|Vol. 25, No. 3
Latest Burma News
By Robert Genis
Burma Goods Becoming Scarce
The amount of unheated goods from Burma continues to dwindle. The world’s appetite for Burma ruby, sapphire, spinel and jade is insatiable. But the prices are so high in Burma, few American dealers can afford to buy, partly due to the weakness of the American dollar. The international market is willing and able to buy at these new higher prices. Of course, all Burma goods are priced in dollars rather than the local Burmese currency. The Chinese are flush with US dollars as their economy skyrockets. They have always craved these gemstones and now they have the money to purchase these gems. The Europeans have serious buying power because of their strong currency. A euro is worth approximately $1.41 today compared only being worth .85 cents in 2002. This gives the European dealers a tremendous advantage compared to American dealers with US dollars. The Russians also remain significant buyers of these stones. Therefore even one carat unheated Burma rubies are difficult to obtain. This is almost unheard of and something we do not remember happening the last 10 years. What is the collector or jewelry buyer to do? Some speculate the only way to get goods is to repurchase them from collectors who purchased them years ago. The Burma market may follow the Kashmir sapphire market in this regard. It is either pay the collectors or pay the new prices. There are no options left at this stage. Don’t say we didn’t warn you.
Burma to build gem museum in new capital
Burma is projecting to build a gem museum in the new administrative capital of Nay Pyi Taw in 2008 to display of the country's world famous gems. The new gem museum will be built at a 29-acre plot, east of the Hotel Zone. Of course, Burma is a known producer of some of the best gems in the world. They produce ruby, sapphire, spinel, cat's eye, peridot, diamond, topaz, pearl, coral and a variety of yellow garnet. There are six mining areas under gem and jade exploration-Mogok, Mong Hsu, Lonkin/Phakant, Khamhti, Moenyin and Nanyar. Jade is one of Burma's major exports earning $205 million in 2005-06.
Burmese Gem Auctions
Burma started to hold a gem auction annually in 1964, introducing the mid-year one in 1992 and the special one in 2004. The latest 12 day event was a gem, jade and pearl event. The items in the sale were sold on the basis of competitive bidding. A total of 4,665 jade, gem and pearl lots were sold with more than 4,000 gem merchants including 2,437 from abroad. The vast majority of the stones sold were jade. The gem traders mostly came from China and Thailand.
Anti-government protests lead by Buddhist monks have erupted over an increase in fuel prices. In August, protests began in Rangoon after the government doubled fuel prices, saying the increase was necessary because of rising world oil prices. The monks contend they were brutalized and insulted by the the military and are demanding an apology. The unrest has spread throughout the country. The military-ruled government is attempting to discourage monks from joining public rallies. The regime cut public internet access. Activists say authorities have killed at least 200 demonstrators. These are the largest demonstrations in over two decades. The bottom line is political instability is bad for mining production.
Asia Money Article on Gem Investing
Asia Money (www.asiamoney.com/) recently wrote an interesting article on gemstone investing. They interviewed NGC regarding the issues. We stressed the non liquidity of gemstones and the fact only those with substantial assets should even consider investing in gemstones. The stock traders like to brag about the liquidity of their investments. We had quite a laugh during the recent subprime mortgage mess. The Federal Reserve had to step into provide liquidity for the markets. However, we digress. Here is the article in its entirety.
The Rock Solid Rule
Precious stones have a romantic, even mystical appeal that means they will always be in demand. But as an investment they aren’t liquid like stocks and bonds, and typically only investors with the deepest pockets and longer-term outlooks should seriously consider adding them to their portfolios. Simon Parry reports on a glamorous world in which patience can definitely pay off.
In the world of precious stone enthusiasts, Warren Hancock is an icon – the man with the Midas touch, the collector who gave his name to one of the world’s most precious gems, the investor who bought a tiny red stone for US$13,500 in 1956 that sold for almost US$1 million in 1987. Twenty years on, the story of the Hancock Red, which fetched a world record price of US$926,000 per carat, continues to beguile and inspire experts and investors alike. Its price was extraordinary because of its tiny size and the fact that its value had increased so dramatically since Hancock bought it from a local jewellery store in Montana, in the
United States. “It wasn’t even one carat, and it achieved a bid of just below US$1 million,” says Christina Hudson, marketing director of the Diamond Trading Company Asia-Pacific, the sales arm of diamond merchants De Beers. “Imagine what that stone would go for today,” she adds. Red diamonds are so rare that it may be years before anything comparable comes to auction. But the folklore that has built up over the Hancock Red has played a part in knocking precious stones off their pedestal, drawing the eyes of investors and making buyers view them in a less romantic and more pragmatic light.
The appeal of such stones is nowhere more evident than in Asia. Recent auctions in the region have been a dazzling success, including US$39 million raised at a Hong Kong jewellery auction at the end of May. Vickie Sec, director of the jewellery and jadeite department at Christie’s in Hong Kong which hosted the May auction, estimates that flawless D-coloured (colourless) diamonds and top-quality rubies and sapphires have doubled in value in the past three years. “The market has been really strong,” she says.
The level of customer interest has exploded the myth of the advertising
slogan “A diamond is forever” – it can be an excellent shorter-term investment,
but only if you have deep pockets and patience.
Records in the field of precious stones are being set almost on a monthly basis. In 2005, an 8.01 carat Burmese “pigeon’s blood” ruby the colour most sought after by ruby collectors – sold at a New York auction for a record US$2.2 million, or US$274,656 per carat. Less than a year later, in Switzerland, an 8.62 carat Burmese ruby sold for US$3.64 million, or US$425,000 per carat. “You can’t even find a good ruby over five carats,” says Sek. “The price has gone up steeply because of rarity and also oil prices, which make it so much more expensive to excavate and drill.
“Then there is the demand from Russia which has been a strong factor. Russian buyers demand all the top-quality diamonds. For the past few years it has been very difficult to find a stone over 20 carats. Before, it was much easier. All of these factors have made the market very strong in the past few years.” In the May auction, eight individual coloured diamonds fetched more than US$1 million each, including a purplish-pink 6.88 carat diamond that sold for US$1.38 million, more than US$200,000 per carat. “It was a very good sale,” says Sek. “The whole market has gone crazy because there’s not enough on the market.”
One factor that is helping to keep the market so buoyant is scarcity value.
“High quality diamonds are getting rarer and rarer and the price and demand is
always on the rise,” says Hudson. “There are a surprisingly small number of
diamonds above one carat found every year and cut and polished. I believe per
annum there are less than 500,000 stones.” And they are remarkably expensive
because of this. Robert Genis, president of Arizona-based National Gemstone and
editor of Gemstone Forecaster, says: “Some of these stones can fetch more than
Old Masters [works done by noted European painters from 1500 to the early
A Specialist Field
Like such works of art, precious stones are an investment for a rarefied few and not many wealth managers will encourage you to add them to your personal portfolio. Two major private banks that Asiamoney approached were unable to provide a specialist to speak about precious stones and jewellery for this article. “They aren’t a traditional investment,” says Genis. “Precious stones aren’t liquid like stocks or bonds, or even rare coins or gold bullion. As a general rule, people who should be buying precious stones are extremely wealthy people, who can afford to put a small part of their portfolio in something that isn’t liquid.
“They are really best suited for someone with a large portfolio with many things in it and just one small part is gem stones. You wouldn’t want to put more than 5% to 10% of your wealth into gem stones.”
Genis adds that only individuals with substantial wealth should even consider precious stones as an investment. “If you’re making US$100,000 a year you shouldn’t be investing in anything more ambitious than a diamond ring for your wife,” he says. It is arguably the purchase of those small diamond rings the world over that underpins the rising value of rarer gems – even though the price for a one-carat round diamond is little changed in the past 20 years. In fact, a one carat ring purchased at the end of the 1970s when rampant inflation drove the price to US$65,000 would now be worth less than a third of that value.
But while prices have not surged in clear diamonds, which are relatively
common, they have done so in the headier realm of coloured diamonds and
untreated rare, precious stones. Patricia Hambrecht, founder of jewellery
advisory service Jaspar and adviser to Citi Private Bank clients, points out
that while the price of a one-carat diamond may still be well below its late
1970s peak, prices for flawless, 10-carat stones have recovered almost to their
record highs at that time. In the past nine months, she says, she has found
herself approached by wealthy family groups seeking a strategy for investing in
jewelery. “People have two different motives,” she says. “One is they want to
have the investment in case the world comes to an end ... and this is obviously
going to be a more liquid investment than real estate. Other people have come
and said: ‘We want to hold for the long term. What is a good investment?’”
The current economic climate is also encouraging increasingly wealthy families to look seriously at jewellery as an investment, Hambrecht says. “They consider other asset classes to be fully priced and in some cases investments are non-liquid. There is also a point of view that the world is awash in capital right now and people are looking for some other place to put their money,” she says. De Beers, the South African-owned mining and trading group of companies which controls about 40% of global diamond production, has over the past half-a-century played a major role in the price of diamonds. The company is quick to claim that the core value of diamonds is deeply rooted in history and the human psyche, and as such their valuation is well beyond the forces of market supply and prices.
“If you look back in history, diamonds have always had a mysterious power,” says Hudson. “The Greeks believed diamonds represented the tears of God. The Romans actually believed diamonds were shards from the stars, the arrows of Eros. The Indians thought they were good luck charms that warded off illness and forces of evil. “There are amazing myths and magical qualities about diamonds that captivate so many people. They have always been sought after by the world’s wealthy and powerful. There have been stories that amongst kings, they believed that wearing a diamond in battle would magically protect the wearer. It was not uncommon to see armouries that were glittering with diamond-encrusted weapons.”
Romantic historical images and beliefs aside, diamonds also have a very real value attached to them: their individuality. “Every diamond is unique, every diamond is different,” says Hudson. “There are only a tiny number of diamonds which actually come out of the earth that have one carat-plus. There are very few even of a gem size that can be cut and polished and set in jewellery. They each have their own unique characteristics.”
It is the romantic appeal of precious stones and the emotional attachment
they command that makes them such a vastly different kind of investment,
according to Sek of Christie’s. “Jewellery isn’t something you can immediately
make 30% to 40% on, but in the long term, you can,” she says. “I always tell
people when they buy jewellery: ‘Don’t really think of it as merely an
investment.’ Jewellery is different from stocks, from property and other things
because a woman does need jewellery to give her glamour. And men receive face
when they bring their wife out wearing all the jewellery.”
Slowly Growing Appeal
While there is surging demand from Russia for precious stones and jewellery, mainland Chinese buyers are only slowly emerging in the market. “In China, buyers are still more interested in paintings, ceramics and antiques. There has been growth in interest in jewellery, but for jewellery, the market there is not that mature yet,” says Sek. “People in China do not want to be seen so obviously wearing big diamonds yet. We still need to educate them to buy for investment or to buy some smaller items to start with. They may buy a lot of Rolls Royces and other top-end cars, but they don’t want to let people see what jewellery they are wearing.”
Those attitudes may be changing gradually, according to Hudson. “Diamond wedding rings are so prevalent now in places like Shanghai and Beijing that eight out of 10 women who get married in a city like Shanghai will actually get a diamond wedding ring. In Beijing it’s seven out of 10. A few years ago it would probably have been half of that,” she says. When it comes to the upper realms of jewellery investment, buyers are a little less easy to profile. “They are often entrepreneurs, and they come from businesses that range from the real boring to the real sexy,” says Genis. “Then there are professionals – lawyers, doctors, and other people making large incomes. You also have old money, old wealth.”
The advice that Citi expert Hambrecht says she gives to buyers is the same
advice she gave when she worked as a senior auction house executive: “Buy
something because you love it, not because you consider it an investment.”
Nevertheless, she sees parallels with the recent boom in the contemporary and
modern art market. In that field, one extraordinary item can fetch as much as an
entire jewellery auction, Hambrecht points out. “Jewellery doesn’t see big
prices like that. Can it happen? Yes. Are there hundred-carat-plus stones that
trade on the market for
very big numbers? Yes – and those are often bought by very wealthy Middle Eastern clients or Russians who are perhaps not holding for investment but for liquidity, if they ever have to move in a hurry.” In tips for jewellery buyers that he posts on his website, Genis also urges collectors to love what they are buying first and to become experts. He suggests that investors regard the pieces as a long-term hedge, given the difficulties of locating buyers. In this way, high-end jewellery bears more similarity to real estate than precious metals. It can be instantly liquidated, but at a discount, he cautions.
But for investors prepared to collect in the cautious way that Hancock did over the years, it could be surprising what happens. “If economic conditions change and inflation heats up, your portfolio may be worth a fortune,” says Genis. “These two conditions – time and inflation – made Mr. Hancock’s small investment worth US$1 million.”
The irony for Hancock himself was that he never lived to see his day of triumph in the auction room. It was only after his death that his family, facing ruinous tax bills, discovered to their amazement that the stones he bought for a few thousands dollars each at his local jeweller’s in the 1950s were worth so much that they would be the family’s salvation. The Hancock Red, rumored to have been bought by a representative of the Sultan of Brunei, has never been seen since.
It dazzles secretly somewhere, perhaps waiting to emerge into the daylight and set a new record price that will further burnish the legend of the man from Montana who made a big name out of a little rock.
The $100 million Diamond Skull
by Robert Genis
An unknown 18th century skull of a 35 year-old man was built onto a base of 32 platinum plates, studded with 8,601 diamonds for a total weight of 1,106.18 carats. A 52 carat pink diamond acts as the center piece, and surrounding it are 14 additional pear-shaped diamonds. The pink diamond in the forehead is reportedly worth US$8 million. Damien Hirst, 42, is believed to be Britain's wealthiest living artist. Hirst has a fortune valued earlier this year at 130 million pounds by the London-based Sunday Times. The White Cube's galleries sold his pieces for about $260 million even before the skull deal was struck. His auction record of almost $US 20 million is the highest the highest for a living artist at auction. The record was in June at Sotheby's, when a telephone bidder bought a pill cabinet, "Lullaby Spring.'' It contained 6,136 individually painted pills. It was reported an anonymous investment group bought the diamond skull for $100 million. It now appears they plan on reselling it later. Further, it appears Hirst is also part of the investment group. What this means is the skull has not found a final buyer for his most expensive artwork. Hedge fund managers and other art collectors have lost money in the credit markets and may not be prime buyers now. Hirst will oversee the new global tour to look for a buyer of the skull. The British artist, who is most famous for preserving animals in formaldehyde, has rejected suggestions that his works are a standing joke against the art establishment. Some in the art market believe this is not about art collecting but simply investing. Some critics dismissed it as tasteless while others saw it as a reflection of celebrity-obsessed culture. Hirst said the skull, called For the Love of God, was "uplifting" and "takes your breath away."
Largest Diamond in the World?
by Robert Genis
Mining industry stories are as big as the “fish that got away” yarns. In August, a giant greenish "diamond" was found in the North West province, Africa at an undisclosed location by Brett Jolly. The province is an area rich in minerals but not noted for its diamonds It is either the greatest diamond find in history, or a case of an extraordinary mistaken identity.
A cell phone photograph began circulating on the internet. It looks like a
stage-prop about the size of a coconut. If true, this diamond will be larger
than the Cullinan Diamond and some say “the eighth wonder of the world”. The
3,106.75 carat Cullinan was found in South Africa in 1905 and is now a part of
the Britain’s Crown Gems. The new diamond is reported to weigh over 7,000
Brett Jolly is an elusive person and Information about him is hard to come by. Jolly's background is as a property developer in Cape Town, where a timeshare company he founded became embroiled in legal difficulties. Media reports based on court papers revealed how five of the directors went on a trip to Las Vegas when Jolly alleged the company’s finances were in chaos. His new group's website is off line, but archived copies show it says it can multiply the value of property ten times, at no cost to the owner. The following year, Jolly became the CEO of a controversial waterfront development in Swakopmund, Namibia, a US $45 million project that reportedly became mired in litigation and debt.
Around 1900, a famous Afrikaner prophet Siener van Rensburg said that such a diamond would be found in the area of stone’s discovery. It would be known as the "skaapkop" diamond because it was shaped like a sheep's head. The prophecy was that two brothers would find the Skaapkop diamond and only one would make it. It is not known whether Brett Jolly has any siblings.
The photograph of the stone does seem to have octahedral-like characteristics. Some contend it is possible a large stone could be found in the North West province. Some geologists say the typical light green color is typical of diamonds from Zimbabwe. Jolly said he put the stone against an angle-grinder and the stone was left unblemished.
Excitement over the "world's biggest diamond" quickly faded into skepticism over the genuine value of the find. Diamond experts contend no way that the glass block in the photo is a diamond that has been produced from either an alluvial or kimberlite ore body. Diamond experts are skeptical that a stone of such weight and size could be from an area where usually only alluvial stones are discovered. There is also the question of the stone’s near-perfect appearance. Some contend it looks like a fluorite crystal, which is only 4 in hardness.
The President of the World Federation of Diamond Bourses Ernest Blom will be the first person to examine the stone. if natural, Blom said that it would be "the holy grail of diamonds" - and most certainly the largest of its kind ever discovered. The 7,000 carat light green stone is sitting in a bank vault in Johannesburg at press time
10,050 Carat Emerald Discovered
by Robert Genis
Gemfields Resources is a coloured gemstone exploration and mining company in Zambia. Since 2000, they have been active in emerald and amethyst deposits. Gemfields has been in emerald production since June 2006. Gemfields Resources announced that a 10,050 carat emerald was recently discovered at the Mbuva-Chibolele emerald mine. The stone was part of a pocket that was mined in the M3 area from the reaction zone of the hanging wall pegmatite approximately 40m from the surface. It is a 10 cm long hexagonal crystal. Although it doesn’t look to be top gem quality, it is interesting nevertheless. The biggest emerald ever found was a 86,000-carat boulder dug up in Brazil in 1974.
New York Diamond District
A jeweler was robbed of $115,000 in gold at a Midtown subway station. Three men described as being in their 20s sprayed Mace into the face of the victim, Zalmah Gruenhut, of Brooklyn, in the stairwell of the crowded Rockefeller Center subway station at 48th Street and Sixth Avenue. He was carrying three spools of gold wire valued at $115,000 in a bag at about 1 p.m. The thieves, dressed in khaki pants and one carrying a beige backpack, first bumped into Gruenhut before blinding him, grabbing his bag and fleeing with the merchandise.
A gutsy thief made off with a US$2.5 million dollar diamond and ruby necklace just by simply asking for it. Justin Jackson e-mailed the jewelry store ‘Chopards’ and claimed to be Chris Lighty, an agent for some of the biggest names in hip hop, like 50 Cent, P. Diddy and LL Cool. He said he needed jewelry for a photo shoot with Madonna at the Seminole Coconut Creek Casino. Chopard's sent the jewelry with a security guard who was supposed to watch the necklace and earrings at all times. At some point, Jackson slipped away with the necklace. He ended up selling the necklace for $50,000 to a Boca Raton jeweler. Authorities tracked his emails back to a Coral Springs library. They also tracked his cell phone. Eventually they caught Jackson and he allegedly confessed and started crying. Jackson is now charged with grand theft and dealing in stolen property.
Tear gas sprayed by two thieves during a summer heist in Ginza, Tokyo, that netted jewelry worth US $2.5 million. Two thieves entered the Exelco Diamond Tokyo store in Ginza and one sprayed tear gas at a clerk. They pried open two showcases and stole a tiara and a necklace. The thieves are believed to be members of a Europe-based crime ring known as the Pink Panther. A 25-centimeter-tall spray can swathed in black vinyl tape was found on a street near the store. The tear gas was purchased two years ago at a military surplus store in Marseille, France and is under embargo. The tear gas is widely available in France for use as a deterrent against animals, such as dogs. However, the spray is prohibited from being exported or taken out of France. The gas was wrapped in black vinyl tape when smuggled into Japan to avoid detection by airport security. The Japanese police suspects the pair headed to Narita Airport and left Japan immediately after the robbery.
Ex-gang member's book haunts him in heist trial
A former Crips gang member who detailed his criminal exploits in a 2005 book, "Inside the Crips: Life Inside L.A.'s Most Notorious Gang," was hammered with his own words. Prosecutors argued that he helped carry out a botched jewelry store robbery in Temecula, California before faking a carjacking to cover his tracks. One especially damning section read: "I love doing jewelry licks. . . . It gets so I go in alone, ask to see a Rolex, grab two, dash out the store, turn them around, and have eight thousand dollars stuffed in my pocket." The defense argued there would be no case without the book.
At the time of his arrest, Simpson, 41, was using seven different names, three Social Security numbers and three birth dates. Simpson cased the store before the robbery, setting up lookouts and a getaway car. Police say two men walked into a Robinsons-May on March 17, 2003. Witnesses testified that one of them leaped over the counter and grabbed a diamond earring worth about $700 before a clerk slammed the case shut and locked it.
The men fled in a silver Ford Taurus allegedly driven by Simpson. A friend of the suspect had listed him as the driver when she rented it. Simpson said he was carjacked the day of the robbery, yet prosecutors said he was on a cellphone repeatedly during the alleged carjacking yet never called 911. Richard Briones-Colman, Simpson's attorney, accused the prosecution and police of distorting the truth and lying in order to obtain a conviction. The defense argued that Simpson can't be tried for crimes he wrote about that were committed 20 years ago. In fact, he said, the Temecula robbery was so badly botched that it defied logic for someone of Simpson's criminal expertise to be behind it.
According to his book, Simpson joined the Rollin' Thirties Harlem Crips at age 10. The day he was initiated into the gang he shot two rival Bloods with a .38-caliber revolver. Over the years he stole thousands of dollars worth of jewelry and shot and paralyzed a man who tried to tackle him during a heist.
The defense attorney said Simpson had too much going for him now to waste it all on a small-time robbery. He's working for the rapper Ice-T, had just written a book with coauthor Ann Pearlman, and his father, Dick Simpson, was a well-known outfielder for the Los Angeles Angels in the early '60s.
Alternatives to equities can prove jewel in the crown of your
by Rosemary Gallager
Editor: More and more articles are appearing about the viability of alternative investment assets. This is due to the shaky stock markets around the world and the high prices of oil and gold which may portend inflation is coming. Many financial experts believe alternative investments are a proper asset diversification.
“As market turmoil continues, financial advisers are recommending people diversify their portfolio. There are numerous ways of doing this and a small part of your investment could be in a range of interesting and alternative assets such as wine, jewellery, gold and art.
While still relatively niche, this is a growing market with people over the age of 50 spending £2.5 billion in the past five years on alternative assets, including money, pop and royal memorabilia, according to Direct Line.
Patrick Connolly, marketing and PR manager at Towry Law, an independent financial advice firm, said: "Sensible investors will hold a range of different asset classes and will not be too reliant on equities. These people will also have a good understanding of the risks they are taking in their investment portfolios. For these investors, the recent stock market volatility should not be a concern."
Jewellery can be a worthwhile investment, but it is vital to consult an expert on exactly what you should buy.
Gemmologist and jeweller Alistir Tait is often asked for advice on the
investment potential of jewellery by customers at his shop Alistir Wood Tait
Antique & Fine Jewellery in Edinburgh's Rose Street. Tait said: "There are many
reasons why a piece of high-value or antique jewellery can be a great item to
invest in. Unlike most investments, a beautiful piece of jewellery is something
you can actually make use of and derive great pleasure from. Jewellery will, of
course, outlast your plasma TV or car, but it's important to pick carefully to
find something that will retain its value."
He explained diamonds can be a good option. They are almost all certificated so you can be certain of the quality of what you are getting.
More unusual stones are also worth investigating, according to Tait: "We have coloured gemstones such as Tanzanite which is a rare blue violet colour and only found in one place - northern Tanzania. Because it is only mined there, prices have gone up exponentially. Tsavorite, discovered by Campbell Bridges, a Scottish geologist, is less well known, but it's 200 times rarer than emerald. This stone is languishing in neglect but with a bit of education it's very likely to be the next big thing."
Antique jewellery can prove lucrative, but Tait warns to be wary of buying at auctions as there can be hidden costs and jewellery may be damaged after being handled.
Tait added: "The market can be fickle. Victorian jewellery was popular but it's now fallen from grace to be taken over by Edwardian pieces from well-known names such as Cartier and Faberge.
"Anything associated with the suffragette movement is popular as the 100th anniversary of women getting the vote is coming. Some pieces of jewellery were produced in the suffragette colours of green, violet and white representing 'give woman votes'. Anniversaries in general can add value to jewellery."
Tips from Tait include looking for pieces that are in their original box; finding pieces which are named - as with a painting, having a name can increase value; to be wary of pieces marking a death as this can be too macabre for some investors; avoid buying at the top of the market and talk to an expert consultant.
Gold is another market that has become more accessible in the past few years, partly as a result of the launch of gold exchange traded funds in the UK in 2003. The latest statistics from the World Gold Council revealed dollar demand for gold in jewellery, retail investments and industrial sectors all reached new heights in the second quarter of this year.
Global demand for gold jewellery showed the strongest surge, reaching a record $14.5 billion, 37 per cent higher than at the same time in 2006.
Natalie Dempster, investment research manager at the World Gold Council, said: "Gold exchange traded funds have proved hugely successful tin the UK and New York. People can choose to invest in gold mining equities or physical gold depending on their preferences.
"Gold has provided a compounded annual growth rate over the past five years of 15.9 per cent, while the FTSE has achieved 11.2 per cent and the alternative investment market has returned 11.6 per cent. The outlook is good as supply will remain tight and demand is growing, for example in the China and Middle East."
As well as being a joy to drink, wine could be somewhere to put your cash, but once again, go to an expert, such as Corney and Barrow or Berry Brothers.
Bryce Fraser, director of Corney and Barrow, said: "Wine investment is a
totally unregulated industry. You need to speak to someone who is experienced in
doing it as there are an awful lot of people who pretend they know what they are
doing, but they have no idea and don't necessarily have access to the wines
which will perform from the best possible source at the optimum price.
"There are a number of hard and fast rules - you're better to have one bottle at a £1,000 than ten at £100 if it's solely an investment. There are probably only 15 or 20 properties which are, from a pure investment point of view, worth looking at.
"If you look at figures of how wine has performed over the past 20 to 25 years, you'll see it's a staggering return."
Financial advisers have mixed views on alternative investments. Lindsay Fraser, head of St Andrews Asset Managers, part of Pagan Osborne, said: "As many alternative investment items can be very expensive, they can simply be out of reach for the average investor. However, as in most investment, diversification is important, and it would be highly risky for people to put all their savings into a single painting - it is worth having a range of investments if possible."
Robert Hair, financial planning director at Turcan Connell, said: "We tend to look for tax efficient schemes and this is what we have demand for to offset investment risk and lack of liquidity. You have standard alternatives, such as venture capital trusts and enterprise zone trusts. Forestry is another area worth looking at which can offer inheritance tax relief and has been given a boost by China becoming the world's largest importer of wood. Then there are a number of agricultural land funds that let people buy and run arable land. For private individuals, there are also a raft of structured products which have thankfully evolved from the precipice bonds we saw a lot of at the turn of the millennium. "I would recommend people can have up to 15 per cent in alternative investments to give them a sensible asset allocation."
Theo Zemek of New Star fund managers advisers investors to approach forestry with caution. She explained: "There's plenty research published on forestry about how good the returns are, but I think some of it is a lot of rubbish. The US investment model is totally impractical in the UK because there aren't the vast tracts of forests." But she adds that it does have its appeal, such as IHT mitigation and it could turn out to be lucrative.
Kate Warne, market strategist with Edward Jones, an investment firm, advises people to approach alternatives with caution.
"When you buy an investment, you are expecting returns from future payments, such as interest or dividends," she said. In contrast, to receive returns from luxury items such as jewellery, horses or art, you need to find a buyer willing to pay more than you paid for the specific items you own.
"There are two other reasons to be cautious. First, most luxury prices have risen for several years, and buying now could result in low returns, since prices generally do not rise steadily and tend to fall periodically.
"Second, some have noted that luxury item prices do not drop when the stock
and bond markets decline and thus add diversification to investment portfolios.
While that may have been true at times in the past, we may see luxury item
prices become more similar to stocks and bonds if these items are increasingly
treated as investments. The diversification achieved may not be as great as
expected. Our advice is to buy fine art, wine or other luxury items to enjoy,
rather than because they might rise in value over time."
Burma - India Smuggling
By Surajit Khaund
Editor: Burmese goods have always been smuggled. Most of the gemstones crossed the Thailand/Burma border. They were then cut and treated in Bangkok. Now it appears these goods are also going to India.
“Northeast India has become a major transit point of precious stones smuggling. Precious stones – ruby and sapphire are generally smuggled from Myanmar across the border and then sent to various destinations as per demand of the market. In view of growing demand in the market, gem stones smuggling are on the rise in the North-east. During the past 10 years, the law enforcing agencies deployed along the border have made several seizures of precious stones of Myanmar.
“There have been several incidents of gem stones seizures at Champhai, bordering Myanmar. These stones are generally ruby and sapphire,” Jora Moiya, a senior police official of Mizoram Government told this correspondent over telephone today. According to him, Burmese people living along the border are involved in the smuggling to earn their livelihood.
These stone mines are scattered in Sagying Division, Myitkyina and Mogok of Myanmar. But now Myitkyina mines are controlled by the Kachin Independent Army (KIA) as per the agreement with the Burmese Junta. Mogok area is famous for ruby from which Myanmar Government earns a huge chunk of revenue. As these areas are geographically very close to the North-east border, smugglers easily run their business.
In North-east, stones are generally brought from Mogok and Myitkyina areas by the Burmese women and then sent their consignments to the region with the help of carriers. The carriers later dispatch to these to Jaipur and Delhi as per demand of the customers.
“We have confiscated several consignments of precious stones during the past several years and these stones have good demand in the Delhi and Jaipur markets,” a Customs official, who did not wish to be named, said. He further informed that these stones are generally brought in ‘impure form’ which are sent to Delhi and Jaipur for refining and marketing the product.
Myanmar ruby has already made its strong presence in the global jewellery
market because of its purity. In India, gem stones market has been picking up
following increasing demand of the customers. According to a survey, the
jewelery market in the country has been growing at a rate of 20 per cent
annually. To meet the demand, stones are brought from Myanmar. Moreover, the
porous North-east border is also helping the illegal traders to run their
business without any hindrance.”
Diamonds really are for ever
EDITOR: Here is a present for all geoscientists. Any information about the “dark ages” of geology is welcome by those fascinated by rocks.
“James Bond (and Shirley Bassey) were right – diamonds really are for ever. Precious stones that are 4.1 billion years old, or just 300m years younger than the planet, have been found by scientists. Just like the title of Sean Connery's 007 adventure and the hit theme song, it seems that diamonds are seemingly indestructible. The gemstones, found in ancient fragments of zircon in Western Australia, are 1 billion years older than any other example. Experts believe they may hold clues to how the planet was formed. “Recent studies of these ancient crystals have suggested Earth might have cooled much more quickly than previously thought, with the continental crust and oceans forming as early as 4.4 billion years ago,” reported the journal Nature.
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