Posts Tagged: ‘gold’

A Window Into the Real Lauren Bacall

March 28, 2015 Posted by admin

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Press Release: Interest in Fairtrade Gold Blossoms in 2015

March 27, 2015 Posted by admin

Press Release: Enough gold to make over 3,700 Fairtrade gold wedding rings has arrived in the U.K. this month. The shipment, weighing 15 kg, was received by CRED Jewellery and marks the third month of the Fairtrade Foundation’s “I Do” campaign, which is designed to encourage U.K. couples getting married to choose Fairtrade gold when they buy their wedding rings.

The Fairtrade Foundation hopes that if 50,000 couples buy 100,000 Fairtrade gold rings, an estimated $1 million in fair trade premiums could be generated, improving education, healthcare and livelihoods for some of the poorest mining communities across the world.

It is estimated that around 262,000 U.K. couples will get married this year, creating an opportunity for over 500,000 Fairtrade gold wedding rings to be bought.

Couples-to-be can go to a special online hub at to find a jeweler near them who is selling Fairtrade gold wedding rings.

Since the campaign launched in January, another 33 U.K. goldsmiths have signed up to sell Fairtrade gold jewelry.

Victoria Waugh, the global business development manager at Fairtrade International, said, “Choosing gold wedding bands shows a commitment not only to each other, but can also be a strong statement about your values around people and planet. There are so many beautiful styles that couples can now choose from.”

CRED’s CEO, Alan Frampton, said, “Fairtrade gold is getting real traction now as more and more people are asking where their gold comes from. Knowing that the lives of the miners are enhanced by the Fairtrade premium makes it the best gold in the world.”

The Fairtrade Foundation is an independent certification body, which licenses the use of the FAIRTRADE Mark on products that meet international Fairtrade standards.

Rapaport News is not responsible for, and does not endorse, the content of any third-party press release. This is not a Rapaport Press Release. It has been provided as additional information for our clients.


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I’m tired of people whining about how expensive the Apple Watch is

March 26, 2015 Posted by admin

Yes, Apple will sell some of the most expensive smartwatches you can possibly buy this year, especially the gold Apple Watch Edition version that can cost up to $17,000. That still doesn’t mean that a) you have to buy any of these models if you can’t afford one, ir b) that Apple is wrong to price its products however it wants.

Even so, there are plenty of people who are constantly whining about how expensive the Apple Watch is and why it shouldn’t be priced so high, which is in line with similar complaints about “overpriced” Apple devices.

It’s time to stop whining about all that.

FROM EARLIER: Galaxy S6 and iPhone 6 Plus face off in the ultimate camera shootout

One artist this week gained a good deal of attention over her clever publicity stunt that bashed the Apple Watch Edition’s minimum $10,000 price tag.

“If you own or plan to purchase a 18k gold apple watch, you are rich and evil. We are offering you one way out: donate to us. After all, why on earth you need a watch,” San Francisco artist Qinmin Liu wrote about the project. “Believe it or not, as an artist, I couldn’t care less about the technology and price. I care more about individual’s (sic) behaviors, and want to explore the relationship between desire and action.”

This is obviously silly. Just because someone can afford a gold expensive Apple Watch, that doesn’t make that person evil. Yes, Apple Watch Edition buyers might be very rich if they don’t mind spending that much money on a watch, and they probably own plenty of similarly priced (if not more expensive) regular watches and other jewelry. But it’s their right and their business to spend their money however they feel like.

And is the 18-karat gold Apple Watch really that expensive when you compare it to other luxury watches on the market? The answer is no, especially when you consider all the functions the Apple Watch adds compared to old “dumb” watches.

The Rolex Day-Date II President Platinum costs more than $60,000. It’s a gorgeous watch that offers various models to choose from and is customizable to some extent just like the Apple Watch, and it can perfectly tell time, just like the Apple Watch. However, it doesn’t offer much functionality beyond this despite costing up to six times as much as the Apple Watch Edition.

Yet people are not finding reasons to protest against Rolex’s pricing strategy. And artists aren’t demanding free Rolexes to make a point either — at least for the time being.

And this is just one example of the plethora of luxury watches the “rich and evil” can buy. These devices have been deemed as luxury items by the companies that make them and have managed to convince their customers to pay plenty of money for a “silly” wearable device they might not really need.

So then, if Rolex can sell watches for $60,000 a pop, why can’t Apple price its gold smartwatch starting at $10,000 and hope to make a profit from it? Why can’t Apple offer the world its own vision of luxury? Why can’t Apple price the most basic Apple Watch Sport model for up to $399, and expect millions of buyers to get one, when there are plenty of other alternatives that are more expensive than that yet customers still buy them?

Just try and find a Tag Heuer Carrera priced at the same level of the most basic Apple Watch! Yet the iconic Carreras aren’t seeing similar criticism either. Probably that will change later this year when a premium Carrera smartwatch running Android Wear will also be found not good enough to warrant a high entry point.

Maybe it’s time to start accepting that any company, Apple included, can charge whatever it wants for any product it makes. Whether buying these expensive products makes sense is something customers should try figuring out for themselves though. Paying anywhere from $349 to $17,000 for an Apple Watch isn’t wrong if you’re willing to do it, and it doesn’t mean Apple fooled you into forking over the cash either.

As for me, I’ll just get the one Apple Watch most people will buy in the coming months, the most affordable one. And as long as I’m not spending your money for it, stop telling me how expensive it is and present me reasons why Apple is wrong asking me to pay the price it wants me to pay for it.

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China’s Wealthy Are Banking on Extinction

March 25, 2015 Posted by admin

Right now, in warehouses scattered across China, the carcasses of hundreds of dead tigers sit steeping in vats in a mixture of rice wine and herbs.

In weeks, months, or even years, the resulting tiger-bone wine will be packaged—often in bottles shaped like living tigers—and sold for between $80 and $300, according to reports from the Environmental Investigation Agency and other international conservation organizations. The longer the bones steep in the rice wine, the higher the price the bottles will fetch.

China’s elite are purchasing many of the most expensive bootleg bottles, either to give as gifts, as displays of their own wealth, or for their future value, much in the same way that people invest in precious metals, according to J.A. Mills, author of the new book Blood of the Tiger, which details her 20-year career investigating wildlife crime.

She said one of the major driving factors in the illegal wildlife trade is now China’s “über-elite, who are investing in these items as a new asset class.” Quoting reports from undercover investigators working in the field, Mills said people are “banking on extinction”—buying products hoping that wild species will soon disappear.

“These items will become priceless if these species become extinct,” she said. “Banking on extinction is the newest, most deadly threat to the survival of wild tigers and other endangered species.”

Siberian tiger-bone wine is displayed for sale at the Siberian Tiger Park in
Harbin, China. (Photo: Hong Wu/Getty Images)

Investing in Extinction

Tigers, elephants, rhinos, bears, and even a few tree species have become new kinds of collectible investments, similar to fine art and antiques, several experts said.

As more collectors have entered the market, killing endangered species has grown increasingly profitable. Ivory wholesale prices, for example, have shot up from $564 per kilogram in 2006 to at least $2,100 today.

“Ivory prices have been skyrocketing,” said Grace Ge Gabriel, Asia regional director for the International Fund for Animal Welfare. “When I go to ivory markets, people literally tell me ‘This is a good investment.’ ” Market buyers, she said, have recently come up with a new name for ivory: white gold.

A New Trend

Until a few years ago, traditional medicine played the biggest role in driving China’s illegal wildlife trade owing to the belief, not supported by science, that certain animal parts hold curative powers

Things began to change in 2008. Though the international ivory trade was banned in 1989, seven years ago the Convention on International Trade in Endangered Species allowed a onetime sale of 105,000 kilograms of ivory to China and Japan. That kicked off a buying frenzy for culturally valuable ivory carvings that the initial supply could not satisfy. It also inspired the start of a deadly new poaching crisis that today threatens African elephants with extinction. Poached ivory can easily enter the market because “customers don’t know what is legal and what is illegal,” Mills said.

Within two years, conservation organizations began to notice that wildlife products were being sold for “wealth, not health.” One of the most blatant examples occurred at the end of 2011, when IFAW officials got word of a major auction planned just down the street from their office in Beijing.

“Through our investigations, we found that one auction house was about to sell off 400 bottles of tiger-bone wine in a hotel pretty much next door to our office,” said Gabriel. “We walked over there during our lunch break and investigated the preview.” In addition to the tiger-bone wine, they also found “numerous rhino horns and ivory carvings.” All but the ivory was illegal under Chinese law.

The discovery of the auction created an international outcry. As a result, China issued a notice to auction houses that the sale of tiger bones and rhino horns remains illegal. Auctioneers pulled endangered species from their offerings, a move that reduced their sales by $322 million in 2012.

But the trade did not stop. It just became less visible.

New Venues

“You rarely see endangered species for sale in physical shops in major cities,” said Zhou Fei, head of the China office for TRAFFIC, the international wildlife trade-monitoring network.

Instead, the trade has gone online.

“More recently, they have moved from websites to social media,” Fei said, noting that ivory tusks, rhino horns, bear gall bladders, hornbill beaks, and other products now turn up for sale on art collection websites, online forums such as Baidu Tieba, the mobile phone app Wechat, and even Facebook.

A small ivory ring can fetch about $1,000 in these markets. A full rhino horn can sell for $100,000 or more, according to the IFAW.

Items are sold under code names: “African materials” or “white plastic” for ivory, “red” for hornbill beaks, “striped T-shirt” for tiger skins, and “black” for rhino horns.

Some sales, according to investigators, are hidden in chat rooms that cannot be accessed unless someone invites you. Without that introduction, the doors remain locked to prying eyes.

The Growing Middle Class Is a Growing Problem

The prices for the most elaborately carved elephant tusks and rhino horns have grown so high that only China’s ultra-elite can afford to buy them. They are not the only buyers, however.

“The middle class aspires to becoming wealthy,” Gabriel pointed out. They are still buying smaller items such as ivory jewelry or trinkets in the hope that their value will increase.

Although they are only acquiring smaller items, the effect of China’s estimated half a billion middle-class consumers adds up. “When you look at China, everything is magnified,” said Julian Newman, campaigns director for the EIA, who has been investigating the illegal wildlife trade since 1997. “Even a small percentage of the population obviously has a big numeric impact.”

More Than One Way to Invest

While some people buy these products to hold on to, many others use them as a different kind of investment. The high price of ivory, tiger-bone wine, and other items makes them valuable in China’s gift-giving culture.

In other words, they are great for bribes.

“We’ve had many, many traders say that some of their customers want to provide ivory tusks or tiger-bone wine to government leaders or business contacts to create a chance of doing business,” said Newman.

In one notorious recent example, a Chinese businessman was arrested for electrocuting and eating a tiger at a banquet.

Here, the specter of traditional medicine lingers. “Tiger-bone wine has medicinal use,” Gabriel said, “but at current prices, they don’t buy it as a medicine. They buy it as a way to bribe officials.”

Culture Matters

One final element driving trade is wealth combined with a return to tradition.

Newman points to the recent surge in sales of old-style furniture called hongmu, made from rosewood trees, several species of which grow in South America, Africa, and Asia.

“It’s a style of furniture the emperors used,” he said. “It has become very fashionable again.”

The illegal trade in rosewood species from around the world now threatens several species with extinction—as well as the species that depend on the trees in the wild.

Here, too, there’s speculation.

“The price of rosewood has gone up so high now that a single cubic meter is worth over $50,000,” Newman said. “People are sitting on the wood, storing it away, and waiting for the price to go up” if certain rosewood species go extinct, EIA investigators have found.

Moving Forward

Reducing the demand and consumption of endangered wildlife—and saving some of these species from extinction—will require multiple approaches. As Zhou said, “We need to address all of the parts in the puzzle: international pressure, behavior change, government leadership, capacity building in law enforcement, and revision of existing laws.”

Those forces have been at work in the recent reduction in demand for shark fins. Zhou said he is also hopeful that the demand for ivory will soon decrease, and recent polls suggest that this is already starting to happen.

Newman acknowledged that persuading people not to buy wildlife products is a “long-term approach that’s not going to happen overnight.”

Meanwhile, though, he praised recent efforts to track down and punish the criminal enterprises responsible for poaching as well as the people within China who are working to change the existing laws. “It’s China’s law, so it needs to be changed by Chinese people,” he said.

Elephants, rhinos, and tigers may not have many more years to wait for change. “We haven’t got that much time for some of these species,” Newman said. 

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Will Apple Watch bridge the gender divide? – Chico Enterprise

March 24, 2015 Posted by admin

CUPERTINO — Forget the Mickey Mouse face, the communication tricks and the steadfast timepiece, which ticks within mere milliseconds of the global standard.

Whether the new Apple Watch emerges from the smartwatch pack, analysts say, may hinge on its appeal to the 50 percent of the population who have been slower to embrace the gadgets: women.

Apple won’t comment on its marketing strategy, but its promotional ads and events so far seem to target the elusive female tech market. Women, after all, make most of the purchasing decisions and account for a huge market when it comes to jewelry and consumer goods.

Whether living out boyhood fantasies of emulating Dick Tracy or angling to expand their collections of tech toys, men have been the chief buyers of early smartwatches, driving 61 percent of sales, according to a survey of U.S. consumers conducted last year by Kantar Worldpanel ComTech, a consumer research firm. Men tend to adopt new types of tech devices sooner than women, and the heft and industrial design of early smartwatches have limited their appeal, said Carolina Milanesi, chief of research and head of U.S. business at Kantar.

But some think that Apple’s timepiece, which heads to stores in April, may bridge the gender divide. The Apple Watch’s sleek design, dual sizing and potential for customization with various colors and materials will appeal to fashion-minded shoppers — many of them female — who scoff at the thought of wearing a gadget that does not reflect their personal style, Milanesi said.

The Apple Watch, which starts at $349 and commands up to $17,000 for luxury gold models, comes in two sizes and three collections, with an array of interchangeable bands.

“(Apple is) doing a lot things that, in my view, are needed in the market,” she said. “The focus on design definitely helps open up a wider market than just the tech-savvy.”

Women seem to be top of mind for Apple as it makes its pitch for the watch, its first brand-new device since the iPad. Model and entrepreneur Christy Turlington Burns strode across the stage at an event centering on the product earlier this month, the first woman to be featured at an Apple showcase in years. To highlight the watch’s fitness components, the company detailed her experiences running a half-marathon with the gadget strapped to her wrist.

The Cupertino tech titan also has courted fashionistas in the run-up to the watch’s release next month, staking out a place for the watch in the glossy pages of Vogue with a 12-page advertising spread.

The Apple Store will be another valuable tool as Apple tries to attract a diverse audience for the watch. Although the company has not yet revealed how it will display the gadget in stores, the retail experience will be much more akin to browsing a department store than shopping at outlets such as Best Buy, where other smartwatches have been peddled, Milanesi said. With the right ambience, the Apple Watch could be an impulse buy for both sexes: men, who succumb to tech wizardry, and women, who sometimes enjoy shopping for shopping’s sake.

“It’s just us that can go shopping without anything to buy,” Milanesi said.

But women who buy the watch will be motivated by much more than aesthetics, said technology strategist Ellen Petry Leanse.

“Women are smart shoppers,” she said. “They are not sucked in by fashion.”

Apple is not the first smartwatch maker to set its sights on female shoppers. Other manufacturers have feminized their designs with pink hues and crystal accents, Milanesi noted. But Apple’s emphasis on personalization, which lets the customer have the final say on design, is a smarter approach, she said.

“As a woman, I don’t just wear pink, and I don’t just wear jewelry covered in crystals and whatnot,” she said. “I want to be able to choose the materials.”

To sell the watch, Apple has touted its health and fitness tracking. That may resonate with many female customers, who have adopted fitness bands made by companies such as Fitbit faster than men, said Angela McIntyre, an analyst for Gartner.

“The activity tracker fits in without even looking like a wearable device,” she said.

Despite Apple’s attention to style, branding expert Allen Adamson thinks the gadget’s bulky size — smaller than other smartwatches, but still large for many women’s wrists — will attract a mostly male following.

“If it didn’t skew 70-30, I’d be surprised,” said Adamson, who is chairman of North America for Landor Associates, a branding firm.

Based on Olivia Rawlins’ reaction, Apple may have a tough sell. For starters, the 18-year-old Morgan Hill resident says she hasn’t worn a watch in ages — she uses her cellphone to keep track of the time. Plus, she finds the early designs she’s seen from Apple to be too “masculine.”

“I wouldn’t say they need his and hers” versions of the watch, said Rawlins, who works at Staples. “But it just seems like there’s a lot of guy stuff on it.”

Contact Julia Love at 408-920-5536. Follow her at

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Bringing Diamond Jewelry to India’s Masses

March 23, 2015 Posted by admin

RAPAPORT… Carat Lane is a start-up retailer in India focused on selling diamond jewelry, primarily online. The company raised $31 million from Tiger Global, an early investor and venture capital fund, in its fourth round of funding that ended in January 2015. Titan Jewellery, a major Indian jeweler, is also rumored to be in talks to purchase a significant stake in the company. Mithun Sacheti, co-founder and CEO of Carat Lane, recently spoke with Rapaport News about what motivated him to establish Carat Lane and how online retail can bring diamond jewelry to India’s masses:

Rapaport News: How did you decide to go into selling diamond jewelry online?

MS: I grew up in Mumbai where my father has a jewelry store. My family owns Jaipur Gems, which manufactures high-end jewelry that is sold in our own retail stores.

After I received gemology training, I moved to South India to open a Jaipur Gems store there. I opened a second Jaipur Gems store in South India in 2007, but it had taken me seven years to reach that goal. I saw that if we kept expanding the traditional way it might take 15 years to build the next six stores. That was way too slow for me.

We saw the online jewelry retail market develop in the U.S., so we thought we might be able to use the Internet to run a better distribution system in India. We decided to find a way to sell jewelry and diamond solitaires online. It was an obvious bet to make given the growing internet-savvy younger generation in India.
The other trend I noticed was that until the mid-2000s, the diamond jewelry business in India was focused on selling to upper middle class and wealthy customers that make up the top 5 percent of the population. All of the stores and diamond jewelry brands were marketing toward that demographic and were aggressively promoting bridal diamond jewelry in particular.

In the U.S., jewelry brands advertise and sell across a wide spectrum of price points. There is something for everyone in the U.S., while diamond jewelry in India is very elitist. At Carat Lane, we provide jewelry at a price point that is very different from what the Indian customer was used to before we started the company.

RN: What is the size of the domestic jewelry market in India?

MS: The estimated size of the domestic jewelry and bullion market in India is somewhere between $30 billion and $40 billion. About 70 percent of this consists of gold jewelry and gold bullion sales.

In terms of Carat Lane, if even 1 percent of the market will be willing to buy jewelry online, that means potential online annual jewelry sales of $400 million. If that figure were to reach 10 percent, it would translate into an online jewelry market that generates around $4 billion per year in sales. The market is growing but it’s still small as online sales of fashion and fine jewelry combined are expected to reach $150 million in 2015, while last year it was $125 million. In 2013 it was not even $2 million. This part of the jewelry market is exploding.

RN: Why focus on selling diamond jewelry online in India if gold jewelry has a much larger share of the market?

MS: We made an important strategic decision early on to focus Carat Lane on diamond jewelry and not chase the larger gold jewelry market.

We chose diamond jewelry because India is becoming more and more Americanized. The middle class jobs that are growing rapidly in India are IT-based and in every aspect of life we have a lot of technology. Our clothing is also becoming a lot more westernized, which we believe means that India’s jewelry requirements are also going to become more westernized.

When you manufacture Western-style jewelry you can create jewelry at a wider variety of price points than you can with Indian bridal jewelry, where the potential for online sales is limited. I think that most Indian people will still only buy bridal jewelry in a store and not on the Internet.

RN: How is Carat Lane different from U.S. online retailers?

MS: What distinguishes us from some U.S. etailers is that we do not utilize a drop-shipment model, where a third-party supplier ships directly to the end consumer.

We manufacture close to 80 percent of the jewelry we sell. We procure the raw materials to create our jewelry, including gold in different purities and diamonds in various sizes, colors and clarities. Our factory works on a just-in-time manufacturing model to minimize the amount of finished jewelry we have to hold in inventory. The amount of inventory we hold is roughly equivalent to 5 percent of our total turnover.

In addition, if you look at diamond jewelry etailers in the U.S., their product mix is heavily weighted toward solitaires, even though diamond jewelry is a business with much healthier margins. As a result, their profit margins are very thin. In 2010-2011, we saw that we were going to run into the same problem as these U.S. companies, so we switched our model so that solitaires comprise 30 percent of our business and jewelry makes up the remaining 70 percent.

The jewelry business is not a business that you can run at a loss. You need to make money by the second transaction. If you follow that principle, you are pretty certain to make money in the long run. At Carat Lane we are fairly confident that when we are about five times our current size we will have a profit margin between 7 percent and 8 percent.

RN: Who is Carat Lane’s target demographic and what is your average price range?

MS: Our core customers are forward-thinking people, who typically shop for other retail goods online as well. They are working professionals who have never been tied to the concept of a family jeweler, but have always had an interest in jewelry.

If you look a bit closer at the demographic breakdown, 70 percent of our shoppers are women and 30 percent are men. With our jewelry offerings in particular, we are targeting working women between the ages of 30 and 45, although in reality they could be younger or older. These are women who like to wear jewelry often in their everyday life, not just for weddings, and they are pleasantly surprised by our price points, which are typically between $300 and $600.

In terms of our solitaire sales, we have a vision to democratize the concept of a diamond engagement ring in India. India may be the global center of diamond polishing, but to this day, very few Indian men buy diamond engagement or wedding rings. Part of the reason is because diamond rings are out of reach for Indians earning an average wage. We want to change that.

In the U.S., the rule of thumb is that an engagement ring should cost the equivalent of two months’ salary. We believe the same rule of thumb should apply in India. Until now, diamond solitaires in India was really targeted toward people earning more than $2,000 per month. But if the average Indian salary is $1,600 (INR 100,000) per year, then we need to offer solitaire products that cost between $250 and $500 to appeal to most Indians. In order to reach that price point we decided to expand our range of solitaire sizes to 0.25-carat and up, rather than our initial model of starting at 0.50-carat sizes.

RN: Do you expect foreign online jewelry retailers to try to penetrate the Indian market in the near future?

MS: I don’t expect any of them to try because they have yet to reach their potential in their own home markets.

The jewelry retail brands have become really strong online over the past couple of years. The amount of online orders processed by Helzberg, Zales and the entire Signet group, is far outpacing what the pure online companies are doing. But if these omni-channel companies come to India they will establish a full presence here and not just an online one. I don’t think they view India as an opportunity right now for the same reason that American diamond merchants do not enter India to set up shop. They know they will never see the margins in India required to maintain their operations.

RN: What is your plan for the near future? Do you anticipate expanding outside India?

MS: We have three sales channels that we are developing: online, which we have been discussing, try-at-home shopping and our brick-and-mortar stores.

Our try-at-home sales channel appeals to consumers who would rather buy something in the comfort of their own home than drive to a store. In India, because of the traffic congestion in most major cities, this is a potentially large segment of consumers.

For this channel, we have a sample line for every product that we sell. You can use the sample line to select any five products and a well-trained salesman will come and display those products to you for purchase. We were the first to launch this sales channel for jewelry in India, but I am sure others will also adopt it.

Regarding our brick-and-mortar sales, we already have five physical stores. They are very different from the typical Indian jewelry store, which tend to be very large, with a guard and an usher who walks you in. They are elitist by nature. Our stores are designed for the customer who walks into a mall or a duty-free shop. There is no glass and you can walk right up to the products. You can touch, feel and play with the jewelry.

It’s more inviting than what the retail store environment currently is in India and our stores are already doing very well.

Altogether, India is a very large market in which we can grow. We anticipate that Carat Lane can grow into a business with annual sales of $400 million per year and we have a plan to reach that scale in India in the next four years.

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What Moves Gold Prices?

March 22, 2015 Posted by admin

The price of gold is moved by a combination of supply, demand and investor behavior. That seems simple enough, but the way those factors work together is sometimes counterintuitive. Many investors, for example, think of gold as an inflation hedge. That has some common sense plausibility — paper money loses value as more is printed. But the supply of gold is relatively constant. As it happens mining doesn’t add much year to year.

Correlation to Inflation

Two economists, Claude B. Erb of the National Bureau of Economic Research and Campbell Harvey, a professor at Duke University’s Fuqua School of Business, studied the price of gold in relation to several factors. It turns out gold doesn’t correlate well to inflation. That is, when inflation rises, that doesn’t mean that gold is necessarily a good bet. (For more, see: The Better Inflation Hedge: Gold or Treasuries?)

So inflation isn’t it, what about fear? Certainly, during times of economic crisis investors flock to gold. When the Great Recession hit, gold prices rose. But gold was already rising up until the beginning of 2008, getting near $1,000 an ounce before falling under the $800 level and then bouncing back up and rising as the stock markets bottomed out. That said, gold prices kept rising even as the economy recovered. The price of gold peaked in 2011 at $1,921, and has been on a slide ever since. It now trades at south of $1,200 (as of mid-March 2015).

Erb and Harvey note in their paper “The Golden Dilemma,” that gold has positive price elasticity. That basically means that as more people buy gold the price goes up in line with demand. It also means there isn’t any underlying “fundamental” to the price of gold. If investors start flocking to gold, the price rises no matter what monetary policy might be. That doesn’t mean it’s completely random or the result of herd behavior. There are forces that affect the supply of gold in the wider market — and gold is a worldwide commodity market, like oil or coffee. (For more, see: How Can I Invest in Gold?)


Unlike oil or coffee, though, gold isn’t used up. Almost all the gold ever mined is still around. There is some industrial use for gold, but that hasn’t increased demand as much as jewelry or investment. The World Gold Council’s 2014 figures show that total demand was 3,923.7 metric tons, but only 389 tons was for the tech sector. The rest was investment at 904.6 tons and jewelry at 2,152.9 tons. Back in 2001, when gold prices were nearing all-time lows (at least since ownership of bullion was re-legalized in the 70s), jewelry took up 3,009 tons while investment was 357 tons, and tech was 363 tons.

So one would expect, if anything, the price of gold to drop over time, since there is more of it around. So why doesn’t it? Aside from there being more people who might want to buy, the jewelry and investment demand have some clues here. As Peter Hug, director of global trading at Kitco, said, “It ends up in a drawer someplace.” The jewelry is effectively taken off the market for years at a time.

Even though in countries like India and China gold can act as a store of value, the people that buy it there don’t regularly trade it (few pay for a washing machine by handing over a gold bracelet). Jewelry demand tends to rise and fall with the price of gold, so when prices are high the demand falls relative to investor demand. (For more, see: Gold: The Other Currency.)

Central Banks

Hug says the big market mover is often central banks. In times when foreign exchange reserves are large, and the economy is humming along, a central bank will actually want to reduce the amount of gold it holds. That’s because the gold is a dead asset – it makes no return, unlike bonds or even money in a deposit account.

The problem for central banks is this is precisely when other investors aren’t that interested in gold either. So a central bank is always on the wrong side of the trade, even though selling that gold is precisely what the bank is supposed to do. As a result, the price of gold falls. (For more, see: What are Central Banks?)

Central banks have since tried to manage their gold sales in a cartel-like fashion, to avoid disrupting the market too much. Called the Washington Agreement, it basically says the banks won’t sell more than 400 (metric) tons in a year. It’s not binding like a treaty, more of a “gentleman’s agreement” – but one that is in the interests of central banks as unloading too much gold on the market at once would negatively affect their portfolios.

One exception is China. The Chinese central bank has been a net buyer of gold, and that could be putting some upward pressure on the price. The price of gold has still fallen, though, so even Chinese buying has at most slowed the decline. (For more, see: Get to Know the Major Central Banks.)


Besides central banks, exchange traded funds (ETFs) are now major gold buyers and sellers, such as the SPDR Gold Shares (GLD) and iShares Gold Trust (IAU), which allow investors to buy into gold without buying mining stocks. Both offer shares in bullion and measure their holdings in ounces of gold. The SPDR ETF currently holds about 9,600 ounces while the iShares ETF has about 5,300. These ETFs, though, are designed to reflect the price of gold, not move it. (For more, see: Which Gold ETF Should You Own?)

Portfolio Considerations

Speaking of portfolios, Hug said a good question for investors is what the rationale for buying gold is. As a hedge against inflation it doesn’t work well, but looked at as a piece of a portfolio then it’s a reasonable diversifier. It’s just important to recognize what it can and cannot do.

In real terms gold prices topped out in 1980, when it hit nearly $2,000 per ounce (in 2014 dollars). Anyone who bought gold then would have lost money. On the other hand the investors who bought it in 1983 or 2005 would be happy selling now even with recent price drops. It’s also worth noting that the “rules” of portfolio management apply to gold as well. The total number of gold ounces one holds should fluctuate with the price. If one wants 2% of the portfolio in gold, then it’s necessary to sell when the price goes up and buy when it falls. (For more, see: How Much Disaster Can Gold Hedge?)

Retaining Value

One good thing about gold: it does retain value. Erb and Harvey compared the salary of Roman soldiers 2,000 years ago to what a modern soldier would get based on how much those salaries would be in gold. Roman soldiers were paid 2.31 ounces of gold per year, while centurions got 35.58 ounces.

Assuming $1,600 per ounce, a Roman soldier got the equivalent of $3,704 per year, while a U.S. Army private in 2011 got $17,611. So a U.S. Army private gets about 11 ounces of gold (at current prices). That’s an investment growth rate of about 0.08% over approximately 2,000 years. (For more, see: Does it Still Pay to Invest in Gold?)

A centurion (roughly equivalent to a captain) got $61,730 per year, or while a U.S. army captain gets $44,543 — 27.84 ounces at the $1,600 price, or 37.11 ounces at $1,200. So the rate of return is either -0.02% per year or nearly zero.

The conclusion Erb and Harvey made, though, was that the purchasing power of gold stayed pretty constant. It also seems unrelated to the current price.

The Bottom Line

If you’re looking at gold prices, it’s probably a good idea to look at how well the economies of certain countries are doing. As economic conditions worsen the price will (usually) rise. Gold is a commodity that isn’t tied to anything else, so it makes a good diversifier in a portfolio in small doses. (For more, see: The 5 Best Performing Gold ETFs.)

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Gold Looted From Ancient Empire Returned to Romania

March 21, 2015 Posted by admin

First, though, the gold had to be tracked down. The bracelets, and thousands of crudely minted silver and gold coins found with them, began surfacing on the international market almost immediately after they were found in Sarmizegetusa’s soil in the late 1990s, offered to collectors privately and at auctions in New York, Paris, and Zurich.

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Jewelry robbed from Gold Assay of Durham – WTVD

March 20, 2015 Posted by admin

Investigators need the public’s help identifying the person responsible for robbing a jewelry store in Durham on Thursday.

Police said it happened around 1:15 p.m. at Gold Assay on Fayetteville Road.

Authorities said a man told the Gold Assay employee that he had some jewelry he wanted to sell. When the employee looked up, the suspect pointed a gun and demanded jewelry.

The suspect allegedly took several pieces of jewelry and fled in a red car. Authorities said the car may have been a Kia Soul, and it was driven by a second person.

Police described the suspect as a black male with a light complexion. He was wearing a gray zip-up hoodie, a t-shirt, and blue jeans.

Anyone with information is asked to call Investigator A. Stringham at (919) 560-4415, ext. 29311 or CrimeStoppers are (919) 683-1200. CrimeStoppers pays cash rewards for information leading to arrests in felony cases and callers can remain anonymous.

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Gold For Softball Fundraiser

March 19, 2015 Posted by admin

gold-jewelryThe Verona High School girls softball team is kicking off its 2015 season with a fund-raising event that will benefit the team and its supporters–a gold, silver and platinum sell-off.

The Hillbilly diamond girls will receive 7% of the proceeds when supporters sell their old gold, silver and platinum to Walter Bauman Jewelers, 653 Eagle Rock Ave. in West Orange, from Thursday, March 19 through Saturday, March 21.

To help boost the girls’ fundraising total, Walter Bauman Jewelers will add 20% to the value of all purchases, making the event a win-win for the softball team and their supporters. Sellers must mention Verona High School softball to benefit the team and get their 20% bonus.

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