by: Ben Tseytlin - on Gold & Bullion
buying bullion

Purchasing precious metals today has been described like the Old West. There is very little regulation, which many liberty minded folks like because buying bullion gives them flexibility and privacy. However, unscrupulous dealers and their underhanded practices ruin things for everyone, since they cost consumers millions and give the government an excuse to intervene.

Unethical Tactics Used By Some Bullion Dealers

Some bullion dealers intentionally offer their clients the most inappropriate and expensive forms of silver and gold, and then claim to keep it in storage without the client accepting delivery for an extended period of time. Some dealers take it a step further, presenting their clients with the chance to leverage purchases via complex loan or margin agreements. Eventually, the client will lose their money on a purchase because they didn’t take physical delivery while they had the chance.

The reason the government hasn’t gotten involved in most cases is because the sales tactics being used don’t yet resemble securities trading. However, if you don’t hold precious metals in your physical possession, you don’t own them. The only exception to this is if you have them stored in a depository that is approved such as those in places like the Cayman Islands. Unethical firms will often use telemarketers to promote their products. These individuals promise a great deal, but in most instances those that buy from them will end up losing a tremendous amount of money.

How To Avoid Becoming A Victim

The best solution is not greater government oversight, but greater awareness on the part of the consumer. Conduct extensive research on the dealer you intend to buy bullion from. Find out how long they’ve been in operation. Learn their business procedures and methods. If they employ a telemarketing team that doesn’t own a single ounce of silver or gold, this should be a red flag. Ascertain their reputation. If they don’t have an address in Google Maps, or a positive rating on the BBB (Better Business Bureau) website, then they cannot be trusted, period. As far a television advertising goes, the promotions you see on TV are paid for by the viewer, so beware when buying bullion.

The government has begun taking actions against some. For instance, the CFTC charged the Monex Deposit Company and related affiliates in a multimillion dollar scheme to defraud their customers. Essentially, the defendants used deceptive tactics which lead to retail customers losing hundreds of millions due to non-legal, off exchange precious metals that were leveraged in various transactions.

As precious metals enter another bull market, cases like the Monex scandal will continue to be a problem. Whether you’re a collector or investor in gold and silver, it is important to perform your due diligence and ensure that the company you’re dealing with is legitimate. Although the Monex case has been resolved, many of the victims will never get their money back so preventing these problems is the best course of action.

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by: Ben Tseytlin - on Vintage & Luxury Watches
luxury watches

Serious watch buyers have probably noticed that a lot of the brand new luxury watches on the market are being sold for higher than the retail price, and are difficult to get. The most notable examples are Audemars Piguet, Patek Philippe and Rolex, which can be a real headache for some. Below are some reasons why this is the case, and what can be done about it.

What Determines Luxury Watches Demand?

Demand for luxury timepieces are heavily influenced by perception as well as emotion. Dealers of such merchandise have known for decades that availability and perception is far more important than the inherent value. This essentially means that even short term trends of high demand can result in more demand than the market can supply.

Unfortunately, Luxury consumers wind up prioritizing the fact that a watch is difficult to get a hold of as opposed to what the watch is actually worth. Exclusivity occurs naturally whenever a watch (or anything else) has limited production due to its complexity or the rarity of the materials needed for its manufacture. However, exclusivity can also be created artificially by simply manufacturing less. Although this reduces profits in the short term, it can increase profits over the long term since reducing supply keeps consumers engaged and having emotional demand for goods that are limited, which now carry additional value due to exclusivity.

How Major Watch Manufacturers Behave

Rolex will not send you luxury watches every time you order them. Instead, watches are randomly shipped to retailers and as a consequence they have no method for determining which will satisfy their clients and when. This forces retailers to be selective with regard to which clients they are most loyal to.

Basically, this creates an environment where the consumer is expected to spend a minimum amount with a retailer before they are allowed to buy a luxury timepiece at a retail price. The practice is encouraged because customers accept it, and the brands promote it. It works for many retailers because it gives them the opportunity to sell their less popular watches.

Most luxury shoppers don’t mind this behavior because they have the disposable income to support it. The current tactics being used by watch manufacturers is a result of the oversupply problem that occurred in the past. Twenty years ago, watch brands expanded aggressively to capture as much market share as possible. This required them to manufacture more luxury watches, but because their growth plans were unrealistic; more watches were produced than customers wanted. Watch makers then decided to go in the opposite direction, creating artificial scarcity which focuses on producing less, but making more.

Current and future profits in the watch industry will be made from taking greater value from each watch rather than selling more watches. Raising interest in their entry level timepiece is the best way to maintain demand.

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by: Ben Tseytlin - on Gold & Bullion
oil and gold

Each day in Saudi Arabia, more than five million high sulphur barrels of crude oil will be converted into low crude sulphur. Afterwards it will be transferred to refineries which are responsible for generating a variety of petroleum products. Saudi Arabia and other Middle Eastern countries represent a significant portion of international oil supplies, which influence gold in a number of ways.

How Gold Usually Performs When Oil Prices Rise

During the crisis in Suez in 1956, ten percent of international oil supplies were subject to restrictions which lasted six months, and caused the price of oil to rise by around 9 percent. However, gold coins didn’t increase much at the time since its price was still fixed by the U.S. government. The 1970s were a different story.

When the 1973 oil embargo was initiated by OPEC, 8 percent of international oil was subject to restriction and its price increased by over 200 percent. This caused gold prices to rise by 65 percent. Twenty four months earlier, then U.S. President Richard Nixon sealed gold’s window, which allowed the price to rise gradually over the following twelve months.

In 1978, during the revolution in Iran, oil prices rose again by over 100 percent, causing gold to shoot up in price by 163%. As you can see, any sort of instability in the Middle East tends to send oil prices higher, which then corresponds to a rise in gold.

Why Then Didn’t Gold Prices Spike During The Recent Arabia Turmoil?

Despite the recent missile attacks which occurred in Saudi Arabia, gold prices hardly moved, which is different from historical patterns. The reason for this is because the international market believes that Saudi Aramco can resume production quickly.

Within the first forty eight hours of the attacks, there was tremendous speculation about whether or not the Saudis would be able to recover from the damage, and how long. Investors poured over the satellite imagery of the damage and television analysts predicted (wrongly) that the damage would wipe out five percent of international production for an extended period of time.

However, the CEO of Aramco, Amin Nasser, revealed that the facility is still producing approximately two million barrels each day and plans to reach 4.9 million barrels daily (which was the production level before the attacks). This resulted in oil prices falling back to previous levels, an indication that global investors believe Mr. Nasser.

Should Gold Prices Be Higher?

Gold has performed exceptionally well in 2019, and many experts believe it should and will go higher, due to various geopolitical factors. However, it is easy to see why gold didn’t respond heavily to the Arab oil field attacks. The shock in oil price was brief and the nation appears to be recovering from the damage with ease. So although gold has historically followed oil in terms of price (since both are commodities), this isn’t always the case.

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by: Ben Tseytlin - on Coins & Currency
federal reserve notes

The United States Treasury is responsible for issuing federal reserve notes, but must receive permission from the member banks of the Federal Reserve. This system started during the 1930s when a law was signed by the president that transformed U.S. bills into fiat currency.

What is Fiat Currency?

The term “fiat currency” means that the American dollar, which at one time was backed by silver and gold, no longer had such backing. Instead it was declared legal tender through the U.S. government. However, it must be emphasized that there is a difference between notes issued by the Federal Reserve and those of the Treasury. Understanding the distinction is essential for currency collectors, and the population at large.

What Are Federal Reserve Notes?

Although Federal Reserve issued notes are legal today, this wasn’t always the case. When John F. Kennedy assumed office, he made a decision to legalize the printing of U.S. notes. These notes were the very first legalized currency the country ever had, first introduced around 1862, but it was phased out by Fed notes. It was the U.S. note that had the backing of gold and silver. By the time Kennedy was assassinated, about four billion U.S. notes were in circulation. These notes were eventually recalled and no longer used as legal tender. They were replaced by the now common Federal Reserve notes, which are the only currency to be accepted by the U.S. government.

US notes also differ from Fed notes due to their red colored seal and the serial number. Fed notes have a green serial number and seal. They were originally authorized with the Legal Tender Act, and were widely circulated during the Civil War. Many Americans do not know the difference between the two as both have issuing authority from distinct statues. The biggest difference is that U.S. notes were gold redeemable until the 1930s when the gold standard ended. Fed notes were authorized through the Federal Reserve Act in 1913, and even though the Bureau of Engraving and Printing were originally responsible for printing them, they are circulated primarily through the Fed system.

What About Treasury Reserve Notes?

Many financial researchers believe that the term “Treasury Reserve Note,” or TRN, was coined to bring stability to the American and international markets in the wake of the subprime mortgage crisis that occurred in 2008. It was similar to the early U.S. notes, in that it would have the backing of hard assets such as silver and gold. Some took this as a sign that it would phase out the Fed notes, but in truth, TRNs were never actually circulated or printed, so it is unlikely that the U.S. government is planning to replace Federal Reserve notes anytime soon.

Be that as it may, U.S. notes and certificates are a hot item among currency collectors. The value of such bills vary based on year, star note and rarity, but can fetch prices which range from hundreds to thousands and even tens of thousands of dollars.

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by: Ben Tseytlin - on Antiques & Jewelry
topaz

Topaz is a yellowish gem that has been in use for at least two thousand years. The specimens found in nature tend to be large and crystalline, which makes them perfect for applications where faceted stones are needed. It is quite hard, comes in multiple colors and can be used in many different applications.

Characteristics

Although topaz most commonly appears in yellow, it can also be red, orange, purple, pink or blue. The naturally blue colored stones are highly coveted, since they are exceptionally rare. The color is caused by irradiation and heat. These stones is essentially allochromatic, meaning the color is the result of structural impurities as opposed to the presence of elements like chromium and iron.

These gemstones have unusually high clarity levels. The majority of the stones that you will find in stores are “eye clean,” meaning that any impurities such as inclusions which are present in the stone will be invisible to the eyes. Unlike other gems, which are found only in certain regions, topaz is widely distributed around the world. It is most common in the mountainous areas of Central Europe, along with Australia, North America, South Africa and Brazil. Russia used to have lots of mines, but supplies there have become exhausted.

Most of the topaz sold by jewelers has been treated to some extent. This is usually done through radiation which results in a stone that is more beautiful and vivid. Others are given a special coating which results in rainbow effects. A good jeweler will always notify buyers of what specific treatments have been made.

How To Shop For Topaz

When shopping for topaz the most important thing to pay attention to is color. Specifically, the saturation, hue and tone are essential for determining value. Hue is the primary color, while tone is a measure of how dark or light the gem is. Saturation determines the color brightness or intensity. With this gem you want vibrant coloration that is free of significant blemishes or inclusions. Topaz is durable, so it can be readily cut into a variety of shapes. Finding London Blue topaz in bigger carats won’t be a problem but the size should be in millimeters so it is easier to know what you’re purchasing.

How To Wear And Care For Topaz

Because topaz comes in so many colors matching it with clothing or jewelry should never be a problem. It is the perfect gemstone for anniversaries and is one of the birthstones for the month of December. Topaz doesn’t get the attention of other stones such as diamonds, rubies or emeralds so will draw a lot of attention when worn. It reflects light well and will give you an enchanting look.

Topaz differs from other gems in that it doesn’t scratch easily. To clean it, all you need to do is use a soft coat with water that is soapy. It should be well rinsed to remove the soap residue. Don’t bother with ultrasonic cleaners or other fancy steam equipment, and be sure to remove the stone before engaging in strenuous activities.

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by: Ben Tseytlin - on Coins & Currency
IBNS Grading Standards For Currency Collecting

It is essential for those getting started with currency collecting to understand IBNS grading standards. Even a minor grading difference can have a tremendous impact in regards to value. The following grades have been standardized and are accepted by most coin/currency collectors in the West: Uncirculated, About Uncirculated, Extremely Fine, Very Fine, Fine, Very Good, Good, Fair and Poor.

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