Sunday, February 23, 2014

Review of "Gold: The Race For The World's Most Seductive Metal"

This is a new (2013) book, the title is long, so I will just refer to it as "Gold" from here on.  Author Matthew Hart has written other books, fiction and non-fiction (latter includes Diamond: The History of a Cold-Blooded Lover Affair).  He is a contributing journalist to various publications as well.

In his new book Gold: he takes us on a set of voyages through space and time.  He writes of mine visits in several countries, geology, some history of gold and on many of the arcane facts that you do not see in very many places, even in the gold blogs...  There are a lot of interesting facts and references that I will look into more myself, he is meticulous about referencing many of his claims ("Notes" for each chapter at the end of the book). Hart also provides many details of gold mining technology, which I now understand better, even better than from my visit to the Malartic Gold Mine in the Val d'Or (in Quebec in 2013) here, the first provides some information on how open-pit gold mines work:

His Chapter One is mostly a hair-raising tale of South African gold mining at present (dangerous!) and the incredible corruption in that country.  There are illegal miners everywhere, many working under appalling conditions.  Yet the cops won't arrest them (except the occasional bust, much like what we see here re "drug sweeps").  Why?  Apparently they are connected very high up.  There is a lot of gold smuggling out of South Africa.  South Africa looks to be an unhealthy place...  Hart closes his chapter with a brief look back to a part of Bulgaria, where the first (6000 years ago) decorative gold works were found, the first appearance of gold as money are the familiar gold coins from Lydia around 635 BC.  Hart, near the end of Chapter One:

"Yet by the fourteenth century, 200 years later [after Lydia], the entire world supply would have fit into a six-foot cube."

Keep that pictured in mind, as the world supplies would later grow much greater.  A six-foot cube really did mean that gold was mostly for Kings.  Now that cube is roughly 60 feet per side, around 1000 times as much.

In Chapter Two, Hart writes of the first big Gold Rush, that of Spain into the New World, particularly Peru.  I have written several articles describing gold in Peru, but Hart provides many facts I did not know re Peru and gold, bravo!  It is clearer to me now why so many in Peru hate Spain...  His description of Pizarro's conquest of the Incas (and looting of their gold) is the best short account (15 pages) I have yet read.

In Chapter Three he goes on to write of the effects of all that gold (Europe's gold supply quintupled in the century before 1565), and Spain was not equipped to handle that gold, most wound up elsewhere in Europe.  But, the all of that gold did kick-start international trade, and soon bills of exchange came along (the first commonly-accepted "paper gold").  Gold and silver both played roles in the money of Europe and the early USA, there was also a lot of fluctuation in what we now call the "gold:silver ratio", this happened mostly when there were new discoveries of one or the other.  Hart then goes on to describe the effects of the California Gold Rush as well as the other major monetary events in the 1800s, including the demonetization of silver, that causing a lot of pain.

Chapter Four offers a good history of Nixon's closing of the gold window.  Hey, I was (barely) aware of what was going on around me in 1971, but I missed all of the drama, the profound worries that our contry's precarious state (losing its gold) and Nixon (cancelling the ability of foreigners to take our gold at $35.00 per oz) caused around the world.

Chapter Five describes an important, even on a global scale, US gold field that I knew very little about, the "Carlin Trend" in Nevada.  While I knew that gold was mined there, I did not know how much.  The Carlin Trend's discoveries and the technology to produce gold from lower grades of ore meant that as gold prices rose, more gold would be found.  This was an excellent chapter, filling in many blanks in my knowledge of gold in general.  In this chapter and others, he describes the origins and development of several of the famous gold miners most of us know...  Hart also provides into gold geology, most of which I had never run into before...  It looks like most of the world's gold is found in districts, some very large (hundreds of square miles), in which geological forces have created rich zones of ore.  South Africa's Witwatersrand ("Rand", "Reef") is the most well known, a 300 mile crescent with gold fields scattered around.  The Carlin Trend, while not as rich is also hundreds of square miles big.  (Even Peru is thought to have a big gold province, as I mentioned from hearing from locals in two previous articles):

Chapters Five and Six review the rise of Newmont and Barrick, Six giving many details of what became the world's largest gold producer (Barrick), which later ran into problems by hedging its future production.

China is now the world's number one gold producing country.  They have produced gold for millennia, but did not really get down to business until the reforms of Deng Xiaoping.  Chapters Seven and Eight review Chinese gold production and the author's own visits to China to learn more.  China also has a problem with illegal miners.  Almost all of this information was new to me.

Chapters Nine and Ten cover much of the ground that FOFOA (, for new readers, he is my favorite gold analyst) covers in great detail, this would include the gold ETF "GLD" as well as institutions involved in keeping and trading large amounts of gold (the IMF and the BIS (Bank of International Settlements, the "central bank's central bank" in Basel, Switzerland).  Hart does a pretty good job of describing the functions of the various players in the gold arena, and even covers some ground of interest to me and various others who like gold: What happens if everyone who has "paper gold" wants the real thing?  Hmm...

In Chapters Eleven and Twelve, Hart returns to the field, this time to Africa, in particular Senegal and the benighted country of the Democratic Republic of Congo.

Hart says that it looks like there is plenty of gold still out there, including likely new gold fields to be discovered.  Bringing in more gold production will depend on many things, perhaps the most important will be the price of gold.


Throughout the book Hart seems to have some disquiet for gold..., like that it is dirty in origin (well, yes it is).  I have myself seen and heard many tales of violence and environmental contamination from many countries producing gold.  My guess is that Hart perhaps is not an owner of gold!  Yet, thousands of poor laborers work illegally at informal (and even formal) gold mines to scratch out a living.

I enjoyed this book immensely.  Hart provides much information I had never encountered, in every single chapter.  He provides Notes and links to search out further information.

Hart does not explore topics like current gold prices and prospects for the current prices to go up or down, nor technical analysis and other speculation-related topics.  He discusses speculation a little bit in his discussion of the GLD.

Verdict:  Highly recommended.  Perhaps the best book out there for non-specialists to learn about various facets of the huge yet poorly known (secretive by design) gold business.  I especially value his discussions of the geology of gold deposits.  A must-have for anyone who wants to more about gold.

Monday, February 10, 2014

Review Of American Hard Assets: Jan/Feb 2014

The latest issue of American Hard Assets ("AHA")is out and focuses mostly on precious metals, offering up predictions from various serious players in that financial sector.  This issue kicks off its second year of publishing here in the USA.  Their focus remains the same: examining various kinds of "hard assets" mostly focuses on the core metals, and aiming particularly at a high-end readership.

The publisher noted that this issue is their best one yet.  I agree!

It is important to remember that AHA comes out every two months, the information is meant to be more reflective in nature...  Quicker information is better derived from a multitude of internet sources (which I follow nearly every day).

In their "World News Updates" section there are articles about a rare coin auction (netting $23 million).  Also there is an interesting article on Antwerp (Belgium) and how that city is the heart of the secretive world diamond trade (I have previously advised to take extreme care in playing in the diamond business).

For me the most interesting article was their piece "Is Russia (Finally) Running Out of Palladium", some experts are saying yes, the Russian government stockpiles are running out, on the other hand, that fact may not wind up influence palladium pricing this year.

Other "World News Updates" items include an article on Dubai hosting a $7 billion expo in 2020, an article on Bitcoin (getting much more attention..., later in the issue is another BTC article), and Elemetal's subsidiary Ohio Precious Metals being added to the LBMA's Good Delivery List (more comments on Elemetal below).


Eavan Moore writes up an article "Going for Gold in Alaska" on mining for gold in Alaska, perhaps capitalizing on the popularity of a couple of "reality shows" on cable TV about small miners giving that a go...  There are many small players (including individual miners, "panning for gold" (placer mining in streams) -- 450 of them are "permitted miners", as well as various other small players).

But he writes the small miners face high obstacles.  Alaska has a sort "mining season" for them, as the rivers freeze in October...

Regulatory compliance in the small sector space is light -- for now.

But, the larger quantities of gold come from real gold mines.  This is now getting harder to pull off even in fairly mining-friendly Alaska (where there is already considerable production).  The "Big Enchilada" of Alaskan gold would the the Pebble Mine, but due to environmental fears (the EPA looks to release a negative assessment of environmental impact of the mine) as well as local opposition, this world class gold mine is, at best, on hold -- Anglo-American walked away, even with a huge deposit, world scale...


Numerous times I have mentioned that this magazine is aimed at the wealthy.  "Investing in Film" (by Gabe Benson) would further evidence of my point.  Film (movies) is not really a "hard asset" but is definitely only for those who can place money at risk.  But, the rewards can be there: successful: films that had early investors include "My Big Fat Greek Wedding" (over $360 million in ticket sales) as well as "The Blair Witch Project" ($248 million), so it can be done.  As always with these kinds if investments:

"Have a professional you trust advise you, or you may lose it all."


Luis Golino writes an article aimed at buyers of gold and silver coins who want a pretty coin ("American Coin Designs").  It seems that the classic designs of the past have been much better accepted by collectors.  Yet, the US Mint knows that they must move forward with new designs that people like, most modern designs for special coins have not been, well, beautiful.

The resolution to this may depend on how much freedom the Mint gives their artists as well as careful judgement in choosing the designs for coins.


Both silver and gold are previewed for 2014.  Brad Yates writes "2014 Silver Preview".  Yates provides an overview of silver, interest rates and actions by the Federal Reserve in 2013.  He writes that the consensus is that the Fed will continue its "Taper" in a gradual way.

Yet he is somewhat cautious, perhaps bearish, on silver prices if the economy grows and the Fed does not mess anything up...  He explains that silver (and gold) are diversification.


The time has come for me to start looking and researching Elemetal, LLC.  Elemetal is a major advertiser in AHA and is the owner of a number of companies involved in segments of the precious metals sector.  A quick glance at shows the below companies they own and their participation in the precious metals industries:

-- OPM (Ohio Precious Metals), a refiner in Jackson, OH that specializes in refining recycled gold and silver.  They have just become LBMA-certified for gold (mentioned above).  They make a 1 kg gold bar that looks very attractive, and it is "green" -- recycled gold.

-- NTR Metals, which offers precious metals recycling and processing services in 12 countries, they have some 20,000 companies who are customers.

-- Provident Metals, a leading internet seller of precious metals, check out their OPM 1 kg gold bars apparently now in stock:

-- Echo Environmental, a large-scale processor of hazardous and non-hazardous products containing precious metals.

-- Elemetal also has some kind of relationship with DGSE Companies, Inc. (ticker DGSE, so I imagine that Elemetals does not own all of DGSE).  DGSE owns some 30 brick & mortar stores that deal in precious metals, coins in general and high-end watches., most of their stores are in Texas, Georgia and a few more in other southern states and a store in Illinois.

Elemetal, even though they have advertised for sometime in AHA has been relatively opaque.  They appear to be privately owned.  About a year ago, I made an inquiry with them as to how to buy a 1 kg gold bar, I was not able to get a straight answer, but they appear NOT to have owned Provident at that time.  Provident WAS recommended to me after I made a number of calls to OPM and NTR.  It may be that Elemetal was working on consolidating their businesses, they look to being a major presence in their niches in the prcious metals world.

I hope to make better contact with Elemetal and write more about them in the near future (so be waiting for my calls guys...).


Mark O'Byrne founded GoldCore, a precious metals seller and provider of PM storage services.  Mr. O'Byrne is prominent among gold fans who read Zero Hedge (GoldCore is a "Contributor" to ZH almost every day) as well as  Here is GoldCore's website:

In this issue of AHA he writes at length on the dangers of bail-ins and other deposit confiscation ("Bail-Ins and Deposit Confiscation Makes International Gold Ownership Essential").  He goes into detail about what happened in Cyprus (bail-ins, oh, except for the very rich who got advance word) and the various proposals being floated in Europe and to a lesser degree in the USA.  His article is excellent, and goes into great detail, he has clearly done his homework.

Bail-ins are clearly a real risk today.  O'Byrne is a believer in diversification, a concept I have pounded the table about for a long time (forever?).


"At the Crossroads: Gold in 2014" (Mike Getlin) describes gold's prices in 2013 (the first down year in the last 12) and discusses at length various factors in gold price (including, of course, Fed interest policies) as well as detailed discussions on both supply and demand for gold.

He writes that gold supply will likely not change much (almost irrespective of price), and so gold's prices will likely be decided by demand.  Recently, other investments have done better than gold, so gold has underperformed and there appears to be subdued demand for physical gold (except for China).  His guess is that gold prices will not move very much in 2014.  But, Getlin writes at the end of his article:

"The real question is not if gold prices will rise in 2014.  It's whether gold is more likely than other asset classes to provide low downside risk and high upside potential.  Looking at all these factors together, I believe the answer is a resounding YES!""


Further evidence that AHA is aimed squarely at the wealthy is Jason Walter Vaile's piece "Fountain Pens: The Most Elegant Weapon".

Collecting fountain pens, while esoteric, is a real hobby.  Many of these pens have rocketed in price and are very expensive.  An example is the "Montegrappa's Chaos Pen" (est. price: $69,500), designed by Sylvester Stallone, this pen made an appearance in his recent film "Expendables 2".

Nice pictures in the article as well, AHA does go the extra mile to publish very pretty and high quality pictures in its magazine.


Platinum, ah, platinum...  Perhaps my favorite precious metal of them all.  Custom jewelry designer and writer Ed Estlow ( a frequent contributor to AHA) at long last writes "Platinum: The Metal of Kings" (although I have seen gold referenced as "the metal of kings" as well).  Estlow makes a reference to France's Louis XVI claim that it was the only metal fit for royalty.

He provides a history of platinum (first referred to in 1557 and first discovered in Colombia) from discovery through its adoption by royalty and large discoveries in Russia and South Africa (the latter produces some 75% of world production).  He also notes some of platinum's physical properties (a higher much melting point than gold, greater density than gold (but Pt is about 11% denser than gold, not 60%, densities: Pt: 21.45, Au: 19.30), and it is considerably harder than gold -- making it suitable for gem settings in rings for example).  Estlow notes that Pt is used in some high-end watches (what a surprise) such as Patek Philippe and a few Rolexes.

An excellent article.

I would note that one of my new internet contacts ("Silver Rhino" from Zero Hedge) once posted that he was interested in related metals like osmium and iridium.  Both of these metals have densities of approximately 22.56, and are the densest (stable) materials in existence...  These two would be very hard to fake.  Even platinum is very hard to fake without having to use iridium or osmium, and THAT would not be as easy as "salting" gold bars with tungsten...


"AHA" sat down with Michael Haynes, CEO of precious metal and coin market-maker APMEX, "Market Predictions".  Haynes sees uncertainty in PM prices, and believes that diversification of assets is important (that of course would include precious metals).


Susan Kime writes "The Bitcoin Controversy", a useful article for beginners (but developments happen very quickly in Bitcoinistan™...).

She wrote the article when BTC price was some $200 each.  I got my first BTC at $350 and have bought small amounts all the way up to $800 or so.

As I write today Bitcoin trades around $660 each.  Earlier today, there was a "flash-crash" in BTC as one of its large exchanges (Mt. Gox) has serious problems and may wind up losing various of its customers serious money.

Yet with all of its problems, the amounts of BTC being created and traded are very large numbers.  Here is some other information from today:

Hash code for $27,000,000 BTC transaction today:


Here is some information of a huge mining block (over $36,500,000) won by "BTC Guild" (a mining pool) just today as well:

(block 285155)

Ignoring Bitcoin may be an error...


Author Susan Kime writes another article (an interview) for AHA about the success of homebuilder-for-the-wealthy  Joe Farrell ("Real Estate Star Joe Farrell on Giving People the Homes They Want").  Farrell started building homes in the Hamptons (eastern Long Island) in 1995.  His target price range is typicall int he $3 - $6 million dollar range.

Farrell has been criticized as "building McMansions", but he defends his houses as giving buyers what they want.  Farrell has his own home up for sale, price: $43 million.  His house has contremporary art by Andrew Wyeth, Roy Lichtenstein and Peter Max.


I turn the page, and the next article is "What to Expect From the Art Market in 2014"!  Nicholas Forrest has a large photo of Balloon Dog (Orange) by Jeff Koons.  Lucky Koons just had a record set, his Balloon Dog (Orange) just sold for $58.4 million, the most expensive work by a living artist ever.  Art had a good year in 2013.

Forrest then goes on to discuss hot issues in the world of modern art:

-- Indonesian art (hot!)
-- Paris (more art businesses setting up there)
-- Digital art (hmm...)
-- Art Title Insurance (tropical storm Sandy caused some $300 - $500 million in claims)


Numismatist Fred Reed is back with another article on valuing coin collections.  He suggests working with a well-regarded (ethical) pro to properly value coins.

Don't be in a hurry to sell.  SOme coins are worth a LOT!


The concept of "Vintage Sports Memorabilia" is back!  Matt Markey writes "Discovering Baseball Gold", another article on baseball cards (what is it about baseball cards???).  The story is about an Ohio family that found a treasure trove of valuable baseball cards among their grandfather's old things in the attic...  Cousins Karl Kissner and Karla Hench even made it onto "The Today Show", and their lucky trove (the cards were sold at auction) was split up among some 35 family members -- at least that story ends nicely.


The "Mining News" section starts with a short article on the failure of Taseko's new copper and gold New Prosperity mine in BC (Canada).  Taseko was planning on spending $1 billion on the mine.  I would note that this is the THIRD big proposed gold mine to get rejected (New Prosperity here, the huge Pebble mine as well as the huge Conga mine in Peru).  This points yet again to the damages done to the industry by their own past actions.  Either they have ruined the local environment that locals depend upon or they did not offer the locals enough money (or both).  At some point, there WILL be less gold mined...

Another article in "Mining News" is the news that Cliffs Natural Resources (ticker: CLF) is going to quit its planned Ring of Fire project in remote Ontario after encountering several roadblocks...

The unhappy news in "Mining News" continues with an article noting that Mexico will raise variuos taxes on the miners.  The miners are unhappy...

"Mining News" finishes with two short items, a diamond mine has gotten preliminary approval to start in the Northwest Territories of Canada, but the local Native Americans are unhappy with that.  The other note is about changes at the top at Barrick Gold (ABX), which has seen a lot of turmoil over its many years.


John W. Garibald writes another of his editorials ("Last Word") at the end of each issue of AHA.  This time around he makes some "Anti-Predictions".  Because of the complexity of our economic system, he makes some anti-predictions (that is, predictions of things that will likely NOT happen) for 2014.  Here are a few to give you an idea [with my occasional comment]:

-- The bankers that largely contributed (to our financial problems) while amassing fortunes will NOT suffer any real personal setbacks, much less go to jail [I agree].

-- This commentator (Garibald) will NOT sign up (successfully) for Obamacare

--  Congressional approval will NOT improve to 15% [I agree].

-- Twitter and Snapchat (and anything else like it) will NOT turn a profit

-- Miley Cyrus and Justin Bieber will NOT... [oh, never mind, who cares?]

-- Janet Yellen will NOT grow a beard in homage to the previous Fed Chair [does that mean s/he could?].

You get the idea...


The new publisher (Brad Hastedt) promised that this was the best issue yet of American Hard Assets.  I would agree.

Saturday, February 8, 2014

Costa Rica: Wrap-Up (& Plan B?)

Costa Rica is without doubt one of the nicest developing countries in the world.  It is well known for it natural scenic beauty, its serious commitment to environmental conservation (a big plus) and it kind people.  In this article, I would like to discuss a few other items I did not go into in my previous two articles as well as take a look at Costa Rica as a "Plan B" for anyone looking at moving there.


We spent almost all of our time in the small Pacific town of Quepos, some three hours from San Jose.  Quepos does not have too much claim to fame, other than the great sportfishing, but even re fishing Quepos is in the shadow of the more famous town of Jaco, the latter being larger and one hour closer to San Jose.  Jaco is the home of a spectacular planned community of "Los Suenos", a gated community with a nice marina, a golf course, stone fountains, etc.  Everything you would expect for a niche community for the rich.  We had lunch at a restaurant in Los Suenos, and so got to take a small look around.

But, Quepos is the town our group knows the best.   I provide the below contact information for anyone interested in exploring this area of Costa Rica.  Your travel agent will likely be able to give you many other facts pertinent to any of you who may want to visit, but here is what we did.

We stayed at the Mono Azul (Blue Monkey) hotel, right near the edge of the fairly small national park "Manuel Antonio).  This hotel is perfectly comfortable and is nested in tropical foliage.  We paid $86.00 per night (total, double occupancy) You can see and hear monkeys there...  Here is a link to their hotel, the owner's name if Chip Braman, an American:

Chip Braman: <>

Our fishing was arranged by the very competent and friendly Felipe Fernandezwho directs much of the fishing from Quepos, here is his email and link:

I had coffee twice at the pleasant El Balcon de Cafe.  I only went fishing one day on this trip, preferring a leisurely vacation...  This cafe is located on the second floor of its building, and has a nice balcony overlooking the fairly interesting bus station:  Coffee in Costa Rica is very good!  Some of the best coffees in the world are produced there.  And now they keep some of their best coffee there, in the past (as in many coffee-producing countries), most of the best gets exported (Peru is an example of that, most local coffee is not so good in Peru).  Highly recommended for a relaxing half hour or so.

El Balcon del Cafe


I had a lot of leisure time, and sometimes I would talk to locals there in Quepos, taxi &bus drivers, owners of local small business, etc.

Of the eight locals I spoke with, all of them said that Costa Rica's current economy is bad!  This was the first time (in about six trips there) that I have heard that.  A few commented that tourism was down (but others said, perhaps down only some 5% - 10%).  Four of them put the blame of the Socialist president of Costa Rica.  I did not have the time nor inclination to explore this further (blaming the left, LOL...), but it fits the usual pattern...


A few comments on Costa Rica as a "Plan B" or retirement destination.  There is a fairly large community of ex-pat Americans in various parts of the country (the two largest colonies are in/near San Jose and in the NW part of Costa Rica: Guanacaste).  But, I found several in Quepos as well.  Quepos is a quiet town, there is not much to do beyond fishing, jungle adventure tours and enjoying the national parks.

Costa Rica is very tolerant of Americans and is a relatively safe place re violent street crime (that is different than Peru, many parts of Lima and the country are dangerous for foreigners).  Because of its tolerance and pleasant people (and great weather...), the country for decades has attracted more than its share of Americans, most of them retirees.

But, to get residency in Costa Rica is harder than it used to be: you need either a large amount of capital or a fairly hefty income (I do not have the figures at hand, but it would be easy to get this info via Google searches...).

Costa Rica does not welcome criminals and is not tolerant of extremely bad behavior.  Even though there is no army, the police are armed.  Violence is a part, albeit relatively small part, of life there.  Petty theft is common...

There is a joke (?) among Americans who move to Costa Rica:

Q:  How do you get a million dollars in Costa Rica?

A:  Go down with two million...

As with every other country, YOU would be a foreigner in their eyes.  YOU would have to conform (at least somewhat) to THEIR ways, their food, their customs.  And learn Spanish.  Even doing all of this, there are Americans who become disenchanted with living there, so you may not want to burn all your bridges back to the USA (like cheating the IRS...).  And you, as in all other countries, would be viewed as a "Rich American", and only valued as such...  If you become poor, few stay your friends.  It takes a lot of time to become accepted by the locals, even when marrying into a good family (although that helps).

And yet, Costa Rica is one of the BEST places to emigrate to (in Latin America)!

Our own choice, of course, is Peru.  We have family (my in-laws, very nice) and a company there ("infrastructure").  For a typical "USA upper middle class / lower upper class" member (like many of my readers appear to be), Costa Rica would be a better choice.  Peru is poorer and less stable.