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18 The Next Big Jewelry Stone
6 World News SPECIAL FEATURES
Judith Rosby takes us behind the scenes into the world of fancy colored diamonds and gemstones.
14 Wearing Your Investment 66 Republic Forge 72 Storage Auctions JEWELRY & GEMSTONES
30 Ethical Collecting
18 The Next Big Jewelry Stone
Eavan Moore dives into the sphere of gems, where they come from, and reviews a fragmented industry.
30 Ethical Collecting PRECIOUS METALS SPOTLIGHT
40 Precious Metals IRA 46 Provident Metals LIFESTYLE AND LUXURY
40 Retire With Metals
24 Time Can Be Money 36 Wine Inspection
Elena Lathrop outlines the benefits and history of the precious metals IRA.
50 Just LuxeW NUMISMATICS
54 Quest for the Best 58 JFK 50th
46 Spotlight on Precious Metals
MINING & MINERALS
80 Mining News REFERENCE
Some cool pictures and products are revealed in this spotlight of an online company that started small but is onto big things.
88 Preferred Dealers 94 Events 96 Hindsight
72 Unexpected Treasure Jason Vaile is back with a step-by-step review of the risk-reward that is storage auctions.
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EDITOR’S NOTE
OCTOBER / NOVEMBER 2014
PRESENTED BY: AHA Metals, LLC
Gemstones, Metals, & More
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VP CONTENT: Brad Hastedt EDITORIAL SUPPORT: Kevin Thompson VP SALES & MARKETING: Mike Obert SUBSCRIPTIONS: Leigh Chamberlain
elcome back to this brand new edition of American Hard Assets. Hopefully you and yours have enjoyed the onset of Fall and are ready to wind down 2014 as we head toward the
LAYOUT DESIGN: Noel ‘Kip’ M. Macasero, J.K. Monte de Ramos, Open Look Creative Solutions
holidays.
FEATURE WRITERS: Eavan Moore, Jason Vaile, Michael
This issue, our focus moves a bit to gemstones and jewelry. Now I know what you’re thinking -- “Hey, I just want to read about gold. Give me the gold!” -- And, you are right! Don’t worry; we will not be taking our eye off the ball this issue or any issue for that matter. You’ll still be seeing plenty of the great bullion content you’ve come to expect here. And that goes for all hard assets in general, and specifically the assets that you’re investing in at the moment. AHA will bring you loads of content this issue with updates on gold and silver, as well as great info on numismatics, mining news, collectible gems, firearms, and more. Our team here at AHA would again like to invite you to please visit our website at www.ahametals.com. It’s thereyou will find the latest news and content you’ve come to expect from us along with great pieces from our partners, real-time updates, exchange rates, metal prices, and more. In recent months, more original content has been posted on the site from our great team of industry writers. Please check it out. So, we’re heading toward the end of 2014and we’re excited to bring you a look at gems and jewelry, as well as bullion and other hard asset news that will keep you busy. As always, don’t hesitate to give us feedback on the magazine or online to help us get better.
Haynes, Hector Cantú, Abe Elias, Judith Rosby, Gabe Benson, Elena Lathrop, Frank Martell, Marissa Stempien, Louis Golino
CONTRIBUTORS: Christy Stewart, John W. Garibald
DISCLAIMER: American Hard Assets is 100% American owned. All contents of American Hard Assets (AHA) are for information purposes only. AHA does not guarantee the accuracy, completeness or timeliness of the contents. None of the information contained herein constitutes a solicitation, offer, opinion, or reccomendation by AHA to buy or sell any security or commodity, nor legal, tax, accounting, or investment advice or services regarding the profitability or suitability of any security, commodity or investment. All commentary and advice in this publication is of a general nature only, and doesn’t consider your individual circumstances or financial objectives. You should always consult a licensed financial advisor for your personal investment advice. Please do your own research.
CONTACT US FOR ADVERTISING Publisher Inquiries: bhastedt@ahametals.com
Thank you for continuing your commitment to this publication and keep up with American Hard Assets for all your metals and asset news in the future.
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A Leading Worldwide Source for Modern Coins and Precious Metals
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5565 Broadcast Court, Sarasota, Florida 34240 1.800.362.9004 www.ModernCoinMart.com
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H A R D A S S E T U P D A T E S | World News
World News Updates
The State of “Who Owns Who” in the Luxury Watch Market
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atch brands today are faced with complex challenges ranging from getting the right parts from suppliers, to expensive advertising initiatives and worldwide production distribution. To be a successful watch company, a company often needs help. Since the “quartz crisis”(that really changed the way traditional watch companies do business) and the 1980s, the wrist watch industry is increasingly populated by “big brands” that are often part of a larger multinational groups. A watch company controlled by a larger group is not necessarily a bad thing, but rather raises some positives and negatives. The positives include better distribution, more product availability, often a high degree of stability and reliability. The negatives include most of what comes with large corporate politics and internal competition. In listing the major groups that own most of the luxury (and nonluxury) watch brands one needs to start with the Swatch group. It is the first major mega group to own a range of watch brands and helped save the Swiss watch industry in many ways. It’s clearly an innovator when it comes to making watches in the modern age. Here are the brands under it:
The Swatch Group Watch Brands • Breguet • Harry Winston • Blancpain • Glashütte Original • Jaquet Droz • Léon Hatot 6 | American Hard Assets www.ahametals.com
• Omega • Longines • Rado • Union Glashütte • Tissot • ck watch • Balmain • Certina • Mido • Hamilton • Swatch • Flik Flak Next is the second major name in luxury watches and other fine labels, the Richemont Group
The Richemont Group Watch Brands • A. Lange & Söhne • Baume & Mercier • Cartier • IWC • Jaeger-LeCoultre • Montblanc • Officine Panerai • Piaget • Roger Dubuis • Vacheron Constantin • Van Cleef & Arpels
World News | H A R D A S S E T U P D A T E S
World News Updates The Swatch Group and Richemont are the two mega groups in the high-end luxury watch industry, but LVMH isn’t far behind. LVMH is a more diversified group with more than just watch brands. Their holdings include some of the largest, most popular companies today.
LVMH Watch Brands • Bulgari • Hublot • TAG Heuer • Zenith • Chaumet • Fred • Dior The fourth is the Kering Group, having added more and more luxury brands to their portfolio over the last several years. They are still relatively new to the industry and have yet to prove themselves as a major influence in the market – even though many of their brands are important.
The Kering Group Watch Brands • Boucheron • Girard-Perregaux • JeanRichard • Gucci • Ulysse Nardin
Currently Independent Major Luxury Watch Brands • Rolex / Tudor • Audemars Piguet • Breitling • Frederique Constant / Alpina • Chanel • Chopard • Patek Phillipe • Hermes • Richard Mille
There is also the smaller China Haidian Group that has recently begun to acquire a few labels.
China Haidian Watch Brands • Corum • Eterna
Over time, things can and will change and if the history is any indicator, fewer and fewer brands will be independent. Having said that, a brand like Rolex is totally independent is and often regarded as the most important name in luxury watch making. As a consumer, it is also interesting to know how these families are made up, and what brands are truly trying to complete with who.
The above lists represent most ot major luxury watch brands on the market, but not all of them. There are still independently owned and operated watch companies and some of the them are extremely large and powerful. Here’s the list of the big names in watch making that are independent:
SOURCE: Forbes
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H A R D A S S E T U P D A T E S | World News
World News Updates
2014 World’s Most Expensive Cars
Lamborghini Veneno Roadster
1. Lamborghini Veneno Roadster Country of Origin: Italy Engine: 750-hp, 6.5-liter, 12-cylinder Engine: 750-hp, 6.5-liter, 12-cylinder Starting price: $4.5 million Among many other innovations, Lamborghini Veneno Roadster’s lightweight body design makes extensive use of carbon fiber-reinforced polymer. Top speed is 221 mph. Only nine copies will be built by Lamborghini in 2014.
2. Bugatti Veyron 16.4 Grand Sport Vitesse Country of Origin: France Engine: 1,200 hp, 8-liter, 16-cylinder 0-62 mph: 2.6 seconds Starting price: $2.5 million Having been driven 255.5 mph in April 2013, Bugatti says it’s the “world’s fastest production roadster”. In December 2013, the 400th Veyron was sold since its introduction in 2005. Only 50 are available out of the total planned production of 450. 8 | American Hard Assets www.ahametals.com
Bugatti Veyron 16.4 Grand Sport Vitesse
World News | H A R D A S S E T U P D A T E S
World News Updates 3. Koenigsegg Agera S Country of Origin: Sweden Engine: 1,030 hp, twin-turbo, 5.0-liter V-8 0-62 mph (that is, 100 km per hour): 2.9 seconds Starting price: $1,520,000 The name refers to the “1-to-1” power-to-weight ratio. The Agera S belongs to the exclusive 1,000-hp-plus club, with a twin-turbo V-8 that generates 1,030 hp. That flings the car from zero to 62 mph in 2.9 seconds, or zero to around 188 mph in 22.7 seconds – that is, if you’re on a racetrack or if you own your own highway. It’s said to produce 1,400 hp and weigh around 1,400 kg.
4. Hennessey Venom GT Country of Origin: United Kingdom Engine: 1,244 hp, 7.0-liter, twin-turbo V-8 0-60mph: 2.7 seconds Price: $1.2 million Hennessey Venom GT sets a Guinness World Book-record time of 13.63 seconds from zero to 300 kph, or 186 mph, in January 2013. In December 2013, only 11 Venom GTs were sold to clients worldwide, including only 5 in the United States. Only 29 is the planned production. The luxury car is created from a base Lotus Elise/Exige and utilizes components including but not limited to the roof, doors, side glass, windscreen, dash, cockpit, floorplan, HVAC systesm, head lamps and wiper.
5. Porsche 918 Spyder Country of Origin: Germany Engine: 887 hp (total output), 4.6-liter V-8 with two electric motors 0-62 mph: 2.5 seconds Starting price: $845,000 Porsche 918 is largely built with lightweight but strong carbon fiber-reinforced polymer. It can go up to 19 miles on battery power alone. By itself, the V-8 gasoline engine produces 608 hp. Besides the hybrid gasoline-electric powertrain, other interesting features include rear-wheel steering, where the rear wheels adjust slightly in turns.
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H A R D A S S E T U P D A T E S | World News
World News Updates 6. Rolls-Royce Phantom Extended Wheelbase Country of Origin: United Kingdom Engine: 453-hp, 6.75-liter V-12 0-60 mph: 5.8 seconds Starting price: $298,900 This model is about nine inches longer than the standardwheelbase. The brand image is old-fashioned but RollsRoyce’s current cars have high-tech features like cameras at five locations to watch out for obstacles when parking, and to project predicted path on a screen when doing a reverse.
7. Ferrari F12berlinetta Country of Origin: Italy Engine: 740-hp, 6.3-liter, V-12 0-62 mph: 3.1 seconds Starting price: $315,888 The Ferrari F12berlinetta says it has the fastest acceleration of any road-going Ferrari0 as opposed to Ferrari racecars, which are confined to the track. This model has a top speed of “over 211 mph,” the company said. Not only that, it can go as far as 125 mph in only 8.5 seconds.
8. Bentley Mulsanne Country of Origin: United Kingdom Engine: 505-hp, 6.75-liter, twin-turbo V-8 0-60 mph: 5.1 seconds Starting price: $298,900 The company calls it “the grandest of grand tourers.” It’s performance is pretty amazing considering it weighs close to 6,000 pounds. Two of its interesting features are wood veneers and leather upholstery made from “blemish-free” hides, from herds raised in cooler climates where ther are fewer insects.
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World News | H A R D A S S E T U P D A T E S
Source: www.businessinsider.com
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H A R D A S S E T U P D A T E S | World News
World News Updates 9. Aston Martin Vanquish Country of Origin: United Kingdom Engine: 565-hp, 6.0-liter V-12 0-62 mph (that is, 100 km per hour): 4.1 seconds Starting price: $279,995 With Aston Martin’s brand image caught up with classic James bond movies, the Aston Martin Vanquish is the first lightweight car with strong carbon-fiber body panels the car company built. Its speed reaches 183 mph. It’s a convertible and a two-door hardtop coupe. Among its personalized options are matching a favourite color to paint the exterior, or custom leather.
10. Mercedes-Benz CL65 AMG Coupe Country of Origin: Germany Engine: 621-hp, 6.0-liter, bi-turbo V-12 0-60 mph: 4.2 seconds Starting price: $215,500 With a handcrafted V-12 engine, the Mercedes-Benz CL65 AMG Coupe reaches a top speed of 186 mph. The Mercedes-Benz AMG division used to be a separate company that souped up stock Mercedes-Benz models. Bigger, more powerful engines continue to be the heart and soul of the AMG treatment, even though the company became a wholly owned subsidiary years ago.
SOURCE: Forbes
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World News | H A R D A S S E T U P D A T E S
World News Updates
How Diamonds are Mined in Russia
F
or two consecutive years, Russia’s Alrosa is the leader in diamond extraction with an estimated 28% share globally.
The diamond extraction is technological process that begins with geologists determining “where to dig” and rock is dynamited to clear the horizon. Then drillers start their work. Special underground dump trucks take the rock, hauling the ore to the bunker from which ore is transferred to the surface and sent to a plant for processing. More than 4,891,500 karats were extracted there in 2013. Once diamonds are identified, these are sent to a workshop where they’re washed free of impurities using chemical substances. Next, the diamonds are transported more than 310 miles to Mir, the capital of the Russian Diamond region. It’s where diamonds are sorted into groups by size and purity. After this, diamonds are sent to the Alrosa Unified Sales Organization where they will be prepared for sale to customers. Evgeniya Konzenko of Alrosa Official said “Between 2015 and 2017, most likely, we will increase the number of long term contracts from 40 to 50. We will make our choices very carefully based not only on the client’s financial documentation but also on our previous working experience working with them and their purchase volumes during periods of a weakened market.
She also emphasized that in accordance with the company’s development strategy, all business development efforts of Alrosa are focused on diamond mining not the company’s jewelry subsidiary business, Alrosa Diamonds, where the highest quality diamonds go to. However, the company does continue to cooperate with many jewelry houses. In total, the company is developing 22 deposits. Western Yakutia and Arkhangelsk region as well as Angola and Botswana are its principal diamond processing facilities. The company held a successful IPO on the Moscow Stock Exchange in October 2013, during the course of which 16% of the company’s shares were sold. This raised about $1.3 billion. Alrosa has high hopes for the Udachny underground, one of the largest in the so-called Diamond region that is reaching its final stage for launch. The director of the Udachny Mining and Processing Division, Alexander Makhrachev said, “If we currently extract 132 tonnes of ore a year, then next year – with the launch of the mine – the planned volume is 480 tonnes. The mine can be worked on for a long time – the projected capacity of the field is calculated at 60 years and proven reserves already total 159 million tonnes.” SOURCE: In.RBTH.com
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H A R D A S S E T U P D A T E S | Wear Yor Investments
Wear Your Investments
By Michael Haynes, Chief Executive Officer , APMEX.com
Is it possible to really enjoy your investments? Here is one way you can: Wear Them! Clearly, you cannot wear all of your investments, but Gold, specifically Gold coins, provides any investor a way to wear and enjoy the investments in ways not possible with almost all other forms of investments.
Wear Your Investment Gold Coins in Pendants One of the most enjoyable, fun and attractive ways to wear your Gold coin investments is in the form of a pendant on a necklace or bracelet. A pendant consists of a bezel and a Gold coin with most bezels holding the Gold coin in a decorative ring by a single Gold screw covered by the design of the bezel. This style of bezel prevents injury to the Gold coin and presents the coin in a very attractive manner.
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There are several styles for the pendant including a rope design, radial line design, teardrop design, reeded edge design and a number of ruby and emerald encrusted designs. There are two general types of Gold coins suitable for pendants, the modern Gold bullion coins minted by several world mints such as the Australians, Chinese and Austrian governments and the U.S. Gold coins minted by the United States Mint prior to 1933.
Gold Bullion Coins The investment properties of Gold are well documented and include a hedge against inflation, the loss of purchasing power of the U.S. Dollar, a hedge against rising oil prices, a hedge against political risk in Washington, D.C. and other capitals around the world, a hedge
Wear Yor Investments | H A R D A S S E T S U P D A T E S
Gold Australian Kangaroo
against rising government debt and in general, an asset that is not correlated to the traditional investments in stocks and bonds. In Chart 1 below, you will note that since January 2000, the indexed value of Gold is 454 as compared to the indexed value of the S&P 500 at 138.
Chart 1.Indexed Value of S&P 500 and Gold, January 2000 = 100.
The Gold Kangaroo was introduced in 1986 and currently, the obverse shows the red kangaroo of Australia. With this decorative piece, you will display one of the more interesting visuals of your entire jewelry collection while you wear your investments. The Gold Kangaroo contains one troy ounce of Gold and has a $100 Australian legal tender value, a purity of .9999 Gold and a diameter of 32.6 millimeters.
Gold Chinese Panda Beginning in 1982, the China Gold Coin Corp, a unit of the People’s Bank of China, launched the Gold Panda series. The Panda is one of the world’s most interesting and adorable animals and the Gold Panda offers a new obverse design each year, which means that as you wear your investments, people will notice. With one troy ounce of Gold, the Gold Panda supports a legal tender value of 500 Yuan, a purity of .999 Gold and a diameter of 32.05 millimeters.
Gold Austrian Philharmonic
For your pendants, you can consider the following Gold coins and their related benefits:
Gold American Eagle This series began in 1986 in order to provide Americans with a U.S. Gold bullion coin to compete with the Canadian Maple Leaf and the South African Krugerrand. The front of the coin (called the “obverse”) follows the artistic design of Augustus St. Gaudens for the $20 Gold Double Eagles which were issued between 1907 and 1933, inclusive.This is certainly a patriotic way to wear your investments. The coin has one troy ounce of Gold and carries a $50 legal tender value, with 91.7% Gold and a diameter of 32.7 millimeters.
Gold American Buffalo The United States Mint began to produce the Gold Buffalo in 2006 with a .9999 Gold purity to provide Americans with a pure Gold coin to compete with the pure Gold Canadian Maple Leaf. The back of the coin (called the “reverse”) shown here as well as the obverse are designs inspired by the very popular U.S. Buffalo Nickel which was produced from 1913 to 1938 and originally designed by James Earle Fraser. The Buffalo is an American icon and certainly an interesting conversation starter when you wear your investments. The Gold buffalo holds one troy ounce of Gold and has a $50 legal tender value and a diameter of 32.7 millimeters.
In 1989, the Austrian Mint introduced the Vienna Philharmonic Gold bullion coin. The obverse design shows the pipe organ of the Vienna Musikverein Golden Hall and the reverse design depicts orchestral instruments, including the Vienna horn, bassoon, harp and four violins. Regardless of your night out at the symphony or opera, the Gold Philharmonic is an elegant way to wear your investments. The Gold Philharmonic contains one troy ounce of Gold and has a legal tender value of 100 Euro, a purity of .9999 and a diameter of 37 millimeters.
The Historic U.S. $20 Gold The United States began issuing the $20 Gold coin in 1850 and continued until 1933. There were two designs, the first design life was from 1850 to 1907, the second began in 1907 and continued until 1933. The $20 Gold was removed from circulation by Executive Order of President Franklin Delano Roosevelt in 1933 as the United States stepped back from full convertibility of the Dollar to Gold. The premium over Gold metal value in the U.S. $20 Gold represents the relative demand for the Gold coin by collectors of the series. There are a number of ways to collect the U.S. $20 Gold including the following: (1) Collect one of each date; (2) collect one of each date and mintmark (the location marked on the coin indicating the city of the U.S. Mint that struck the coin); (3) collect one of each design (there were four designs, some with very small changes); collect one of each of the U.S. Gold denominations including the $20, $10, $5, $2.50 and $1.00; and (4) other varieties and combinations. In Chart 2 below, the premium over Gold metal value is plotted at January of each year for the last twelve years, from 2003 to 2014. As you will note, the current premium of approximately 11% compares favorably with the premiums up to approximately 35% in 2009. When comparing the premium investment of a one troy www.ahametals.com American Hard Assets | 15
H A R D A S S E T U P D A T E S | Wear Yor Investments
ounce American Gold Eagle bullion coin, with value almost exclusively derived from the Gold content, to the premium investment of a U.S. $20 Gold St. Gaudens holding 0.96 troy ounces of Gold, the opportunity for appreciation of the U.S. $20 Gold St. Gaudens is provided from both the Gold content and the collector demand.
$20 Gold St. Gaudens contained about 0.96 troy ounces of Gold, with a composition of 90% Gold and 10% Copper and a diameter of 34 millimeters.
Chart 2.Premium Over Gold Price for U.S. Gold $20 St. Gaudens, 2003-2014.
In addition to the pendant that can be worn around the neck with a one troy ounce Gold coin as shown above or in smaller sizes, such as the one half troy ounce in a bezel for the bracelet, there are other interesting and attractive ways to wear your Gold coin investments.
Premium Over Gold Price for US Gold $20 St. Gaudens (Extremely Fine Condition)
Wear Your Investment Gold Coins in Other Ways
Gold Coin Cuff Links
40%
For a classic look, add Gold bullion coins to your cuff links. There are a variety of Gold coins that can be used for this utility and fashion statement as shown in the table below.
35% 30%
25%
20% US $20 Gold St. Gaudens Premium 15%
11%
10%
With Gold coin cuff links, you can make a presentation of the patriotic, the cute and adorable or the classic and historical.
5%
5% American Gold Eagle Bullion Coin Premium
0%
Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14
Source: APMEX and market makers
U.S. Gold $20 Liberty The designer of this famous American Gold coin was James Barton Longacre and depicts the bust of the lady Liberty on the obverse with an elaborate Eagle and breast shield on the reverse. Although used for currency during its lifetime, today, the $20 Gold is a Gold investment, a collectible investment, an historic object from America’s legacy and an attractive and wearable item for jewelry. This large Gold coin contained about 0.96 troy ounces of Gold, with a composition of 90% Gold and 10% Copper and a diameter of 34 millimeters.
Gold Coin
Size
Benefit
American Gold Eagle
1/10 troy ounce, diameter of 16.5 millimeters
A patriotic and attractive use of your investments on your cuff. Certain to attract positive comments.
Chinese Gold Panda
1/10 troy ounce, diameter of 17.95 millimeters
No question that the Chinese Panda is one of the most fascinating animals in the world. These cuff links say that the investments you wear are interesting and adorable.
Chinese Gold Panda
1/20 troy ounce, diameter of 13.92 millimeters
What is more adorable than a smaller and understated fashion item than tiny Chinese Pandas?
South African Gold Krugerrand
1/10 troy ounce, diameter of 16.5 millimeters
The design on the Gold coin is the native Springbok, an antelope-like graceful animal that is sure to cause friends to ask about your Gold investments.
U.S. Gold $20 St. Gaudens Often called the “World’s Most Beautiful Coin,” this Gold coin became synonymous with America’s growing global influence in the early 20th century. Designed by famous sculptor Augustus St. Gaudens at the behest of then President Theodore Roosevelt, this Gold coin was revolutionary in its creative approach. President Roosevelt asked for a design similar to the high relief design of the ancient Roman coins and St. Gaudens delivered and shaped an almost three dimensional Liberty walking toward the viewer on the obverse and a flying eagle on the reverse. While representing the growing economic and political power of the United States during its lifetime, today, the $20 Gold St. Gaudens represents all at once, a Gold investment, a collectible investment, a beautiful example of American art and the opportunity to wear your investments. The 16 | American Hard Assets www.ahametals.com
Gold Coin Rings When it is time to show your Gold investments, perhaps the best way is to put forward your hand with a Gold coin ring. Whether on your pinkie or a stronger statement on a larger finger, the Gold coin ring introduces you and your investments to your friends and acquaintances at any gathering. There are a variety of ring styles to hold your investment you wear. You can obtain both the 1/10 troy ounce Gold American Eagle or the 1/20 troy ounce Chinese Panada for your presentation on the pinkie,
Wear Yor Investments | H A R D A S S E T S U P D A T E S
Now May Be the Time to Wear Your Investments
but for a more bold approach, consider the ½ or Ÿ troy ounce Gold American Eagle with a diameter of 27 millimeters or 22 millimeters, respectively.
With Gold prices outpacing the S&P 500 during the 21st century, now may be the time to display some of your favorite Gold coin designs with Gold coin jewelry. There are opportunities for both men and women from pendants to cuff links.
Gold Coin Bracelets The Gold coin bracelet provides fashion and Gold investment in one package. The 1/10 troy ounce Gold American Eagle is available in several wrist-bezel designs from understated elegance to a bejeweled presentation.
This may also be the time to consider the beautiful and historic U.S. $20 Gold for your portfolio and to pull one or more out of the portfolio for gifts and personal dressing accessories. Regardless of how you proceed, it is perhaps only Gold that can provide some enhancement to both your investments and your personal presentation.
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N U M I S M A T I C S | The Hobby of Kings
THE NEXT BIG JEWELRY I
STONE
t is a rare occurrence that we are able to say with certainty exactly where the market is headed. However, the truth is that in the jewelry world, evolution happens at a gradual pace, as opposed to the fastpaced, ever changing general fashion world.
Behind the Scenes In the world of jewelry, jewelers and fashion houses of all price points must buy the diamonds and gemstones that they are setting into their 18 | American Hard Assets www.ahametals.com
By Judith Rosby
masterpieces in order to make any creation, from the smallest pieces to the largest, most expensive, and most intricate. Since so many diamonds and gemstones must be bought in order to produce jewelry, the institutions that are creating the jewelry are careful not to overbuy any stones that won’t be desirable to their target market. While no diamond color or gemstone type ever goes completely out of fashion, there are most certainly fluctuations in the popularity of one over another, tied to the popularity of certain colors in the fashion world and the overall financial capability of
The Next Big Jewelry Stone | J E W E L R Y & G E M S T O N E S
Thus, the industry environment has given rise to a demand for more exciting pieces, and this has naturally led to much greater interest in jewelry with color – meaning rubies, emeralds, sapphires, and of course, diamonds in every color under the sun. These stones appear in many different permutations, depending on the inspiration of the jeweler and depending on the demand. That is, if a jewelry piece is custom made, then any stone that is requested will be used no matter what. But when the gloves are off, a jeweler without any limits on their creativity may combine diamonds of different colors, colorless diamonds with color diamonds, color diamonds with gemstones, colorless diamonds with gemstones – the results are truly limitless.
Shrinking Supply, Rising Demand This is especially true because diamonds are the world’s most precious limited natural resource. That means that we are limited to the supply of diamonds that nature has bestowed on us, created millions of years ago under the Earth’s surface. We are bound only by the quantity of diamonds that we can remove from the ground, and seeing as how only 1 in every 10,000 carats of diamonds that are mined have color, the supply of color diamonds in the world is only getting smaller as no new diamond mines have been discovered. The further scarcity of color diamonds has added to their desirability, which has also added to the popularity of gemstones that approximate the color of color diamonds, without the accompanying price tag that would ensue.
Haute Couture In addition, regardless of nature and scarcity, colors in jewelry have seen a huge rise in popularity in the twenty-first century as fashion trends have illuminated the beauty of bright, vivid colors. People have embraced exciting pieces since they have been introduced on the celebrated runways of Paris, New York, and Milan. Couture designers are seeing the exhilaration that something as seemingly demure as color can provide to statement pieces, and incorporating
buyers. That is how the world’s jewelers know which gemstone and diamond collections to cultivate, and on which collections to wait. That is not to say that jewelers do not stock up on quality stones of different types when the prices are down because of less demand, but that is beyond the scope of this article.
Natural Conclusion That being said, the general feel of the jewelry market has definitely steered toward more exciting and vibrant pieces than ever before. Today’s consumers have evolved into an audience who are looking for a revolving door of excitement, innovation and activity. In part, due to the proliferation of the internet and product availability, but also due to our interconnectedness on social media and the unceasing fountain of inspiration that inundates us on every device that we use, in every location that we visit throughout our day. A small sample of Leibish & Co. fancy color diamonds
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J E W E L R Y & G E M S T O N E S | The Next Big Jewelry Stone
scales in the mid-1970s, yellow diamonds were largely looked as the end of the colorless diamond scale, color grades K-Z and beyond. Once the decision was made to grade color diamonds with a description, yellow diamonds truly made their way into the limelight as a beautiful stone in and of themselves, and not just as the end of the colorless diamond scale.
A magnificent fancy yellow diamond, colorless diamond, and ruby bracelet these bright colors as such. Additionally, within the last 10 years, since color stones have become significantly more prevalent, they have quickly attracted the attention of the world’s wealthiest and fabulous, making their appearances on the Red Carpet in some of the most exciting jewelry pieces in Hollywood. Also, the popularity of color diamond jewelry has certainly increased due to the massive headlines that famous color diamond jewelry pieces are making at auction. Increasingly, we are seeing pieces with color diamonds earn prices in the multimillions – just a few months ago, the now notorious Pink Dream earned an incredible $83 Million at auction for its 59.60 carat size!
The Next Big Stones The two biggest stones in the jewelry market are without a doubt going to be yellow diamonds and pink diamonds. Given that their popularity at auction, as investments, and as couture pieces has risen, this intense demand has filtered into the fashion houses and jewelry companies in the form of beautiful pieces of jewelry, especially but not limited to engagement rings.
Yellow Diamonds The diamond that is going to take over the spotlighted colorless diamonds one day, yellow diamonds are a refreshing way to make your jewelry unique, while still looking classy and modern. Many people turn to yellow diamonds as their center diamond to stand out from the crowd, while still maintaining the traditional feel of diamond jewelry. The yellow color in yellow diamonds is attributed to the inclusion of nitrogen in the diamond’s crystalline structure during its formation millions of years ago. Until the Gemological Institute of America made the official color
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A Leibish & Co. 5.91 carat Fancy Vivid Yellow diamond ring Seeing as they are a rare gem, prices for natural color diamonds are as a general rule higher than colorless. However, since there are so many different colors, different color intensities, and color combinations available, the range of prices is actually quite broad. Compared to a quality white stone (G color and above, with a high clarity level, and good cut), many shades of yellow diamonds are actually more affordable then colorless stones, meaning you can get more diamond for your money if you should choose to do so. This is a popular choice not only among people who love jewelry with more presence, but also among designers who are looking for a fresh and exciting angle in their jewelry design, as the yellow colors allow for more exciting setting and design options.
A Leibish & Co. 8.37 carat Fancy Yellow Radiant and White Diamond Bracelet
Pink Diamonds The other gem that is taking the taking the world of jewelry by storm is the fabulous pink diamond. The second rarest diamond color in the world, its color thought to be a result of extreme pressure that diamond underwent during its formation. Although the exact cause of the color remains a mystery to scientists and gemologists alike, its appeal is certainly no mystery at all. Long hailed as the color of romance, femininity, and passion, the color pink stands for many different things for many different people.
Story Name | S E C T I O N N A M E
One of the most interesting attributes of the pink diamond market is the investment potential of these stones. Due to their scarcity in nature, and because there so few pink diamonds of a significant size,
A Leibish & Co. 0.84 carat Fancy Intense Pink Oval Diamond Halo Platinum Ring
every pink diamond that appears in the market is able to garner quite impressive prices per carat. Thus, when pink diamonds of superior quality are sold at auction, such as those that are Vivid, Internally Flawless, or very large (or all three!), they tend to shatter records with the prices that buyers are willing to pay for them. This overall attitude, which has only increased in the last 20 years, had led to an incredible appreciation in value that tops 891% - a number that is absolutely unheard of in traditional investment circles. While this has been a wellkept secret for quite some time, the news has gotten out and people of means are beginning to invest in pink diamonds, knowing that they will provide a return in the long term. Of course, pink has always been an extraordinarily popular color in fashion and remains so, especially given the fabulous pink designs that the world’s trendsetters wear on the runway www.ahametals.com American Hard Assets | 21
S P E C I A L F E A T U R E | Time Can Be Money
and on the Red Carpet. Pink diamonds recently skyrocketed into popularity when Ben Affleck gave Jennifer Lopez a pink diamond engagement ring in the 1990s. Like many things in the rotating carousel of the fashion world, pink diamonds have arisen into people’s top of mind awareness and have taken a strong foothold as a gorgeous, desirable piece to incorporate into any collection.
A Leibish & Co. 3.61 carat Fancy Purplish Pink Radiant Diamond Ring
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How to Use This Knowledge Knowing the increasing appeal of yellow and pink diamonds, and that no new diamond mines have been discovered, the increasing demand and decreasing supply are a sure sign of their inevitable increase in price on the market. Whether they catch your fancy for their appeal or their investment value, one needs to treat this asset as you would any non-renewable natural resource. Thus, whether you plan to drape yourself in color diamond and gemstone jewelry, or to buy pink diamonds as an investment, it is imperative to buy your goods from a reputable dealer, and you can be assured that you are in the best of hands and that your glimpse into the future can be actualized.
Counterfeiting | S P E C I A L F E A T U R E
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L I F E S T Y L E & L U X U R Y | Time Can Be Money
TIME CAN BE MONEY By Gabriel Benson
Admit it. Whenever you meet someone, especially in a business setting, as you complete the handshake your eyes drift to the person’s watch. Watches have joined fine automobiles as a status symbol for the next generation. However, if you know what you are looking for, unlike that latest BMW sitting in your driveway, watches may actually go up in value – or at least not drop like a rock.
HISTORY AND COMPLICATIONS – THE FOUR KEYS TO WATCH INVESTING Sadly, the Timex or the Casio watch your mother bought you in high school probably hasn’t gone up in price. In fact, most quartz watches have zero after market value. What watch investors are looking for are unique, rare and high quality pieces. When investing in a watch, it is best to look at four characteristics:
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Brand History – Investors like to tell a story, and especially with the older watch companies these brands come with a rich and detailed history. Rolex was built not just on their beautiful craftsmanship, but also its reputation for building high quality watches for divers (Submariner), pilots (GMT) and adventurers (Explorer I). To this day, Rolex advertising focuses on the lifestyle a Rolex wearer enjoys almost as much as the watch itself. Other brands also try to capitalize on their rich history. Panerai, the Italian brand known for amazing styling, built their reputation after supplying high quality watches to the Italian Navy. IWC is well known for their Swiss craftsmanship. Omega’s watches were worn by some of the first astronauts and currently by the latest incarnation of James Bond. Tag Heuer and Breitling not only make quality products, but also have a strong following among athletes and movie stars.
Time Can Be Money | S P E C I A L F E A T U R E
Rarity – This characteristic of course makes the most sense to any investor, as it follows traditional investing rules. Patek Philippe makes some of the world’s most desired watches not only because they there are beautifully tooled, but many of the brand’s watches from the 1940’s and 1950’s were actually considered unpopular and as such saw limited production runs. Those limited runs have now made those watches quite valuable on the auction circuit today. Watch companies today usually offer their higher end customers limited edition watches to invite investment.
Provenance – Some of the most expensive watches to ever be sold at auction have a history to them related to a famous person or event. Albert Einstein’s 1929 Longines sold for almost $600,000, while a Patek Phiippe once worn by Eric Clapton sold for $3.6 million. Complications – When looking at modern watches, it is important to many investors to know how the watch actually works.
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L I F E S T Y L E & L U X U R Y | Time Can Be Money
Watches with mechanical movement, not quartz or digital, are preferred and only offered in higher end pieces. A complication in watch terminology is how many different movements the watch makes. For example, each movement of the second hand, minute hand, hour hand, and more, all count as a complication meaning the more intricate the design work needed to make the watch work. Many high end watches have over twenty complications meaning the inside production work is extremely delicate, complicated and amazing.
WATCHES FOR THE MODERN INVESTOR While some higher end watches have high price tags due to their gold, silver or diamond embellishments, those things of course have value in addition to the watch. For your watch to have true value as an investment it is usually best to buy a watch from a “watch house.” Companies like Cartier, Hermes and Mont Blanc all make beautiful watches, but they can be shunned by investors as they use “off-the-shelf” complications instead of having unique features. Though of the three, Cartier watches usually have the best resale value.
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Time Can Be Money | L I F E S T Y L E & L U X U R Y
The Following Watches Are Known For Entry Level Pricing, For Holding Their Value And, In Some Cases, Growing In Value:
$20,000. The Panerai PAM0507 retailed for $8,000 in 2011 is now difficult to find for less that $40,000 due to late demand.
ROLEX: Rolex values have a tendency to hover near purchase price, with some of the more rare models going up in price. Rolex generally has a twice yearly price increase that also help raise the value of pre-owned watches as after just a short period of time a new watch in the same Rolex category is retailing for your purchase price plus. While not all Rolex’s hold value, they do have a tendency to at least hold their value over time.
OMEGA: Omega watches are the choice for James Bond and pro golfer Rory McIlroy and have become increasingly popular over the last twenty years. They can be purchased for as little as $3,000 with the aftermarket for rare models holding very steady.
HIGHER END MODELS Patek Phillippe – The investor’s brand due to their high-end price
PANERAI: This company has done an excellent job of keeping their profile high among investors by offering numerous limited or special edition watches per year causing long waiting lists for many popular models. A used Panerai can be purchased for around $6,000 to
tag, history, and limited edition. If you can afford one, these watches seem to be the brands that are most desired by collectors. They are things of beauty, extremely limited and it is near impossible to buy a
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L I F E S T Y L E & L U X U R Y | Time Can Be Money
new one for under $50,000. Some older used models can be purchased for under $10,000.
Audemars Piguet – They start at $15,000 and only 26,000 are made each year. Their popular Royal Oak Offshore can run closer to six figures depending on the model. Hublot – Almost everyone else on this list has a long history and classic styling. Hublot was established in 1980, and has taken a more modern aesthetic to classic watches. The results are beautiful watches that are difficult to find under $20,000.
NOT ENOUGH TIME ON MY HANDS Other watch brands such as Breitling and Tag Heuer make beautiful watches that have a tendency to lose value, before peaking at a price of around 50%-60% of the original purchase price. This is due to what is a relatively low original purchase price that doesn’t limit demand. The bottom line is that while it may be difficult to buy any watch and expect it to rise in value, it is very possible to buy a high end watch, enjoy it for a period of time, and sell it for near the original purchase price or at least a value that is still very healthy after long use. As with any investment the keys are track record and scarcity.
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Investing for Geeks | S P E C I A L F E A T U R E
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S P E C I A L F E A T U R E | Investing for Geeks
Ethical Collecting By Eavan Moore
T
he country of Burma produces the most coveted rubies in the world. Pigeon’s blood rubies, with their deep red hue, sell for thousands or millions of dollars, and they can only be found in Burma, a hotspot for pretty rocks that accounts for more than 90% of global ruby trade and leads the rest of the world in gem-quality jade. Yet it also produces the most controversial rubies in the world – because gem production in Burma is inextricably linked to the human rights abuses committed by its ruling military junta. According to Human Rights Watch, the junta’s list of crimes includes recruitment of child soldiers, persecution of ethnic minorities, use of forced labor,
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and imprisonment of political dissidents. It owns many of the country’s gem mines and gem dealers, depending on sales of Burma’s finest natural resource to finance government operations. The mines reportedly use slave labor, including children as young as four, to extract gemstones in unsafe working conditions and with few environmental protections. The average ruby buyer may not know this, nor might they realize that their gems even came from Burma. Collecting gemstones, either as a hobby or as an investment, puts the buyer closer to the source of their stones than purchasing jewelery does, but it
Ethical Collecting | J E W E L R Y & G E M S T O N E S
is still very likely that the dealer who sells the gem was uninvolved in mining it. Each step of the process may take place in a new country. Is it ever possible to be sure that your gem was mined by free agents in conditions of their choosing? The answer is yes, according to the small number of miners who have built businesses on transparent, exploitation-free gemstones.
A Shroud of Mystery The travel history story of a gemstone can attract collectors just as much as its sparkle. Mined in remote Colombian or Afghan mountains, traded from hand to hand, gems gain a mystique that discourages close inquiry into their conditions of production. “The colored gemstone industry has always been somewhat shrouded in mystery,” says Hayley Henning, executive director of the Tanzanite Foundation. “This is sometimes what makes these gems so intriguing, is that the origins are very often locations that are farflung parts of the world where you’re unlikely to visit.”
Tanzanite has such a story. The stone is a vivid blue and violet variety of the mineral zoisite, and its only known commercial source covers a few square miles in Tanzania just south of Mt. Kilimanjaro. Tanzanite’s popularity in jewelry comes from its color; its interest as a collector’s item comes from the limited supply, which Henning says could run out as soon as 25 years from now. It has a third attraction: The top producer, TanzaniteOne Mining Ltd, a multinational company listed on the AIM London Stock Exchange, is publicly committed to mining ethically. It created the Tanzanite Foundation in 2003 to promote the mineral while implementing standardized labor, safety, and mining best practices and a transparent route to market. TanzaniteOne workers participate in collective wage and condition bargaining and work in a safe environment that includes solidly built underground mine shafts with adequate ventilation and dewatering. Miners live on site, with free accommodations, meals and health care. TanzaniteOne prides itself on being a responsible corporate citizen, having contributed to over $100 million to the Tanzanian tax base, and through the Tanzanite Foundation, also supports the local community outside the mining area. “When we talk about gemstone mining being an ethical process,” says Henning, “it’s not only the actual process of mining – it includes employing locals where the benefits
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J E W E L R Y & G E M S T O N E S | Ethical Collecting
reach within and beyond the local community. Through the Tanzanite Foundation, a percentage of proceeds of what is mined at TanzaniteOne goes back into the neighboring community. So far we have built two schools, an orphanage, a medical clinic and a community center; we pump fresh water every day from the mining operation into the local village; and we have supported a reverse osmosis plant. We believe strongly in leaving a legacy of education and infrastructure, long after Tanzanite has been mined out.” Having established protocols of ethical tanzanite mining in collaboration with local government and key dealers, the company added a fifth C to the usual list of value components: color, clarity, cut, carat – and confidence. Stones from the TanzaniteOne mine come with a tag assuring the buyer that they are authentic and ethically mined.
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When asked what other mines are doing wrong, Henning declines to rush to judgment. “Gemstone mining has for centuries provided livelihoods in communities where there really is very little else,” she explains. “And it’s not fair to compare a large, multinational company like TanzaniteOne, who has the capital behind it to dig wonderfully deep detonators, to other mining operations that may not have the finance to do that.” Some of the practices that put food on the table in gemstonemining regions are considered unethical in the United States – but that doesn’t mean they’re wrong. Young people in certain communities finish school early and immediately start to prospect for gems. Instead of serving out an eight-hour work shift, artisanal miners may need to keep going until they have enough to live on.
Ethical Collecting | J E W E L R Y & G E M S T O N E S
“Many of these resources have put food on the table that may not otherwise have been,” says Henning. “It would be very difficult to impose first-world business models and criteria on some of these far-flung exotic places where they just don’t operate in the same way we do. We can’t impose our standards on other environments, frankly.” How is a gem buyer to know who was exploited and who did their best to feed their families? Henning thinks that it’s important to remove the shroud of mystery. “Buy from a reputable dealer, and trust your resource. Do research. Ask for certification.” In Henning’s observation, TanzaniteOne’s customers buy on the basis of the company’s legitimacy. “At the present, reputation has a lot to do with it,” she says.
A Solid Source for Popular Stones For those who consider buying gemstones a means of investing in something with long-term value, the safest choices are the most popular colored gems: rubies, sapphires, emeralds. The ethically-minded investor does have at least one option there: Gemfields PLC (LON: GEM), a miner that runs a transparent source-to-market supply line of emeralds, rubies, and amethysts from conflict-free zones. It boasts fair pay, safety equipment, and other benefits for employees at its Kagem emerald mine in Zambia, Kariba amethyst mine in Zambia, and Montepuez ruby mine in Mozambique. The mines do not employ anyone under 18, and it has long-term plans to restore its mine sites with biodiversity in mind.
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J E W E L R Y & G E M S T O N E S | Ethical Collecting
The rubies are Gemfields’ newest product, following its acquisition of the Montepuez mine. According to the Gemological Institute of America (GIA), the Montepuez rubies were first discovered in 2009 and, as amphibole-related deposits, are distinct from basalt- or marble-based Southeast Asian rubies. They have taken over the gem markets in Thailand – the world center for ruby cutting, formerly dominated by Burmese rubies. Up until June 2014, these Montepuez rubies were all technically illegally mined. Gemfields just held its first rough ruby auction in Singapore; Vincent Pardieu and Andrew Lucas of the GIA reported that this signalled “a seismic shift in the way rubies will enter the market” and that it ultimately proved successful. Fifty-five companies placed bids on 62 offered lots of rubies, ultimately buying 1.83 million carats for $33.5 million.
A fragmented industry Olivia Young, marketing executive at Gemfields, says that the same chain of custody is much more difficult to trace with the rare
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gemstones. “Traditionally it has been such a fragmented and artisanal industry,” she says. “If you’re interested in more rare gemstones, then you’d have to really look to all the different sort of councils, to any bodies around authenticating chains of custody. But I think you’d really be hard pushed to be able to prove that those gemstones were ethically mined, simply because out of the mine, you can’t tell where it’s from and it’ll change hands so many times between when it reached you the consumer and when it came out of the ground. It’s a really difficult thing to trace back to the source.” So collectors interested in spinel, tsavorite and sphalerite will need to rely on their own research and instincts. There is some momentum for a more organized chain of custody protocol; for example, the Responsible Jewellery Council has taken an interest in applying its certification program for precious metals to gemstones. But the nature of the industry is that eyes and hands are needed to mine gemstones. As long as it remains the province of individuals, particularly in impoverished countries, trust between individuals will continue to be the order of the day.
Busting the Myths in Sports Memorabilia | S P E C I A L F E A T U R E
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