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16 - Modern Gold Bug How does the Modern Gold Bug compare to 30 years ago? Amber Ness takes us on a tour through time.

6 World News SPECIAL FEATURES

12 The Future of Bitcoin 16 The Modern Gold Bug 22 Making an American Eagle 28 Good Delivery, Good for You

22 - The American Eagle Has Landed

34 Closet Preppers 46 American Artisans

Jason Vaile reviews the historical value and production of this icon.

50 Mint Spotlight Numismatics

72 American Eagle First Strike HARD ASSETS

28 - Deliver the Goods The importance of good delivery is explored and shows why this could be good news for investors.

78 Top 10 Tips for Buying Metals LIFESTYLE AND LUXURY

40 We Love Our Cars 54 American Polo 57 Venom GT 58 American Watches 66 Space Visit

34 - Prepping on the DL

68 Captain America

When no one is looking, how do you prepare for “just in case”? Amber Ness shows us how.

Mining & Minerals

82 Mining News Reference

88 Preferred Dealers

78 - Tipping Point

94 Events

John Maben shows the first time buyer the Do’s and Don’t’s of metal investing.

96 Hindsight

www.ahametals.com American Hard Assets | 3


EDITOR’S NOTE

America the Beautiful

H

appy Fourth of July to all of our readers and hopefully you have experienced plenty of warm summer weather in whatever part of the country you picked up this copy of

AHA.

JUNE/JULY 2014

PRESENTED BY: AHA Metals, LLC

As we always do in this part of the publication, we ask you again to please visit our website at www.ahametals.com. We’re really proud of it and it’s there you will find the up-to-the-minute news and stories you’ve come to expect from AHA along with interesting stuff from our partners, real-time updates, exchange rates, metal prices, and more. We’ve introduced even more original content on the site in recent months from our great stable of industry writers and plan to feature even more in the coming year. This issue, as you can tell by the great-looking cover provided by our wonderful design folks, is all about America. The “American” in American Hard Assets is the focus here and we’re bringing you a boatload of content with a definite focus on American gold, American coins, refiners, wristwatches, and a whole host of other interesting stuff.

VP CONTENT: Brad Hastedt EDITORIAL SUPPORT: Kevin Thompson VP Sales & Marketing: Mike Obert SUBSCRIPTIONS: Leigh Chamberlain GRAPHIC DESIGN: J.K. Monte de Ramos, Noel ‘Kip’ M. Macasero (Open Look Creative Solutions)

FEATURE WRITERS: Ed Estlow, Gabriel Benson, Eavan Moore, Jason Vaile, Amber Ness, Susan Kime, Richard Alexander Rogers, Michael Haynes

CONTRIBUTORS: Christy Stewart, John W. Garibald, John Maben

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

So, we’re all set to keep the summer going and to celebrate our great country and what it has to offer in the way of gold, silver, and other hard assets. We are excited to bring you this third issue of the year and, as always, don’t hesitate to give us feedback on the magazine or online to help us get better. We say it every time, but we are committed to bringing you the news and stories you want (and need) to see. Thank you for continuing your commitment to this publication and keep up with American Hard Assets for all your metals news in the future. Good Investing! American Hard Assets Editorial Staff

services regarding the profitability or suitability of any security, commodity or investment. All commentary and advice in this publication is of a general nature only, and doesn’t consider your individual circumstances or financial objectives. You should always consult a licensed financial advisor for your personal investment advice. Please do your own research.

CONTACT US FOR ADVERTISING Publisher Inquiries: bhastedt@ahametals.com Ad Inquiries: mobert@ahametals.com

SUBSCRIPTIONS www.ahametals.com 1.877.695.1258 P.O. Box 835433 Richardson, Texas 75083-5433 American Hard Assets is a bi-monthly publication and subscriptions are available for one year at $29.99.

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H A R D A S S E T S U P D A T E S | World News

World News Updates

Source: www.washingtonpost.com

The World’s Most Expensive Dog, A Tibetan Mastiff Sold for $2 Million A Tibetan Mastiff — an ancient breed of dog that looks more lion than canine — just fetched nearly $2 million at a Chinese “luxury pet fair” in the eastern province of Zhejiang, Agence France-Presse reports. More expensive than the 2011 sale of a red mastiff named Big Splash, which cost $1.6 million, Tuesday’s transaction might just make this dog the most expensive of all time, AFP says. The buyer, an unnamed 56-year-old property developer from Qingdao, dropped a whopping 12 million yuan ($2 million) on the dog on Tuesday, and the dog’s breeder was elated. For reporters on Tuesday, he laid it on thick. His dogs “have lion’s blood and are top-of-the-range mastiff studs. Pure Tibetan mastiffs are very rare, just like our nationally treasured pandas, so the prices are so expensive.” In 2010, the Associated Press called the breed the “dog of the

6 | American Hard Assets www.ahametals.com

moment.” Its ownership has come to symbolize status and wealth as much as a new car or an ostentatious mansion. “I used to invest in German shepherds, but Tibetan mastiffs are what’s hot right now,” business owner Sui Huizheng, who owns 20 of the dogs, told the AP. But in China, they are relatively common, and have a short life expectancy. “It’s quite puzzling why they are fetching such a high price in China,” says Martha Feltenstein, president of the American Tibetan Mastiff Association. This red-haired, two-million-dollar dog is a hulk of an animal, 31 inches tall and weighing nearly 200 pounds, AFP reports. The luxury dog trade has been a hot business in China lately. With more than 800,000 millionaires — the most in its history — that nascent class has helped make China one of the world’s largest luxury markets.


World News | H A R D A S S E T S U P D A T E S

World News Updates

SOURCE : www.cnbc.com

Most Expensive Markets for New York City has become an otherworldly market for real estate to most people. It’s the town where a skyrise condo just sold for more than $50 million—and it was only that cheap because it was raw space. But to the global rich, New York is a bargain. New York is half price compared to some other favorite cities of the rich, a new report shows that on a per-square-foot basis. The Knight Frank Wealth Report shows that the tiny, tony principality of Monaco remains the most expensive real estate market in the world. The report found that $1 million will only get you 15 square meters of space, or about 160 square feet. So you could buy a $1 million bedroom—and presumably share a bathroom and kitchen with other property-poor millionaires.

The darling of the rich: London is the favorite city of the rich. The study ranks cities by their attractiveness to the rich based on four criteria: economic activity, quality of life, knowledge/influence and political power. London ranks first in the world, followed by New York. The two cities always dominate the top of the list (they are like the Gates and Buffett of rich cities), and they are basically tied. But, as seen in the chart below, the study projects New York will eventually retake the lead.

2013

2014

2024

London

London

New York

New York

New York

London

Singapore

Singapore

Hong Kong

4

Hong Kong

Hong Kong

Singapore

5

Geneva

Geneva

Shanghai

6

Shanghai

Shanghai

Beijing

7

Dubai

Miami

Dubai

8

Miami

Dubai

Miami

Paris

Beijing

Geneva

Beijing

Paris

Mumbai

1 2 3

“New York is a definite bargain from the global marketplace perspective,” said Dolly Lenz, founder of Dolly Lenz Real Estate in New York. “It’s not a bargain from the perspective of New Yorkers who have seen the prices quadruple over the past 20 years. But the wealthy look more globally, and when they compare these cities, New York is great value.” But the report—done by Knight Frank, a London-based real-estate firm, along with research firm WealthInsight—had other interesting tidbits when it comes to the real estate and global wealth. These include:

9 10

Biggest price gains: With prices up 38 percent for prime, luxury real estate, the city that had the biggest price increases for luxury real-estate was Jakarta, Indonesia. Auckland, New Zealand, ranked second, at 29 percent, while Bali, Indonesia, ranked third, with prices up 22 percent.

“History, location and their long established wealth mean that London’s and New York’s positions remain unassailable,” the report said, adding that New York will soon get an edge from political power and economic activity. www.ahametals.com American Hard Assets | 7


H A R D A S S E T S U P D A T E S | World News

World News Updates Worst Investment in the World This Year

SOURCE: qz.com

You’d have to hunt pretty hard to find a worse investment over the last three months than bitcoin. Bitcoin, the virtual, electronic currency tumbled at 38% against the US dollar since Dec. 31 last year, making it one of the worst assets to own. That’s right. We reckon bitcoin has dropped more than copper, the Russian stock market (Micex), and the Nikkei. It’s even declined worse than the official dip of the Argentine peso. Although unofficial black market declines in that currency are much worse. Of course, it’s expected that confidence in the crypto-currency has been falling apart. First of all, unless you were dodging taxes, laundering money or involved in selling illegal drugs, it never really made much sense to use bitcoin as a medium of exchange. It did momentarily make a lot of sense to own bitcoin for a few months. But only because it was going up. In other words, it made sense if you 8 | American Hard Assets www.ahametals.com

were confident you could flip it to another sucker at a tidy profit. But the Japanese bitcoin exchange Mt. Gox catastrophic collapse a month ago made it painfully clear that bitcoin is not a safe store of value either. (Some $450 million worth of bitcoins somehow disappeared during the implosion of the company.) In short, bitcoin is not a widely accepted medium of exchange. It’s not a reliable store of value. It doesn’t come anywhere near meeting the test of a currency. And, in March, the US Internal Revenue Service (IRS) dealt it a harsh blow by ruling that for tax purposes, bitcoin should be treated like a financial asset such as a share of stock, which will make it almost impossible to use as a currency. Of course, your ownership share of a share of stock represents a claim on the profits of an actual company. Your ownership of bitcoin, even before the IRS decision, represented, well, that you were a pretty cool, tech-savvy person. In other words, not much.


World News | H A R D A S S E T S U P D A T E S

World News Updates

The world’s richest billionaires are responsible for some of their nation’s most well-known products: The chairman of Samsung is South Korean Lee Kun-Hee, Amancio Ortega of clothing company Zara boasts a $64 billion fortune in Spain – the biggest in Europe. Heineken, Netherlands’ most famous beverage conglomerate, is responsible for the $10.4 billion fortune of heir Charlene de Carvalho-Heineken. And who could forget Microsoft’s Bill Gates, who is America’s wealthiest man as well as the worlds. As defined by Luisa Kroll and Kerry A. Dolan, those methodology rules rank individuals rather than large, multi-generational families who share fortunes. We don’t include members of the royal family or dictators who obtain their fortunes entirely as a result of their position or power, nor do we include royalty who, often with large families, control the riches in trust for their nation. Do you know who the richest person is in your country? View the full list below.

SOURCE: www.forbes.com

Algeria Richest: Issad Rebrab Net worth: $3.2 billion Source of wealth: Food

Belgium Richest: Albert Frere Net worth: $4.9 billion Source of wealth: Investments

Colombia Richest: Luis Carlos Sarmiento Net worth: $14.2 billion Source of wealth: Banking

Angola Richest: Isabel dos Santos Net worth: $3.7 billion Source of wealth: Investments

Brazil Richest: Jorge Paulo Lemann Net worth: $19.7 billion Source of wealth: Beer

Cyprus Richest: John Fredriksen Net worth: $13.6 billion Source of wealth: Shipping

Argentina Richest: Carlos and Alejandro Bulgheroni Net worth: $5.5 billion Source of wealth: Oil & gas

Canada Richest: David Thomson & family Net worth: $22.6 billion Source of wealth: Media

Czech Republic Richest: Petr Kellner Net worth: $11 billion Source of wealth: Banking, insurance

Australia Richest: Gina Rinehart Net worth: $17.7 billion Source of wealth: Mining

Chile Richest: Iris Fontbona & family Net worth: $15.5 billion Source of wealth: Mining

Denmark Richest: Kjeld Kirk Kristiansen Net worth: $10.2 billion Source of wealth: Lego

Austria Richest: Dietrich Mateschitz Net worth: $9.2 billion Source of wealth: Red Bull

China Richest: Wang Jianlin Net worth: $15.1 billion Source of wealth: Real estate

Egypt Richest: Nassef Sawiris Net worth: $6.7 billion Source of wealth: Construction

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H A R D A S S E T S U P D A T E S | World News

World News Updates

Finland Richest: Antti Herlin Net worth: $3.3 billion Source of wealth: Elevators, escalators

India Richest: Mukesh Ambani Net worth: $18.6 billion Source of wealth: Petrochemicals, oil, gas

France Richest: Liliane Bettencourt & family Net worth: $34.5 billion Source of wealth: L’OrÊal

Indonesia Richest: R. Budi Hartono Net worth: $7.6 billion Source of wealth: Banking, tobacco

Georgia Richest: Bidzina Ivanishvili Net worth: $5.2 billion Source of wealth: Investments

Ireland Richest: Pallonji Mistry Net worth: $12.8 billion Source of wealth: Construction

Germany Richest: Karl Albrecht Net worth: $25 billion Source of wealth: Retail

Israel Richest: Eyal Ofer Net worth: $7 billion Source of wealth: Real estate, shipping

Greece Richest: Spiro Latsis & family Net worth: $3.2 billion Source of wealth: Banking, shipping

Italy Richest: Michele Ferrero & family Net worth: $26.5 billion Source of wealth: Chocolates

Guernsey Richest: Stephen Lansdown Net worth: $2.4 billion Source of wealth: Financial services

Japan Richest: Masayoshi Son Net worth: $18.4 billion Source of wealth: Internet, telecom

Hong Kong Richest: Li Ka-shing Net worth: $31 billion Source of wealth: Diversified

Kazakhstan Richest: Bulat Utemuratov Net worth: $2.2 billion Source of wealth: Mining, banking, hotels

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Kuwait Richest: Fawzi Al-Kharafi, Jassim Al-Kharafi and Mohannad Al-Kharafi (tied) Net worth: $1.3 billion Source of wealth: Diversified Lebanon Richest: Najib Mikati and Taha Mikati (tied) Net worth: $3.1 billion Source of wealth: Telecom Lithuania Richest: Nerijus Numavicius Net worth: $1 billion Source of wealth: Retail, pharmacy Macau Richest: David Chow Net worth: $1.8 billion Source of wealth: Casinos Malaysia Richest: Robert Kuok Net worth: $11.5 billion Source of wealth: Diversified Mexico Richest: Carlos Slim Helu & Family Net worth: $72 billion Source of wealth: Telecom Monaco Richest: David Nahmad Net worth: $1.75 billion Source of wealth: Art


World News | H A R D A S S E T S U P D A T E S

World News Updates Morocco Richest: Othman Benjelloun Net worth: $2.8 billion Source of wealth: Banking, insurance

Romania Richest: Ioan Niculae Net worth: $1.2 billion Source of wealth: Agriculture

Taiwan Richest: Tsai Eng-Meng Net worth: $9.5 billion Source of wealth: Food, beverages

Nepal Richest: Binod Chaudhary & family Net worth: $1.1 billion Source of wealth: Diversified

Russia Richest: Alisher Usmanov Net worth: $18.6 billion Source of wealth: Steel, telecom, investments

Tanzania Richest: Rostam Azizi Net worth: $1 billion Source of wealth: Telecom, investments

Netherlands Richest: Charlene de Carvalho-Heineken Net worth: $10.4 billion Source of wealth: Heineken

Saudi Arabia Richest: Prince Alwaleed Bin Talal Alsaud Net worth: $20.4 billion Source of wealth: Investments

Thailand Richest: Dhanin Chearavanont Net worth: $11.4 billion Source of wealth: Food

New Zealand Richest: Graeme Hart Net worth: $7 billion Source of wealth: Investments

Singapore Richest: Robert & Philip Ng Net worth: $11 billion Source of wealth: Real estate

Turkey Richest: Murat Ulker Net worth: $3.7 billion Source of wealth: Food manufacturing

Nigeria Richest: Aliko Dangote Net worth: $25 billion Source of wealth: Cement, sugar, flour

South Africa Richest: Johann Rupert & family Net worth: $7.6 billion Source of wealth: Luxury goods

Uganda Richest: Sudhir Ruparelia Net worth: $1.1 billion Source of wealth: Real estate

Norway Richest: Stein Erik Hagen & family Net worth: $5 billion Source of wealth: Retail

South Korea Richest: Lee Kun-Hee Net worth: $11.1 billion Source of wealth: Samsung

Ukraine Richest: Rinat Akhmetov Net worth: $12.5 billion Source of wealth: Steel, coal

Oman Richest: Mohammed Al Barwani Net worth: $1.2 billion Source of wealth: Oil

Spain Richest: Amancio Ortega Net worth: $64 billion Source of wealth: Zara

United Arab Emirates Richest: Abdulla bin Ahmad Al Ghurair & family Net worth: $4.8 billion Source of wealth: Diversified

Peru Richest: Eduardo Belmont Anderson Net worth: $2.5 billion Source of wealth: Cosmetics

St. Kitts & Nevis Richest: Jacky Xu Net worth: $1.2 billion Source of wealth: Apparel

Philippines Richest: Henry Sy & family Net worth: $11.4 billion Source of wealth: Diversified

Swaziland Richest: Nathan Kirsh Net worth: $3.7 billion Source of wealth: Retail, real estate

Poland Richest: Jan Kulczyk Net worth: $3.6 billion Source of wealth: Telecom, oil, beer

Sweden Richest: Stefan Persson Net worth: $34.4 billion Source of wealth: H&M

Portugal Richest: Americo Amorim Net worth: $5.3 billion Source of wealth: Energy, investments

Switzerland Richest: Ernesto Bertarelli & family Net worth: $12 billion Source of wealth: Biotech, investments

United Kingdom Richest: Gerald Cavendish Grosvenor & family Net worth: $13 billion Source of wealth: Real estate United States Richest: Bill Gates Net worth: $76 billion Source of wealth: Microsoft Venezuela Richest: Gustavo Cisneros & family Net worth: $4 billion Source of wealth: Media Vietnam Richest: Pham Nhat Vuong Net worth: $1.6 billion Source of wealth: Real estate

www.ahametals.com American Hard Assets | 11


S p e c i a l F e a t u r e | Bitcoin Review

An Update on the Unsettling News for By Susan Kime Justluxe

B

ack in December, I discussed the pros and cons of Bitcoin, the new P2P (peer to peer) virtual currency at Justluxe.com. From the outset, this idea and its reality, its theory and its practice, has been replete with controversy. Paul Krugman, a 2008 Nobel Laureate in Economics, wrote in an Op-Ed piece in The New York Times called Bitcoin Is Evil. He said that “to be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why Bitcoin should be a stable store of value.” Krugman says this because of the fluctuations in value that Bitcoin has exhibited recently, as on December 6 and 7 of last year, the value of one Bitcoin fell from $1200 to $600 in the course of 48 hours. And, since computer programs can easily adjust the price

12 | American Hard Assets www.ahametals.com

of goods along with the value of Bitcoins, the currency doesn’t have to maintain a stable store of value. Yet there is another group of economists and business investors whose ideological passion lies in strengthening a system of exchange that is independent of any government or bank. As a spokesman for such views, I quoted Charles Eisenstein, author of Sacred Economics, in my previous article: “Today’s national and supranational currencies have become a blight…created through interest-bearing debt, controlled by financial elites, tracked by the surveillance state, and necessitating endless growth, money as we know it is a primary agent of inequality, injustice, and ecocide.” He believes in Bitcoin.


Bitcoin Review | S p e c i a l F e a t u r e

In both of these opposing ideologies, something may be missed: the basic newness of the idea, and how a new idea during its first years has a tendency to bump and grind along. The Bitcoin idea has had its share of dings, scrapes and bruises. The most recent one, occurring this week, could be considered a major fracture. Time will tell, but here is what happened. Even though the concept of Bitcoin rejects the control of banks and government, the flow and fiscal movement of Bitcoin had to be dealt with somehow, so digital currency exchanges evolved to allow trading Bitcoins for U.S dollars and several other currencies. There are many exchanges, but the largest and best-known Bitcoin exchange is Mt. Gox, which seems to have met its demise on February 24th after having lost, according to Bloomberg, hundreds of millions of dollars of its customer’s Bitcoins. The

New York Times reported that a document circulating widely in the Bitcoin world states that Mt. Gox had lost 744,000 Bitcoins in a theft that had gone unnoticed for years. That would be about six percent of the 12.4 million Bitcoins in circulation. To many, this was not a profound shock, as Mt. Gox had complications for some time - last year it had its accounts seized by government regulators and experienced increasing trouble allowing its customers to get at their money. In March, the company’s chief executive resigned from the board of the Bitcoin Foundation, the primary advocacy group for Bitcoin. Then they took down their website and their Twitter feed.

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S p e c i a l F e a t u r e | Bitcoin Review

There are many exchanges, but the largest and best-known Bitcoin exchange is Mt. Gox, which seems to have met its demise on Feb 24 after having lost, according to Bloomberg, hundreds of millions of dollars of its customer’s Bitcoins. What does all this mean in terms of Bitcoin’s viability? Again, there are two diverse sides. One believes that Mt. Gox was an accident waiting to happen, given what is seen now as lax security measures. Those who see it this way also see this as a Mt. Gox problem, and not a Bitcoin problem. Indeed, the other more secure trading Bitcoin exchanges — Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle — have already released a statement, distancing themselves from Mt. Gox. Part of this statement reads, “This tragic violation of the trust of users of Mt. Gox was the result of one company’s actions and does not reflect the resilience or value of Bitcoin and the digital currency industry.”

14 | American Hard Assets www.ahametals.com

Ultimately, what this demise does is remind investors that Bitcoin is in its infancy, and seems still a capricious proposition. It also shows, right now, the darker side of unregulated currencies, and again defining the Wild West nature of anything unregulated by any governmental agency. So, what happens now? Will the general public view this experience to be just another reason to distrust Bitcoin? Will investors, who have become more skeptical and non-ideological as days pass, see the demise of Mt. Gox as a good thing, paving the way for greater security, transparency, and consumer protection in future transactions? Tune in tomorrow!


Alaskan Gold | S p e c i a l f e a t u r e

www.ahametals.com American Hard Assets | 15


S p e c i a l F e a t u r e | Modern Gold Bug

By Amber Ness

I

n his groundbreaking 1981 book titled Gold, Peace and Prosperity, former Texas Representative Ron Paul famously wrote: “The dollar died on August 15, 1971. After that date, it had no independent value for anyone. The new rules, with the dollar now simply a managed fiat currency, ushered in even greater inflation, economic turmoil, and set the stage for total loss of confidence in the dollar. This will happen eventually, and perhaps in the near future, though no one knows exactly when.”

Dr. Paul was of course referring to the day President Nixon put the proverbial nail in the gold standard’s coffin by announcing that the United States would no longer redeem currency for gold. In the decade that followed, geopolitical crises — including Russia’s invasion of Afghanistan at the tail end of 1979, and the shock of the 16 | American Hard Assets www.ahametals.com

Iran Hostage Crisis — combined with unorthodox monetary policies, led to the infamous gold spike of 1980. Though 1980’s Q1 $800 high was followed by a drop to the $300-400 mark (where it remained for a greater portion of the decade) it precipitated a renewed interest in owning the yellow metal. And it was spearheaded by what many Americans viewed as a fringe of right-wing nutcases. As the twentieth century drew to a close, the prevailing perception of the gold investor was the fanatical gold bug: guntoting, backwoods militiamen, fixated on anti-government conspiracy theories and apocalyptic doomsday prepping. Though some claim a stereotype is just a shortcut to the truth, like all stereotypes, the 1980’s image of the gold bug was based on an oversimplified caricature of forward-thinking Americans turning to the safe haven investment as a form of financial protection.


Modern Gold Bug | S p e c i a l F e a t u r e

As the twentieth century drew to a close, the prevailing perception of the gold investor was the fanatical gold bug: gun- toting, backwoods militiamen, fixated on anti-government conspiracy theories and apocalyptic doomsday prepping. But who was this new generation of investors? Though the tired old stereotype of the doomsday gold bug may continue to lurk in the shadows of the collective American consciousness, the people who really invest in gold may surprise you.

The Conservative Myth At the height of the Great Recession, as right-wing commentators like Glenn Beck — along with Tea Party leaders across the nation — began encouraging Americans to stockpile gold, the idea that gold investors leaned right-of-center continued to prevail. Yet according to Gallup polls taken over the last two years, there is little-to-no correlation between an investor’s political affiliation and his or her likelihood to invest in gold. While over the last decade Republicans and other conservatives reported more of a preference for gold than their left-leaning counterparts, in the last two years, the distinction has begun to dissipate as more Democrats join the ranks of precious metals investors.

A nod to Ron Paul, one of gold’s greatest champions: a copper round produced by the Provident Mint

The Great Recession: A New Investor is Born Fast forward twenty some odd years.

According to the same polls, men are consistently more likely to invest in gold than women, who tend to rely on savings accounts.

Propelled by the financial crisis of 2008, a United States budget deficit in the trillions, an unstable banking system, the constant threat of tax hikes, increased interest rates and insurmountable levels of debt — and BAM!

Middle income adults aged 50 and above are more likely to invest in gold than younger Americans, and those of upperincome levels prefer stocks and real estate to gold. Lower-income individuals tend to utilize savings accounts.

A new generation of sophisticated, dedicated gold investors was born. In an era of Facebook friend requests, reality TV stardom and a whirlwind of social progressivism, the first decade of the new millenium brought gold into the mainstream. Financial experts encouraged investors to hold anywhere from five to 20 percent of their assets in precious metals, and countless investors jumped on board. Doctors, teachers, lawyers, small business owners, plumbers — mainstream America began purchasing the metal as a safe haven investment in preparation for it to hit the fan. By 2012, gold began rating higher than other investment options like stocks, bonds, real estate and even savings accounts.

www.ahametals.com American Hard Assets | 17


S p e c i a l F e a t u r e | Modern Gold Bug

The Modern Investor: Why Gold? • A Hedge Against Inflation and the Weak U.S. Dollar Despite its ranking as one of the most influential currencies on earth, the United States dollar has declined — to a breathtaking degree. This is in thanks to an overly-large budget, massive trade deficits and overprinting of currency. When the value of the dollar deteriorates, investors turn to gold to safeguard their wealth, which raises the price of gold. Furthermore, gold is a real and tangible asset — not an IOU — which means it can serve as a hedge against other disasters, too.

• Geopolitical Crises Often touted as a “crisis commodity,” gold tends to retain its value, even as world headlines report grave geopolitical crises. As faith in the government wanes and global tensions rise, confidence in gold rises with it. When the world is in fear, gold generally outperforms alternative investments. In the aftermath of the 2008 financial crisis, gold prices skyrocketed. Subsequent circumstances — the eurozone debacle, angst surrounding Affordable Care Act and the Dodd-Frank Wall Street Reform Act among others — led to a rise in the price of gold, as safe haven investors braced for the worst. Between 2008 and 2011, gold prices doubled. Though prices have suffered in the years since, experts believe tensions over Crimea, along with concerns about the Chinese economy, will be key determinants in this year’s gold prices — which are expected to go up as the world grows uneasy.

• Supply and Demand For the last twenty years, gold has made its way onto market by way of the world’s central banks. As central banks slowed sales at the onset of the 2008 financial crisis, mining of gold had already been on the decline for nearly a decade. Though gold production has increased slightly in the last few years, the market continues to recover. Asian markets — namely China and India — have seen an increase in demand as their economies boom. India’s gold culture has created one of the world’s strongest appetites for the metal, especially during the high wedding season.

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Modern Gold Bug | S p e c i a l F e a t u r e

(Endless) Golden Opportunities There are countless forms of gold bullion to choose from, and the medium an investor turns to depends largely on his investment goals. For instance, some investors are also numismatic collectors, with an interest in the history, design, rarity or origins of a coin. Antique and rare coins tend to have value above and beyond their gold content. Investors who want to own quality bullion backed by a government tend to purchase gold coins like American Eagles, Canadian Maples, Austrian Philharmonics, South African Krugerrands, Gold Buffalo and Chinese Pandas. An added draw to owning these coins is in the event of financial collapse, is that government-issued coins would be most trusted for barter. Many of today’s investors prefer gold bullion bars, which are often produced by reputable private companies, like Provident Mint, Johnson Matthey, PAMP, Engelhard and others. Bars are convenient for ordering in bulk and they are also easy to store.

Wealthy Indian families spend thousands (sometimes hundreds of thousands) of dollars on gold for a family wedding, and the asset is generally saved as a family heirloom and hard asset. At the same time, mainstream America has grown to view gold as a viable means of diversification, further increasing demand for the yellow metal, including ETFs.

• Portfolio Diversification Today, one of the key reasons new investors turn to gold is to diversify their portfolios. With experts encouraging people to hold that five to 20 percent, the modern investor is adding precious metals alongside stocks and bonds as a means of reducing risk.

Exchange traded funds (ETFs) are also on the rise, especially for investors who prefer not to take delivery of their precious metals. ETFs allow investors to buy shares of gold without having to store it. Stocks and mutual funds in mining companies also serve this purpose — though critics claim storing your gold in a vault hundreds of miles away makes it virtually useless in an emergency.

The Mainstream American Gold Bug Robert A. Mundell (b. October 24, 1932), winner of the Nobel Memorial Prize in Economics eloquently framed the way the modern investor interprets the importance of gold: “When the international monetary system was linked to gold, the latter managed the interdependence of the currency system, established an anchor for fixed exchange rates and stabilized inflation.

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S p e c i a l F e a t u r e | Modern Gold Bug

In some senses, today’s gold investor holds on the ideas held dear by their gold bug predecessors — that owning a physical asset like gold is one of the only ways you can truly and completely protect your wealth in times of economic and geopolitical crises. Yet the modern gold investor is so much more. He is your neighbor. Your co-worker. Your pastor. She is your doctor, your lawyer, your best friend. The fact is, the modern gold bug is a member of mainstream America. One of millions who believe owning the precious metal is a way to protect their financial future — a legacy they can leave behind. As the future continues to grow uncertain, more and more Americans are finding space in their portfolios for one of the oldest, most trusted stores of value the world has ever known. Gold has been prized by mankind for thousands of years — long before recorded history. Prized for its beauty and malleability, gold was used in art, jewelry and other adornments, and as early as the bronze age, it was struck into coins used as currency. Today, gold has not lost its luster. Countless Americans — from both sides of the aisle, every walk of life and an pay scale — continue to look to gold in a world of increased uncertainty. Over the last 40 years, the world has continued to turn, and the gold bug has evolved along with it. Yet the hands of time have failed to change one thing for countless modern investors: what Ron Paul has been teaching rings true. Gold really is the ultimate money.

When the gold standard broke down, these valuable functions were no longer performed and the world moved into a regime of permanent inflation. What will be the character of the international monetary system in the next century and how will gold intersect with it? This subject may strike modern audiences as a strange topic, but back in the 1960s, when people were deliberating about the future of the international monetary system, gold figured importantly in the discussions. Even today, the importance of gold in the international monetary system is reflected in the fact that it is today the only commodity held as reserve by the monetary authorities, and it constitutes the largest component after dollars in the total reserves of the international monetary system.” ~Robert A. Mundell, Nobel Laureate for Economics, 1999 Over the past forty years, the term Gold Bug is one that comes with negative connotations: Bullish. Paranoid. Conspiracy theorists obsessed with the Gold Standard. Metal-pushers. 20 | American Hard Assets www.ahametals.com


Investing in Film | S p e c i a l F e a t u r e

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S p e c i a l F e a t u r e | The American Eagle

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by Jason Walter Vaile

orged in fire, formed from the world’s most precious metals, sought after by millions... this is not a mythical ring to rule them all. It is the American Eagle Gold Bullion coin, one of the most popular mint produced coins of all time. The Mint has produced over 13 million of these coins since introducing them in 1986. Each year, the coin’s sales continue to exceed the previous year.

As successful as the American Eagle Bullion coin has been, coins have not always been the sought after collector’s items they are today. They began as simple currency -- a regulated item for trade. Though not as easy to carry or store as today’s paper currency, gold coins had REAL value because of the precious metals they contained.

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The American Eagle | S p e c i a l F e a t u r e

Coin History The Lydians, located in Asia Minor, were the first persons to use gold and silver coins. Around 550 BC, the Lydians began producing coins that were made from electrum, an alloy of gold and silver that occurred naturally in the area. They weighed from 17.2 grams to as little as .2 grams. They further enhanced these coins by stamping them with lion’s heads adorned with starbursts. This was the symbol of King Alyatts, who reigned from 610-550 BC. Coins continued to grow as the popular monetary trade with Greek colonization. They spread across Persia and then the rest of the world.

By the middle of the 6th Century BC, technology had advanced, and minting pure gold and silver coins became much easier. The Greeks were the first to create a “standard” so that coins could be widely circulated outside their geographical boundaries. The Aegina was a coin that was traded widely in the marketplace and has been found as far away as Egypt. Other cities began minting their coins to the Aegina weight standard (6.1 grams). Thus a universal coin was born.

American Coins The Constitution of the United States, Article 1, Section 8, claims that “The Congress shall have the power...to coin money.” When the framers of the United States Constitution created a new government for their United Republic, they quickly realized the critical need for a respected monetary system. Secretary of the Treasurer, Alexander Hamilton, personally prepared plans for the National Mint on April 2, 1792. Congress passed The Coinage Act, which created the Mint and authorized construction of a Mint building in the nation’s capital, Philadelphia. This was the first federal building erected under the Constitution.

Around the same time the Lydians developed their coins, China began producing utensil shaped trading pieces. Spade and knife shaped trinkets were created from bronze and traded for value. Around the 4th Century BC, the western state of Qin made a new type of coin, the “ban liang”. The bian liang coins are cast bronze, round coins with the familiar hole in the center.

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S p e c i a l F e a t u r e | The American Eagle economic growth, and made the Depression worse. People were threatened with $10,000 fine and up to ten years in prison. Executive Order 6102 required “all persons to deliver on or before May 1, 1933, all but a small amount of gold coins, gold bullion and gold certificates owned by them to the Federal Reserve.” In exchange, they would receive $20.67 (about $3 per troy ounce). The Treasury then raised the price of gold to $35 an ounce. This resulted in a large profit for the government which funded the Exchange Stabilization Act.

President George Washington appointed Philadelphian, David Rittenhouse, a leading American scientist, as director of the mint. Under Rittenhouse, the mint produced its first circulatory coins --11,178 copper cents, which were delivered in March 1793. Soon after, the Mint began issuing gold and silver coins as well. President Washington donated some of his own personal silver for the minting.

The price remained in effect until August 15, 1971, when President Richard Nixon announced that the United States would no longer convert dollars to gold at a fixed value. This abandoned the gold standard for foreign exchange. In 1981, Ron Paul presented an idea to Ronald Reagan’s Gold Commission. The South African gold Krugerrand was gaining popularity and provided a great source of income for their government. Ron Paul suggested America do the same. The stipulation was included that only American mined gold could be used in the manufacturing of the gold bullion coins. In 1986, the first American Gold Eagle coins were rolled out. Over a million coins were sold in the first month alone. What made it such a huge success? Obviously, the demand had built up over the years for gold coins since the market had been suppressed. Additionally, these were beautiful and desirable collector pieces.

THE DESIGN Mint officials approved the design of the American Eagle gold bullion coin that featured the striking Lady Liberty inspired by the design of Augustus Saint-Gauden. His early relief portraits decorated the Double Eagle coins he designed for the US Mint from 19051907. His original coin is still considered one of the most beautiful American coins ever issued. His ultra high relief $20 gold piece did not stack properly because of the detailing and was deemed unfit for commerce. Only 20 of them were produced in 1907 and are highly sought after collector’s items. One sold at auction in 2005 for the hefty price of $2,990,000.

About 140 years later, things drastically changed. President Franklin D. Roosevelt signed Executive Order 6102 on April 5, 1933. This order forbid “the hoarding of gold coins, gold bullion, and gold certificates within the continental United States.” It criminalized the possession of monetary gold by “any individual, partnership, association or corporation. “ The Great Depression caused people to fearfully store away their gold coins which stalled 24 | American Hard Assets www.ahametals.com


The American Eagle | S p e c i a l F e a t u r e

The American Eagle gold coin’s rendition of Lady Liberty features her hair flowing in the breeze, a torch in her right hand and an olive branch in her left. The Capitol Building is behind her in the distance. The reverse side is an eagle family designed and sculpted by Miley Tucker-Frost. The majestic father eagle is landing in his nest, carrying an olive branch back to a female eagle and her hatchling. This beautiful coin illustrates many of the most patriotic symbols of America.

The difference between a hub and a die is that the hub has a raised image and a die has an incuse image -- so one forms the other. The mint found that by using a lower amount of pressure in the hubbing process, they can prolong the life of the hub and die used.

Once the design was approved, the engraving began. An engraver fine tuned the brass model under a microscope where the date and lettering were added. Then another reduction process occurred which created a “matrix” negative. This matrix was the final size of the coin and made of high-grade steel. This is called the “punch” and is inserted into the coin press.

Production A plaster disc 10 1/2” diameter is sculpted by an artist from the design. This creates a “negative” design in the plaster disc. A “positive” is then created by making an impression of the cut out. An artist then hand details the positive mold. They add to the design and carve out areas that might not have been cast properly. A negative mold is cast again, which is turned into flexible rubber mold and cast a hard epoxy 10 1/2” diameter version of the coin. The hard epoxy allows for sharp design details to be transferred and won’t be damaged by the reduction process like the plaster model would be.

The epoxy model was placed on a pantograph, a reducing machine, that reproduced an exact copy, just 1 1/2” times smaller, called the master hub. This process takes about 36 hours. The master hub was then heat treated to make it harder. The master hub was used to make only a few master dies via hubbing. That involved pressing the master hub into a steel blank to impress the image on to the die. The master die was then used to form as many working hubs as needed through the same process. The working hubs were then put through the same process to form the working dies.

Several different versions were made and scrutinized before the final model was approved for production.

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S p e c i a l F e a t u r e | The American Eagle

Minting Many of the American Gold Eagle coins are minted at the West Point Mint in West Point, New York. They begin exclusively with gold mined in the United States. The coins are minted to an exact standard that has not been used since 1834. The American Gold Eagle has a gold fraction of .9167 for its 22kt gold rating. This English Standard is traditionally referred to as “Crown Gold.” The remaining alloys are 3% silver and 5.33% copper.

fact that, it could break when being struck. So the blanks are put into an annealing furnace. The annealing furnace is capable of heating the blanks to a specific temperature, known as the “re-crystallization temperature.” This produces changes in the atomic structure and allows the gold to soften. The typical temperature during this process is around 1,292◦ Fahrenheit. It is designed to give a uniform heating with a gradual cooling process to prevent oxidation. The heating chamber is air tight with a slightly positive pressure. Inside is typically a mixture of nitrogen and hydrogen.

The American mined gold and scraps from previous American Gold Eagle coins are put into a casting furnace at 2100◦ Fahrenheit. This melted gold is formed into a solid long bar that is 1 1/2” wide by 5 1/2” tall. The bar is then cut into segments that are 30” long so they are easier to handle. These bars are put into a roughing mill. Inside, two large rollers exert over nine tons of pressure to flatten the bars. After about a dozen passes through the roughing mill, the segments come out 1/2” thick. These are called fillets. Once the blanks are no longer brittle, they are moved to the coin press. The press contains a hub and a die, or stamps. One for each side of the coin. The two sides of the coin are pressed simultaneously. They are pressed twice to insure a high-quality, detailed coin results. Whether you are a coin collector, numismatic -- a studier of currency, or merely in it for the investment, the American Eagle Gold Bullion coin has a rich history in design, collectability and value.

The fillets are then sent to the finishing mill, which flattens the bars even more to the final thickness of the coin, which is 3/100” or 2/10”, depending on the denomination. The stamping machine then punches out the blank coins. The left-over webbing is then chopped and sent back to the casting furnace to be melted down and recycled into fresh bars again. The blank coins are moved to the rimming machine that applies a finish raised edge or “rim” to the coin. Next, the blanks go into a tub filled with water, a cleaning solution, and steel beads. When spun at a high rate of speed, the beads act as an abrasive, smoothing and polishing the blanks. After about twenty minutes, everything is poured into a sifter that separated the blanks and the beads. Each individual blank is then hand-dried to insure there will be no water stains on the final coin. As the gold is heated and reheated continuously during the coin-making process, the gold may become brittle. So brittle in

The Medusa Coin The snake coiled hair of Medusa was regarded as lucky in ancient Rome. It was intended to ward off evil, protect, and comfort friends. The mask or head of Medusa on coins was a common theme from 400-300 BCE. Medusa was one of three sister Gorgons, so these coins are often referred to as “gorgonian.”

Jason Walter Vaile wishes he had a large stack of American Eagle Gold Bullion coins in his collection. You can follow him as Mrpenhead on Instagram, Tumbler and Twitter.

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Story Name | S E C T I O N N A M E

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S p e c i a l F e a t u r e | Good Delivery

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hen it comes to investing in physical material everybody wants to be certain that what they own, what they spend their finite capital on, is the real thing. Knowing that what you see is what you get is key to investing with confidence, whether your medium is Picasso and Pollock or baseball cards and comic books. Certainly, this same rule applies to investing in precious metal coins and bullion.

Good Delivery, Liquid Investing For verified investing in coins we have entities like the NGC that set an industry standard for verification and certification across the board. Coins issued by sovereign mints in the United States, Canada, and China (among several others) have a consistent precious metal content, and in a large majority of cases the veracity of these coins can be proven with a basic knowledge of their 28 | American Hard Assets www.ahametals.com

by Richard Alexander Rogers

appearance, physical weight, and markings. When it comes to bullion (bars, ingots, or rounds) minted by private refineries though, not all fine gold or fine silver bars are created equal, and only a particular category can be traded with the utmost liquidity at all times. This category, the most versatile bars to invest in within the industry, is known as “Good Delivery,” a status most importantly granted by one of two groups: the London Bullion Market Association (LBMA) or Comex, the commodities futures exchange run by The CME Group. So what does “Good Delivery” actually mean? The most common definition describes Good Delivery bars as “approved metals brands acceptable for delivery against metals commodities contracts.” It’s a vague, confusing definition for investors not concerned with trading in electronic commodities markets. To simplify: “Good Delivery” bars are created in adherence to a specific, strict set of requirements, and after minting are stored and transported through a traceable chain of possession.


Good Delivery | S p e c i a l F e a t u r e

The Global Standard LBMA and Comex issue their own lists of Good Delivery refiners, and as such they have their own exact standards for certification although the broad strokes-- the points that are relevant here-can be assumed to be closely similar. To simplify things further, at this point we are going to talk specifically about LBMA standards for Good Delivery. While Comex recognition denotes a very high standard of material production and management, the LBMA standard is even more demanding. Worldwide, LBMA good delivery is the top class for gold and silver production and is in high demand internationally, while Comex certification is not as recognized overseas as it is here in the United States.

LBMA good delivery is the top class for gold and silver production and is in high demand internationally.

So why is this important? It all connects to an important part of any investment’s value, mentioned earlier: liquidity. An asset’s liquidity is determined by two things: 1) how quickly it can be turned into cash; 2) your ability to convert the asset to cash without incurring large fees. Your stock of gold, silver, or other precious metals will always be more liquid as an asset than your mint copy of Action Comics #1 but as we have been hinting at, not all bars are created equal. Good Delivery bars, because they meet strict standards of production and storage, can be accepted on face-value within the investment and banking industry. No time needs to be spent assaying the bar for purity, which also means no assay/analysis fees to be charged. Let’s talk about the general requirements for a bullion bar to have Good Delivery status..

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S p e c i a l F e a t u r e | Good Delivery

Guaranteed Purity

Chain of Integrity

Good Delivery status guarantees that a gold bullion bar will absolutely be 99.5 percent pure or better (99.9 percent for silver; 99.95 percent for platinum) and more importantly guarantees that the purity marked on the bar is strictly accurate. LBMA’s certification officials confirm this by closely inspecting and testing not only a refineries minting facility and process to the most minute details, but also subjecting the refiner’s in-house laboratory to a stringent battery of tests. The former is done to ensure that the bars are created consistently every time, the latter to demonstrate that the refiner’s laboratory is able to accurately test purity to a fractional percentagepoint. There are also physical specifications for the bars produced:

The second important component to a bar holding Good Delivery status is a traceable, verifiable chain of integrity at all times. From the point the bars are produced and stamped, they must be stored in LBMA member vaults, and only transported by trusted and approved transport. Brinks and Via Mat are two examples of storage and transport companies that hold such status with LBMA. After being produced to the stringent standards of the LBMA, if a gold or silver bar is ever taken possession of outside this chain of integrity it is no longer considered acceptable as Good Delivery.

• gold bars must show a serial number, year of manufacturing, and the refiner’s assay mark • gold bars must have a fineness stamp to four decimal places; silver bars must be at least .999 fine • gold bars must be between 10.9 kilograms (350 troy oz) and 13.4 kg (430 t/oz) in weight • silver bars must be between 23kg (750 t/oz) and 34kg (1,100 t/oz) in weight.

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American Hard Assets Issue 9