. And the next day when I came down, I saw something was wrong right away. I said, is everything okay? No. We called our family back where they were from and they said, you know, we moved too quick and we needed to get one more offer. And they had somebody coming and they said, the gentleman's here and he's just Going to make an offer. And it was gentleman from the Middle east in the whole, you know. And I said, listen, I understand that it's fine, but we're gonna do one thing. We're going to put a number on a piece of paper and we're gonna end it. Whoever has, you know, the higher number. And so we went to the bar and this gentleman, kind of like out of a movie, and put a number, I put a number and I won the stone.
- [48:42]
Rachel Yukatel
Okay.
- [48:43]
Chris D Gatto
So it was over a 50 carat cushion cut. And I remember finally when the stone came back to the States, my daughter Alessandra was, I don't know, four or five at the time. And I remember putting the stone in her hand and saying, don't ever get married unless somebody gives you. And of course my wife yelled at me, you're spoiling them. They know you're going to ruin them for anyone else. So I'd say that's my favorite stone, but because of my daughter.
- [49:07]
Rachel Yukatel
Oh, I love that story. Wait a minute. So what did the other guy offer?
- [49:10]
Chris D Gatto
I didn't know the price. Oh, yeah. But my price obviously was a little bit high.
- [49:15]
Rachel Yukatel
Wow, okay, I love that. And what happened to the stone?
- [49:17]
Chris D Gatto
Sold it.
- [49:17]
Rachel Yukatel
You did? Okay, interesting. For a good profit.
- [49:21]
Chris D Gatto
For a profit.
- [49:21]
Rachel Yukatel
Okay, I love that. All right. And what do you see in the future in terms of the luxury market and the diamond market? Are you like predict 5, 10, 15 years from now what we're going to be seeing?
- [49:33]
Chris D Gatto
So I think the diamond market in general really hurt itself by rushing for profit and lab grown by promoting it. And I mean the retailers and the wholesalers and I've been outspoken about this in the industry, as have some other really prominent people in the industry saying, you sold this item just like diamonds, when it's not just like diamonds. It can be made in unlimited supply, which means there's no resale value. You can guarantee people buying a lab grown two or three years ago for five, six, eight thousand dollars. And I know this from my former company where all we did is buy back from the public when they go to sell that they can have zero value as opposed to some value. So I think the public was, in a sense, slightly misled. Not everybody really understood now, maybe some sold it properly and said, hey, there's probably not going to have the same value as if you buy a natural. And some consumers are fine with that. So I think the industry has to get back on track and really market natural diamonds for what it is and not have this confusion and say natural is Special natural is rare. Natural is a store of value. Lab grown is a legitimate alternative for a different use, a different consumer or sometimes the same consumer. Just like me. If I say, hey, I don't want to spend on a natural pair of studs just for this reason and that's fine. One is people have a tendency to want to say, this is good, this is bad. It's not really the case. They're just different. Natural will always be there. It's not going anywhere. I think it's leaning into luxury. You're seeing a luxury market expand. So I see from places like the Middle east, from places like India, Russia, unfortunately, before the war in Ukraine was a huge market for luxury. And I see ostensibly will come back at some point. China's still soft right now. People thought the Chinese market would come right back after Covid. It really hasn't fully, but at some point it likely will. So I think, you know, you look at someone like Bernard Arnault and lvmh, you know, he's incredibly brilliant. So much respect for him. I mean, I don't think not many people are betting against him and how he's grown luxury and what the next generation of consumers are for it.
- [51:31]
Rachel Yukatel
You used the word scarcity a couple times.
- [51:33]
Chris D Gatto
I'm curious if you're a maintenance supervisor at a manufacturing facility and your machinery isn't working right, Grainger knows you need
- [51:41]
Rachel Yukatel
to understand what's wrong as soon as possible. So when a conveyor motor falters, Grainger
- [51:46]
Chris D Gatto
offers diagnostic tools like calibration kits and
- [51:49]
Rachel Yukatel
multimeters to help you identify and fix the problem.
- [51:52]
Chris D Gatto
With Grainger, you can be confident you have everything you need to keep your facility running smoothly.
- [51:57]
Rachel Yukatel
Call 1-800-GRAINGER clickranger.com or just up the on grainger are the ones who get it done.
- [52:05]
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- [53:06]
Rachel Yukatel
Is there. First of all, how long does it take to make a diamond?
- [53:09]
Chris D Gatto
Well, it's hundreds of millions of years.
- [53:11]
Rachel Yukatel
Okay, so is there a chance at some point we will not find any?
- [53:16]
Chris D Gatto
Absolutely. So I may not have these numbers. Right. But I don't think they'll be far off. So I think by some, if we don't find any new diamond mines as they exist now, I think by 2050 we will not have an active diamond mine operating in the world. Now will we find? We probably think so. You know, it'll happen, but there will become a point where there'll be no more natural diamonds and you're only going to have what's being recycled. Wow. Unless we find others.
- [53:45]
Rachel Yukatel
Right, right, right. So there's a possibility in the year
- [53:49]
Chris D Gatto
3000 that there's no operating diamond mines.
- [53:52]
Rachel Yukatel
Right. So then it's just what's in consumption, whatever, what everybody has. And maybe that would have been the time that lab grown could have really made their mark.
- [54:01]
Chris D Gatto
Maybe. But at that point, it's not like why are diamonds so special? I mean, they're very special just because of the properties that they have. The hardest substance, the way they conduct electric. I mean, there's a million things that are really special about diamond I as a substance that make them valuable for the space industry, industrial uses, et cetera. But at the end of the day, why, you know, from thousands of years ago, I mean, I had Pliny the Elder, who was one of the ancients, and he has a quote about the value of diamonds. From ancient times, people recognized diamonds as this rare item that has incredible value, that's attractive to humans. That's not gonna change.
- [54:40]
Rachel Yukatel
Right. One thing, and it struck me when you were talking before about lab grown, and I just want to bring it up, you were talking about how it's $125 a carat or whatever you said.
- [54:49]
Chris D Gatto
Yeah, wholesale.
- [54:50]
Rachel Yukatel
Wholesale, Right. Okay. So when I had Moshe here, he was talking about how somebody had come in and said that they had bought a 10 karat ring or something and they were, their fiance had paid $50,000. Can you speak on that though, about that? If someone is for a lab grown. For a lab grown. So if somebody's being Quoted because it seems like that is happening a lot. So if they're being quoted a number like that, they're just getting plain ripped off. Correct.
- [55:16]
Chris D Gatto
To be fair, prices have collapsed especially over the past year wholesale with Lab grown. Right. So you know, two years ago or a year and a half ago, the prices were a lot higher. But it was obvious that it was going to happen with the product. Like I said, that's a tech product, could be made in unlimited supply and there's more and more of it on the market and more sellers going direct to consumer. So yeah, a lot of people bought Lab grown for thousands and thousands of dollars and you have no value. Now maybe that 10 carat stone for $50,000 if you bought the comparable and natural would have been 250 or 350.
- [55:49]
Rachel Yukatel
Yeah.
- [55:49]
Chris D Gatto
But you could sell it for good money at some point as well.
- [55:53]
Rachel Yukatel
Right, right.
- [55:54]
Chris D Gatto
And again, it's personal. I would never spend $50,000 on something that is worth zero on a lamp grown diamond.
- [56:00]
Rachel Yukatel
Right. And so, and then just to go back with resale on a natural real diamond, you're getting resale and sometimes you can even do well.
- [56:10]
Chris D Gatto
Yeah. Again, depending on how long you're holding it. But there's always, if you're buying, let's say you know, a two and a half carat GVS diamond, it also depends on where you buy it.
- [56:18]
Rachel Yukatel
Yeah.
- [56:18]
Chris D Gatto
You're buying it really well at a family jeweler or a guy on 47th street that's treating you well. There's real value there. If say God forbid it didn't work out in three years or five years, you're going to get 25, 35 depending, maybe 45% of your money back.
- [56:32]
Rachel Yukatel
Yeah.
- [56:33]
Chris D Gatto
You know, there's, there's nothing wrong with that.
- [56:35]
Rachel Yukatel
But for people that are listening, like they shouldn't go on Blue Nile or something, you know those websites and just sell their, their jewelry.
- [56:42]
Chris D Gatto
I don't know if Blue Nile buys, but if you want to buy on Blue Nile, I wouldn't disparage Blue Nile. You wouldn't know. It's a real model. It's, you know, it's a real business model for people that want to go on and buy and not interact necessarily. I prefer, I want service, I want to look at, to me diamond. Every diamond is different. Every diamond has a face. I've seen women especially really connect, sure. With the diamond and say this is my diamond.
- [57:06]
Rachel Yukatel
Yeah.
- [57:06]
Chris D Gatto
And I think that's lost with something like Blue Nile, but it's fine.
- [57:12]
Rachel Yukatel
Yeah.
- [57:12]
Chris D Gatto
But I just think if you Know, especially it's an experience. It's an intimate, nice experience to shop for a diamond and find something that you love.
- [57:20]
Rachel Yukatel
Yeah. You started out on 47th Street. What do you think of what it's become these days? Does it have the same value? All these guys down there are selling you a lot when you walk down that street.
- [57:32]
Chris D Gatto
Yeah, I know it's changed a lot. I mean, I started on that street in 1987, and there was a lot of real great old timers, Eastern Europeans, a lot of families that fled World War II. And the character and the trust, it felt much more like a community. So that's actually what I would say the biggest change is. It felt much more like a real community. And deals were done, and they're still done on a handshake, but back then, you'd see transactions on the street and deals on a handshake. And most people knew each other for generations. And today it's a little bit of a newer generation, I'd say, because of the success of the Swiss watchmark, there's a lot more watch dealers there. But the real industry, the diamond industry, is not on 47th Street. It's in the buildings upstairs between 45th street and Rockefeller Center. That's the infrastructure of the US diamond industry upstairs in those few blocks.
- [58:28]
Rachel Yukatel
Got it. All right, so what's next for you? Like, what's your big plan?
- [58:33]
Chris D Gatto
I love what I do. I'm lucky. We're fortunate in that the diamond industry continues to need funding. So we're growing. So we continue to, you know, to work to grow our fund, to continue to finance some of the best companies in the world in diamonds and jewelry.
- [58:49]
Rachel Yukatel
Yeah. I've seen in your past, though, you've done a bunch of things. I'm just curious if you have something in the future that you're like, oh, I really want to do this, or do you really want to retire?
- [59:01]
Chris D Gatto
No, I can never retire. My curse is I'm stressed when I'm not doing. Doing something. And that's not good. Right. That's bad.
- [59:08]
Rachel Yukatel
You always have to have a project.
- [59:09]
Chris D Gatto
Yeah. So I always have so many ideas and things to do. And I do a lot of mentoring today within the industry and a lot of mentoring and branding. What I did at Circa was really create a brand. Done it for a lot of other people as well. So I like that and do more of that and helping people. But I spend all of my time kind of managing and building the businesses that I have today.
- [59:31]
Rachel Yukatel
Got it. So you don't have some interest outside of the. This narrow focus of gems.
- [59:35]
Chris D Gatto
And I do. There are things that intrigue me, but nothing that I'm kind of publicly.
- [59:41]
Rachel Yukatel
Got it. Okay. And then can I ask you, because you brought it up earlier. You talked about being in the polo business how.
- [59:49]
Chris D Gatto
No, I played polo for years and years. I was one of the original members in Palm beach, the International Polo Club in Wellington.
- [59:57]
Rachel Yukatel
Like as a hobby. You started this?
- [59:59]
Chris D Gatto
Yeah, I started it as a hobby, and it became a huge part of my life. I had the polo team that played in Argentina and Palm beach and the Hamptons. I played for many years. But it's a dangerous sport. I've broken every bone and et cetera. So after a period of time, you call it quits. Yeah.
- [60:16]
Rachel Yukatel
Do you go and watch it?
- [60:17]
Chris D Gatto
I can't. I'm not a good spectator. I can only participate.
- [60:20]
Rachel Yukatel
Got it. Because you get upset about what they're doing wrong or what.
- [60:23]
Chris D Gatto
Yeah, I just. Yeah, I need to be doing.
- [60:25]
Rachel Yukatel
I can't watch it because I get upset for the horses. I always get nervous that they're gonna get hit with the. The stick.
- [60:29]
Chris D Gatto
So that a lot of people think that. But actually, the best polo ponies are the horses that love it. They wouldn't do it. Horses are. They wouldn't do it if they didn't love it.
- [60:37]
Rachel Yukatel
Really? You think the horses have fun? They see it as a game.
- [60:39]
Chris D Gatto
They do. If you. If you're not. If you're on a great polo pony and if you're not a good rider and the ball moves direction really quickly and you're not in your saddle, that horse is going to move before you even do anything. And it goes this way and you're going to fly that way.
- [60:50]
Rachel Yukatel
Got it?
- [60:51]
Chris D Gatto
Yeah. So.
- [60:51]
Rachel Yukatel
So the horse's nose.
- [60:52]
Chris D Gatto
The horses. Yeah.
- [60:53]
Rachel Yukatel
Okay. I love that. Yeah. All right. Any other question, things you want to talk about that I haven't covered on this subject at all?
- [61:00]
Chris D Gatto
No. I think we covered a lot of ground, Rachel. Thank you.
- [61:02]
Rachel Yukatel
Well, I really appreciate you being here. I feel like you. You explained everything very well. And, you know, it's a conversation that people, I feel like, are not educated in.
- [61:12]
Chris D Gatto
Yeah.
- [61:12]
Rachel Yukatel
And they make rash decisions or emotional ones, or sometimes they just pick what's easiest for their budget. And this is helpful because I think that sometimes even though you have a budget, you should stop and think about what you're purchasing for a longer term play.
- [61:27]
Chris D Gatto
That's right. And the one thing, and you just brought it up, it's really smart, is there's a lot of misinformation out there. And what people don't realize is that diamonds are a stratified asset class. So what does that mean? It's when gold moves, the whole category moves. When you've heard of these articles recently saying diamond prices have gone down, there's no such thing as diamonds moving in a category. If you're a 1 carat or a 2 carat or a 3 carat diamond, what you call a Rapoport diamond price list is published twice a month that dictates global diamond prices. But every price category, every color and quality, every price, every size category, every color and quality and every shape. Either rounds or fancies move differently so diamonds don't move as a group. So what you've seen over the last three years when you're hearing all these crazy stories about diamond prices dropping has really been a price drop in the lower size, cheaper quality because that's where lab grown has cannibalized in large high value stones. There's actually a scarcity and prices actually I was just reading today are trading at a higher percentage versus rapaport than they have over the last couple of years. So it's not true that diamond prices have fallen. No. The category that have been most vulnerable to lab grown have fallen over the last 36 months but now they've stabilized. The high end has not fallen at all and arguably have actually gone up in firmed in price. Right. So that's a big misconception that people have the diamonds move in one category. That's not true.
- [62:55]
Rachel Yukatel
Amazing. Great information. All right, if our listeners are interested in following you, being mentored by you, anything, where could they find you?
- [63:02]
Chris D Gatto
I guess on Instagram. Chris D Gatto so D G A T T O and Instagram, I mean
- [63:08]
Rachel Yukatel
anything and a website or anything?
- [63:09]
Chris D Gatto
No, Instagram is fine. I mean the website for the company is the Delgado Finance Group dot com.
- [63:15]
Rachel Yukatel
Perfect. Thank you so much. Thank you so much for listening to Misunderstood. I'm your host Rachel Yukatel. Please be sure to subscribe to the show and give us a five star rating and review. You can support the show by joining Our Patreon@patreon.com Misunderstood with Rachel Ukitel do you have ideas for the show or want to reach out? Email us@infomisunderstoodpodcastmail.com that's spelled M I S S. Understood. Thank you so much and I'll see you next time. RingCentral's AI receptionist uses Voice AI to answer on the first ring. So you'll never miss a call again in just a few minutes, you can personalize your own AI receptionist to answer questions, route calls, schedule appointments, and even send texts in multiple languages. Plus, it's easy to scale create unlimited AI receptionists across any phone system. It's all powered by one reliable platform for effortless AI communications. See for yourself@ringcentral.com RingCentral Voice of your BUSINESS if you're a maintenance supervisor at
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