18 Ten Most Expensive Houses in the World Need we say more? Everyone wants to know what their house is worth. Julia Trello checks in with a great piece on the priciest shacks on the planet. See if you can keep up with the Joneses.
6 World News SPECIAL FEATURES
24 Gold Outlook 38 Federal Reserve 44 Tony Bose NUMISMATICS
12 Silver Bullion Preview
24 2015 Gold Forecast
54 Numismatic Preview 66 History of Coin Collecting
Louis Golino joins AHA again and provides the Gold outlook for the remainder of the year.
LIFESTYLE
18 Most Expensive Houses 50 JustLuxe
30 Where the Gold At? Ever wondered what the gold reserves look like by country? Join Gabe Benson as he examines gold by location around the world and it’s relationship with money.
PRECIOUS METALS SPOTLIGHT
30 Countries with the Most Gold 60 Silver Series MINING & MINERALS
70 Mining News REFERENCE
60 Product Review: Silver Series by Elemetal
76 Preferred Dealers 78 Events
Jason Vaile is back again and takes a look at the closing gap between metals and sports enthusiasts in this great product review. Also, Jason previews what’s next from this outsidethe-box product series.
80 Hindsight
www.ahametals.com American Hard Assets | 3
EDITOR’S NOTE
FEBRUARY 2015 / MARCH 2015
A Brand New Year
2
015. Wow. We’re now reaching the years that were considered “the future” in the books, TV shows, and movies that we consumed when we were younger. Amazing to think about and amazing we’re now onto the third year of American Hard Assets and www.ahametals.com. Welcome back again as we kick off our third year in digital and print. This issue, we get back to basics kicking off 2015 with Gold and Silver bullion forecasts, as well as continuing our trend on highlighting collectible bullion products. This month we talk about the exciting Silver Series product that hopes to ignite the flame inside sports and bullion collectors, alike. As always, we will still be bringing you the content that you expect from the AHA team with loads of good stuff on gold and silver updates and where we see it going in 2015, as well as great info on mining news, lifestyle, firearms, and more. Please also take a look at www.ahametals.com. It’s there you will continue to find the latest metals news with great pieces from our partners, real-time updates, exchange rates, prices, and more. In 2015, more and more original content will be posted on the site from our great network of industry writers.
PRESENTED BY: AHA Metals, LLC VP CONTENT: Brad Hastedt EDITORIAL SUPPORT: Kevin Thompson VP AD SALES: Mike Obert SUBSCRIPTIONS: Bailey Chamberlain LAYOUT DESIGN: Noel M. Macasero, Iain Duane V. Yu, Open Look Creative Solutions
FEATURE WRITERS: Eavan Moore, Hayden Tubbs, Jason Vaile, Abe Elias, Gabe Benson, Louis Golino, Andrew Salzberg, Brett Tau, John W. Garibald, Victor Padilla
CONTRIBUTORS: Christy Stewart, Julie Hatfield, Mila Pantovich
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
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.
or investment. All commentary and advice in this publication is of a general nature only, and doesn’t consider your individual circumstances or financial
Good Investing!
objectives. You should always consult a licensed financial advisor for your personal investment advice. Please do your own research.
American Hard Assets Editorial Staff
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4 | American Hard Assets www.ahametals.com
H A R D A S S E T S U P D A T E S | World News
World News Updates
the CARS that billionaires drive (Source: Yahoo)
Most billionaires love a sensational set of wheels. From Maserati Quattroporte to the extremely rare Porsche 959 Coupe, here’s how the world’s richest tycoons get around.
Carlos Slim Helu
Mark Zuckerberg
Bill Gates
The miserly side of one of the tech giants founder is no secret. Facebook’s founder owns one of the cheapest cars in this list, an Acura TSX.
The daily drive of Microsoft founder Bill Gates is a Porsche 959 Coupe. Only 230 of this car were built.
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Currently ranked as World’s Richest Man by Forbes, the Mexican tycoon is worth about $69 billion. He hops inside his Bentley Continental Flying Spur, worth a measly $300,000.
World News | H A R D A S S E T S U P D A T E S
Steve Ballmer
Michael Bloomberg
Another world’s richest from Microsoft is Steve Ballmer and he drives a more modest set of wheels. Instead of an expensive Benz or Bentley, he drives around in an environmentally friendly $19,000 Ford Fusion Hybrid.
Because speed is important in the financial world, data mogul Michael Bloomberg drives around an Audi R8. It’s a German supercar that’s able to hit a top speed of just under 200 mph and can sprint from a 0-62 in 3.6 seconds.
Alice Walton
Prince Alwaleed Bin Talal Alsaud
The world’s second richest woman, Wal-mart Fortune Heiress, Alice Walton owns a simple car, a 2006 Ford F-150 King Ranch.
A member of the Saudi Royal Family, Prince Alwaleed Bin Talal Alsaud drives a luxurious $246,000 Rolls-Royce Phantom.
Eric Schmidt
Warren Buffet
Tech giant billionaire, Google’s Eric Schmidt rolls in with the most modest car on the list. The $11,000 second-gen Toyota Prius is decked out with over $120,000 worth of equipment and can drive itself, so we’re not sure how fair that most modest assessment really is.
One of the World’s Richest, Warren Buffet didn’t get there by throwing away all his money. His ride of choice which he purchased in a show of support for General Motors during the American Automakers recent financial crisis and subsequent government bailout is a $45,000 Cadillac DTS.
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H A R D A S S E T S U P D A T E S | World News
Michael Dell
Francois-Henri Pinault
With a net worth of $15.5 billion, the 47-year old founder of Dell Inc., Michael Dell can be seen driving around a 2004 Porsche Boxster.
Chief executive officer of PPR Francois-Henri Pinault drives a Lexus LX SUV.
Ingvard Kamprad
Larry Ellison
Founder of Ikea, Ingvard Kamprad is worth an estimated $28 billion. He owns the humblest cars among the billionaires and has been driving a 1993 Volvo 240.
The car collector, Oracle founder Larry Ellison owns a McLaren F1. One of the most expensive cars on the list, the center-seated former world’s fastest car can hit a top speed of 231mph.
Laurene Powell Jobs
Phil Knight
The widow of Apple founder Steve Jobs’, Laurene Powell Jobs drives around a silver Audi A5.
Phil Knight, co-founder and chairman of Nike, owns an Audi R8.
8 | American Hard Assets www.ahametals.com
World News | H A R D A S S E T S U P D A T E S
World News Updates
Johnson Matthey Exits Gold & Silver Refining After 160 Years Longest-standing London Good Delivery refiner sells US and Canada sites to Japan’s Asahi Holdings (Source: BullionVault)
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OLD & SILVER refining will end at Johnson Matthey Plc next March after more than 160 years, as the UK-listed chemicals and technology company sells the brand’s last two major bullion refining plants to Asahi Holdings of Japan. The Salt Lake City plant in Utah, USA, and Brampton near Toronto in Canada, are being sold for £118 million ($186m). Asahi Holdings (TYO:5857) was founded in 1952, opening its plant at Kobe, Japan in 1968. Asahi’s Saijo plant became a Good Delivery supplier of silver in 2000, and Kobe received Good Delivery accreditation for delivering gold to the London market – heart of the world’s wholesale bullion trade – in 2008. Today Asahi said the deal will extend its business to processing “primary” material from North American gold mines, as well as the electronics and other “scrap” its Japanese sites already refine. In its statement on the sale, Johnson Matthey stressed its long-term “focus on areas where we can use our expertise in chemistry [and] high technology solutions.” Increasingly focused since the 1950s on catalysis and environmental technologies, Johnson Matthey was formed in 1851 and became Official Assayers and Refiners to the Bank of England – then lynchpin of the global Gold Standard, maintaining the Good Delivery list of acceptable material managed today by trade body the London Bullion Market Association – the following year. Listed on the London Stock Exchange in 1942, Johnson Matthey Plc (LON:JMAT) won the exclusive contract to refine Britain’s demonetized silver coinage in 1946. But as the company’s platinum and catalyst businesses grew, it sold its UK and Irish jewelry business in 1993, and then sold its Electronic Materials Division in 1999. In 2012 work began at Brampton to increase capacity, anticipating a “new primary refining contract” for mined gold due to start in 2014/15. But Salt Lake City also suffered “operational issues” that financial year, taking the Gold and Silver Refining business to a small loss. In August 2013 both Brampton and Salt Lake City received Responsible Gold accreditation from the LBMA, confirming the
“highest level of diligence” in tracing all metal being refined, so as to avoid taking in raw materials from war zones or terrorist control. But January 2014 saw members of the United Steel Workers strike for 18 days at Brampton in protest at Johnson Matthey’s 3-year wage offer, despite the union recommending they accept. Sales from Johnson Matthey’s Gold and Silver Refining business fell 10% in the financial year 2013/14, and dropped a further 23% in the six months to 30 September. “Underlying operating profit was also down” at that division, Johnson Matthey said in its half-year report, as “falling gold and silver prices adversely affected secondary volumes” of so-called scrap metal from owners of existing above-ground metal. Commenting on today’s news of the Brampton and Salt Lake sale, “There are few synergies with the rest of the Johnson Matthey group,” the Financial Times quotes one analyst. With 11 plants now accredited by global trade body the London Bullion Market Association, Japan has more Good Delivery gold refineries than any other country. China and Russia come next, each with 8 gold refineries approved to produce Good Delivery bars. The latest annual Gold Survey from data consultancy Thomson Reuters GFMS says Japan’s bullion exports “slipped by 10% in 2013 to an estimated 74 tonnes...dominated by flows to Hong Kong at almost 50% of the total.” Material from six former Johnson Matthey refineries is today accredited on the LBMA’s “former” gold list, with bars from three previous facilities on the former list for silver. “Bars produced by [such] refiners prior to their transfer to this list,” explains the Association, “continue to be acceptable as Good Delivery.” Gold bars cast with Brampton’s current markings were first added to the Good Delivery list in 1961. Salt Lake City output was accredited in 1989. Together, these last remaining Johnson Matthey gold plants are major North American producers of the large 400-ounce bars used in the wholesale and professional investment markets. www.ahametals.com American Hard Assets | 9
H A R D A S S E T S U P D A T E S | World News
World News Updates
Newman Collection Part V Realizes $10.4+ Million
(Source: Coinnews.net)
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eritage’s most recent US coins auction scored more than $10.4 million in sales was led by a 1794 silver dollar that fetched $470,000 in “spirited bidding”.
Achieving distinction with all offerings selling out, Heritage’s Eric P. Newman Collection Part V auction was presented at the Waldorf Astoria in New York last November 14 and 15, 2014. “This latest installment of the epic Newman Collection proved important not only for the spectacular prices realized on the amazing coins,” said Greg Rohan, President of Heritage Auctions, “but also because it represents, once again, another auction where every single coin found a new home.” Certified by Numismatic Guaranty Corporation (NGC), the first five parts of the Newman Collection realized nearly $55 million.
1794 silver dollar NGC AU50 10 | American Hard Assets www.ahametals.com
“The Eric P. Newman Collection has solidified its place as one of the greatest collections ever sold and NGC is honored to have been chosen to grade the first five parts,” says Mark Salzberg,
World News | H A R D A S S E T S U P D A T E S
1776 Continental Dollar NGC MS63 that earned $381,875. It’s the finest of only four known pewter Continental Dollars with the “CURRENCEY” misspelling. One of the auction’s most followed coins was the 1785 Inimica Tyrannis America/Confederatio Copper NGC MS 63 Brown. This variety is known by only seven specimens struck as a proposed coinage for the newly independent United States. The finest of the group was sold at $352,500. Additional highlights of the Eric P. Newman Collection Part V US Coins Signature Auction include, but are not limited to: • • •
1776 Continental Dollar NGC MS62
• • •
NGC Chairman. “Newman Part V featured some truly incredible prices realized for selections from the 103-year-old scholar’s extraordinary collection of early American coins.”
•
1776 Continental Dollar Brass MS62 NGC: Realized $58,750 1879 $4 Flowing Hair PR65 NGC: Realized $182,125 1776 $1 Continental Dollar, CURRENCY, Pewter MS64 NGC: Realized $199,750 1796 $2 1/2 Stars AU58 NGC: Realized $223,250 1867 $20 MS66 NGC: Realized $258,500 1776 $1 Continental Dollar, CURENCY, Dotted Rings, Brass AU50 NGC: Realized $282,000 1776 $1 Continental Dollar, E.G. FECIT, Pewter MS66 NGC: Realized $305,500
In this fifth installment of Newman Collection, the “undisputed star“ is the 1794 silver dollar NGC AU50, pedigreed to Matthew A. Stickney, Major Richards Lambert, and “Colonel” E.H.R. Green. For the first time in 104 years, the rarity appeared in public sale according to Heritage. The second highest prize of the event was earned by Newman’s 1776 Continental Dollar NGC MS62. The coin achieved $440,625, struck in brass with the “CURENCY” misspelling. Following it is the
1785 Cent Inimica Tyrannis America/Confederatio Items sold are from the extensive collection of Eric P. Newman Numismatic Education Society (a Missouri not-for-profit corporation) and have been assembled over a period of 90 years. Proceeds of the auction of all items will be used exclusively for the benefit of other non profit institutions selected by Eric P. Newman Numismatic Education Society and supplementing the Society’s museum operations and scholarly numismatic research efforts. 1776 Continental Dollar NGC MS63
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N U M I S M A T I C S | Silver Bullion Preview
2015 World Silver Bullion Coin Overview Louis Golino
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odern world silver bullion coins are increasingly popular with both silver investors and modern coin collectors, and with buyers who fall into both camps. Some people buy ungraded coins, while others purchase graded examples. Other coins bearing these designs are minted in special versions aimed at coin collectors such as proof and high relief coins. The world bullion field has continued to expand in recent years as many more countries have begun to issue their own coins or have contracted another mint to produce them on their behalf. But there are ten major bullion coins issued every year that stand out from the others in terms of their broad appeal to buyers, worldwide sales levels, and established track record with collectors and investors. Each coin has certain distinctive features that distinguish it from other coins on the list. Five of these coins have designs that do not change each year, larger mintages, and typically smaller premiums over silver value than other bullion coins. These features make them a good choice for silver stackers who want the most metal at the lowest cost. Some people build complete date sets of these coins, but they tend to have less appeal for those with a strong interest in numismatics than the coins in the second group. They are often bought in quantity.
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American Silver Eagle – 2015 coins will be released in early January possibly under an allocation or rationed basis due to shortages in late 2014 of 2014-dated coins. This resulted in a temporary halting of production for 2015 coins and the imposition of an allocation system for 2014 coins, which in November approached the previous record for yearly sales reached in 2013 of 42,675,000. This is the most widely sold bullion coin in the world, and it is always in high demand and is universally recognized. Its Walking Liberty obverse design is very popular with buyers. It is also minted in a variety of special versions for collectors such as proof and burnished uncirculated coins. It has been minted since 1986.
N U M I S M A T I C S | Silver Bullion Preview
Canadian Maple Leaf – The second highestselling bullion coin in the world, they have been issued since 1998. In 2014 two special security features were added (radial lines and a micro Maple Leaf) designed to make buyers feel safer when buying these coins. There are various collector versions such as privy mark coins, reverse proofs, etc. 2015 coins will available soon. Although they are collected by date, the bullion version of this coin is primarily intended to be a silver bullion vehicle.
UK Britannia – From 1998 through 2012 these had limited mintages and changing designs and were not made of one troy ounce; since 2013 the reverse design has and will remain the same (except on proofs), and the coin is minted to demand and contains one troy ounce of .999 silver. For 2015 the background of the reverse design was changed from a brilliant to a more matte finish. The 2015 coins are releasing soon. The issues from 1998-2012 have been strong performers because of their different designs and limited mintages even under 100,000 in several cases. The issues released since 2013 have not seen a great deal of price appreciation over silver. There is also a special version issued since 2013 that has lunar privy marks along the entire rim of the coin. The 2013 snake privy had a mintage of 350,000 and sells for more than the regular Britannia coins from the same year.
Austrian Philharmonic – Typically the third best seller in silver bullion coins these coins have been issued since 2008. Their mintage levels vary each year and are based on demand levels. The coins feature an attractive design of the Austrian Philharmonic in Vienna that is popular with silver buyers. These coins are mainly purchased as a silver investment and tend to have the lowest premiums (along with Canadian Maple Leafs) over spot value of the major world bullion coins. 2015 coins are releasing soon.
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Silver Bullion Preview | N U M I S M A T I C S
Mexican Libertad - Minted since 1982 Libertads have been issued longer than any other major world bullion coin. Their mintages vary by year and are not announced until well after the coins are released into the market. Many past issues have very low mintages under 100,000, and the highest is 2.5 million for the 1992 issue, past issues are harder to find than other bullion coins (apart from Pandas) and have a strong history of price performance. The bare-breasted Winged Liberty angel design is very popular with buyers and is often described as the most beautiful design on a world bullion coin. Since 1992 these coins have been issued in sizes other than just the one ounce issue. The 2015 issue will not be released until sometime next year. Unlike other world bullion coins Libertad release dates vary widely, and these are the last bullion coins issued each year. The mintage of the 2015 coin will not be known until towards the end of next year. The mintage of the 2014 coin was just released on December 2 and it stands at 429,200, which is the lowest since 2007. A second group of six coins has a new design each year, lower mintages, and usually slightly higher premiums that make these issues appeal in particular to numismatic collectors. Because of their lower mintages than the coins in the first group these coins have strong potential for long-term price appreciation apart from silver value as past issues become harder to find:
Perth Mint coins - 2015 Year of the Goat, Kookaburra, and Koala coins are all available. Each is issued with official capsules, and the Perth Mint is well known for its high quality standards, which results in perhaps the bestquality world silver bullion coins. The Lunar goats are part of the Lunar series II and have a limited mintage of 300,000. As a result of their low mintage and large base of collectors, past issues in the Lunar I and II series have tended to acquire the largest aftermarket premiums over time.
Kookaburras - The Kookaburras have a mintage of 500,000, and this year’s coin marked the 25th anniversary of the series. The design of the 2015 coin is a slightly modified version of the 1991 design. This is a very popular series among collectors.
www.ahametals.com American Hard Assets | 15
N U M I S M A T I C S | Silver Bullion Preview
Koalas - Koalas are minted to demand and are also popular with collectors and silver buyers. Each coin is also issued in a variety of other sizes, and in special collector versions with limited mintages. Although it is the newest series, Koalas continue to be more popular every year.
Somalia Elephant – Issued since 2004 with a different design each year, these coins have low mintages for a world bullion coin, and have past coins have appreciated a lot in price, especially the earliest issues. Mintages in the first few years were 5,000 but have been as high as 170,000 more recently. 2015 mintage is not yet known, and the coin is available now.
Chinese Panda – The silver Panda mintage used to be much lower but is now 8 million. These coins have strong worldwide demand especially in Asia where a growing middle class buys silver for wealth and inflation protection. Past issues were widely collected, hard to find, and have seen very strong price performance, especially for the ones with lower mintages. Chinese Pandas are a very popular series with collectors. For 2015 the weight and purity were removed from the design. It is not clear why that was done, but many people speculate it could have something to do with China’s interest in backing the Yuan with gold and silver and replacing the dollar as the world’s reserve currency. 2015 issue available soon.
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Silver Bullion Preview | N U M I S M A T I C S
Canada Birds of Prey series – The third and fourth coins of the series will be released this year, but the RCM has not announced what they will be. The first one should be out in early 2015. Each coin has a limited mintage of one million, and the animal designs are popular with buyers. Premiums for this series have so far not gone up as much as they did for the precious wildlife series, but they may in the future. They are also released as proof coins.
UK Lunar series – This series started in 2013 with the Year of the Horse coins. The 2015 goat coins are available now. Sells for about the same premium over melt as Britannia coins and like them is also minted to demand. As a coin only in its second year of production these are still in the process of catching on with collectors and silver buyers. These coins typically sell for a slightly higher premium than regular Britannia coins. Silver investors have a wide range of options for physical purchases of the metal from bars and rounds of many sizes made by a large number of producers to legal tender coins. The advantages of the legal tender coins discussed above is their universal acceptance for their silver content, their attractive designs, and their status as legal tender, even though their actual denominations are only a fraction of their actual silver content value. Buyers looking for the most legal tender silver for their money will find their best options in the first category, while those looking for collectible series that become scarce over time will find the second group more appealing. History has shown that if buyers are patient the collectible silver series often enjoys greater price appreciation, and their larger premiums are also a hedge against declining silver spot prices. In the coming months we will discuss gold legal tender coins and other physical gold options as well as other forms of physical silver and second-tier precious metals, including platinum, palladium, and rhodium. “Article first written for www.ModernCoinMart.com and granted permission to reprint in this issue”
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L I F E S T Y L E | Most Expensive Houses
Comparison of The Most Expensive & Beautiful Houses In The World: Who Can Compete With the Royal Family?
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here’s an odd-looking building in South Mumbai in India that looks like it’s under construction, only that it’s finished and furnished. Called the Antilia, after mythical island in the Atlantic, the building is famous not for its odd structures of extra high ceilings and protruding floors; it’s the second most expensive house today at $1 billion. Barring the Buckingham Palace, which is valued at $1.55 billion, it would have been our most expensive house in our list, as Forbes.com has named it in 2014. In fact, Forbes cited that it’s the first house (other than palaces) to breach the $1 billion range.
18 | American Hard Assets www.ahametals.com
Our list of the world’s most expensive houses compares the home values against the British Royal’s residence. Interestingly, the palace is not the most ornate or opulent among palaces; Saudi royals and sheiks are known to live more lavishly, beating their European counterparts. But property value is not just about what the house is, but who lives in it. The Queen of England lends to the palace a value higher than the structure’s worth. Likewise, property value is all about where it is. It’s no surprise that Kensington in Southwest London has three entries in our list, a known favorite playground by the world’s billionaires. The usual suspects, Aspen, Beverly Hills, and Palm Beach, are also included.
L I F E S T Y L E | Most Expensive Houses
10 Most Expensive Homes In The World
1
Buckingham Palace London, U.K. $1.55 B Owner: nation of Britain
Now the British monarch’s official London home, the palace features 775 rooms, including 19 State rooms, 52 Royal and guest bedrooms, 188 staff rooms, 92 offices, and 78 bathrooms. *Nationwide Building Society (U.K.) estimates; August 2013 forex Originally built as a private “large townhouse” for the Duke of Buckingham in 1703, the palace was acquired by King George III 58 years after.
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2
Antillia Mumbai, India $1 B Owner: Mukesh Ambani
An Indian billionaire and owner of the country’s second most valuable company, Reliance Industries, dabbling in refining, petrochemicals, oil, and gas A 27-storey, 400,000-sq. ft. building considered the first “home” to cross the $1 billion value. It features six underground parking levels, three helicopter pads and requires 600 staff to run it. It ran into controversy when the land where it stood was originally allocated for the education of underprivileged children.
Most Expensive Houses | L I F E S T Y L E
4
Four Fairfield Pond Sagaponack, New York $248.5 M Owner: Ira Rennert
An American investor and businessman who has acquired assets in mining, metals, industrial fixtures, and vehicle assembly lines. A 29-bedroom home with its own power plant. The buildings are over 100,000-sq. ft., while the whole property is 63 acres. It features 39 baths, a basketball court, bowling alley, squash courts, tennis courts, a dozen chimneys, a 91-foot long formal dining room, and three swimming pools.
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18-19 Kensington Palace Gardens London, U.K. $222 M Owner: Lakshmi Mittal
An Indian steel magnate and head of the world’s largest steel manufacturer, ArcelorMittal, he was once the fourth richest man in the world Located in the ultra high-security street called the Billionaires Row in London, Kensington Palace Gardens consists of mansions along the residences of the past dukes and duchesses, now home to Prince William and Kate. Mittal owns one of these homes, which he bought from Formula One head Bernie Ecclestone in 2004. It has 12 bedrooms, Turkish baths, indoor pool, and parking for 20 cars.
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Ellison Estate Woodside, CA $200 M Owner: Larry Ellison
Co-founder and chairman of Oracle and once the third richest man in America Inspired by Japanese design, the 23-acre compound hosts ten buildings, a man-made lake, koi pond, tea house, and bath house. It took nine years to build the house. The estate is just one of the many properties held by Ellison, who owns nearly whole neighborhoods in Malibu and Lake Tahoe area.
3
Villa Leopolda Cote D’Azure, France $750 M Owner: Lily Safra
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Hearst Castle San Simeon, California $191 M Owner: William Randolph Hearst’s trustees
A Brazilian philanthropist and socialite married to prominent banker, Edmond Safra, who was killed when their Monaco home burned, allegedly by an arson, his bodyguard, who after eight years of jail still maintains he didn’t mean to murder his boss. Originally one of the many waterside homes for Belgian King Leopold II’s mistress, who was evicted after the king died in 1909. In 2008, Russian billionaire Mikhail Prokhorov planned to buy the property from Safra but pulled out of the deal and forfeiting a fifty million euro deposit. The villa was featured in Alfred Hitchcock’s To Catch a Thief.
The late newspaper magnate who built America’s largest newspaper chain and helped give rise to yellow journalism The Italian style villa was used in the movie, The Godfather. The 27-bedroom has hosted John and Jackie F. Kennedy, Greta Garbo, Clark Gable, Bob Hope, Franklin Roosevelt, and Winston Churchill. Considered a heritage and tourist site, the property is included in the California Park System in agreement with the Hearst Estate and Hearst Corporation. www.ahametals.com American Hard Assets | 21
L I F E S T Y L E | Most Expensive Houses
8
Seven The Pinnacle Montana $155 M Owner: Edra and Tim Blixseth
An American real estate developer, record producer, songwriter, and timber baron, and his (now ex-) wife. Considered the largest property in the billionaires-only private ski and golf community, the Yellowstone Club. It boasts of heated flooring throughout the property, fireplaces in bathrooms, huge wine cellar, indoor and outdoor pool, gym, and its own ski-lift. The Yellowstone Club went bankrupt in 2008 due to mismanagement and was bought by a private equity firm.
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9
Kensington Palace Gardens London, U.K. $140 M Owner: Roman Abramovich
Russian billionaire, owner of the private investment firm, Millhouse LLC, but best known as owner of Chelsea Football Club. It’s neighbor to Mittal’s home, yet another home in London’s Billionaires Row. Abramovich’s plans to build a subterranean extension including a tennis court, health center, and auto museum are rumored to be in the pipeline.
Most Expensive Houses | L I F E S T Y L E
Other Most Expensive Residences What’s the most expensive apartment Odeon Tower Penthouse Monaco $400 Million Owner: Marzocco family The family behind Group Marzocco, on of Monaco’s largest developers with projects including Villa Marie, Les Tamiris, and Palazzo Leonardo. Slated for sale in 2015, the penthouse boasts of a giant infinity pool and own slide on top of the soon-to-be second tallest building in Monaco. At 560 feet, Odeon is equipped with a health center, 24/7 concierge service, a private chauffeur, and a spectacular view of the Mediterranean coast. The building’s blue hue and curved shape is designed to blend with the sea and sky, but neighbors, angry that it ruins their view, call it Odious Tower. Notable guests include: King George V, Queen Mary, John Lennon, Oscar Wilde, Ronald Reagan, Ted Kennedy, John Wayne, and Brad Pitt.
What’s the most expensive celebrity home Oprah’s Santa Barbara Estate Montecito, CA $85 Million Owner: Oprah Winfrey The host of the multi-award-winning “The Oprah Winfrey Show”, actress, producer, media proprietor, and one of the richest celebrities today. It has 6 bedrooms, 10 fireplaces, 14 bathrooms, and a lake for rare fishes she collects. The 23,000-sq. ft. home also boasts of a private cinema plus a sprawling 4,500-sq. ft. guest house.
What’s the most expensive castle Ashford Castle Ireland $68 Million Owner: Red Carnation Hotels A chain of boutique hotels in the U.K.
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17 Upper Phillimore Gardens Kensington, South-west London $128 M Owner: Elena Franchuk
Maried to Stanley Tollman, founder of The Travel Corporation and a renowned hotelier, Bea founded the Red Carnation Hotel in 1984, a hotel chain known for its opulent decors and luxurious locations from Africa to Europe and the U.S.
Ukrainian oligarch and daughter of a former president, but more known as an AIDS philanthropist and friend to Elton John. An ex-girls’ preparatory school featuring Victorian architecture, 10 bedrooms, an underground swimming pool, sauna, gym, cinema, and panic room. Outside the house is less than stellar for its stature, but inside, the breathtaking interior includes marble pillars, hardwood, brass, gold, Old World furnishings, and priceless artworks.
Previously owned by the Guinness family, the castle traces its roots back in 1228 when a structure was first built on its land. It changed hands over the centuries among feuding kingdoms, and eventually Sir Benjamin Lee Guinness bought it in 1852, until a family heir sold it to the Irish government in 1939. The current owner bought it as well from previous private investors, making the castle today the most expensive. www.ahametals.com American Hard Assets | 23
S P E C I A L F E A T U R E S | Gold Outlook
2015 Gold Forecast By Louis Golino
T
he past two years have been some of the toughest in decades for gold investors. In early November gold hit a low of $1143, the lowest price since April 2010. But prices then quickly reversed and by the end of the month the metal was back above $1200. And retail demand surged when gold hit its low point, which helped drive the reversal in spot prices. On November 30 Switzerland held a national referendum which would have required the Swiss National Bank to substantially increase its gold reserves and pledge not to sell any of its gold holdings. The measure was closely watched by gold analysts and if it had passed, it would have likely pushed prices up sharply because Switzerland would have needed to acquire billions in gold. But the measure was defeated, as late polls had predicted.
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As expected the evening of the failed referendum, gold dropped quickly back to its previous low of $1143, but then in a matter of hours it rebounded to around $1220, and India announced it was easing import restrictions on the yellow metal. The fact that this dynamic occurred twice in the same month suggested to many gold analysts that the metal’s fortunes were changing for the better, though the mainstream media continued to push the story that gold will continue to underperform. As investors and analysts look to the coming year, opinion remains divided on how gold will perform in 2015, but the bullish argument gained considerable ground by the end of 2014.
Gold Outlook | S P E C I A L F E A T U R E S
In the view of most large banks and investment firms like Goldman Sachs, gold will continue to do poorly next year. In a July poll by Reuters of 31 precious metals analysts, the average prediction for gold prices in 2015 was $1250. At a recent BNAmericas Mexico Mining Summit held in Mexico City analysts agreed that gold prices will continue to fall in 2015. “We expect gold prices to continue to fall in 2015 due to weak physical and investment demand, and don’t expect any rebound at least for the next year,” according to Fernando Bolaños. Similarly, Patricia Mohr, economics vice president at Scotiabank said: “Gold is going to edge down over the next 12-18 months, mostly because the U.S. dollar is going to move up.” Specifically, summit participants saw gold prices declining to an average of $1225 in 2015 and then rising to $1350 in 2016-2017. But other analysts such as Michael Haigh of Societe Generale in New York argue that gold is a speculative bubble and that by 2017 it will decline to $900, according to a November 6 USA Today article. On the other hand, precious metals dealers and experts such as Barry Stuppler and Patrick Heller see gold prices moving higher next year, especially given the rapid reversal in prices after the low for the year was reached in early November.
Mr. Heller recently told American Hard Assets: “In an extremely volatile market during 2015, I expect more than a 50% likelihood that gold will end the year above $2,000.” It is noteworthy that both camps see the same many of main factors shaping gold prices, especially the value of the dollar (currently at a four-year high against the euro and yen) ; monetary policies of the Federal Reserve; and the relative strength of the U.S. economy compared to other major world economies. Where the two part company is how they interpret these forces, specifically whether long the dollar will remain stronger than other major world currencies like the euro and yen; how the Fed will end up raising short-term interest rates next year; and how the U.S. economy will fare. The metal bears see a dollar that continues to rise, and they are confident that an improving U.S. economy will result in the first Fed move to raise rates in almost a decade, as growth continues to pick up and inflationary pressures surface. The metal bulls, on the other hand, are much more pessimistic about the U.S. economy, think the Fed is more likely to start another round of QE (quantitative easing) than they are to raise rates, and think it is unlikely the dollar will continue to rise. They would also point to recent concerns raised by the Fed and international financial institutions about the risks of a new global economic slowdown.
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S P E C I A L F E A T U R E S | Gold Outlook
Mr. Heller said: “The main driver of a higher gold price will be the decline in value of the US dollar. I perceive that right now there is about every trick in the book being used to try to prop up the dollar, at least through the recent 2014 elections in November. After the 2014 elections through the end of 2015, the politicians will be more inclined to let bad news come out that will hurt the value of the dollar. When we get into 2016, there will be another round of trying to hold up the value of the dollar.” He also noted that there are many reasons why the dollar could move lower in 2015: “Continued efforts by China, Russia, and others to reduce their use of U.S. dollars in international commerce. Even banks in the United Kingdom are now issuing yuan-denominated bonds; possible implosion of the COMEX gold or silver markets, or at least a huge revision in how these markets operate, as a result from the rising popularity of exchanges in the Far East; a major decline in the U.S. housing market; and problems with the Affordable Health Care Act.” Analysts from both camps also agree that gold prices will be especially volatile next year. In addition to the factors already
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mentioned, there are also some important changes to the U.S. COMEX market exchanges for precious metals that began on October 1 as a result of provisions in the Dodd-Frank Act.
S P E C I A L F E A T U R E S | Gold Outlook
These changes will give investors with leveraged accounts who used to have three to five days to find the money to cover margin calls only one day to do that. This change will make silver and gold prices even more volatile than they have been recently. Over time this will result in more margin calls and will likely result in higher prices because there will be fewer chances to profit from declining prices through short-selling. Retail and investment demand is another key factor analysts cite as support for their price predictions. The bearish camp sees lower demand from retail buyers and investment funds, while the more bullish experts have the opposite view. In addition, China continues to produce and import gold at record levels as it seeks to acquire larger gold reserves than the world’s current leader, the United States, and in 2014 Russia acquired a whopping 150 tons of gold for its reserves, which is more than all other central banks combined for the year. Both countries see gold 28 | American Hard Assets www.ahametals.com
as part of their efforts to get the world to stop using the dollar as the reserve currency. Gold expert Jeffrey Nichols, who is bearish on the long-term outlook for the U.S. economy and bullish on the outlook for gold, points out that even if he is wrong about the economy “Gold will still appreciate smartly over the years to come on the strength of Asian demand…with China and India leading the way as voracious gold consumers and investors.” Moreover, both the bearish and bullish analysts agree that further out in the time horizon, as the U.S. national deficit reaches levels that will make financing it ever more difficult, gold prices are likely to rise substantially. Supplies of gold will also be constrained in the coming years, which will put upward pressure on prices. Current gold prices are barely enough for many mining companies to recoup their costs,
Gold Outlook | S P E C I A L F E A T U R E S
as extracting the world’s remaining gold becomes more and more difficult and costly, and over time that is likely to result in increased supply deficiencies. It is possible that at least for part of 2015 gold prices will remain under pressure and will underperform, especially if the U.S. economy and stock market continue to do well. But over the course of the year gold price action will be shaped mainly by what the Fed does on interest rates and how the dollar fares. If rates remain low, and uncertainly about the global economy persists, investors will want to put more of their assets in gold. The Fed will most likely not end quantitative easing altogether, but it will probably continue to scale down the amount of asset purchases. Even if interest rates are increased, the amount is likely to be very small. Anything larger could derail the recovery, and bigger increases are not likely to be required as inflation is expected to remain in check for some time, especially if oil prices remain
low. By the end of 2014 an increasing number of experts said it is unlikely that the Fed will raise rates in 2015. Meanwhile, the European Central Bank has already announced plans to raise inflation expectations as quickly as possible to stave off deflation with bond buying programs if German opposition can be overcome, and low interest rates in Europe will put pressure on the euro, which will contribute to dollar strength. If retail and investor demand for gold is strong , interest rates in the U.S. remain low, and supplies become more constrained as a consequence of reduced mining activity, there should be greater upward pressure on price as 2015 progresses. In fact, an increasing number of analysts now see 2015 as the year when gold’s secular bull market will return with prices moving towards $2,000 an ounce, and the three-year bear market for gold will finally end.
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