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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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S P E C I A L F E A T U R E | Busting the Myths in Sports Memorabilia
By Frank Martell
Inspect Before Buying
These tips will help improve your odds of buying healthy bottles.
Y
OU WOULD NEVER buy a car, home or work of art without asking questions and inspecting quality. What good is a vintage Ferrari if it does not have an engine? How much is a Picasso worth if torn or damaged? Buying old bottles requires the same attention, but our tools to ensure a wine has been well stored are limited and superficial. Still, it is surprising how many wine buyers will take risks by not asking the appropriate questions or by misunderstanding the standards of inspection. It is said that after 30 years there are no longer great wines, only great bottles. Even within a perfect case that has been stored properly for decades, not every bottle will express the same characteristics, and some may have spoiled for no apparent reason. The following tips will help improve your odds of buying healthy bottles that will provide all the pleasure intended by the winemaker.
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The label tells little about the wine inside the bottle. Some collectors prefer to buy bottles that have perfect labels. Unfortunately, it is not likely that a bottle will emerge from several decades of rest in a cold, dark and humid environment with perfect labels, and a perfect label does not mean perfect storage.Asoiled and damp-stained label will often indicate that a wine has rested well and was undisturbed. Sometimes when putting bottles in smaller racks the labels will take small tears, or a bottle may break and stain the labels below. None of these are indications of abuse, and sometimes an ugly duckling will provide the most beautiful drinking experience. Unless the wine stain on the label appears to have been caused by seepage, you can ignore most imperfections.
A high fill level does not guarantee healthy wine. Not surprisingly, many wine buyers assume that perfectly high fills indicate better storage. This is a deceptive measurement that can
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L I F E S T Y L E & L U X U R Y | Inspect Before Buying
through the center of the bottle when held up to the light. Red wines that have not been stored properly will appear cloudy, muddy, brown or dark orange. A white wine will grow darker with age, but even after 30 to 40 years, the primary color should be a rich gold, and never brown or muddy. In both reds and whites we expect clarity, purity of color and only a sense of color weakening at the edges where the liquid is thinnest in the bottle. While I don’t recommend taking unnecessary risks, I have had some pretty amazing results from wines that had terrible fills but perfect color. Sauternes and other sweet wines can be the exception to the rule since they can turn many shades between amber and motor oilbut still taste quite good.
Bad Luck Happens. Unfortunately, there are potential problemsthat cannot be observed visually. White burgundy produced between 1996 and 2005 (and perhaps more recently) can be susceptible to premature oxidation, also referred to as advanced aging. Nobody is 100 percent certain about how or why it happens, but it is a phenomenon that is of concern to all buyers. There is no way to predict the problem, though especially bad bottles will have an unusually dark color compared to others of the same age. Both red and white wines can sometimes be tainted by a bacteria contained in the cork. Neither premature oxidation nor corked wines are a sign of abuse, and there is little that can be done when bad luck strikes, but we move on and try again. It is painful to pour hard-earned money down the drain, but the rewards of careful shopping are nothing short of magical. As with every purchase of expensive bottles, it is important to know the person who is selling the wines and to ask questions about where the bottles were sourced. An honest auction house or broker will always try to answer your questions to demonstrate the quality of the products they offer. Š2014 Heritage Auctioneers & Galleries Inc.
lead to mistakes. It is possible for a wine to have been exposed to excessively high or low temperatures over a long period of time without dramatically affecting the fill level. If a bottle is quickly frozen or heated, the cork will oftenprotrude and wine may seep through the cork. But if a temperature change happens slowly, you may not see the same evidence of abuse. It is also possible for a cork to fail, allowing air to damage the wine without significantly reducing the volume in the bottle.
A low fill level does not guarantee a spoiled wine. I have had hundreds of bottles with lower fills that were absolutely delicious, and sometimes better than seemingly perfect wines. Twelve bottles from the same box will not always demonstrate identical fills after 30 to 40 years and it is not always true that the lowest fill will necessarily be a lesser wine. A buyer must be wary of wines that have unusually low fills for their age, but this should not be your principal deciding guide. Color! Color! Color! The No. 1 predictor of whether a wine will drink well is the color and clarity of the liquid inside the bottle. Even after 75 years, a red wine should have a bright, translucent red color 38 | American Hard Assets www.ahametals.com
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H A R D A S S E T S | Buying Metals at Auction
Safeguarding Your Retirement with a Precious Metals IRA By Elena Lathrop, American Bullion, Inc.
P
recious metals have long been used as a hedge against economic uncertainty and an easily liquidated store of wealth. They are usually confined to home safes, safe deposit boxes, jewelry cases, etc. However, since the IRS allowed it in 1997, investors have been using precious metals to safeguard their retirement funds by adding them to their individual retirement accounts. A newer, more diversified retirement account is now on the market: the precious metals-backed IRA.
provided they are in the form of IRS-approved coin or bar products. Since gold is the most commonly purchased of the four, the overarching term “gold IRA” is used most often for a retirement account containing any combination of precious metals. Depending on the portfolio contents and which metal is being marketed, you may also see the terms “precious metals IRA”, “silver IRA”, “platinum IRA”, or “palladium IRA” used. For the purposes of this article, it will be referred to as a precious metals IRA.
The four precious metals now allowed to be held in an individual retirement account are gold, silver, platinum, and palladium –
For an IRA to hold precious metals, it must be a self-directed IRA – a specialized IRA that allows investment in a larger array of assets such
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Safeguarding Your Retirement with IRA | P R E C I O U S M E TA L S S P O T L I G H T
as precious metals, LLCs, mortgages, and much more. Before opening a precious metals IRA, it is useful to know the basics of the self-directed IRA and how it came to be.
A BRIEF HISTORY OF THE SELF-DIRECTED IRA The modern-day IRA was first authorized by the Employee Retirement Income Security Act (ERISA) in 1974 to encourage working Americans to save for retirement. Early IRAs did allow some diversification into multiple types of assets. However, the institutions that served as IRA custodians at the time were more focused on selling traditional assets like stocks, bonds, and mutual funds and did not have the administrative capability or willingness to invest their account holders’ funds into other types of assets such as real estate, LLCs, commodities, etc. Consequently, many Americans had to settle for less diversification in their retirement portfolio. By the early 1990s, IRAs had become popular and account holders were eager to diversify their investments more. Due to the inability of their custodians to do so, trust companies began popping up and offering such services. But there was a problem – with such an array of different investments available, opportunities could arise and then disappear very quickly. Custodians were unable to keep up, resulting in many missed investment opportunities. The need for the individual account holder to be the one to make the investment decisions became apparent. Major changes occurred after the 1996 rulings of Swanson v. Commissioner, now known as the Swanson Decision. U.S. taxpayer James Swanson used his IRA to form a company, meaning his IRA owned the company. Swanson was the unpaid manager of the company and made all decisions. Whatever profits the company made were deposited into his IRA. The IRS challenged this, claiming that since he was personally benefitting from it, he was engaging in an illegal transaction. Technically, Swanson himself was not the one benefitting, since his IRA was receiving the funds, not him. The courts ultimately ruled in his favor, and the age of the self-directed IRA began.
PRECIOUS METALS ENTER THE PICTURE
Most government-minted coins, such as American Eagles or Canadian Maple Leafs, are permitted. Bullion is permitted as well, as long as it meets standard levels of fineness and is produced by a COMEX or NYMEX-approved refiner. Coins must have a certain level of purity of metal content so as to prevent the use of collector’s coins, which are prohibited. Therefore, coins like South African Krugerrands and older Double Eagle gold coins are disallowed. Gold and silver products are the most popular choices for IRAs. The current list of IRS-approved precious metal bullion to be held in an IRA is as follows:
Gold • American Gold Eagle bullion coins • American Gold Eagle proof coins • Canadian Gold Maple Leaf coins • Austrian Gold Philharmonic coins • Australian Kangaroo/Nugget coins • Chinese Gold Panda coins • American Gold Buffalo uncirculated coins (proofs not allowed) • Gold bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirement of 0.995+
Silver • American Silver Eagle bullion coins • American Silver Eagle proof coins • Canadian Silver Maple Leaf coins • Austrian Silver Philharmonic coins • Australian Silver Kookaburra coins • Chinese Silver Panda coins • Mexican Libertad coins • Silver bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirement of 0.999+
Platinum
Precious metals officially came into the equation on August 5, 1997 when the United States Congress passed the Taxpayer Relief Act of 1997 allowing tax-deferred investment in select gold, silver, platinum, and/or palladium bullion within an individual retirement account. Previously, all forms of precious metals had been considered collectible items, which are prohibited in an IRA (investing IRA funds in items the IRS considers to be collectibles is treated as a distribution and taxed accordingly). However, the text of the Taxpayer Relief Act of 1997 specified “certain bullion not treated as collectibles” and provided a list of exempt items that would no longer be treated as taxable distributions. No longer were any and all precious metal products considered collectibles. IRS regulations pertaining to investment in precious metal bullion within IRAs can be found in Section 408(m)(3) of the Internal Revenue Code and in IRS Publication 590. Specifically, IRS Publication 590 states:
• American Platinum Eagle coins • American Platinum Eagle proof coins • Canadian Platinum Maple Leaf coins • Isle of Man Noble coins • Australian Platinum Koala coins • Platinum bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirement of 0.9995+
Palladium • Canadian Palladium Maple Leaf coins • Palladium bars and rounds produced by a NYMEX or COMEX-approved refinery or national government mint, meeting minimum fineness requirement of 0.9995+
Your IRA can invest in one, one-half, one-quarter, or one-tenth ounce U.S. gold coins, or one-ounce silver coins minted by the Treasury Department. It can also invest in certain platinum coins and certain gold, silver, palladium, and platinum bullion.
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P R E C I O U S M E TA L S S P O T L I G H T | Safeguarding Your Retirement with IRA
place to another, such as when one transfers money from a checking to a savings account. In a transfer, also called a trustee-to-trusteetransfer or direct transfer, the account holder instructs that money be transferred directly from their current IRA trustee to their newly-opened precious metals IRA. There is no limit to how many times this can be done per year. A rollover, the most common method for those with an employer-sponsored retirement plan such as a 401(k), requires a slightly different process: the account holder withdraws funds from their current retirement account and then contributes them to their new precious metals IRA. The funds must be contributed within 60 days of withdrawal to avoid taxes and penalties. Unlike transfers, a rollover may only be completed once per year per account. One way of opening a precious metals IRA is through a precious metals dealer specializing in gold IRA rollovers, which may be certified by relevant organizations and governing bodies such as the United States Mint, American Numismatic Association, Industry Council for Tangible Assets, Professional Coin Grading Service, etc. When the client chooses this route, the process is usually as follows: 1. Client contacts a precious metals dealer specializing in precious metals IRAs and completes an application for a transfer/rollover. 2. Dealer handles the transfer/rollover process, and a new selfdirected IRA which can hold precious metals is opened for the client.* 3. Client chooses the IRS-approved precious metal products (bars, coins, proof coins, etc.) he or she would like to own in their IRA and purchases them from the dealer. 4. Dealer (with client’s approval) completes the purchase and arranges to have the metals shipped to an IRS-approved depository for storage.* *Many gold IRA rollover companies work exclusively with select self-directed IRA custodians and precious metal depositories, while others have the client choose a custodian and depository.
OPENING A PRECIOUS METALS IRA Not all retirement accounts are self-directed IRAs. The Retirement Industry Trust Association estimates that 2% of IRAs are of the self-directed variety, accounting for about $94 billion of the $4.6 trillion invested in IRAs. The most common retirement accounts are traditional IRAs and 401(k)s. Investors interested in a precious metals IRA can transfer or roll over their current plan to a self-directed IRA. A transfer is from one IRA type to another – for example, from a traditional IRA to a self-directed IRA. A rollover, commonly referred to in the industry with the blanket term “Gold IRA rollover”, is from a non-IRA plan to an IRA plan. For instance, a 401(k) would have to undergo a rollover in order to be converted to a self-directed IRA. Almost any retirement or pension plan qualifies for a rollover to a precious metals IRA, including but not limited to a traditional IRA, Thrift Savings Plan (TSP), SIMPLE (Savings Incentive Match Plan for Employees) IRA, tax-sheltered annuity, Roth IRA, SEP (Simplified Employee Pension) IRA, 401(k), 457(b), or 403(b). Each plan is subject to its own terms and regulations. Except for a few select cases, a gold IRA rollover or transfer is tax-free and penalty-free. Money is simply being moved from one 42 | American Hard Assets www.ahametals.com
The client may also go directly to a self-directed IRA custodian, in which case the precious metal dealer comes into the equation only when the client is ready to purchase precious metal products for their IRA.
Buying Metals at Auction | H A R D A S S E T S
STORAGE To comply with IRS requirements, all IRAs, including precious metals IRAs, must be in the possession of a trustee or custodian. Precious metals in an IRA are in the possession of the trustee or custodian, not the IRA owner – in other words, the metals are owned by the IRA. IRS Publication 590 specifies that for all IRAs, “The trustee or custodian must be a bank, a federally insured credit union, a savings and loan association, or an entity approved by the IRS to act as trustee or custodian.” Therefore, the trustee or custodian is responsible for storing the metals. Most hold them in a civilian (private) depository, working exclusively with one or two depositories. Many include sophisticated security features such as timed locks, automatic re-locking features, 24/7 monitoring, and motion, sound, and vibration detectors. Not surprisingly, they are covered by large insurance policies – some amounting to as much as $1 billion. They may be approved or licensed by government bodies and commodities exchanges. The IRS-approved depositories for storage of all four IRA-accepted metals (gold, silver, platinum, and palladium) are:
There are two types of storage that a client may choose: Segregated: Each client’s metals are stored separately from other clients’ metals. The client will usually have a designated storage unit for their metals that they can access and inspect at any time. Allocated (also called “comingled”): Client’s metals may be mixed with other clients’ metals. The metals owned are recorded under the client’s name, but not physically partitioned from other holdings. The major difference between the two types of storage comes about when the client wishes to visit and inspect their metals or take possession of them. With segregated storage, the client can view or take possession of the exact same metals he or she purchased initially. With allocated storage, since the metals are taken from a pool of bullion also containing other clients’ metals, they may not be the exact metals that were originally purchased. For those who choose segregated storage, which usually comes with an additional cost, what the difference represents to them is peace of mind. The cost to the client (negotiated by the IRA custodian) is an annual depository storage fee ranging from $100 - $200, with segregated storage typically costing more than allocated. Depending on the depository, the client can usually view and inspect their metals at any time.
• Brink’s • HSBC Bank USA • JP Morgan Chase Bank NA • ScotiaMocatta Depository • Delaware Depository Service Company, LLC • CNT Depository, Inc.
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S E C T I O N N A M E | Story Name
POSSESSION As previously mentioned, IRA assets are held in the custody of a custodian or trustee, not with the account holder. However, after reaching age 59 ½, account holders may take physical possession of the precious metals in their IRA at any time, tax and penalty-free. It is treated as a distribution. Before this age, a 10% early distribution federal penalty is incurred if the metals are not returned in full to the IRA or contributed to another retirement account within 60 days. Account holders who take distributions may choose to keep the metals in their possession, pass them on to a loved one, or liquidate them for cash. Additionally, required minimum distributions, or RMDs – minimum amounts account holders are required to withdraw each year after reaching age 70 ½ – can be taken in the form of precious metals.
WHY PRECIOUS METALS IN AN IRA? Since gold is typically treated as a long-term, safe-haven investment, it makes sense for use in protecting one’s retirement account. There are several motivations for doing so, the most common ones being the following: • Limited exposure – Traditional Wall Street investments such as stocks, bonds, mortgages, etc. depend on credit to function, but precious metals do not. They cannot “go out of business” and are not at will of the decisions of corporate board members. • Protection – Precious metals serve as a hedge against inflation, falling currency values, market crashes, and other economic crises, 44 | American Hard Assets www.ahametals.com
as well as geopolitical conflict. They are a tangible asset that governments cannot print or manipulate with monetary policy. • Diversification – Having a diverse set of assets in your portfolio, as opposed to holding only paper-backed assets, ensures that it will not lose all or most of its value should a serious market downturn occur. Precious metals are a tangible alternative to paper assets like stocks and bonds, and they tend to hold their value through market crashes and other crises. • Purchasing power – As the money supply increases, the U.S. dollar falls in value and buys less goods and services than it used to. $100 in U.S. dollars now buys less groceries than it did in 2000, while the same money invested in precious metals now buys more. • Liquidity – Precious metals are one of the most liquid assets. They can be easily bought or sold for cash as needed.
IN CONCLUSION – IS IT RIGHT FOR ME? A precious metals IRA offers peace of mind more than anything else. Having a physical asset that can be held in your hands is very powerful and attractive to many investors. Precious metals IRA account holders generally want the profit potential and dividends of stocks and bonds but also wish to keep an investment on hand that they do not have to track and think about on a daily basis – but will be there when needed. Before deciding whether it is right for you, knowing what your needs and options are is a great start.
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P R E C I O U S M E TA L S S P O T L I G H T | Provident Metals
SPOTLIGHT:
N
ot long ago, the market for safe haven assets like precious metals was hot. The stability of other investments was questionable at times. But with certain sectors of the economy stabilizing and the stock market roaring the bullion market has had to evolve. To explore this changing market, American Hard Assets recently sat down with Provident Metals COO, Jake Haugen. Provident Metals has taken these market challenges and changed the paradigm to create a new roadmap for the industry.
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By Gabe Benson
LIMITING THE EDITION “One of the things that has become obvious in this market is that retail demand is waning and that we need to do the best job possible to deliver for our customers,” said Haugen. “Our customers demand a high quality product, a product that is priced competitively, and delivered quickly. But we also looked at this time period as our opportunity to do something new. We wanted to deliver a bullion product that would hold more value for them than just the monetary value. It would be a product that they were excited to own.”
Provident Metals | P R E C I O U S M E TA L S S P O T L I G H T
38mm. Designed by artist Michael Skrepnik, the reverse depicts a giant woolly mammoth roaming the flatlands. The animal’s detailed features were authenticated by the Royal Tyrrell Museum of Paleontology, and portions are frosted to soften the fur and enhance its massively curved tusks. Mountains can be seen in the background. The coin is inscribed with its face value of 20 DOLLARS, along with 2014 and FINE SILVER 1 OZ ARGENT PURE 9999. This $20 denomination coin has a limited mintage of just 7500 and retails for $87.49.
ZOMBUCKS – THE CURRENCY OF THE APOCALYPSE With the success of The Walking Dead, it is not surprising that it was decided that we needed a zombie currency. What is surprising is how absolutely beautiful and collectible these coins are. Made of .999 fine silver and weighing in at one ounce, this ten coin series will include zombified versions of historical figures, with each coin only being available for three months. After those three months, the coins will never be minted again making these true collectors items from day one. “The first coin in the series was called the Walker. The 2017 Zombucks™ Walker pays homage to the Walking Liberty Half-Dollar (1916-1947) and the American Silver Eagle (1986-2013), which depicts a beautiful image of Walking Liberty striding forward with the Provident has delivered on this promise by offering several new limited edition products that feature unique and stunning limited edition releases. Going one step further, these products are designed, marketed and produced in such a way to appeal to collectors.
THE WOOLLY MAMMOTH Working in conjunction with the Royal Canadian Mint, Provident has commissioned a new series of extremely limited edition coins called the Prehistoric Animals series. The first coin in the series is the Woolly Mammoth, with other coins to follow. “We are excited about this product, as the limited edition offering means that this will remain a rare product for anyone who buys it, securing it’s value,” says Haugen. The Gold version is Composed of 1/10 troy ounce of .9999 pure gold, each coin weighs 3.14 grams and has a diameter of 16mm. Designed by artist Michael Skrepnik, the reverse depicts the side-profile of a giant woolly mammoth, its short fur — molted for the warm season — has been struck in a soft matte finish. The animal’s features were authenticated by the Royal Tyrrell Museum of Paleontology. The coin is inscribed with CANADA, 9999, FINE GOLD 1/10 OZ OR PUR. This $5 denomination coin is being limited to just 3,000 pieces and retails for $267.72. The silver edition is Composed of 1 troy ounce of .9999 pure silver, each coin weighs 31.39 grams and has a diameter of
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S E C T I O N N A M E | Story Name
sun on the horizon. The original Walking Liberty is also accompanied by stars and stripes while clutching laurel and oak branches. Adolf Weinman’s design grasps the essence of what the U.S. Mint was looking for during the mid-1910’s, which was patriotism, independence and liberty.” “While there’s nothing patriotic about being chased by the living dead and fighting evil to survive, it’s the reality of a zombie apocalypse. This silver Walker is a zombified Walking Liberty reaching ahead for a human. She is wrapped in torn and disheveled clothing with an ax in hand, surrounded by stars and stripes and walking in front of a mushroom cloud.”, says Haugen.
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THE 12 LABORS OF HERCULES “With the success of the Zombucks line, we wanted to explore other mintings that we felt would have collectible value. And we felt that visually and thematically, The 12 Labors Of Hercules worked well for us,” said Haugen. “But we also decided to change up our gameplan just a little bit.” “With Zombucks, the product was available to purchase for three months. With Hercules, these products are only available to 30 days. With one exception, there will be a 5oz silver Hercules coin available during the entire run. However, when the 12th Labor finally ends it’s run on September 12, 2015 that Hercules coin will disappear as well.”
Provident Metals | P R E C I O U S M E TA L S S P O T L I G H T
Provident Metals BRINGS THE CURRENCY OF THE APOCALYPSE TO NASCAR. Provident Metals has signed a four-race sponsorship deal with Phil Parsons Racing in the NASCAR Sprint Cup Series. The No. 98 car driven by Josh Wise will soon be covered in the post-apocalyptic stylings of Provident Metal’s Zombucks line. “It made sense for us to partner with Phil Parsons Racing and a special talent like Josh Wise because they work extremely hard for everything they get,” said Joe Merrick, CEO of Provident Metals. “Like Provident, they have been performing with a high level of success despite being underdogs.” “The guys from Provident Metals arrived in Daytona to sign the agreement with monster boxes full of Zombucks silver rounds to cover their deposit,” said Phil Parsons, owner of Phil Parsons Racing. “That was an exciting exchange and a first for us.” Provident Metals will be prominently featured on the No. 98 car in the following races: 1. Irwin Tools Night Race at Bristol Motor Speedway (August 23rd) 2. Federated Auto Parts 400 at Richmond International Speedway (September 6th) 3. Bank of America 500 at Charlotte Motor Speedway (October 11th) 4. AAA Texas 500 at Texas Motor Speedway (November 2nd)
Provident Metals is pushing the envelope in delivering high quality and unique products to bullion buyers. As the market continues to challenge, Provident has proven with its unique relationships with mints across the globe that they can deliver outstanding products. “Many bullion dealers are just delivering surplus products that they have purchased from mints around the globe. We also offer those products, but we have also taken the extra step to create relationships with mints to create these new and exciting lines of products that we believe will appeal to our customers.”
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L U X U R Y & L I F E S T Y L E | Just Luxe
Mont Blanc Cuff Links Might Be the Perfect Men’s Fashion Accessories By Marissa Stempien, JustLuxe.com
For some guys style is hard to come by, while others can’t help but look completely fabulous. If you’re not one of the latter (or maybe you are, but need something smart to add to your closet), you might want to try the snazzy cuff links at Mont Blanc. Yes, they’re known for their pens (which can make your desk super swanky), but they also have a line of watches, leather, jewelry and fragrances that can make you look like you belong in a street-style blog from fashion week. One of our favorite accessories right now are their cuff links— perfect blends of steel, silver and gold all adorned with the Mont Blanc star. Understated pieces that subtly hint at the luxury of their brand convey timeless style without looking tacky. Sleek bar links, cubes and cylinders are fashion forward, but still speak to the classic look
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of the historic brand. Setting themselves apart from the rest of the line, some pieces feature exotic materials such as onyx, lacquer, mother of pearl. Designs include traditional squares and rounds, modern bars, and artistic shapes and patterns including brushed metals. We’d never tell a guy what cuff links to wear (the same way he couldn’t tell us which heels to sport), but if it’s any pair from Mont Blanc, it doesn’t matter which he’d choose, because he’d look great either way—and that’s rare to find in a single collection. Our personal favorites include the mother-of-pearl creative cuff links and black carbon iconic cuff links.
Brilliant Earth Offers Conflict-Free, Environmentally Sustainable Jewelry By Marissa Stempien, JustLuxe.com
There is something that we really love about ethically-derived, ecologically-friendly jewelry. Maybe it’s that there are limited resources or that it’s so much easier to buy a conflict-free diamond that not doing so makes us feel like bad people—our only issue is the selection can be sort of—limited. Or at least it was until we found Brilliant Earth. With a surprisingly large selection that varies from vintage pieces to building your own modern wedding rings, everything is conflict-free, environmentally sustainable and they give back to charities. Overall it’s one luxury purchase you seriously can’t feel bad about.
labor laws. Every Brilliant Earth-made piece is crafted from recycled precious metals including gold and platinum. Even their colored gemstones, a commonly overlooked area of responsible jewelry, are closely monitored and most originate from Sri Lanka where they are mined in small, sustainable areas with strict labor codes. To help not only diminish the social and environmental impact of diamond mining, Brilliant Earth also donates “five percent of profits toward education, environmental restoration and economic development.” But while a business can offer the world in terms of charitable commitments and social movements it means nothing if their product isn’t up to par. No one wants an ugly ring—even if it is beyond conflictfree. Thankfully that’s not an issue with the pieces at Brilliant Earth. With a collection that includes everything from trendy necklaces to vintage engagement rings, they manage to offer pieces for almost every style. Offering custom designs for wedding rings and special occasion jewels, customers can work with designers to create the perfect piece for their wardrobe. Partnering with famous stylists and designers, they also curate must-have lists inspired by your favorite celebrity styles.
Founded by Beth Gerstein and Eric Grossberg, Brilliant Earth was formed when Gerstein’s fiancé Alex couldn’t find a ring that “represented her values”—something good for the environment, society and would give back to those in need. At the same time Grossberg had been also been looking at responsibly sourced jewels as being a “tool for social change in developing counties.” And that’s exactly what they set out to do. Forming the company in 2005, the two friends created not only a place for women and men to purchase ethically and environmentally responsible jewelry, but also provided a platform where a community could come together and help cultivate change through their buying power.
Aside from offering up a wide selection of jewelry and basically saving the world through sustainable and ethical avenues, their online blog is an amazing place to find inspiration, advice, and information about ongoing conflicts and resolutions in mining areas. For those looking to find an engagement ring (or for those dropping hints) this is the best place to start for ideas and better understanding of trends and styles. They also have a brick and mortar store in San Francisco, so if you’re in the area, stop by to take a look at what they offer—maybe you’ll go home with a new, guilt-free sparkler around your finger.
To help that vision come to life, Brilliant Earth is home to a full-fledged team of gemologists, designers, sales associates and more to make sure that each step of their commitment is fulfilled and transparent to consumers. Only 0.01% of the world’s diamonds meet the standards that Brilliant Earth has set for themselves to be both good for the earth and its communities. Every diamond has a fully traceable history to a mine in Namibia, Russia, Canada or Botswana that adheres to strict
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L U X U R Y & L I F E S T Y L E | Just Luxe
The Gem Palace is Taking Over the Kremlin Museum and Net-A-Porter With Jewels Fit for a Queen By Marissa Stempien, JustLuxe.com
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ome of the most beautiful and exceptional pieces of luxury jewelry in the world aren’t found in the windows at Bugari, Buccaletti, Chopard or Van Cleef & Arpels—they are custom made for royalty and collectors from all over the globe. One of the most established families in creating these one-of-a-kind, opulent pieces are the Kasliwal’s and their line MUNNU The Gem Palace—and they have been expanding and improving upon their legacy of luxury for nine generations. Now lead by Siddharth Kasliwal, MUNNU The Gem Palace is expanding upon family traditions with an exhibit at the Kremlin Museum in Moscow and a new collection at Net-A-Porter. We spoke to Kasliwal about what it takes to run such a personal business, about the curated museum and Net-A-Porter collections, and what it’s like to live up to his father’s legacy. JustLuxe: Can you talk a bit about your background and family’s history with jewelry? Was this something you always wanted to do or something that you fell into being the next in line? Siddharth Kasliwal: The Gem Palace has been in my family for generations. I am now the ninth generation Kasliwal to lead the family business, which makes me very proud. My father was my mentor, friend and teacher. At the age of 17, I left boarding school because my father was preparing for an exhibition at the Metropolitan Museum of Art. I spent hours with him in his studio and that is when I realized I wanted to be a jeweler. Before that moment, I wanted to be a travel writer, but following my experience at the MET I realized I wanted to be a part of his world. I never felt obligated to join the family’s dynasty—I was very proud of my legacy and felt fortunate to be born into this family and
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therefore felt this was where I belonged. I understand why The Gem Palace has existed for so many generations, why it was so special to my father, and why it is so special to me. JL: Your father really brought Indian designs to the attention of the West, bringing it to the Museum of Art in New York and Somerset House in London—now you’re showing at the Kremlin in Moscow—do you feel you’ll be able to live up to your father’s great success? What challenges do you think you’ll face? SK: I am the biggest collector and admirer of my father’s collections. My father taught me that jewelry is art and each piece needs to be made with heart and soul, especially in this modern time. I plan to continue his “quality not quantity” outlook while creating pieces for my collection for MUNNU The Gem Palace. My pieces will not stray too far from my father’s work as the designs are greatly influenced by him, but they will have my own contemporary aesthetic. JL: Can you tell us about the collection on display in the Kremlin? What makes that collection so unique? SK: The exhibition at the Kremlin is very important to my family as the entire show was dedicated to the memory my father. The process started when the director of the Kremlin approached him with the honor of having his work displayed in the exhibition. Indian jewelry and Russian jewelry have many similarities, hence the Indorussian collection. As we continued the selection process for the Kremlin
Just Luxe | L U X U R Y & L I F E S T Y L E
show, we wanted to select pieces that were truly iconic pieces, indicative of my father’s passion, style and talents. All of the pieces chosen were made in the last 20-25 years of his life. JL: Your family has been creating jewelry for generations from the most extravagant royal designs to your new collection with Net-a-Porter. Can you speak about the differences in design, artistry and craftsmanship between the two? SK: The pieces on display at the Kremlin represent the highest level of craftsmanship that MUNNU The Gem Palace has to offer. They are all made of precious materials—some of the rarest in the world—and require months, sometimes years, of craftsmanship. Each piece is truly one-of-a-kind, never to be reproduced in the same design again. The craftsmanship, artistry and design of pieces in the Net-A-Porter collection are just as painstaking and detailed. While each piece is one-of-a-kind due to the fact that they are all handmade, more than one piece can be made in the same design—as is necessary for them to be sold in an online-retail format. The Net-A-Porter pieces also use semi-precious stones as opposed to the emeralds, diamonds and rubies you would see at the Kremlin and in Jaipur. This allows us to make the artistry and craftsmanship of all MUNNU The Gem Palace pieces more accessible. JL: What is the process that goes into creating a new piece? Do you start with a design, a jewel, an idea…how is it then executed? How much time goes into making a new piece? SK: My father always said jewelry needed to have soul. Our pieces are conceived out of individual inspiration and made by and by the finest, most highly-skilled craftsman in the world. Each piece is individual, some begin with a design idea, others begin with the jewel as the inspiration and focus of the piece. Some pieces from the Kremlin exhibition were worked on for nearly four years before they were ready. I believe that is what makes our pieces special—when the motive and objective is to create something so unique, the time it takes to complete becomes unimportant. JL: What are some of your favorite jewelry aesthetics? What are some of your favorite pieces from the Kremlin exhibit? From the Net-a Porter collection? Why? SK: I enjoy working with diamond and emeralds as well as other materials, which will be seen in my new collection. All of the pieces at the Kremlin exhibition are dear to me because they showcase some of
the last works of art completed by my father before his passing in 2012. One of my favorite pieces at the exhibition is the little ruby box, which is comprised of 927 rubies. This piece is a true work of art that required great skill, amazing passion and patience to create in today’s era. Attention to detail was extremely important to my father. His commitment to spending five years of his life on one piece of jewelry showed his dedication to his craft. From the Net-A-Porter collection, I love the drop earrings. The colors of the stones catch light beautifully and look very elegant. JL: What do you hope women will feel when wearing your jewelry? How do you wish for them to see themselves in your pieces? How do you want your pieces to be seen or interpreted? SK: My father believed that jewelry should be as beautiful on the outside as the skin-side. The back and underside of our pieces are just as carefully detailed as the front, in line with traditional Indian belief that what touches your skin should be just as beautiful as what the eye sees. We want women to feel unique and playful while wearing our pieces. Whether worn with a gown, or with jeans and a white tee, each woman will feel like they are wearing a work of art. JL: Do you think your new Net-a-Porter collection accurately portrays your family’s heritage? SK: Yes, all of the pieces are handcrafted at The Gem Palace in Jaipur by the finest craftsmen in the world. We understand the importance of making pieces accessible to admirers of the brand and Net-A-Porter is the perfect platform. JL: What are your plans for the future of the company? Where do you want to go from here and how do you want to expand? SK: Right before my father’s passing, he told me that “it takes generations to build a business, but only takes one to tear it all down.” It is very important to continue my father’s legacy by running the business just as he did, but also adapt those traditions to the new way of life. This will always be a quality business and never a quantity business. Moving forward, my focus is on producing my new collection, which will have my own contemporary flare. MUNNU The Gem Palace is now available at Net-A-Porter and priced from $7,000-$34,000.
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N U M I S M A T I C S | Quest for the Best
The 1901-S Barber quarter, graded MS67 PCGS, is Gardner’s favorite. “It’s unbelievable,” he says. “It is truly hypnotic to look at.” The coin realized $258,500 when it went to auction at Heritage Auctions in June 2014.
Quest for the Best Interview by Hector Cantu | Portrait by Brandon Wade
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HERE’S NO DOUBT that Gene Gardner’s coin collection is among the most important ever assembled. “An epic collection which will be discussed for decades or centuries,” says CoinWeek. The Gobrecht Journal places his Seated Liberty coins among the “Collections of a Lifetime.” Coin experts call Gardner one of numismatics’ greatest collectors, alongside legends such as Louis Eliasberg, Harry Bass Jr., John J. Ford Jr. and Eric P. Newman.“The collections Gene has put together are the finest ever assembled,” says John McCloskey, president of the Liberty Seated Club. “Nothing comes close to it. It’s remarkable. Absolutely amazing.” Gardner’s U.S. silver coins, both business strikes and proofs, date from the late 1830s to about 1915. He has the all-time greatest sets of business strike Seated Liberty dimes, Seated Liberty quarters, Barber quarters, and Seated Liberty half dollars. He has one of the three all-time finest sets of Seated Liberty half dimes and one of the five all-time finest sets of business strike Barber dimes. “Although Gene Gardner’s numismatic interests are wide-ranging, there is no question that Seated Liberty coins are his favorites,” says Mark Borckardt, senior numismatist at Heritage Auctions. “Some collectors choose a denomination, and then decide to specialize in either business strikes or proofs. Gardner chose all denominations, and pursued both business strikes and proofs. And he nearly completed every denomination in both production categories. But he then went a step further, and sought out the finest available coins.” “Gene is more than a coin collector,” adds Heritage Auctions President Greg Rohan. “He’s a numismatist who has an appreciation for the historic and aesthetic side of the hobby in addition to being one of the nicest people in
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numismatics, and so generous with his time and with his knowledge.” Gardner began collecting coins as a child in Pennsylvania. His father Paul, who growup as a foster child and farm laborer in Lancaster County, Pa., purchased the patent for the original radial saw from a local inventor in the 1920s. He built the business that became DeWalt Products Co., later sold to American Machine & Foundry Co. Inc., and most recently acquired by Stanley Black & Decker. “I started collecting pennies in 1941 or so, when I was 5 years old,” Gardner says, “probably because my parents were trying to find something that kept me quiet. We had a primitive cabin – no water, no heat, no nothing – and we would go up there on weekends. We stopped at a place called Hunters Run on the way to Pine Grove Furnace [State Park].” Hunters Run was a small store where the family purchased supplies for the weekend. “As part of the entertainment there, the proprietor and my parents would let me look through pennies, sacks and sacks of pennies. I would look for certain dates. And that was really the start of it. You could still find Indian Head pennies in circulation … nothing rare, but all the late-date Indians were still available.”
Quest for the Best | N U M I S M A T I C S Why did you sell that collection?
Gardner soon had his own Whitman tri-fold penny boards, with an obsessive goal of filling every slot. “It’s amazing, actually, that all those coins in my boards, except for one, came from going through pennies in circulation. I filled the first board – 1909-1945 – then completed the second one up to 1958. I finally had to buy one coin, the 1912-S cent. I never did find one of those. So finally in about 2002 or so, I paid a dealer 30 bucks for one and that was it. But other than that, you can count the value of the collection by counting the pennies. Except for the $30, this collection cost $3.98 to assemble!” The 2014 auction of the Eugene H. Gardner Collection is the collector’s second auction. His first was nearly 50 years ago, when he sold roughly 500 coins. His latest collectionconsists of close to 3,000 coins. Part one of the auction was hosted by Heritage Auctions in June 2014. Part two is scheduled for Oct. 27, 2014, at Heritage Auctions in New York. We visited Gardner and his wife Anne to talk about collecting and the auction of his current collection at their home and the offices of Gardner Russo & Gardner LLC, an investment advisory firm in Lancaster, Pa. that Gene founded in 1968 and continues to operate with partners Tom Russo and Gene’s son Eugene Jr.
When did you make the jump from kid collector to spending serious money as a serious collector? It started in 1955. Coin prices were not that high. If you spent $10 or $15 on a coin, that was something. I collected a whole set of Indian proof pennies that were part of the estate of [noted numismatist] Wayte Raymond [1886–1956], and those were gorgeous. They would be [grade level] 67s, at least, today, perhaps 68s. They were truly gorgeous, but they cost 10 bucks. I sold those in 1965, 10 years later, for about $60 or $70. The coins were special. They brought a high price. Today, they would be hundreds orthousands of dollars. So when you ask when I first spent real money on coins, I don’t remember. But it was not significant. It was a little bit here and there.
You purchased coins from the Jordan Marsh department store in Boston back then? They had a coin department in the basement. They didn’t have super coins, but they had interesting coins, and I bought several. I got to know the dealers in the Boston area. Malcolm Chell-Frost was a person I was close to. I didn’t realize it at the time, but he was really nationally known. He was a contributor to the Red
I needed money. Anne and I had married in 1963. We needed a house. We lived in New York up until then. We didn’t need a car. Suddenly, we needed things. Unless I went cold turkey, I was never going to get away from it. So I decided to sell the coins, put everything behind me, and move on. The sale went very, very well … I think about $700,000.Thank goodness a house cost $40,000 back then!
You went cold turkey? That was the only way I was going to stop. It’s the only way I’m going to stop now. Totally cold turkey. Not sure I can do it again but I’m trying. As a child, were coins the first thing you collected? It’s always been coins. Unless you consider my Kellogg’s cereal Pep Buttons. I collected stamps in a very minor way, but stamps never intrigued me as much as coins.
What specifically about coins, and not stamps or baseball cards, intrigued you? I can’t answer that. It was all about putting a series together.I still have my Whitman wheat penny boards. They are complete. That’s something I’m keeping.
After your 1965 auction, what brought you back to collecting? It was just a random chance. I was in New York one day, walking along 57th Street, and I walked past Stack’s and something was going on. They were having an auction that night, so I stayed around. It was sticker shock. It was unbelievable. Coins I thought were worth $10, $15 or $20 were suddenly worth $1,000, $1,500, $2,000. But I couldn’t sit still for the whole thing so I bought a 1909-S VDB Lincoln cent. Not a particularly distinguished coin. I paid $935 for it in 1995. It was OK, but it wasn’t the quality I actually would go after. I was very uncertain. I sort of spent the rest of 1995 being about that serious … nosing around but not doing much about it. And then in 1996 was the Eliasberg auction, and that was my first real jump back in.
The second time around, you were more focused? Well, I had some knowledge, but not enough to really be successful. For instance, when the Eliasberg coins went up for sale, I bought an 1876-CC Liberty Seated 20-cent piece. I knew it was a rare coin and it was the fifth auction lot, so I just bought it. I had no idea if I’d paid too much or too little. I paid $148,500 for it, which at the time everybody seemed to think was a remarkable price. The good news is it’s worth more today. The coins in Eliasberg were all raw. They were not graded. So it was dependent on your ability to grade, and frankly my ability to grade was zero – certainly compared to the people I was competing with, who were some of the real experts in the field. But I was familiar with rarities.
What else did you buy at the Eliasberg auction?
1873-CC Seated Liberty Dime MS65 NGC. Finest of three known mint state pieces. Sold for $199,750 at Heritage Auctions in June 2014. From the Eugene H. Gardner Collection of U.S. Coins
Bookguide, a significant numismatist, and a terrific person. The first real coins I bought were from him. I would go down there two or three times a week and he would ration them out to me. I knew he had more, but he would only sellyou a couple at a time.
And this is what developed into your first collection? My first collection, yes. But the problem was that I was never focused. This is the collection you sold in 1965 at Stack’s, correct? Yes, and you can see from the auction catalog that I had a little bit of everything. The focus was really on quality and eye appeal.
The other coin I pursued seriously was an 1870-CC Liberty Seated quarter, which I lost. Looking back, I had no idea what value to put on it. I think I bid it up to something like three times catalog – $170,000. It is the key to the Liberty Seated quarter series. They also offered the Abbey Cent, which was a 1799 large cent. Beautiful, beautiful coin. I bid on it, but lost. So I knew where the rarities lay. What I did not know was the quality of the coins I was buying. I could look at them and say,“This is really nice,” but I might grade a coin 65 when in truth it was a 60 or a 50. I had no knowledge. And I also had very little knowledge of value. I was completely a loose cannon. But those two coins, it gets scary when you’re at three and four times catalog, especially when you know you don’t know what you’re doing. But those are truly great coins.
Why have you focused on Seated Liberty coins? That’s just the way the collection developed. I’ve wound up with an unbelievable collection of Liberty Seated coins. I’ve collected all series. The dollars, half dollars, quarters, dimes, half dimes. They are all complete, in high-grade mint state, probably averaging [a grade of] close to 65 and 66. And I’ve also collected them complete in proof, from 1837 to 1891 – in all series, missing only one coin, the 1853 half dime. That’s the way the collection developed. I always had an affinity for the quarters. People kept saying “You’ll never complete the quarters. You just can’t do it. They are the toughest series to complete in highest quality.” That just spurred me on. www.ahametals.com American Hard Assets | 55
N U M I S M A T I C S | Quest for the Best
1871-CC Seated Liberty Quarter MS65 PCGS. Finest known 1871-CC Quarter. Sold for $352,500 at Heritage Auctions in June 2014. From the Eugene H. Gardner Collection of U.S. Coins.
That was your goal, to own the best examples possible? Yes. Sure. The quarters are unreal.
Which is your favorite coin? Of the whole collection? If you ask about sets, it’s Liberty Seated quarters, hands down. For an individual coin, however, it’s the 1901-S Barber quarter. It’s unbelievable. There are three 1901-S Barber quarters in mint state, 67 to 68, and they argue back and forth over which is the best one. Often, they come down to mine. It is truly hypnotic to look at. The colors are beautiful. It’s hard to capture in a still photograph, but when you have the coin in hand, you can see it.Another blow-away coin is my 1896 Philadelphia Barber quarter. And the 1898Philadelphia Barber quarter is of the same character.
How have you acquired most of your coins? Probably two-thirds auction, one-third dealer.The auction houses I’ve worked with most closely are Heritage, Dave Bowers at Stack’sBowers, John Feigenbaum at David Lawrence. I’ve actually worked with very few dealers. Basically Bill Nagle, Jason Carter and Jimmy O’Donnell. And I have to mention Laura Sperber, Larry Whitlow and Katie Duncan. When I look for dealers, I look for their access to high-quality material. There are very few who work with this stuff. Ten years ago, I met Bill Nagle, who is a professional numismatist. His eye is terrific. The high quality of the collection is in most part due to him. I know by naming any single name and house I’m leaving out lots of friends and colleagues whose relationships have meant a lot to me through the years. I’m grateful to all of them.
When you bought at auction, were your purchases based solely on your own research or did you get assistance from dealers? From Nagle. I would go through an auction catalog and pick out the coins I felt would help the collection, then he would go look at them and say yea or nay. In every catalog there might be 15 or 20 coins which might be of interest. He would throw out half of them based on technical grounds. But I’ve probably bid in every auction over the past 15, 20 years.
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Are there coins you didn’t buy that you wish you had? Coins that got away? That would have been earlier on. Once I made up my mind to go after these highgrade coins, I decided that when they’re offered, you buy them. And the result was I usually bought them. The bad news was we paid some incredible prices for stuff. Unbelievable prices. But you have your collection. Somebody else would have bought the coin for one bid less than whatever I paid. And who knows whether that coin would ever resurface.
So after you identified a high-quality coin, was your main concern then about price? How high the price would go? That wasn’t a concern. I’m with you in saying “Yes, I’m going to buy it,” but I was not concerned with what the price would ultimately be.Many of them came within reasonable ranges, and some came at discounts.
Were there cases where prices got too high and you just stopped bidding? I’m thinking about one coin … the Seated Liberty 1873-CC No Arrows dime, part of the Battle Born auction in 2012. It sold for $1.8 million. I needed that coin. The collection still needs it. It’s one of the two mintstate Liberty Seated coins I don’t have.But that day I was absolutely focused on the Seated quarters from Battle Born. In fact, I bought all of them, the 1870, 1871, 1872, 1873With Arrows. It cost a pretty pennyto acquire those four coins. Now at another time, I probably would have bought the No Arrows dimebut I just wasn’t willing to on that day. Maybe a mistake. I may never see that dime. If I had done it, I probably would have gone to work for five years and never put my nose out the door! But there are very few coins I regret not having bought or having failed to buy when I wanted them. That was the lesson of Eliasberg. When you have a chance to buy the Abbey Cent, buy it! I hear you’re still buying coins, even after you decided to sell your collection? I bought one coin.My proof Seated series of dollars is complete[1836-1873]. Half dollars complete[1839-1891]. Quarters complete[1838-1891]. Dimes complete[1837-1891]. Half dimes complete [1837-1873] but for two. One of
Quest for the Best | N U M I S M A T I C S those was auctioned in January by Heritage Auctions. I thought, this is crazy. I’ve looked for this coin for 20 years. The minute I stopped, it shows up. So I said I’m going to buy it. Now the collection is missing only one coin, theLiberty Seated half dime, the 1853.
Why is that coin hard to find? It’s a problem in the Liberty Seated series of the proofs of 1850, 1851, 1852, 1853 – there was sort of a crisis of currency in those years where because of the gold strikes in California, the price of gold and silver got out of whack. The Mint was doing cartwheels trying to balance these things, but there are almost no proofs known from those years. In fact, the 1850 business strike I bought is what I call a controversial proof. It’s maybe a proof, maybe not, although NGC has certified it as proof and it looks like a proof. But the way the Mint was striking coins in those days, it raises issues. The 1851, there are almost no known proofs of any of them. The 1852, there’s just one or two. But again, they maybe first strikes rather than proofs. They’re gorgeous coins, but whether they are truly a proof strike I don’t know.
The numismatists at Heritage Auctions place your collection on the level of Eliasberg, Norweb, the Ford collection, the Bass collection. How does that make you feel to be in that kind of company? I’m awed, because I know how big those collections are. I don’t think this collection is really in that league. I don’t have the all-star coins, like the 1894-S dime or the 1913 Liberty nickel. I’m not in that league. So I’m surprised people put the collection in that league. I think the most expensive coin in the collection might be a couple of hundred thousand dollars, and you’re talking coins that are worth $3 million, $4 million or $5 million. The dealers were all over me saying, “You should buy one of these coins because you’ll need that to establish the collection as being one of these upper-level collections.” But that never really appealed to me. Plus, I would have found it very difficult to do. I would have had to put the wife to work! [Editor’s Note: Anne Gardner has worked with her husband at Gardner Russo &Gardner LLP for 23 years. She is the firm’s Compliance and Administrative Officer.]
But as far as the quality of your collection, the concentration of highgrade coins? As far as quality, this would rank with all of them. It’s unusual because the early collectors of this material, even Eliasberg, do not have what’s here. And the reason they don’t have what’s here is when they collected the Seated quarters, you look at Eliasberg and he had none of the Philadelphia Mint Seated quarters in mint state. They were all proofs. In those days, you had a proof because the 1858 proof was a much better coin than any 1858 mintstate coin. Mine are complete Philadelphia, both mint state and proof, and actually what’s funny is the mintstate Philadelphia coins become very hard to get in certain years because nobody collected them. They all wanted the proofs. There might be 400 proofs of the 1865, there might be five gem mintstate coins. Who knows? This collection is unique in that aspect, in that it’s complete in mint state.
What’s your advice for young numismatists? I would get together with fellow numismatists. Join local clubs and branch out to national ones according to your interests. My favorite is obviously the Liberty Seated Collectors Club, which publishes The Gobrecht Journal.There are some highly informative books here – Gerry Fortin’s seminal treatise on LS dimes, for example. For people interested in this area it is a source of many thoughts and ideas.Go to shows. Subscribe to publications. Find people you respect and feel they know what they are doing. And get your feet wet. Just learn, and read, read, read. It’s the same advice Warren Buffett gives to young investors – to read annual reports.Get down in the trenches. Handle as many coins as you can.
What about advice for older novice collectors who might have more resources to pursue high-grade coins? I would focus on something you like, whether you like pennies or quarters. Something either appeals to you or it doesn’t. Pursue what your gut tells you to. There’s a magic to it.
What are your thoughts on collecting as investing? Coin collecting should not be looked on as an investment – though if you hold nice coins long enough they can certainly appreciate in value.But you’d have to be in it for years before you really overcome the commissions. I think people who look at it in terms of investment, especially with all these modern coins, are just kidding
themselves. Look at modern stamps. You can buy them in bulk for less than the amount on the stamps. So I don’t see the point. So the real motivation should be… Should be rarity and interest. Too many young numismatists are going to be lured in by state quarters, things like that. Maybe it’s a way to getting in, but it’s not significant – and I sort of object to it.
On what grounds? I’ve long gone with the theory that a nation’s currency reflects the moral strength of the nation. For a long time, when you bought a silver dollar, you bought a dollar’s worth of silver. That’s what it was. Half dollars were a half dollar’s worth of silver. Even a penny had to be a penny’s worth of copper, which made it giant. No longer true. Currency no longer has any intrinsic value other than just passing it off to another person.
Do you think your collection will ever be assembled again by one person? I don’t see how it’s going to be possible. Once this is dispersed over the next two years, it would take 30 or 40 years to get every piece back. Coins that go to auction are on about a 20-year cycle. A person will buy it and keep it for 20 years. They’ll show up eventually, but it would be truly impossible. That reminds me of my 1793 large cent in my first collection. It’s a Sheldon-13, which is the Liberty Cap, the rare variety of 1793.I took it to [Malcolm] Chell-Frost one day in 1956. It’s a gorgeous coin. He looked at the reverse. Perfectly struck. You turn it over to the obverse, beautiful strike, except someone had taken a chisel to the hair and drawn three wavy lines. What they thought they were doing, I have no idea. But, of course, it destroyed the numismatic value of the coin. But I thought it was so pretty. I still bought the coin, and I actually made money when I sold it back in 1965. This coin showed up for sale again about 10 years ago, and I said,“Lordy, I’m going to buy this coin,” because people treat it as junk, but it’s really not junk, though it’s got problems. I was ready to pay $1,000, $2,000, but it went for $12,000. I wasn’t about to pay $12,000 for it. It’s out there again, and in another 20 years it’ll be back. It’s a wonderful coin, but it just tears at you that someone was dumb enough… they didn’t like the hair! ©2014 Heritage Auctioneers & Galleries Inc. HECTOR CANTU is editor of The Intelligent Collector.
EVENT
THE EUGENE H. GARDNER COLLECTION, PART II, HERITAGE SIGNATURE® AUCTION 1214 is scheduled for Oct. 27, 2014, at Heritage Auctions in New York and online at HA.com/1214. For details, call 800-872-6467 or email Gardner@HA.com.
Glossary Business strike: Phrase used for coins minted for everyday usage, in wide circulation. Grading scale: Coins are most often graded on a 70-point scale, with a grade of 70 indicating a perfect coin.
Seated Liberty coins: Design shows the goddess Liberty in a flowing dress, seated upon a rock. The Seated Liberty appeared on most U.S. silver coinage from 1836 through 1891. These coins were minted at the U.S. Mint in Philadelphia, and at branch Mints in New Orleans, San Francisco and Carson City. Mint state: Used to describe a coin that has not been used or has not been in circulation (“uncirculated”). Proof: Used to describe coins struck early in the manufacturing process and struck more than once, giving a very fine detail to the image on the coin. www.ahametals.com American Hard Assets | 57
S P E C I A L F E A T U R E | 5 Years of Treasure
2014 John F. Kennedy Half Dollar 50th Anniversary Coins: Collectible or Investment?
By Louis Golino
A
s the 50th anniversary of the slaying of President John F. Kennedy in November 1963 approached last year, many coin collectors expressed hope that the U.S. Mint would issue some kind of special coin or set to honor President Kennedy. In April of last year they found out the Mint was, in fact, considering issuing special coins to mark the fiftieth anniversary of the release of the 58 | American Hard Assets www.ahametals.com
Kennedy half dollar in March 1964. The idea was first suggested in a survey of Mint customers in the spring of 2013 and then again in a second survey earlier this year. Products would include special cupro-nickel and silver halves in a variety of finishes and bearing different mintmarks, and a possible special gold half dollar that would be the same diameter as the halves issued for the past fifty years but be made of three-quarters of an ounce of
JFK Half-Dollar: Collecting or Investment | N U M I S M A T I C S
The first gold Kennedy half dollar sold at the ANA show, which is pictured, was resold to a collector for $100,000. That was a $95,000 profit over the $5,000 paid for it by Mr. Hendrickson, owner of SilverTowne.
gold, provided the surveys showed there would be demand for those coins, which they did. Kennedy halves have been a major staple of modern American numismatics and as of 2013, more than 4.2 billion such coins had been minted. They have always been popular partly because of the continuing popularity of President Kennedy, who is viewed by most Americans as their favorite modern president, and are still hoarded when received in change, which is rarely. They are also accessible to all buyers and are considered to be one of the most attractive modern coins especially because of the appealing side-facing profile of JFK on the coin’s obverse and a reverse that is based on the presidential seal. The silver versions, especially the 90% silver ones from 1964, are also popular for bullion stacking and continue to be available for a modest premium over melt value, even in uncirculated condition. Over the past fifty years relatively few changes have been made to this coin apart from a reduction in the relief of the sculpt of President Kennedy’s profile and more definition to the hair. The coins were issued in 90% silver in 1964; 40% silver in 1965-1970, and since 1971 have continued to be issued in cupro-nickel and silver. But they are no longer made for circulation, and are only sold at a premium to collectors in uncirculated rolls and bags and in silver and clad proof sets.
The proposed 2014 tribute coins would mark the most radical changes in this series to date. First, silver and clad coins would for the first time be struck in reverse proof, which reverses the usual proof finish in which devices are frosted and fields are mirrored. First used on American silver eagles in 2006, reverse proofs feature mirrored devices and frosted fields, which give the coins a very different look. And the coins would also be struck in another, newer finish first used in 2013 also on silver eagles, known as enhanced uncirculated. Plus the coins would feature mintmarks not normally associated with those finishes. But the gold half dollar is an even bigger departure from past Mint practice. The Kennedy coins have never been struck in gold, and the Mint has never in fact issued a half dollar coin made of gold. In addition, for some people it is less part of the Kennedy series and more of a commemorative issue. The Mint announced earlier this year that it was moving forward with plans to issue the Kennedy tribute coins, but details about the program have slowly trickled out over the past few months, as anticipation for the coins continued to grow. The Citizens Coinage Advisory Commission, which is the key group (along with the Commission on Fine Arts) that reviews and www.ahametals.com American Hard Assets | 59
N U M I S M A T I C S | JFK Half-Dollar: Collecting or Investment
because the folks there truly are interested in sparking love of numismatics. However, as a numismatist, well, I’m a bit leery. We’re not celebrating JFK; we’re celebrating a coin. We’ve done that before with classic designs, and I can appreciate the demand for that. The obverse of the Kennedy half is fetching, to be sure; but the reverse--here we go again--yet another heraldic eagle. Only Frank Gasparro’s eagle patterned after the Great Seal of the United States ranks as having more devices than almost any other U.S. Mint coin.” Other collectors and coin writers have noted that the coin, which had an initial price of $1,240 that fluctuates weekly with the price of gold, will be beyond the reach of many collectors, especially many Kennedy half dollar enthusiasts. The series has always appealed to millions of collectors because it contains no major rarities and is not that hard to complete. But now anyone who wants a complete set will have to buy a coin made of threequarters of an ounce of gold.
makes recommendations for the designs that appear on all U.S. coins and official medals, held a series of meetings in 2014 to discuss the Kennedy coins, especially the gold version. It was eventually decided that the gold coins would be struck of .9999 or 24 karat gold; would carry a dual date (1964-2014) to distinguish it from silver and clad halves; would indicate the fineness and weight on the coins; would have a West Point branch mint mintmark on the coin’s reverse; and to make each proposed product unique it and the other tribute coins would use a higher relief rendition of the Kennedy profile that also features more subdued hair detail. That version of the profile was used on the original 1964 silver coin, was created by the coin’s obverse designer, Gilroy Roberts, in 1963, and was inspired by the 1961 presidential inaugural medal for President Kennedy, which is still struck and sold by the Mint. It is not hard to understand why so many collectors of American coins and especially of Kennedy halves are so excited about these new issues, which began with the July 24 release of a two-coin clad set for $9.95, continued with the August 5 release of the gold coin, and will end with the release sometime this fall of the special four-coin silver set in 90% silver with various special finishes and mintmarks. Only the gold coin uses the dual date. The others are all dated 2014. But at the same time, there has been a certain degree of dissent in some quarters about the coins mainly because they primarily honor the coin rather than President Kennedy himself, though in reality there is no way to do one without the other. Plus, this is hardly the first time a coin anniversary has been honored. Dr. Michael Bugeja is a nationally-recognized numismatic author, lifelong coin collector, and dean of the Iowa State Greenlee School of Journalism. He also serves on the Citizens Coinage Advisory Commission. He told American Hard Assets that; “As a hobbyist, I am thrilled that these coins are forthcoming to help others become more involved in collecting. I also want to see the U.S. Mint succeed
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Overall, however, the gold coin’s supporters clearly outweigh its critics. A minority view exists that sees the gold JFK coins as a Mint gimmick to sell coins, but most collectors have said they think the coin is a beautiful tribute piece and testament to the widespread popularity of President Kennedy and Kennedy halves. In fact, no other U.S. coin program has been the subject of anywhere near the same level of interest among numismatists for many years with the exception of the 2014 Baseball Hall of Fame commemorative coins, which were released in March. On coin blogs and online forums, for example, no topic besides the baseball coins garners nearly as much interest as the new Kennedy coins. Dr. Bugeja, who said he argued in favor of the coins at the CCAC and specifically for the 1964-2014 dual date, said he expected a quick sell-out of the gold and silver Kennedy tribute coins.
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N U M I S M A T I C S | JFK Half-Dollar: Collecting or Investment
Landry said the Mint would have a supply of 40,000 of the gold coins, and 37,000 of the clad coins, on hand when sales begin. The 40,000 gold pieces include 2,500 that were slated for sale at the Chicago coin convention. When the clad, two-coin set went on sale on July 24, the Mint sold 68,974 of them in less than two-hours and long lines snarled around the Mint sales facilities in Washington, DC and Philadelphia. By the time the gold coins were launched on August 5, sales of those sets had reached 97,655 units. When the silver sets are released sometime this fall, the Mint will undoubtedly sell an even larger number, as they include special new finishes on silver Kennedy halves that have never been used before, yet are accessible to most buyers at $100 a set. But collectors who care about the future value of their coins, which is most of them, and investors considering speculating on the coins, are concerned that unlimited mintages will make such coins too common to retain much future value apart from their precious metal content.
Perhaps the main issue for prospective buyers of the gold half dollars since they were first proposed is whether the Mint will impose household and/or mintage limits, or whether the coins will have an unlimited mintage, which is known in numismatic parlance as minted to demand. All year buyers have been wondering how sales of the gold coins would be handled because issuing coins with no mintage limits has tended to have two main effects: it has made it easier for everyone who wants a coin to order one from the Mint, but it has also tended to suppress secondary market values. The one main exception is the 2009 ultra high relief double eagle gold coins, which had an unlimited mintage yet have done well in the aftermarket, but they have the benefit of fulfilling the vision of August Saint-Gaudens to create the greatest masterpiece of classic American coinage, which the Mint was unable to do back in 1907 due to striking problems with the original version. On July 9 the Mint announced that the gold Kennedy coins will indeed be “sold based on consumer demand.” Prior to this announcement household limits of five for online orders and two for in-person sales of the coins at the Chicago ANA World’s Fair of Money, where the coins will debut, and the Mint’s sales facilities in Washington, DC, Philadelphia, and Denver were announced. Furthermore, in a media teleconference on July 16 the Mint’s acting associate director for sales and marketing, Marc Landry, explained that the Mint’s goal is to produce enough coins to meet consumer demand but not overproduce, which has in some cases meant melting unsold coins down. The Mint’s preference is to produce coins with no mintage limit because it finds it hard to gauge demand for such products.
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The modern coin market has increasingly been driven by the quest for top-graded coins and special labels designating that the coins were first strikes and early or first releases, or were the first coins sold by the Mint when a major new coin was released at a coin show. This is the third time the Mint has chosen to release a high-interest coin at a show. During both previous instances the show release coins produced a real frenzy as dealers and buyers clamored to buy a limited
5 Years of Treasure | S P E C I A L F E A T U R E
number of coins sold at the shows and have them graded on-site with special coin show release labels, for which buyers have paid thousands of dollars over the regular price of the same coin. The Mint is trying to learn from past mistakes by making some improvements to the process for show sales of the Kennedy coins this year such as handing out tickets a little before sales begin each day and having more sales counters staffed. In the short-term a lot of money will be made by dealers and others who manage to get a significant number of coins at the ANA, have them graded, and quickly sell them before interest turns to the next
big thing. But those who buy show release coins at a high premium may find their values do not maintain themselves over time. In the end, the Kennedy gold half dollar and other JFK tribute coins issued this year are perhaps best seen as collectible coins to be enjoyed and perhaps passed on to your heirs rather than as especially promising long-term investments, although if the demand for them is sustained over time, they should appreciate. It is also important not to underestimate the appeal of this particular issue to a broad cross-section of collectors, investors, and JFK admirers.
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S P E C I A L F E A T U R E | 5 Years of Treasure
Ian Russell, president of Great Collections, told American Hard Assets: “Although the Mint is producing an ‘unlimited’ number of Kennedy coins, the key aspect is the household limit of five coins. This will ensure that the coins are spread around - and there will be a secondary market instantly. If the Mint lifts this limit, then the coins will be freely available and the secondary market will be affected. I personally like the coin (the design is iconic) and expect demand worldwide. Already we have clients wanting 100 coins each, similar to the Reverse Proof Buffalos last year.” In fact, low household limits may be the key factor besides the beauty of the 2009 ultra high relief gold double eagle and the price of gold that has enabled that coin to appreciate in value since it was issued. That is because low household limits give collectors who buy from the U.S. Mint a larger role in the process of shaping the market for a particular coin unlike other minted to demand products that had no buying limits like the 2012 and 2013 American silver eagle anniversary sets. On July 31, less than a week before the August 5 launch of the gold coins, the Mint decided to lower the in-person purchase limit to one, a very sensible move that bodes well for the aftermarket value of these iconic coins. On August 5 the gold half dollar coins were launched through online and call center operations as well as at the ANA coin show in Chicago and U.S. Mint retail locations in Washington, DC, Philadelphia, and Denver. Online buyers mostly reported spending a 64 | American Hard Assets www.ahametals.com
long time in the online waiting room before they could order, though overall online sales were smoother than in the past. In-person there was an absolute frenzy with thousands of buyers lining up in Chicago the night before sales started, and many frustrated buyers the next day, who were unable to secure a coin. First day sales at all locations totaled 56,694, or about 17,000 more than the initial inventory of 40,000 coins made before the launch. According to media reports, the owner of SilverTowne coin company, David Hendrickson, paid $5,000 per coin plus a replacement coin for the first four sold at the ANA show. Those coins were graded by PCGS and were given a special label indicating they were the first coins sold. It will be interesting to see how the aftermarket for the Kennedy half dollar anniversary coins develops, and whether combining no mintage limit with household and in-person limits supports higher retail values for the coin over time, or if supply ends up exceeding long-term demand. Millions of collectors will be watching closely as this unfolds. Louis Golino is an independent numismatic writer and a recognized expert on modern coins. He writes a weekly column for CoinWeek.com and is a contributor to the Numismatist, the American Numismatic Association’s monthly magazine. He has also been published in Coin World, Numismatic News, CoinUpdate.com, and other publications and is a founding member of Modern Coins.com Forum, an online forum.
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S P E C I A L F E A T U R E S | Republic Forge
1911 Cerakoted with a burnt bronze color and the handles are precision fitted mammoth ivory with brown antique coloring to match the burnt bronze. The owner of this pistol has chosen traditional sites.
Republic Forge
by Abe Elias
F
irearms have long been a highly collectable item and can bring high prices at auction. Normally when we think of firearms of great value we think of older pieces that have perhaps gained their value because they are the remaining few of a landmark model, a rare prototype or a firearm of notable provenance. A less traveled road that can sometimes be hard to navigate is the collecting of a modern firearm just for its sheer quality. Indeed, when it comes to collecting modern firearms quality is the main value. Quality is what makes it an instant
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family heirloom, something you have the faith in to pass down to a loved one. A quality firearm also sets the level of what is to be expected from firearms for generations. By buying quality firearms and handing them down, we are in turn also teaching the next generation the value of quality instead of treating items as disposable. One such producer of quality firearms is Republic Forge out of Perryton, Texas. There are a lot of producers of the iconic 1911 but only a few can stand out at the top.
Republic Forge | S P E C I A L F E A T U R E S
Whose Child Is It? Republic Forge is the creation of Benny Deal. Mr. Deal is a native of Perryton, Texas and a graduate of Texas Tech University. Over the years, Mr. Deal has worked his way up the corporate ladder in various careers. Before Republic Forge, his previous ventures were in the ownership and running of a number of oil field service companies whose operations spanned Texas, Oklahoma, Kansas and Colorado. Deal is also an avid outdoorsman, hunter and gun collector. So is coupling his business abilities with his love of the outdoors the main drive behind the creation of Republic Forge? In fact, Benny has more in mind then just combining business with his love of firearms. Benny is a very patriotic supporter of the 2nd Amendment and believes strongly in supporting the American economy and the people that make their living from it. Looking at Benny’s desire to have an all American made product and his strong support of the 2nd Amendment and the NRA, there is no guesswork as to why he calls his business “Republic” Forge. In my interview with Benny he gave me some insight into where his love of the 2nd Amendment and firearms came from. “My father Dave Deal, a World War II Veteran and hero, introduced me to firearms and firearm safety at a young age. Gun ownership and the 2nd Amendment runs deep in our blood. For that reason, we wanted
to establish Republic Forge and build world-class 1911 pistols that are truly 100% made in the U.S.A.” So you can see just as each pistol is destined to be an heirloom, the driving philosophy that started all this is also handed down through generations. Republic Forge’s pistols are 100% built in Texas in Deal’s home town and Deal intends to keep it as an American made product dedicated to quality.
Make It Quality Make It Unique Republic Forge does have a dealer program but their greatest focus besides quality is customization. Deal has been greatly concerned at the growing trend to outsource production of firearms and firearm components across the industry. So it is important that Republic Forge stand out for its ability to produce a high quality product made 100% in the USA. While producing a high quality product Deal knows that it is also important to meet the needs of the customer. The value of an item is not derived from what you put into it but from what the customer gets out of it. A customer can go to the Republic Forge web site and build a firearm to meet their desired requirements. All of the pistols are made in Perryton, Texas and each pistol is assembled and fitted by hand to ensure quality. Republic Forge wants their customers to be able to get the firearm they want made to exacting
Great detail is put into the preparation of the frame to ensure performance and proper fit and finish. Each frame and its parts are hand fitted by a Master Gunsmith.
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S P E C I A L F E A T U R E S | Republic Forge
is. As a result, the only way of making sure your pistol is built to fit you, is for you to have enough experience to know what you want and need. Having experience with shooting the 1911 is what will guide you in building your pistol. Taking the time to try a number of other 1911s will give you a base reference to decide on the different features you prefer in a pistol. Instead of trying to sell you just any pistol, Republic Forge wants your own experience to guide the process. I like this philosophy because I have experienced over the years how what I once thought was what I needed or suited me best, has changed. As my experience and knowledge has grown my choices have also grown and often the hardest part is finding the right piece of gear to meet your needs. You also come to realize that you sometimes need a variety of firearms to meet a variety of uses. To make the right decision you first have to do some footwork. You’ll know when you are ready and then it will be time to build your own firearm with a company like Republic Forge ensuring your vision is built right.
On this model you can see at the rear of the gun the tight tolerances used in fitting the slide to the frame accented by the choice of a tow tone pistol. On the bottom you have burnt bronze and on the top black. The owner chose a set of Bomar adjustable site.
standards. To ensure quality, Republic Forge employs Master Gunsmith Jeff Meister. Combining Meister’s years of experience with modern manufacturing technology, Republic Forge is able to ensure consistency. Every pistol they make undergoes inspection by a master gunsmith before leaving the shop. A Master Gunsmith must go through a complete check list and then target the pistol before they can sign off. Nothing is left to chance: each component from the barrel to the materials used for custom grips is checked for quality. Realizing that the quality of the whole pistol naturally depends on the quality of what you build it with, they make sure the pistol is checked by many skilled craftsmen.
Who Are They For? Republic Forge admits their product isn’t for everyone. If you are going to build your dream pistol you should know what that pistol
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The crown on the barrel is perfectly finish and flush with the frame the lug is precision fit around the recoil spring plug. The finish is a bead blasted finish coated in Sniper grey.
Republic Forge | S P E C I A L F E A T U R E S
Finished in Sniper grey the neutral color makes all the color in the custom mammoth Ivory handle. As you can tell from the front of the pistol to the back the fit and finish is flawless creating a clean look that says quality.
While Building There is no shortage of options out there while building a pistol. Many materials are available and Republic Forge has a wide assortment of choices. One of the choices that tends to really customize your pistol is the grip material. Your options fall into two main categories: natural materials and synthetics. In the synthetic realm, you can choose from nine varieties of grips in different colored micarta and multicolored G-10. For natural materials, you can choose from top grade ivory, mammoth ivory and mammoth tooth. Republic Forge also offers a Damascus steel slide, for that truly one of a kind pistol. The list could go on as the
selection includes items like: caliber, front cooking serrations and of course color and adjustable sights. The variety of choice and the ability of Republic Forge to truly customize your pistol makes the company stand out in a crowd. Republic Forge is producing a quality reliable firearm that they stand behind a hundred percent. Many can say there are others that do the same, but only a few can pull off the clean aesthetics that transforms a 1911 into a work of art. If the precision fit and finish of the pistol wasn’t enough Republic Forge has added a clean style by using custom materials that give it a one of a kind touch. Long
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S P E C I A L F E A T U R E S | Republic Forge
This model is unique the owner has a set of custom grips made by inlaying mammoth tooth in a steel backing. The black finish accents the crisp clean look of the steel on the grips. In turn the clean look of the polished steel brings out all the colors form the mineral deposits in the mammoth tooth.
gone are the days of just simply slapping on a set of pearl pistol grips and calling that good looking. Republic Forge reaches deep into a bag of materials ranging from natural to man made so that your pistol can really be your pistol. With each firearm made, great care is given to achieve excellence, where both engineering and art merge.
The black coating real makes the off white color of the custom Ivory grips pop. You can also see the customer’s choice of an ED Brown Bobtail® style grip with scalloped texture back strap.
Republic Forge is providing the collector and shooter with a quality firearm that would meet the discriminating needs of any shooter. Just by holding the finished product, it is easy to tell that Deal’s own experience has led him to form a firearms company that is built around America’s love of quality firearms. Their product is sought after now but I feel as the years go by they will develop their own cult-like following dedicated to the exquisite 1911s they produce. Whether or not they become highly collectable is hard to say but I can tell you that the pistol they produce now is a product made with great care and attention to detail. Most importantly, it is made for those who value quality and beauty in a firearm. When you are ready for your dream pistol and want to be assured that the project is in capable hands Republic Forge is waiting. A Damascus slide sets this 1911. The use of Damascus creates a one of a kind pistol no matter how many slides are made from Damascus no two can be the same because of the pattern.
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S E C T I O N N A M E | Story Name
by Jason Walter Vaile
S
Can the average investor successfully flip units now that the market Is saturated by reality tv wannabes?
parks fly from the padlock as it’s grinded off by a whirling saw. The dusty door rolls up to reveal... a collectible car... a priceless antique... a piece of art worth a small fortune. Flip through the cable channels these days and you’re bound to stumble across one of the dozens of shows featuring a motley crew of zany characters that bid on abandoned storage units. The show’s success not only rides on just how “eccentric” the bidders are, but also finding that one unique, valuable item that someone forgot about, packed away with the broken ironing board and Christmas decorations. The shows tend to focus on the successful people that have made a career out of buying abandoned storage units and selling their contents for a profit. But how realistic is that? Is there really gold in them there units? If you don’t know much about storage locker auctions, here are the basics: When people fail to pay their monthly rent, the owners of the storage lockers are forced to sell the property contained inside in a public auction. Sometimes the locker operators do the auction themselves, but it is more common to hire an auctioneer to do the job. In some states, the auction is conducted by a county sheriff. The way the auction works is as follows. Bidders stand outside the door. The auctioneer cuts the lock off and gives everyone a couple of minutes to look inside. No one may enter, everyone looks from outside the doorway. Most units are not lighted or poorly lighted, so getting a good look is tough.
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L U X U R Y & L I F E S T Y L E | Storage Auctions Your First Auction Now that you’ve scouted out where your first auction will take place, there’s a few things you’ll need to take with you. The necessities are: a valid id, money (most all auctions require payment in cash), a flashlight, and padlocks.
Learn about sales tax Facilities are required to collect sales tax on units sold at auction. Don’t be caught off guard. Your $100 bid could quickly become $120 with sales tax and a premium. With a resale license though, you don’t have to pay sales tax when you buy the units, just when you resell the stuff you found inside.
After a couple of minutes, the bidding starts. Storage lockers can sell for anywhere from $50 up to over $500. By far, most of them fall in the $100 to $300 level. If you win the bidding, you now own the contents of the locker and typically have 24 hours to remove everything. Some people rent the units for short periods of time to remove the contents, or as they sort and sell the items.
How Do You Find Out About the Auctions? Plenty of free information is available online. Don’t think that you need to pay a service to find auctions for you. Check storage facility websites, auctioneer websites, and auction aggregator sites. You can also call storage facilities directly. By law, storage facilities have to announce their upcoming auctions in the newspaper. They announce these auctions in the legal notices section of your local paper. There is also a website called Storage Treasures that finds local auctions in your zip code. They will email you a list of local auctions within a certain mile radius of your home. If you plan to bid, always go to the auctions in the better parts of town. Contents in these units are obviously going to be better quality than items in the poorer areas of town.
Find out if there’s an entrance fee Usually you can walk away with all of your money in your pockets if you don’t win a unit. Some facilities, however, are charging an entrance fee simply to enter the auction- normally $5-$10. Other facilities have begun collecting buyer’s premiums. This only applies if you win a unit, which is then collected at the end of the auction. But it’s important to calculate it into your bid amount. You don’t want to come up short when it comes time to “pay the lady.”
Call to Confirm The local storage manager isn’t always available to answer the phone, so it’s best to try to call to confirm a day or two before the auction. Also ask how many units are going to be auctioned. If it’s 1-3 there’s a better chance the auction might be cancelled but also a better chance there might be a lighter crowd. So if the facility is close by, it might be worth stopping by to scope out the situation. You can also ask the manager if they think any of the delinquent renters are going to pay up. Often managers know if the tenant has moved and they don’t have any way of notifying the tenant their unit is even delinquent. Or they may be in communication with the tenant and they have a plan to pay up before auction. In any case, always call to confirm there will be an auction taking place.
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Storage Auctions | L U X U R Y & L I F E S T Y L E
What to look for Since you’re not allowed to scope out units ahead of time, and can only peak in on the day of the auction, how do you identify a unit worth your bid? Here’s what to look for: Professional Moving Boxes-These cost money and so do professional movers. If the units contain these type of boxes, the contents may have some value. Plastic wrapped furnitureProfessionally wrapped furniture is another sign of value. It indicates that the storage unit renter has enough money to hire professionals and/or the contents are valuable enough to be stored properly.
Show up early to register Usually 15 minutes will suffice, but remember - it’s better to be early than to miss an auction. Extra time will also give you a chance to ask the manager what information they have about the units and their former tenants, as well as asking the other bidders about their business too. It’s also good idea to chat with the auctioneer before the auction starts so they know who you are.
Dust- It’s a good thing. If everything in the unit appears to be covered in an undisturbed layer of dust, the units entire original contents may be intact. It’s more likely to contain valuable items. If some areas are clean or the dust is disturbed, the renter may have removed the more valuable items.
The cleaning deposit If you purchase a unit, you will usually be required to a pay a cleaning deposit to ensure you empty the entire unit. It varies, but this will usually be around $25-$50. In certain instances it might be worth foregoing your deposit to save yourself the time of emptying the rest of the unit. But be careful, the facility will not look too kindly on this. Try to find another bidder at the auction that will possibly take the stuff off your hands once you are finished sorting and removing what you want.
Make sure it’s a live auction The vast majority of storage auctions are live auctions. A handful of facilities, however, also do a silent auction. They usually have viewing hours throughout the week. They take bids written on a piece of paper, and then award the highest bidder at a specified day and time. Silent auctions can be a great way to get units really cheap, but as you can imagine, there is room for insider dealing because only the facility sees all the bids.
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L U X U R Y & L I F E S T Y L E | Storage Auctions “Reality” TV “Storage Wars” has become A & E’s highest rated TV show with 5.1 million viewers last year. To capitalize on this, they expanded the series to “Storage Wars: Texas” and “Storage Wars: New York.” Jumping on the bandwagon, TruTV launched “Storage Hunters” and Spike TV rolled out “Auction Hunters.” Probably because no one can keep them straight, all of the shows have had huge success.
Keep in mind the time to vacate You usually have 24 to 48 hours to empty the unit, but some facilities will ask you to vacate that same day. If you want to store the items in the unit for a short period of time, just negotiate a highly discounted short term rental rate. But remember, this will cut into your profits.
Have fun Especially as a beginner, don’t spend too much money and be sure to enjoy the process. You can call it whatever you want, a hobby, a new career, but remember it’s really just a gamble on what’s inside. So just treat it like gambling... and never bet more than you can afford to lose!
The “reality” of a “reality show” is that some (or most) of what is shown on TV is staged. Countless people have accused the storage unit shows of planting items to be discovered by the buyers. In 2012, A & E stated, “There is no staging involved. The items uncovered in the storage units are the actual items featured on the show.” A carefully worded statement that could be interpreted in several different ways. “Reality” is going to be manipulated to make it as interesting as possible. After all, who would tune into a show about watching people open old storage units with nothing but junk in them? Tenants who usually default on their storage payments are probably not in great financial health and unlikely to have valuable or interesting items in their units. The units depicted on the show are anomalies. Unfortunately, much of the general public does not realize this. 76 | American Hard Assets www.ahametals.com
Storage Auctions | L U X U R Y & L I F E S T Y L E
Top 5 Storage Auction Finds #5 In Dallas, Texas, a unit that sold for $300 ended up housing a Winchester buffalo rifle, and multiple collectible antique slot cars. Value: $20,000
The popularity of these shows have had a huge effect on driving up attendance at auction. The “reality” is that unless you have the funds to bid on hundreds of units, you will probably lose money at this game. There are a few players who make a living at the auction circuit, but they are few and far between. Dave Hester, featured as the bad guy on A & E’s “Storage Wars,” sued the show for wrongful termination in May of 2013. His lawsuit claimed that, “nearly every aspect of the series is faked.” It also alleges that Storage Wars regularly plants valuable objects in lockers, a practice known as “salting.” His suit accuses A & E of staging entire storage units and asking Hester to “salt” lockers with his own memorabilia.
#4 Two units were sold in Manassas, Virginia that contained documents from the American Civil War, rare art work, and a cane owned by Harry Truman. Original purchase price was $450. The contents were sold for $100,000.
What these programs don’t show you is the six month long process that unit managers go through sending out certified letters, making weekly phone calls, and even daily phone calls as the auction approaches. They make deals and call emergency contacts to try and help the tenant save their belongings. Most facilities don’t want to auction off someone’s things. They just want to recoup their costs, not turn a profit. If the person legitimately abandons or refuses to pay for their unit, then and only then will it go to auction. So if diving into a dirty, dingy storage unit brings out the Indiana Jones in you, grab a flashlight and head to the next auction. Just remember you’re far more likely to find coat hangers and mattresses than a shiny golden idol.
#3 Auctioneer Bill Fair came across a ‘66 Shelby Mustang in a unit in North Carolina. The car was once owned by the designer Carroll Shelby and was one of only 1,100 made. He purchased the unit for $600 and the car was worth over $200,000. www.ahametals.com American Hard Assets | 77
L U X U R Y & L I F E S T Y L E | Storage Auctions
#2 On Storage Wars, a Southern California buyer purchased two units, one for $600 and one for $1,100. The more expensive unit contained a chest full of gold and silver coins and bars. The chest contents were worth over $500,000.
#1 In April of 2011, a near mint copy of Action Comics #1 (the first appearance of Superman) was found in a unit in San Fernando Valley. The unit was purchased for $100 and the comic eventually sold at auction for $2,166,000.
Jason Walter Vaile is a freelance writer who has a whole garage full of junk that should be moved into a storage unit. Follow him as Mrpenhead on Tumblr and Instagram.
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M I N I N G & M I N E R A L S | Mining News
Mining News
South African Platinum Strike Ends
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n June, the five-month strike in South Africa’s platinum mines finally came to an end. The Association of Mineworkers and Construction Union (AMCU), which represents 80% of platinum workers, won an increase in annual pay of about $94 per month, well short of its original goals. It was the first solid win on the part of the AMCU, which had swept away members from the National Mineworkers Union by promising stronger demands and better results. About 70,000 people participated in the strike. The toll of the strike came to about $1 billion in unpaid wages to workers, $2 billion in losses to platinum producers, and almost a fifth of the world’s annual platinum production. South Africa’s economy shrank 0.6% in the first quarter of 2014. Platinum producers warned that they could again attempt the job cuts previously fought down by labor. Mining Minister Ngoaki Ramatlhodi, who started the job in May, has suggested that South Africa change its labor laws to aid strikebreaking.
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Source: American Hard Assets
Anglo American Platinum (JSE: AMS) announced in July it was considering selling its Union and Rustenburg mines, which contribute about a quarter of its annual production, and its Pandora joint venture. The company had lost 420,000 oz of production due to the strike. “Both management time and capital are finite,” it said in a statement. Some weeks before the final pay deal was set, executives of platinum companies had come under criticism after new disclosure rules revealed their compensation and major household expenditures. The CEO of Anglo American, Chris Griffith, received a total remuneration of $1.66 million in 2013. He will receive about $1 million more as a bonus if performance targets are met over the next few years. In comments to a South African newspaper, he defended himself, asking, “Am I getting paid on a fair basis for what I’m having to deal with in this company? Must I run this company and deal with all this nonsense for nothing? I’m at work. I’m not on strike. I’m not demanding to be paid what I’m not worth.”
www.ProvidentMetals.com (800) 313-3315
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M I N I N G & M I N E R A L S | Mining News
Mining News
Tsilhqot’in Title Case Decided Source: American Hard Assets
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n June, the Supreme Court of Canada shook the resource industry by deciding in favor of the Tsilhqot’in First Nation, which had argued it holds title over 1,750 square kilometers in central British Columbia. The 25-year case sets a precedent for other unsettled Aboriginal land claims. Many Aboriginal groups in Canada never negotiated treaties with the Canadian government, or are still in the process of treaty negotiation. The question of what land non-treaty nations are entitled to, and how they are entitled to it, has vexed relations between Aboriginal groups, governments, and other prospective users of land – particularly resource companies – for generations. Tsilhqot’in Nation v. British Columbia agreed that it was possible to define land where it has had pre-European “sufficient, continuous and exclusive occupation.” The process of defining the borders of that land took five years.
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If the Aboriginal group’s title is recognized, the court decision establishes that it has the right to exclusive use and occupation of that territory, and to set the terms of any economic benefits from its develoment. The Canadian government may now allow economic development on title land in the case of “compelling and substantial public purpose.” In all other situations, the First Nation has the right to grant consent. This may pose problems for mining companies without good chances of obtaining consent, or for companies currently operating on land to which Aboriginal groups do or will claim title. However, it may also provide clarity for proposed mine developments where title has been established, and it may better guide the process of establishing title for Aboriginal groups that have not yet done so.
Mining News | M I N I N G & M I N E R A L S
Mining News
Casablanca Candidates Elected To Cliffs Board Source: American Hard Assets
I
n August, Casablanca Capital won majority control of the board of directors of Cliffs Natural Resources (NYSE: CLF). Casablanca owns only 5.2% of Cliffs shares, but aged a successful six-month campaign to have six of its nominees elected to Cliffs’ 11-member board.
performance and restore value. We expect the results to be certified imminently and the new board to convene promptly to go to work on that agenda.” Casablanca Capital is a New York-based activist investment manager founded in 2010 by Donald G. Drapkin and Douglas Taylor. Its selfdescribed mission is to invest in “high quality but underperforming public companies that have multiple levers to unlock shareholder value.” Its goal for Cliffs is to sell or spin off international operations, including Cliffs’ iron ore operations in Australia and Canada, the vestiges of its presence in Ontario’s Ring of Fire, and its North American coal operations.
“This result marks a huge step forward for all Cliffs shareholders, as well as for the many talented employees at Cliffs who care about making Cliffs better and stronger,” said Casablanca in a statement. “There is a clear desire for positive change at Cliffs, and we are gratified by the mandate shareholders have given the new Board to reinvigorate the company and refocus its strategy to improve
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M I N I N G & M I N E R A L S | Mining News
Mining News
Imperial Metals Tailings Pond Fails
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n August 4, a tailings pond failed at the Mount Polley goldcopper mine operated by Imperial Metals Ltd. (TSX: III) in central British Columbia. Almost fifteen million cubic meters of mine waste poured into local waterways, causing consternation among both the Canadian mining industry and its detractors. Preliminary results of water testing suggested that the water was safe for human use. The BC Ministry of Environment stated that “impact to aquatic life and fish is not expected,” but that the long-term effects were unknown. The tailings had been treated to remove most elements of concern and, according to Imperial, were alkaline with an average pH of 8.5. The tailings pond breach caused concern about salmon stock, both because it occurred during the high point of the spawning season for salmon and because there was concern over eating salmon from affected waterways. The First Nations Health Authority said it would create a salmon-tissue sampling program.
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Source: American Hard Assets
In the first days after the spill, neither Imperial nor the government BC had come to any conclusions as to why the tailings pond failed. AMEC Earth and Environmental was the engineer responsible for the tailings storage facility at the time of the spill. The dam was designed and built by the firm Knight Piésold, which left the project in 2011. The company defended its record in a statement, citing an independent review of the design in the 1990s and an independent third-party review in 2006. “The original engineering done by Knight Piésold accommodated a significantly lower water volume than the tailings storage facility reportedly held at the time of the breach,” the firm said in its statement. “Significant engineering and design changes were made subsequent to our involvement, such that the tailings storage facility can no longer be considered a Knight Piésold design.”
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M I N I N G & M I N E R A L S | Mining News
Mining News
The letter in which Knight Piésold ended its responsibility in 2011 had included a warning: “The embankments and the overall tailings impoundment are getting large and it is extremely important that they be monitored, constructed and operated properly to prevent problems in the future.” The Ministry of Environment issued a pollution abatement order, ordering the company to stop any further release of tailings. Because sediment and debris threatened to cause a dangerous water buildup in one of the local lakes, Imperial’s cleanup efforts included building a discharge pipe and pumping water out of the lake and into two pits on its mine site. Imperial also built a temporary dike to halt the flow from its tailings pond. The Mount Polley mine was placed on care and maintenance. Full cleanup will likely cost several million dollars, which may be more than Imperial’s insurance will cover, although exact estimates were unavailable. At 38.5 million pounds of copper and 45,000 ounces of gold, the mine was Imperial’s best cash generator last year. The event was “a major industry concern,” according to the Mining Association of Canada. President and CEO Pierre Gratton said in a statement. “The mining industry in Canada operates on the basis of public confidence in sound public policy, effective regulation and responsible management practices by companies. The confidence of the public in what we do and how we do it is essential.” 86 | American Hard Assets www.ahametals.com
Protests instantly stepped up at already-contentious mine sites such as Imperial’s Red Chris mine, which is scheduled to open later this year but which First Nations still hope to halt. The proposed KSM mine has also come under renewed fire, including calls from Alaska’s two senators to require a more rigorous panel review. Alaska shares river systems with British Columbia. Steve Todoruk, investment executive and geologist at Sprott Global Resource Investments Ltd., took the news calmly. “Will Mountt Polley mine close? Probably not,” he wrote in a newsletter. “This mine provided a lot of very high paying jobs, providing an excellent tax base to the local and provincial governments to support schools, hockey arenas (a ‘must’ in Canada) and curling clubs. The logging industry in this area was decimated by the pine beetle kill, so these mining jobs and tax revenues are dearly needed.” However, he added, “There is no doubt that the unfortunate event that just occurred at the Mount Polley Mine will affect – and likely delay, other companies such as Pretium Resources Corp. and KGHM International that are currently nearing submission of their mine building permits in British Columbia.” Immediately after the spill, Imperial shares plunged 40% to C$9.98. Siskinds LLP issued a press release with a proposed shareholder lawsuit in response to the loss of value.
Mining News | M I N I N G & M I N E R A L S
Mining News
Buy Gold Miners, Not Gold Source: American Hard Assets
A
fter years of lagging way behind, the charts now suggest investors should buy shares of gold miners, rather than the precious metal they dig up.
from a long-term downtrend, suggesting a new trend of outperformance is underway.
Oppenheimer technical analyst Ari Wald believes the Market Vectors Gold Miners exchange traded fund GDX +2.04%, or GDX, can soar more than 40% from current levels to his price objective of $38, which corresponds roughly to the March 2013 highs. The GDX closed Monday up 0.7% at $26.97. Since the GDX began trading in May 2006, it has fallen 28% while the SPDR Gold Trust ETF GLD +0.46%, or GLD, has nearly doubled over the same time. But Wald noted that a relative-strength chart, plotting the GDX against the GLD, shows that the GDX has finally broken out
Therefore, he affirmed that GDX is a “top trade idea.” He believes “GDX has a stronger floor and offers more upside opportunity than Gold SPDR…after many years of GDX underperformance.” The GLD was down 0.2% at $125.96 on Monday. Over the last two months, the GLD has edged up 3.7%, while the GDX has climbed 15%. Among individual GDX components, Wald recommends Goldcorp GG +2.66%, Randgold Resources GOLD +0.81% and Royal Gold RGLD +2.45%, which have year-to-date gains of 30%, 36% and 73%, respectively. www.ahametals.com American Hard Assets | 87
H A R D A S S E T S I N F O R M A T I O N | Preferred Dealers
Preferred Dealers Look for American Hard Assets at these locations! To become a Preferred Dealer, contact 1-877-695-1258
CALIFORNIA A Coin Exchange 18631 Ventura Blvd. Tarzana, CA 91356
Wild West Coin Company 6723 Winding Way Fair Oaks, CA 95628
(916) 967-2646
Coin & Bullion Reserves
COLORADO Chamberlain Coins & Collectibles LLC 385 Main St. Longmont, CO 80501
FLORIDA
(303) 774-9661
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2621 East 15th St. Panama City, FL 32405
(850) 785-9546
David Reynolds Jewelry and Coin 4009 Central Avenue Saint Petersburg, FL 33713
(727) 327-2646
global perspective
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H A R D A S S E T S I N F O R M A T I O N | Preferred Dealers
A Coin and Stamp Gallery Inc. 6217 St Augustine Rd Jacksonville, FL 32217
(904) 733-1302
OHIO HCC Rare Coins
7151 Spring Meadow Dr. West Holland, OH 43528 (419) 865-8461
IDAHO Infinity Coins
545 Shoup Ave Suite 108-A Idaho Falls, ID 83402
(208) 201-5007
ILLINOIS Chicago Coin Co., Inc. 6455 W. Archer Avenue Chicago, IL 60638
(773) 586-7666
Dallas Gold & Silver Exchange 1831 St Johns Ave Highland Park, IL 60035
(847) 780-006
Toledo Coin Exchange 5590 Monroe St. Slyvania, OH 43560
(888) 795-6446
MISSOURI Crystal Coin & Jewelers 521 Bailey Rd. Crystal City, MO 63019
(636) 937-5017
NEW HAMPSHIRE Seacoast Coin & Jewelry 725 Lafayette Rd Ste 1 Hampton, NH 3842
(603) 926-7771
NEW YORK Collector Coins & Jewelry 1846 Grand Ave North Baldwin, NY 11510
(516) 223-1212
Bullion Trading LLC 1156 6th Avenue 8th floor New York NY 10036
7003 Chadwick Drive. Brentwood Tn 37024 (615) 377-4949
(212) 997-2520
TENNESSEE Nashville Coin & Currency
7003 Chadwick Drive. Brentwood Tn 37024
(615) 377-4949
TEXAS C S B Williams Inc
711 W Bay Area Blvd #100 Webster, TX 77598
Halex International/Extraordinary Jewels 12900 Preston Rd. Suite 1112 Dallas, TX 75230 (469) 774-8951
90 | American Hard Assets www.ahametals.com
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H A R D A S S E T S I N F O R M A T I O N | Preferred Dealers
1201 Airport Freeway Euless, TX 76040
(817) 283-4469
1109 West I-20 Arlington, TX 76017
(817) 505-1005
6115 Camp Bowie Blvd. Fort Worth, TX 76116
(817) 840-1546
WEST VIRGINIA DGSE
190 East Stacy Road The Village at Allen Allen, TX 75002 (972) 481-3870 13534 Preston Road Dallas, TX 75240
(972) 481-3850
6174 Sherry Lane Dalla s, TX 75225
(972) 481-3800
11311 Reeder Road Dallas, TX 75229
(972) 484-3662
200 N. Kimball Ave. #205 Southlake, TX 76092
(817) 722-0075
92 | American Hard Assets www.ahametals.com
Bronze Element
311 Mercer St. Princeton, WV 24740
(304) 920-2081
Look for American Hard Assets at these locations! To become a Preferred Dealer, contact 1-877-695-1258
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H A R D A S S E T S I N F O R M A T I O N | Events
Events
December 11-13, 2014 Jakarta International Expo (JIExpo) Jakarta, Indonesia http://www.biztradeshows.com/trade-events/indo-metal-jakarta.html
October 7-8, 2014 7th WaCA Mining Conference Accra International Centre, Ghana http://www.magenta-global.com.sg/wacamining2014/
January 26-29, 2015 Mineral Exploration Roundup 2015 Vancouver Convention Centre - East Facility http://www.amebc.ca/roundup/overview-2014.aspx
October 15-17, 2014 14th International Mineral Processing Symposium Kusadasi, Turkey http://www.imps2014.org/
February 9-12, 2015 21st African Mining Indaba 2015 Cape Town, South Africa http://www.miningindaba.com/
October 20-23, 2014 LME Week London, England www.lme.com/lmeweek.asp
Feb 9-15, 2015 21st African Mining Indaba 2015 Cape Town, South Africa http://www.miningindaba.com/
November 3-5, 2014 2013 Precious Metals Summit Zurich Park Hyatt Zurich http://www.precioussummit.com/event/2013-summit-zurich/
Mar 1-4, 2015 PDAC 2015 Cape Town, South Africa http://www.pdac.ca/convention
November 4-5, 2014 2014 Precious Metals Summit Switzerland Park Hyatt Zurich, Switzerland http://www.precioussummit.com/event/2014-summit-zurich/ November 7-9, 2014 Expominer Barcelona, Spain
March 9-12, 2015 Asia Mining Congress Suntec Convention Centre, Singapore http://www.terrapinn.com/conference/asia-mining-congress/?pk_ campaign=Terr-Listing&pk_kwd=Energy+%26+Resources
http://www.biztradeshows.com/trade-events/expominer.html
April 12-13, 2015 Dubai Precious Metals Conference 2015 Dubai, UAE http://www.dpmc.ae/
November 11-14, 2014 Metal-Expo 2014 The All-Russia Exhibition Center, Moscow http://metal-expo.ru/en/programm
May 11-12, 2015 International Symposium on Precious Metals Falmouth, UK http://10times.com/preciousmetalsfalmouth
November 20-21, 2014 Minerals Engineering International - Precious Metals 2014 Vineyard Hotel, Cape Town, South Africa
May 23-30, 2015 ALTA 2015 Nickel-Cobalt-Copper, Uranium-REE and GoldPrecious Metals Conference & Expo Perth, Australia http://www.altamet.com.au/conferences/
http://www.miningnews.net/eventdetail.asp?eventid=2970950
December 1, 2014 Mines & Money London Business Design Centre, London http://www.minesandmoney.com/london/ December 3-4, 2014 9th Shanghai Gold Summit 2014 Shanghai, China http://www.chinagoldsummit.com/
94 | American Hard Assets www.ahametals.com
May 26-28, 2015 Mines & Money Beijing Sofitel Wanda, Beijing, China http://www.minesandmoney.com/beijing/ May 28-29, 2015 HK Precious Metals Summit Hong Kong http://www.precioussummit.com/
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HINDSIGHT
The Dodd-Frank Shuffle By John W. Garibald
S
o far this year, we have seen four major banks exit the commodities space: Credit Suisse, Deutsche Bank, JPMorgan and Barclays. For all the publicity that trading activity has gotten over the past decade (ie; Enron and the London Whale), the fact that a number of the world’s largest financial institutions would appear to suddenly up and stick a “For Sale” sign on the window raises some eyebrows. I have received more than a few questions from friends and fellow investors asking why banks are abandoning the space and what it means for the industry. The simple answer? Government regulation and market cycles. As the Great Recession gets further in the rearview, regulatory bodies feel more comfortable tightening the clamps on what trading activity is kosher and what is not. The implementation of Dodd-Frank and more specifically the much-vaunted Volcker Rule that limit big bank’s ability to utilize retail banking deposits to fund trading
activities has limited the bank’s upside—rendering the $200MM prop trader extinct. For years many of these banks made markets in futures, forwards, options and more complex “exotic” products, charging customers a fee for the service. As broader interest in the commodities market has waned, so have the fees associated with it. Not only are there fewer customers and smaller dollar amounts, but there are also more ways for players to access the markets without the banks. With the advent of the commodity ETF, everyone from hedge fund titans to mom-and-pop investors can have cheap and immediate access to metals, agriculture or energy prices through their brokerage account. With little volume flowing through their books, traders have had less insight into what the market was doing on a macro scale, reducing the already slim advantage on their flat-price speculations. Put another way, traders have lost their edge over the general public. Goldman and JPMorgan, who had for years bragged about sequential months of profitable trading operations have seen those streaks vanish. The exit from the space en masse is attributable to this and a collection of other events, most obviously the potential end of the commodities super cycle that began winding down even before the 2008 crisis. After a period of explosive investment growth, investors look to other sectors of the market and divert portions of their commodities gains into equities, fixed income and even cash. One important caveat, which so far has held to be true: all of the banks getting out of commodities are retaining their precious metals trading divisions and rolling them into foreign exchange a small, but interesting reflection of how the banks view the risk in gold and silver as being more of an investment play than an industrial use. I have long argued here that it is a more correct taxonomy of metals to bucket them as the ‘anti-currency’ and trade them alongside the Pound and Euro. As banks tend to move in one loose, mildly well-informed herd—be it for corporate earnings estimates or global strategy—I would be willing to bet that we are not done with this type of transformation and that we also may find out it is being directly driven by regulators, possibly as part of the TARP bailout agreements. I fully expect private, non-bank liquidity providers to step in and attempt to fill the void left by the recently departed. Hedge funds, non-bank commodity businesses and even sophisticated producers themselves could very well use their large pools of capital and industry knowledge to span the gap.
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