Here is an interesting article on money and its unique phenomenon in the real world.
Robert Kiyosaki writes:
All booms eventually go bust. We all remember the stock market crash of 2000, and most of us remember the real estate crash after the implementation of the 1986 Tax Reform Act. Today, many people are anticipating another real estate crash.
Unfortunately, despite our understanding of booms and inevitable busts, it's always near the top of a boom that "dumb money" buys in. Currently, this has set the scene for a potential market bust of which few people are aware. I'll describe it today's column, and advise how best to prepare in my next column.
Express-Lane Inspiration
About a year ago, I wrote a Yahoo! Finance column warning readers that the real estate boom was over. How did I forecast the end of the boom? I got my hot tip from the cashier at my local Safeway supermarket.
While she was tallying the cost of my apples, broccoli, and steaks, she handed me her new real estate agent's card and invited me to call her for my next real estate investment. Moments later, I was home writing that column. As my rich dad used to say, "When dumb money chases smart money, the party's over." Needless to say, many real estate agents and investors wrote me nasty notes.
I'm not a hundred-percent certain where things are going today. Most economists are forecasting a strong economy, but economists worry me more than newly minted real estate agents. Most seem to be happy that inflation is in check; when I hear that inflation is in check, I begin to think about deflation, and as most of us know, deflation is much, much, worse than inflation.
An Inconvenient Truth
In the simplest terms, inflation occurs when there' too much money in the system. On the flip side, deflation occurs when there are too few dollars in circulation. When that happens, prices start to fall. For example, in inflationary times, prices of houses go up. In deflationary times, prices of houses come down. If prices of houses begin to drop too fast right now, it could be 1986 all over again.
I wrote a column in 2005 about how I love debt and my credit cards. The trouble is that most people do. Today, you can qualify for a loan to buy a house simply if you're alive and breathing. The strong economy we've been experiencing for years has thus been built on dumb money -- in addition to smart money -- borrowing more and more. Even the U.S. government has had a field day borrowing money to do such things as fight a war and attempt to rebuild Iraq and Afghanistan rather than rebuild our country. And the inconvenient truth about debt is that it has to be paid back.
A Certain Ratio
For the next two years, I'm cautioning people to watch their ratios between good debt and bad debt, and keep liquid reserves such as cash, gold, or silver.
Good debt is debt that makes you rich. An example of good debt is the debt on the apartment houses I own. That debt is good only as long as there are tenants to pay my mortgages. If tenants stop paying their rent, my good debt turns into bad debt.
Most people don't have good debt -- all they have is bad debt. Bad debt is debt that makes you poorer. I count the mortgage on my home as bad debt, because I'm the one paying on it. Other forms of bad debt are car payments, credit card balances, or other consumer loans.
On our home, my wife, Kim, and I keep a 25 percent debt-to-equity ratio. In other words, our debt is 25 percent of the home's value. Unfortunately, many people have an 80 percent or higher debt-to-equity ratio. That means the debt on their home is 80 percent and their equity is only 20 percent.
On our investment properties, we carry a higher debt-to-equity ratio. To protect ourselves, we have cash reserves to cover the expenses of the properties. For example, in case all the tenants leave and no one is left to pay the mortgage and expenses, we have separate funds for each property, with enough liquidity -- i.e. cash, stocks, and bonds -- to carry the building for a year. Unfortunately, the dumb-money crowd has no reserve funds for their properties.
Where Deflation Does Its Damage
In a deflationary market, the value of your home can drop. If the value drops, the bank may call in your loan. Even if you've never missed a payment, and even if you're ahead on the payment schedule, the bank can call in your loan if they feel the value of the property is lower than the loan amount.
For example, say you buy a house for $100,000 and put 20 percent down and borrow $80,000. If the market deflates and the value of your home drops to $70,000 (because everyone else is selling their homes to get out of debt), the lender may ask you to pay the $80,000 you owe immediately.
If such deflation happens, cash will become king. There will be half-price sales on BMWs, expensive restaurants will close, and people will be out of work. And anybody who caters to people with dumb money will be in trouble. As I said before, deflation is much worse than inflation.
Smart Money, Bad Times
The good news is that during deflationary times, smart money reenters the market, so crashes are great for smart people with smart money. Instead of listening to the optimistic economists, then, you should eliminate bad debt and improve your debt-to-equity ratios on good debt.
Most important, study; if you want to be smart, you need to learn. I'll discuss what you should study in the second part of this column. For now, be aware that if deflation comes and there's a recession, it won't have much effect on the poor. Instead, it'll punish middle-class people who think they're rich because their houses and stocks have gone up in value.
I'll explain more in a couple of weeks.
More info @ http://finance.yahoo.com/expert/article/richricher/24515
Thursday, March 01, 2007
The Wizard Of Oz
Memorable quote from the movie:
Auntie Em Gale (Clara Blandick): Almira Gulch. Just because you own half the town doesn't mean that you have the power to run the rest of us. For twenty-three years I've been dying to tell you what I thought of you! And now... well, being a Christian woman, I can't say it!
Auntie Em Gale (Clara Blandick): Almira Gulch. Just because you own half the town doesn't mean that you have the power to run the rest of us. For twenty-three years I've been dying to tell you what I thought of you! And now... well, being a Christian woman, I can't say it!
Opal: Identification and Value
By Paul B Downing
Majestic Press
1992 ISBN 0-9625311-2-X
Paul Downing writes:
My goal as I set out to do this book more than 3 years ago, was to produce a methodology for valuing opals which worked. But more important it had to work the same way for every person who used it. Thus, it was necessary to combine definitions of the various characteristics of an opal with a visual, measurable and reproducible criteria. It needed to be visual so that each person who used the definition gained the same sense of meaning from the words. A picture is worth a thousand words, especially when describing opal characteristics. Measurable criteria had to be developed so that each stone could be objectively characterized. The criteria had to be reproducible so that each individual using the valuing methodology employed the same meaning for each item.
Photographs were the only way. I am fortunate to know to excellent opal photographers, Len Cram and Rudy Weber, who have large libraries of pictures of opals of all types and characteristics. Each has access to some of the best opals found in Australia. Their photo libraries are an attempt to chronicle this exciting stone. Just to see them is a real treat. They are wonderful.
I searched through their libraries and selected pictures that would best illustrate the characteristics I needed for visual criteria. I did not always select the most beautiful picture, although there is plenty of beauty within these pages. Rather, I selected pictures for the utilitarian purpose of adding a visual to the definitions to be contained in this book. Without the help of Rudy and Len this book could not have been done. I am deeply in their debt.
Originally I was going to make my own estimates for value and set up a panel of experts to produce periodic updates. The more I thought about that, the more work it seemed. Then my wonderful wife, Bobbi, suggested a simple solution. Why not use someone else’s estimates of market value? The someone else was Richard Drucker and his market assessment of colored stones called The Guide. Terrific idea. Richard and his panel were already doing estimates of opal value and updating them periodically. Exactly what I needed, leaving me time to research more thoroughly the individual characteristics. Richard and I talked and he agreed to let me use his data. Again, I couldn’t do it without him.
The result of using The Guide as the basis for value is that this book never becomes outdated. To get a current reading of market value all you have to do is consult the current issue of The Guide. Then you can use the prices it contains with the methodology presented in this book to obtain the latest market estimate of the value of any opal.
The whole book is set up with one goal in mind. I want any user, anywhere in the world, to identify all the relevant characteristics of a particular opal in exactly the same way. The book is, unfortunately, quite detailed. This detail is needed so that each reader understands the subtle differences that can have a significant affect on value.
To make this detail a little less difficult to follow, I have broken down the process. The book instructs step-by-step, one characteristic at a time. When all the characteristics have been explained, I show how they are put together to form an estimate of value.
I have attempted to make the book complete by covering all sources of opal that appear on the market from Australia, Mexico, America, Brazil, Honduras and Hungary. I have covered all types too, including solid opal (black, white, and crystal), boulder opal, matrix opal, carved opal, doublets, triplets, synthetics and simulated. However, new sources appear yearly. Fortunately, the characteristics that make opal valuable, even opal from new sources, are covered in this book. Using these characteristics you should be able to estimate the market reaction to that new opal from Timbuktu.
It is important to realize that the use of the terms I define here have evolved in the industry over time and by word of mouth. It is inevitable that others will use or visualize these terms a little differently. Hopefully this book will be a first step toward a common and consistent terminology. Remember that definitions are never wrong—they are just different. I hope to narrow these differences.
I realize that the opal market is alive and well, and thus always in state of change. I cannot hope to anticipate the future. Rather, I have done my best to give the most accurate picture of the market at this time.
To do this I have consulted with various opal experts. I have had the privilege of sitting and kibitzing with the Opal Advisory Service of the Lightning Ridge Miners Association on numerous occasions. I have discussed pricing and this project at length with various opal experts in Australia, including Richard Osmond, Joy Clayton, Greg Sherman and John Traurig of Sydney; Ted Priester and Len Cram of Lightning Ridge; Ewe Barfuss of Yowah; Andrew Cody of Melbourne; Andrew Shelley of Coober Pedy; Stafford Scott of Mintabie; Mario Anic of Andamooka; and many others. Several opal cutters in Hong Kong have been most helpful, especially Sunny Li and Peter Su.
In the United States I have consulted with David Baitel, Martin Bell, Tony Dabdoub, Richard Drucker, Brian Franks, Keith Griffin, Glen and Keith Hodson, Bill Maison, Gerry Manning, and Charlie Smith, among others. None of these very helpful people agree with me completely, but I have taken their advice to the best of my ability. Presentations of these ideas at various meetings of the Accredited Gemologists Association and at the GIA International Symposium have helped me clarify and refine this book. My early article, Evaluating Cut Opal, appeared in the December, 1987 issue of Rock & Gem. This article was stimulated by a prior attempt at a pricing system put out by the American Opal Society.
Specific detailed reviews of drafts of parts or all of this book were done by Len Cram, Richard Drucker, Pat Dunnigan, Richard Osmond and Ted Priester. Without the help of all these people I could not have created this book. Still I must accept all the blame for the remaining errors. I hope you find this book helpful, and may be a little entertaining from time to time.
Majestic Press
1992 ISBN 0-9625311-2-X
Paul Downing writes:
My goal as I set out to do this book more than 3 years ago, was to produce a methodology for valuing opals which worked. But more important it had to work the same way for every person who used it. Thus, it was necessary to combine definitions of the various characteristics of an opal with a visual, measurable and reproducible criteria. It needed to be visual so that each person who used the definition gained the same sense of meaning from the words. A picture is worth a thousand words, especially when describing opal characteristics. Measurable criteria had to be developed so that each stone could be objectively characterized. The criteria had to be reproducible so that each individual using the valuing methodology employed the same meaning for each item.
Photographs were the only way. I am fortunate to know to excellent opal photographers, Len Cram and Rudy Weber, who have large libraries of pictures of opals of all types and characteristics. Each has access to some of the best opals found in Australia. Their photo libraries are an attempt to chronicle this exciting stone. Just to see them is a real treat. They are wonderful.
I searched through their libraries and selected pictures that would best illustrate the characteristics I needed for visual criteria. I did not always select the most beautiful picture, although there is plenty of beauty within these pages. Rather, I selected pictures for the utilitarian purpose of adding a visual to the definitions to be contained in this book. Without the help of Rudy and Len this book could not have been done. I am deeply in their debt.
Originally I was going to make my own estimates for value and set up a panel of experts to produce periodic updates. The more I thought about that, the more work it seemed. Then my wonderful wife, Bobbi, suggested a simple solution. Why not use someone else’s estimates of market value? The someone else was Richard Drucker and his market assessment of colored stones called The Guide. Terrific idea. Richard and his panel were already doing estimates of opal value and updating them periodically. Exactly what I needed, leaving me time to research more thoroughly the individual characteristics. Richard and I talked and he agreed to let me use his data. Again, I couldn’t do it without him.
The result of using The Guide as the basis for value is that this book never becomes outdated. To get a current reading of market value all you have to do is consult the current issue of The Guide. Then you can use the prices it contains with the methodology presented in this book to obtain the latest market estimate of the value of any opal.
The whole book is set up with one goal in mind. I want any user, anywhere in the world, to identify all the relevant characteristics of a particular opal in exactly the same way. The book is, unfortunately, quite detailed. This detail is needed so that each reader understands the subtle differences that can have a significant affect on value.
To make this detail a little less difficult to follow, I have broken down the process. The book instructs step-by-step, one characteristic at a time. When all the characteristics have been explained, I show how they are put together to form an estimate of value.
I have attempted to make the book complete by covering all sources of opal that appear on the market from Australia, Mexico, America, Brazil, Honduras and Hungary. I have covered all types too, including solid opal (black, white, and crystal), boulder opal, matrix opal, carved opal, doublets, triplets, synthetics and simulated. However, new sources appear yearly. Fortunately, the characteristics that make opal valuable, even opal from new sources, are covered in this book. Using these characteristics you should be able to estimate the market reaction to that new opal from Timbuktu.
It is important to realize that the use of the terms I define here have evolved in the industry over time and by word of mouth. It is inevitable that others will use or visualize these terms a little differently. Hopefully this book will be a first step toward a common and consistent terminology. Remember that definitions are never wrong—they are just different. I hope to narrow these differences.
I realize that the opal market is alive and well, and thus always in state of change. I cannot hope to anticipate the future. Rather, I have done my best to give the most accurate picture of the market at this time.
To do this I have consulted with various opal experts. I have had the privilege of sitting and kibitzing with the Opal Advisory Service of the Lightning Ridge Miners Association on numerous occasions. I have discussed pricing and this project at length with various opal experts in Australia, including Richard Osmond, Joy Clayton, Greg Sherman and John Traurig of Sydney; Ted Priester and Len Cram of Lightning Ridge; Ewe Barfuss of Yowah; Andrew Cody of Melbourne; Andrew Shelley of Coober Pedy; Stafford Scott of Mintabie; Mario Anic of Andamooka; and many others. Several opal cutters in Hong Kong have been most helpful, especially Sunny Li and Peter Su.
In the United States I have consulted with David Baitel, Martin Bell, Tony Dabdoub, Richard Drucker, Brian Franks, Keith Griffin, Glen and Keith Hodson, Bill Maison, Gerry Manning, and Charlie Smith, among others. None of these very helpful people agree with me completely, but I have taken their advice to the best of my ability. Presentations of these ideas at various meetings of the Accredited Gemologists Association and at the GIA International Symposium have helped me clarify and refine this book. My early article, Evaluating Cut Opal, appeared in the December, 1987 issue of Rock & Gem. This article was stimulated by a prior attempt at a pricing system put out by the American Opal Society.
Specific detailed reviews of drafts of parts or all of this book were done by Len Cram, Richard Drucker, Pat Dunnigan, Richard Osmond and Ted Priester. Without the help of all these people I could not have created this book. Still I must accept all the blame for the remaining errors. I hope you find this book helpful, and may be a little entertaining from time to time.
Wednesday, February 28, 2007
Diamonds Changing Facets
Here is an update on diamonds.
Economist writes:
An industry once dominated by a cartel is starting to look like any other. DIAMONDS are back on the big screen. The stones serenaded by Marilyn Monroe as a girl's best friend are now, however, portrayed by Hollywood as Africa's worst enemies. Leonardo DiCaprio may win an Academy Award for his performance in “Blood Diamond”, as a mercenary hunting for the precious rocks during the war in Sierra Leone in the 1990s. But in reality, the shape of the industry—which produces an estimated $13 billion of rough stones and over $62 billion of diamond jewellery—has greatly changed since then.
More info @ http://www.economist.com/business/displaystory.cfm?story_id=8743058
Economist writes:
An industry once dominated by a cartel is starting to look like any other. DIAMONDS are back on the big screen. The stones serenaded by Marilyn Monroe as a girl's best friend are now, however, portrayed by Hollywood as Africa's worst enemies. Leonardo DiCaprio may win an Academy Award for his performance in “Blood Diamond”, as a mercenary hunting for the precious rocks during the war in Sierra Leone in the 1990s. But in reality, the shape of the industry—which produces an estimated $13 billion of rough stones and over $62 billion of diamond jewellery—has greatly changed since then.
More info @ http://www.economist.com/business/displaystory.cfm?story_id=8743058
Joban Oil
Nearly all emeralds are treated with a liquid or resin after cutting. In India, Joban oil (green) is the choice for treating commercial grade emeralds. The treaters believe the oil improves the overall gemstonality of the emeralds. All treatments should be disclosed at all levels of the distribution chain. If you are doubtful have it checked by a reputed gem testing laboratory.
The Color Of Money
Memorable quote (s) from the movie:
Eddie Felson (Paul Newman): You're some piece of work... You're also a natural character.
Vincent Lauria (Tom Cruise): You see? I been tellin' her that. I got natural character.
Eddie Felson (Paul Newman): That's not what I said, kid. I said you are a natural character; you're an incredible flake. But that's a gift. Some guys spend half their lives trying to invent something like that. You walk into a pool room with that go-go-go, the guys'll be killing each other, trying to get to you. You got that... But I'll tell you something, kiddo. You couldn't find Big Time if you had a road map.
Eddie Felson (Paul Newman): You're some piece of work... You're also a natural character.
Vincent Lauria (Tom Cruise): You see? I been tellin' her that. I got natural character.
Eddie Felson (Paul Newman): That's not what I said, kid. I said you are a natural character; you're an incredible flake. But that's a gift. Some guys spend half their lives trying to invent something like that. You walk into a pool room with that go-go-go, the guys'll be killing each other, trying to get to you. You got that... But I'll tell you something, kiddo. You couldn't find Big Time if you had a road map.
The Koh-i-noor Diamond
By Stephen Howarth
Quartet Books Limited
1980 ISBN 0-7043-2215-3
Stephen Howarth writes:
Koh-i-noor: the name means Mountain of Light. The diamond called the Koh-i-noor is one of the most famous of the Crown Jewels of Great Britain. It is not the largest diamond in the world, nor is it the most valuable, in monetary terms. Whether or not it is the most beautiful is a matter of opinion; but of all existing jewels, it has the longest history in legend, and the most colorful history in fact.
Diamonds are symbols of eternity. The word comes from the Greek adamas, meaning unalterable and indomitable. This, and the poetic name ‘Mountain of Light’, together indicate the reasons for the high regard in which diamonds have always been held: their beauty and their endurance. Diamonds are one of the hardest natural substances in the world, and many of their uses nowadays are for industrial purposes. But for thousands of years previously they were sought for their beauty, and by their rarity became the province of kings.
The Koh-i-noor was found in an Indian mine, probably more than three hundred years ago, and as the fortunes of India have varied in those three centuries, so the Koh-i-noor has changed hands from one conqueror to another. Through the changes, this special diamond has gradually acquired its own particular symbolism. It has meant different things to different people; to many, it has been an emblem of power and conquest and empire. To others, it has represented something more peaceful, and it is an image of union, factually and philosophically. Diamonds as fact, symbol and legend are woven inextricably into the paradox of Indian society, simultaneously changeless and everchanging. This marriage of constancy and variability can be a difficult concept for many Western minds, but it is this very concept which makes the Koh-i-noor a jewel literally beyond price, for the story of the Koh-i-noor reflects the history of the subcontinent of India. It is a turbulent story, sometimes cruel and violent, sometimes peaceful and calm; and it starts not three hundred years ago, but three thousand years ago, in India’s oldest legends.
The Owners of the Koh-i-noor
Mir Jumla, one-time wazir to the King of Golkonda, presented it to Shah Jahan, the Mogul Emperor, c. 1655-7. It descended to Auragazeb, Shah Jahan’s son. In 1655 it was seen, weighed and measured by Jean Baptiste Tavernier, a French jeweler. It remained with the Moguls until 1739, when it was lost to Nadir Shah, the Persian emperor, after his sack of Delhi. The jewel went to Persia. After Nadir’s assassination in 1747, his grandson Shah Rukh Mirza inherited the jewel. In gratitude for support he gave it to Ahmad Shah, leader of the Durrani clan and unifier of Afghanistan, in 1749. The jewel remained in Afghanistan with Ahmad’s son, Zaman Shah, who inherited it in 1793. Zaman was imprisoned and blinded by one of his brothers, but contrived to hide the jewel, until he passed it on to another brother, Shah Shuja, in 1795. Shuja eventually surrendered it to Ranjit Singh, the ‘Lion of the Punjab’, in 1813, in return for military aid. On Ranjit’s death the jewel passed to Dhulip Singh, his supposed son, in 1839. On the annexation of the Punjab by the British, in 1849, the jewel was claimed by The Board of Government, who took possession of it pending its presentation to Queen Victoria. The presentation took place on 3 July 1850. Since then the jewel has remained in Britain and is now mounted in the State Crown of Queen Elizabeth, the Queen Mother.
Quartet Books Limited
1980 ISBN 0-7043-2215-3
Stephen Howarth writes:
Koh-i-noor: the name means Mountain of Light. The diamond called the Koh-i-noor is one of the most famous of the Crown Jewels of Great Britain. It is not the largest diamond in the world, nor is it the most valuable, in monetary terms. Whether or not it is the most beautiful is a matter of opinion; but of all existing jewels, it has the longest history in legend, and the most colorful history in fact.
Diamonds are symbols of eternity. The word comes from the Greek adamas, meaning unalterable and indomitable. This, and the poetic name ‘Mountain of Light’, together indicate the reasons for the high regard in which diamonds have always been held: their beauty and their endurance. Diamonds are one of the hardest natural substances in the world, and many of their uses nowadays are for industrial purposes. But for thousands of years previously they were sought for their beauty, and by their rarity became the province of kings.
The Koh-i-noor was found in an Indian mine, probably more than three hundred years ago, and as the fortunes of India have varied in those three centuries, so the Koh-i-noor has changed hands from one conqueror to another. Through the changes, this special diamond has gradually acquired its own particular symbolism. It has meant different things to different people; to many, it has been an emblem of power and conquest and empire. To others, it has represented something more peaceful, and it is an image of union, factually and philosophically. Diamonds as fact, symbol and legend are woven inextricably into the paradox of Indian society, simultaneously changeless and everchanging. This marriage of constancy and variability can be a difficult concept for many Western minds, but it is this very concept which makes the Koh-i-noor a jewel literally beyond price, for the story of the Koh-i-noor reflects the history of the subcontinent of India. It is a turbulent story, sometimes cruel and violent, sometimes peaceful and calm; and it starts not three hundred years ago, but three thousand years ago, in India’s oldest legends.
The Owners of the Koh-i-noor
Mir Jumla, one-time wazir to the King of Golkonda, presented it to Shah Jahan, the Mogul Emperor, c. 1655-7. It descended to Auragazeb, Shah Jahan’s son. In 1655 it was seen, weighed and measured by Jean Baptiste Tavernier, a French jeweler. It remained with the Moguls until 1739, when it was lost to Nadir Shah, the Persian emperor, after his sack of Delhi. The jewel went to Persia. After Nadir’s assassination in 1747, his grandson Shah Rukh Mirza inherited the jewel. In gratitude for support he gave it to Ahmad Shah, leader of the Durrani clan and unifier of Afghanistan, in 1749. The jewel remained in Afghanistan with Ahmad’s son, Zaman Shah, who inherited it in 1793. Zaman was imprisoned and blinded by one of his brothers, but contrived to hide the jewel, until he passed it on to another brother, Shah Shuja, in 1795. Shuja eventually surrendered it to Ranjit Singh, the ‘Lion of the Punjab’, in 1813, in return for military aid. On Ranjit’s death the jewel passed to Dhulip Singh, his supposed son, in 1839. On the annexation of the Punjab by the British, in 1849, the jewel was claimed by The Board of Government, who took possession of it pending its presentation to Queen Victoria. The presentation took place on 3 July 1850. Since then the jewel has remained in Britain and is now mounted in the State Crown of Queen Elizabeth, the Queen Mother.
Tuesday, February 27, 2007
Thai Jewelry Market
(via The Nation) Petchanet Pratruangkrai writes:
Growth in the Thai jewelry market this year is likely to drop by half from the original target, because of the world's economic slow-down and the recent appreciation of the baht, say jewelry exporters.
More info @ http://www.nationmultimedia.com/2007/02/27/business/business_30027970.php
Growth in the Thai jewelry market this year is likely to drop by half from the original target, because of the world's economic slow-down and the recent appreciation of the baht, say jewelry exporters.
More info @ http://www.nationmultimedia.com/2007/02/27/business/business_30027970.php
Subscribe to:
Comments (Atom)