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Killing Zone
On October 23, 1994, a group of young men drove up to some Colombians in the poor section of Medellin. They displayed their guns, demanded documents, and then brutally murdered 10 people, who were told to lie down with their hands behind their heads. Recently, there has been a rash of social cleansing killings in Colombia. The crusade is aimed at vagrants, criminals, prostitutes, street children, and drug addicts. According to Carlos Rojas, a researcher at the Center for Grass-Roots Education and Investigation, there were 2000 people killed from 1988 to 1993, as the result of this policy. In the first half of 1994, Rojas has counted 215 deaths due to vigilante groups. Other human rights groups put the number at 345 deaths. Some say the police and the security forces are behind these murders, which they vehemently deny. A group calling itself, "Death to Car Thieves" has already killed 50 people this year in Cali.

Police Bribery
Recently, 174 members of the Colombian national police were fired for taking bribes from drug traffickers. The action was the result of a raid on a Cali Cartel hide-out, where authorities recovered a list of officers along with monetary figures that they were paid.

Peasant Revolt
On January 5, 1995 Colombian troops were sent into southern Colombia to put down a peasant uprising. Farmers in the region torched several oil facilities, destroying million of dollars worth of oil revenue. The farmers, who grow coca (the main extract of which is cocaine) are protesting the government's eradication of their crops, and the Colombian government's general neglect of the area. On December 22, 1994 the farmers occupied eight pumping stations and an oil pipeline. The troops retook all but one of the pumping stations and the oil pipeline. Over 2000 farmers are holding on to the last pump station. The Colombian government has lost $2.6 million since the beginning of the uprising.

Travel Warning
The Department of State has recently issued a travel warning for Colombia. With the exception of several popular tourist areas, violence continues to affect a significant portion of the country. Recent attacks have targeted American citizens and institutions.

The Burmese government clearly amounts to nothing more than organized criminals who hold the population at gunpoint while they strip bare the country's resources. Automatic weapons are everywhere. The newspaper is strictly a propaganda sheet for the military. One government "investment" brochure even uses the words "explore and extract" when talking about harvesting timber, gas, gems, and other resources. This is against the will or knowledge of the average populace.

Mutiny By Karen Guerrillas
Four hundred well-armed Karen guerrillas, occupied a hill-top monastery at a guerrilla-controlled river junction in early December, sparking one of the most serious crises in the Karen's 45-year war for autonomy. The mutiny, supported by Buddhist monks and battle-weary civilian followers of their pacifist teachings, has thrown into question the survival of the Christian-led Karen guerrilla force and the opposition alliance based at their headquarters in Manerplaw. Burmese government forces took advantage of the mutiny to occupy and attack key defensive positions around Manerplaw, which lies nestled against forest clad mountains on the west bank of the River Moei which marks the Thai-Burmese frontier. The Karen, one of the largest of Burma's ethnic minorities, supported the British during World War II and went into rebellion for greater autonomy in 1949, one year after Burma's independence from Britain. Driven out of the Irrawaddy River delta and a central mountain range, Karen National Union (KNU) strongholds in southeast Burma have became the target of regular dry-season offensives by government forces since 1984. KNU leaders blame secret agents of the Rangoon junta, the State Law and Order Restoration Council (SLORC) for instituting the mutiny. In late December, SLORC government forces continued to round up villagers indicating a two week-old offensive against Karen villagers was likely to continue. Eleven government soldiers were killed and 46 others wounded during a six-hour assault on the Karen's Kaw Moo Ra base. The guerrillas seized a number of weapons from government troops during the fighting. They included nine rifles, two machine guns, one mortar and more than 4,000 rounds of ammunition. Heavy fighting died down at Kaw Moo Ra after the Thai army sent reinforcements equipped with artillery pieces to the area to prevent any spill-over of the fighting to the Thai side of the border.

Fighting Disrupts Supply
Also, fighting has once again broken out between the Rangoon army and drug kingpin Khun Sa's forces in the Shah state, Myanmar. The scuffle has brought a slowdown of trading in Mae Sai, the main gem sourcing point for Thai jewelry dealers in northern Thailand. This slowdown has disrupted supplies of Burma ruby, and caused some price increases.

Burma Spinel Shortage
Many of you have asked for gem spinel for over a year, and NGC has not been able to deliver. It appears now that since all the miners have left Moguk for Mong Hsu, the supply is disappearing as there are no spinels in this new area. The only way to buy gem red/pink spinel is from strong-handed collectors.

Traditional Values Decreasing
The rural parts of Thailand have always been thought of as extremely traditional. However, the new found wealth of Thailand is effecting the traditional Thailand culture. Snapshots of granddaughters in heavy makeup and suggestive poses, lying seductively with older foreigners, now are proudly displayed in the houses of traditional Thai families. When girls finish the last mandatory year of school at 11, they are shipped to Bangkok to work as prostitutes. It is estimated that there are 2 million prostitutes in Thailand, a country of 60 million. Increasingly, rural villagers are sacrificing their daughters to pay for the luxuries of the modern world. The girls are often chained, beaten, drugged, denied food, and raped by pimps before being forced to cater to the lowest rungs of society.

The Namibian government recently convinced DeBeers to give up one half of its Namibian diamond operations. In effect, this move was a de facto partial nationalization. The Namibian government put no capital into the deal. In return, DeBeers retains sole marketing rights of the diamond output for the next 25 years. In effect, DeBeers gave away one half of of its top quality Namibian mines without compensation. The value of these mines is speculated to be worth between $1 billion to $2 billion. The mines produce 1.14 million carats a year, with 95% being high quality. Annual sales of these gems are about $200 million per year. The only positive of this transaction is that Namibia could have taken the entire operation, but the deal surely sets a bad precedent for DeBeers negotiations with the rest of the world, especially South Africa.

Sales Drop
Diamond sales dropped 2.7% in 1994 to $4.25 billion from $4.37 billion. DeBeers said the reason for the drop was the plague in India and sales by the Russians. Sales were down 8.4% in the second half of 1994, compared to 1993. DeBeers said improvement depends on the Japanese and European markets. Demand remains high in East Asia, and is improving in the US.

Price Fixing Update
On December 5, 1994, a federal judge dropped all charges against General Electric and DeBeers for attempting to fix the prices of industrial diamonds. DeBeers refused to attend the hearing.

For centuries, the maharajas of India collected priceless gems and jewelry. However,many are now facing financial distress as the result of poor financial planning and onerous taxes. To get hard cash, the maharaja's have been selling their family heirlooms back to Indian dealers and overseas collectors. Some of the pieces took 20 to 30 years to make. One such piece is a gold drinking flask in the guise of a parakeet covered with rubies and diamonds. A bid by a Western gem dealer of $400,000 was rejected. Many westerners, from Mick Jagger to the Prince of Wales, Princess Diana, and Lawrence Rockefeller have been making bids for these pieces.

44 Indicted In Gem Scams
"Ten more alleged gem scam operations and 34 of the operations employees are out of business and facing fines and jail terms thanks to a 20-month cross-border investigation. A federal grand jury in Harrisburg, Pennsylvania slapped 10 corporations and 34 individuals with indictments for conspiracy to commit mail fraud and wire fraud and the actual commission of mail and wire fraud. The charges were made possible by an investigation that involved numerous U.S. and Canadian agencies, including the Royal Canadian Mounted Police, the Toronto Metropolitan Police, the U.S. Postal Inspections Service, the U.S. FTC, and the U.S. attorney's office in Harrisburg. The U.S. postal Inspection Service conducted an undercover "sting" operation." Colored Stone Nov/Dec,1994.

If you have been victimized by these sleaseballs, call the National Fraud Information Hotline at 1-800-876-7060.

Auction Results
At Sotheby's Magnificent Jewelry Auction in October, Saudi Dealer Ahmed Fitaihi, and New Yorker Sam Abram, representing a Hong Kong concern got into a bidding-war over a rectangle 20.17 blue diamond. Abram's top bid of $9 million, or $460,000 per carat won the stone. It was the highest price ever paid for a blue diamond at auction.

At Christies October auction, London jeweler Lawrence Graff paid $1.98 million, or over $368,000 per carat for a 5.38 blue diamond.

The information provided in this newsletter has been derived from research and sources believed to be reliable. However, no guarantee is expressed or implied as to their validity. Opinions included herein are subject to change without notice. Potential investors and collectors should understand past performance is not a guarantee of future performance. This is not intended as an offer or solicitation with respect to the purchase or sale of any security, nor is it intended to be investment advice.

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