Gemstone Forecaster, Vol. 13, No. 4, Part Two

THE GEMSTONE FORECASTER VOL. 13, NO.4 - PART TWO

TABLE OF CONTENTS PART TWO
COLOMBIA

Regulating The Emerald Trade
The Colombian government is going to introduce legislation to regulate the emerald business. They want to step up the scrutiny of emerald exports. The emerald trade has long been used to launder illegal profits from the drug business. The government wants to stop people from illegally bringing money into Colombia. The government does not plan to focus on legitimate gem dealers, but rather focus on those who use the trade as a front for illegal activities.

The Colombian government is concerned with the declining sales, especially to Asia. The declining sales are due to the lack of Colombian production, which has decreased the last two or three years. Most of the Muzo and Chivor production today is light green in color and with light tones. The majority of the goods we are seeing are 4.5-5.5 colors and 65 tones. The world's emerald buyers want deep green colors with medium tones. The only fine emerald on the market is the rough that was found years ago coming out of the wreck of the Atocha.

Drug Trade
Helmer Herrera's reign may be near the end. He is the last of the Cali cartel's bosses. He has a $1 million price on his head. His sister is in jail. His property has been seized. The six other leaders of the Cali cartel are in prison. Two of his lawyers are negotiating with the Colombian government for his release. Arrest warrants for other family members have been issued. Recent bombings against an elite anti-drug police force in Cali have been traced to Herrera. He was also instrumental in helping the Colombian government destroy the Medellin cartel.

President Threatened
President Samper was recently threatened by Dignity for Colombia. This group is linked to the killings of numerous prominent Colombians. This group says Samper took millions of dollars from the Cali cartel, then launched an offensive against the cartel. Colombians are unsure whether the group is right-wing or left-wing. President Samper declared a state of emergency. He vowed to prevent the terrorism that engulfed Colombia in the late 1980s when the Medellin cartel killed thousands of people. A caller representing the group to the newspapers said, "Your armored cars won't be worth anything when a 1,000 kilo charge of dynamite explodes next to you, directed by one of our kamikazes."

Cali
Cali is a city of 1.8 million people, and is the home of the notorious Cali drug cartel. According to a new study by the Centers for Disease Control and Prevention, Cali's homicide rate has increased more than fivefold since 1985. Homicide is the leading cause of death in Cali. More than 104 out of every 100,00 people were killed in 1993. The worst US city is Gary, Indiana with 89 out of every 100,000. Eighteen percent of all deaths in Colombia are from homicide vs. 1.2% in the US. The study found 79% of the deaths were from gunshots. Also, 94% of the deaths occurred in a public place. Suspects were identified 25% of the time, and only charged 9% of the time, Of the suspects identified, a hired assassin was the shooter 71% of the time. Cali officials are attempting to ban guns in public during weekends, holidays, and during elections.

BRAZIL

Emeralds supplies up to five carats are up. These stones trade for 1/2 the price of Colombians. Many alexandrite parcels are being salted with synthetics.

COLLECTOR GEM MINING INFO

Madagascar
A recent discovery of neon apatite has caused a stir among collectors. Collectors have been buying the bright blue and green colors. The reason is they are the same color as the Paraiba tourmaline for a fraction of the price. Although the stone is soft, it is available form $100 -$200 per carat in gem quality vs. $2000-$5000 for similar looking Paraiba tourmalines.

Pakistan
Peridot from the Suppatt region has excited collectors and dealers internationally. Large, clean, excellent color material is currently available, but do not expect it to last.

Brazil
For those of you who do not own a Paraiba tourmaline because the mine is depleted, a new find of blue tourmaline was recently found near Parelhas, 32 miles away from Paraiba. The stones are similar to Paraiba, and are colored by copper. These stones are reported to be sky blue. These stones also are reported to not be heat treated. Expect prices to remain in the $2000-$5000 per carat ranges. The monthly yield is 2.2 pounds of 1-3 carat stones. The yield is expected to be gems averaging .20-.30. Let us know if you have an interest in these new stones, and we will look at the Tucson Gem Show in February, 1996.

Also a new find is reported of blue and green tourmaline near Itambacuri. The stones are similar to Paraiba, but not so neon.

United States
Kennecott has purchased the Utah Red Beryl Mine and the Benitoite mine in California. Look for increased production and marketing of red beryl in the next few years.

WARNING: CANADIAN SCAMS

The Gemstone Forecaster has not written anything substantial regarding the Canadian boiler rooms issue in over 10 years. Obviously, it is time to revisit this issue. All of these stones are coming from clients who are finding us on the Internet. We have received stones that have been sealed in plastic with grading reports from the following two labs:

Gem Information Laboratory, Inc.
Seybold Building
36 NE 1ST Street, #1046
Miami, FL 33132

Gemstone Identification Laboratory, Inc.
Empire State Building, Suite 3304
350 5th Avenue
New York, NY 10118

As an example, one stone was a 1.02 blue sapphire graded 3.5/80 (color/tone) LI (clarity). Upon removing the stone from the seal, we discovered it is an inexpensive, dark (almost pure black with a small flash of blue under high intensity lighting), Australian sapphire. You can buy this at gem shows in buckets for $10 per carat. The client paid $1500 for the stone. As Gemstone Forecaster subscribers know, to receive a 3.5/80 LI from the American Gemological Laboratories (AGL) is extremely difficult. A Ceylon blue sapphire with AGL paper stating the stone is 3.5/LI could be worth $3000.+ This misgrading is like a lab calling a diamond a D-IF, and then having the stone turn out to be an M color, I3 clarity! Beware of these labs!

If anyone high pressures you into buying anything, please be wary. Every investment (stocks, commodities, bonds, real estate, metals and gemstones) is a risk. When you invest, whatever goes up can and probably will go down. If you cannot accept some risk in your portfolio, put all your money in bank CDs or Treasury bills. Gems should represent only a small part of your total portfolio. Most advisors view gold, gems, rare coins as an insurance hedge against inflation or an economic catastrophe. Hopefully, you will never have to use them. If you do, at least you are prepared.

To properly collect gems, you must buy near true wholesale. If you are buying a diamond, make sure you are buying near the Rapaport Diamond Price List. Purchase a diamond with a Gemological Institute of America (GIA) Grading Report. If your interest is colored stones, use Gemstone Price Reports, or the GAA Market Monitor, or National Gemstone's price lists. These lists are for stones with American Gemological Laboratories (AGL) Grading Reports only. If you do not subscribe to these price guides, have your dealer xerox these price lists and prove to you where you are buying. Chances are unknown labs are being used to dupe you. The price lists are only accurate with proper grading reports. You must compare apples with apples.

Never buy a stone that is sealed with plastic that you or a gemologist cannot examine. Stones are sealed in plastic for the seller's protection, not the buyers.

If you buy gemstones from these Canadian companies, you may receive a second call. This time, a salesperson may try to convince you that buying more stones will make your "gemstone portfolio" more attractive for sale to outside "investors" or at alleged auctions. Does this even make sense? It is fine to add to your gem portfolio, but do it for the right reasons-you are further diversifying your portfolio, or you are trading up to improve your gem collection. However, 99% of the time, by adding a gem to your portfolio, it will not make your portfolio more valuable. A salesperson also may call with the promise of a buyer for your stones. Before a buyer can be introduced, however, you may have to pay money up front. The money is needed, you are told, to cover a finder's fee, commission, examination fee, or "required" duties or taxes. Does this make sense? Would you send your stock broker up front money to sell 100 shares of IBM? As part of the deal, you may have to buy additional stones before you can sell any. After sending your money, you may receive stones of questionable value, but no word of a buyer. Whatever the approach, consumers who buy from these Canadian boiler rooms inevitably end up with gemstones worth only a small fraction of what they paid. In addition, the promises of easy resale, outside buyers, and upcoming auctions have all proven false. Consumers who believe these promises can expect to lose all your money. Gems should be bought and sold individually on the stone's own merits.

For More Information
If you have been experiencing problems, you can call or write all of the agencies below. When writing to register a complaint, include a complete history of your involvement with the gemstone company. You should enclose copies of all letters, brochures, or other material you received from the firm in addition to any correspondence you may have sent.

Federal Bureau of Investigation
Check your telephone directory for your local FBI office.

Federal Trade Commission
6th Street and Pennsylvania Ave., N.W., Room 200
Washington D.C. 20580
Contact: Denise Owens
(202) 326-3277

National Fraud Information Center
Consumer Assistance Hotline
1-800-876-7060
9 a.m. - 5 p.m. EST, Monday-Friday

Royal Canadian Mounted Police
(written complaints only)
225 Jarvis Street
Toronto, Ontario M5C 2M3
CANADA

ISOSG
225 N. Humphreys Blvd.
Memphis, TN 38106
901-722-7700

A centralized US location for complaints:

American Gemological Laboratories
Gemline Recovery Service, Cap Beesley
580 Fifth Ave., #706
New York , NY 10036
1-212-704-0727

Conclusion
It has been my experience that it is practically impossible to get any money back from these scum suckers.

Basically, your options are:

  1. Legal- Be prepared to spend at least $20,000.
  2. Communicate with the organizations listed above. AGL Gemline Recovery Service, Cap Beesley, President, has had some success in dealing with these crooks. If you purchased gems with a credit card, you have a better chance than if Federal Express picked up your check.
  3. Liquidate in the real wholesale gem market or mount your gems in jewelry.

The number and diversity of the scam artists are incredible. You should always ask, "Is this deal too good to be true?" The key to successfully collecting gems is hard work, solid research, and smart thinking. Knowledge is power. Learn about gems before you buy, study the legitimate gem laboratories, and gem prices. Most of all, use common sense. Do not send your money to a Canadian firm that promises you excitement and quick money. If you are an American who wants to collect gems, buy and sell with a reputable US company or your local jeweler. At least you have the BBB, Chamber of Commerce, and legal recourse.

PRIVACY SECTION

NEW MONEY UPDATE

Description Of The New Currency

Color
The new currency will be the same size and general color as the old currency. Multi colors were rejected to reduce the accusations of printing monopoly money.

Portrait
Since most people focus on the portrait to verify a notes authenticity, the enlargement of the portrait of Benjamin Franklin makes it easier to recognize, while the added detail will make it harder to duplicate. The portrait is now off center, providing room for the watermark and security thread. Franklin's portrait is a little different from the old portrait.

Watermark
A watermark has been added on the right front side of the note depicting the same historical figure as the portrait. This watermark portrait is only visible when held up to a light source and does not reproduce on color copiers, color scanners, or on any camera work for offset printing. Watermarks are used by many countries as a counterfeit deterrent.

Color Shifting Ink
Color shifting ink changes color when viewed from the different angles. This ink is used to print the number in the lower right hand corner on the front of the currency. The ink looks green when viewed straight on, but changes to black when the paper is held at an angle.

Security Thread
This polymer thread is embedded vertically in the paper and indicates each bill's denomination. The words on the thread can be seen when the bill is held up to the light, but cannot be duplicated by photocopiers and scanners. In the 1990 Series of bills the security thread only appeared on the left side of the bill. As an additional enhancement the new security threads will glow red when lit by ultra violet light.

Microprinting
Microprinted words are extremely hard to replicate without blurring. Originally located around the portrait of the 1990 Series Notes, microprinting has been modified for the new design. Examples of the microprinting, which can be read under magnification, now can be found in two places on the front. "USA 100" is microprinted with in the number in the lower left hand corner, while "United States of America" appears on Benjamin Franklin's lapel.

Federal Reserve Seal
A letter in the serial number will identify the issuing Federal Reserve Bank, instead of being different for each Federal Reserve District.

Serial Numbers
The serial number is a combination of the eleven numbers and letters on the front of the note in the upper left hand corner and the lower right hand corner. An additional letter has been added so that no two bank notes in circulation will have the same 11 character number.

Concentric Fine Line Printing
This is a series of fine lines that is very difficult to reproduce in copies and scanners. It is used on both sides of the bill. It is used behind Benjamin Franklin's Portrait on the front and Independence Hall on the reverse. It will appear just as one color on most copiers.

Conclusion
This new U.S. Currency is able to set off metal detectors at an airport. The metal detectors are set off when, depending upon the setting, a certain amount of metal passes through the detection field. If you have a large amount of U.S. bills on you it will set off the detector. This is because the intaglio printing process uses ink made from metal oxides. U.S. Currency can also be detected with the more sensitive metal detectors sold for mineral prospecting. The new $100 US bills will be out in January, 1996. There should be a surge in hard assets as the new money is introduced. Those who have been hoarding cash will probably want to keep their assets private and trade in their old currency for gold, rare coins, and gems. Remember, it is against US law to keep more than $5000 in US currency not intended to be spent. This is one more reason to place some of you private wealth into diamonds and gemstones.

ID CARD UPDATE

Congress is moving forward with what will be a national ID card or universal indicator-a federal database requiring employers to first check with the government before hiring an employee. The legislation (H.R. 1914) was introduced by Lamar Smith (R-Texas) to keep illegal aliens from taking jobs from Americans. A similar bill was sponsored by Alan Simpson (R-Wyo) in the Senate. This permission-to-work card is supported by both parties and the White House. Prototypes of this database are currently running in 20 test companies, and the INS is hoping to obtain another $50 million to expand the number of test companies. Representative Steve Chaboot (R-Ohio) is in opposition to the bill which was passed in the House Judiciary Committee. He stated the database plan is "an unprecedented assertion of federal power akin to calling 1-800-BIG-BROTHER." Critics of the bill contend it is government overkill because only 1.5% of the US population are illegal aliens. Representative Bill McCollum (R-Fla) wants to go further than the Smith legislation. He plans to offer an amendment to create a social security card with a photo, hologram, and biometric identifier which includes a retina scan and fingerprints. According to the Cato Institute study on new microchip technology, one ID card recently patented can hold up to 1600 pages of information. Another identifier system developed by Hughes Aircraft, consists of chip the size of a grain of rice that can be implanted under your skin, and read with a scanner.

Harris Poll
According to the 1995 Harris poll, 80% of Americans agree that consumers have lost all control over how personal information about them is circulated, up from 71% in 1990.


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 or 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.

The following is for snail mail only:
Write:
NGC
P. O. Box 42468
Tucson, AZ 85733
Call: 1-800-458-6453 or (520)-577-6222

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For comments, questions or price quotes E-mail NGC, Attn: R. Genis

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