S U M M E R

ISSUE 5

VOLUME 1

U P D A T E

SUMMER 2016

Elemetal Direct
Division Profile
Providents Egyptian
Gods Series
Anti-Money Laundering
& Numismatic News

SUMMER 2016
ISSUE 5, VOLUME 1

4 Editors Note
6 Provident Metals
10 Elemetal Direct
16 AML Review
22 Metal Outlook
26 Numismatic
32 Executive Minutes

REFINING THE

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DIAMOND
Elemetal Diamond delivers outstanding customer service
to clients across Elemetal and the gemstone industry

DIRECT

at large. Our customers receive the utmost respect and

professionalism throughout the transaction process,
whether buying or selling diamonds or utilizing our
stone removal
MINTservices. We take pride in being your
straightforward and transparent partner for gemstones.

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REFINING

2016 | All Rights Reserved | Elemetal LLC

214.956.5843 | elemetal.com/diamond

ISSUE 5

VOLUME 1

Summer 2016

Provident Metals
The retail side of our shop is very
excited to bring you some new
designs with an egyptian feel.

REFERENCE GUIDE
4 Editors Note

PAGE 6

6 Provident Metals
10 Elemetal Direct

Elemetal Direct
A full-service review of the what,
why, and hows of this important
Elemetal Division.

16 AML Review
22 Metal Outlook

PAGE 10

26 Numismatic

AML Review

32 Executive Minute

An important info piece for all

customers dealing in precious
metals, stones, and jewels.
PAGE 16

Metal Outlook
Louis Golino is back for another
issue and provides a definitive
preview of the metals market for the
rest of 2016.
PAGE 22

Elemetal Direct | 3

EDITORS NOTE

Summertime
at Elemetal

bout a year ago, we launched this new publication as both

an introduction and a rebirth of one of North Americas
largest precious metals organizations.

As customers, vendors, and partners, you had been doing business

with NTR, OPM, Echo, Bullion Group, or Provident Metals.

Summer update
PRESENTED BY: Elemetal, LLC
MARKETING DIRECTOR: Brad Hastedt
LAYOUT DESIGN: Iain Duane Yu

CONTRIBUTORS: Louis Golino, Royal Mint,

Bradley Yates, Elemetal Diamond, Gareth Amon

DISCLAIMER: Elemetal Direct is 100% American owned.

All contents of Elemetal Direct are for information purposes only.
Elemetal Direct does not guarantee the accuracy, completeness

Back then, we announced to the world not just a new brand

but also a merging of synergies that positioned us to provide
customers with a world-class experience at every spoke in the
precious metals wheel.
That was then. Now, were overjoyed to report our transition to
a global Elemetal is progressing very well and were excited to
keep proving to you a great service experience each time you give
us an opportunity.
In this summer issue, well focus on the folks from Elemetal Direct
with a feature story on that division. Also, we have noted industry
expert Louis Golino joining us again for Numismatic News as well
as a look at the metals industry for the back half of 2016. And, we
have a great review of Anti-Money Laundering laws and what to
look out for in your business. Lastly, Provident Metals checks in
with some great new product releases for this year.

or timeliness of the contents. None of the information contained

herein constitutes a solicitation, offer, opinion, or reccomendation by
Elemetal Direct to buy or sell any security or commodity, nor legal, tax,
accounting, or investment advice or services regarding the profitability
or suitability of any security, commodity or investment.
All commentary and advice in this publication is of a general nature
only, and doesnt consider your individual circumstances or financial
objectives. You should always consult a licensed financial advisor for
your personal investment advice. Please do your own research.

CONTACT US FOR
ADVERTISING AND CONTENT
Brad Hastedt

So, please again take a few moments to read through this

magazine its produced with you in mind -- our core customer.
Thank you for your business and your commitment to our
company. We look forward to continuing to serve you.

Alan Stockmeister

4 | Elemetal Direct

bhastedt@elemetal.com

PUBLICATION INFO
www.elemetal.com
15850 Dallas Parkway
Dallas, Texas 75248

Elemetal, LLC
Editorial Staff

Elemetal Direct is a bi-monthly publication only

intended for Elemetal customers,
vendors, and associates.

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MINT
As the first mint to produce a two troy ounce ultra-high
relief silver round, Elemetal Mint sets the standard for

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first-in-class bullion. We are a market leader in specialty

bullion categories, and we take pride in our ability to push
the private-minting industry to new heights. With IRAcertified
products and good delivery bars, Elemetal Mint
REFINING
leads the market in precision and quality at scale.

VAULT

2016 | All Rights Reserved | Elemetal LLC

800.889.0396 | elemetal.com/mint

P R O D U C T S P O T L I G H T | PROVIDENT METALS

6 | Elemetal Direct

PROVIDENT METALS | P R O D U C T S P O T L I G H T

ans and collectors of Egyptian history rejoice! Due to the overwhelmingly popular release of the
Provident Metals exclusive Cleopatra 2 oz Ultra High Relief Silver Round, bullion buyers can now
look forward to a new series of collectible coins - The Egyptian Gods Series.

History meets myth with this series featuring iconic Egyptian figures, showcasing the fascinating
mythology of one of the worlds oldest civilizations. Two designs will be released each year, and each
ultra high relief round in the series will consist of two troy ounces of .999 fine silver.
In Ancient Egypt, life was infused with mythos; understanding the divine was essential in interpreting
events, actions, and consequences in daily life. Gods and goddesses were given the physical
characteristics of both humans and animals to express the types of power and emotions they
embodied. The art and beliefs from the time period provide rich content for stunning silver rounds.

Elemetal Direct | 7

P R O D U C T S P O T L I G H T | PROVIDENT METALS

The Cleopatra 2 oz Silver Ultra High Relief Silver

Round was originally released as an independent
design, and she quickly became a fan favorite.
Coin collectors pleaded for an Egyptian themed
series, and Provident Metals was happy to oblige.
Some astute buyers have asked, why include
Cleopatra? She wasnt a goddess! Well, wise
Provident customer, you are correct. Cleopatra
was not technically a goddess; however, during
her marriage to Mark Antony, Cleopatra cleverly
linked her identity with the goddess, Isis, to
strengthen her rule. She appeared to her people
in the garb of the goddess and erected statues
of herself as the divine. She referred to herself
as Nea Isis or New Isis. The goddess Isis
represented maternal protection and life. While
Cleopatra was Greek, she learned Egyptian and
adopted much of the culture to align herself with
the Egyptian people.
To follow the design featuring one of the most
highly regarded rulers in Ancient Egyptian
history is no easy feat. When contemplating
the design for the second round, the pious and
superstitious nature that ruled in Ancient Egypt
was considered. For Egyptians, death was
not something to be feared if you were a good
person. To die was to have the opportunity to
pass to the afterlife and eternal comfort. A god
who could help the Egyptians achieve this was a
god worthy of veneration.
Because of his importance in the lives of
Egyptians, Provident Metals chose to feature
Anubis, the god of the afterlife, on the second
round. Anubis was often depicted as a guide for

8 | Elemetal Direct

Egyptians in life. He provided enlightenment to

those seeking goodness. On his 2 oz Ultra High
Relief Silver Round, Anubis is featured as a
man bearing the head of a jackal. Jackals were
animals associated with death and the afterlife,
so it was appropriate for the god of the afterlife
to be associated with the grave-guarding animal.
Many times, Egyptians perceived jackals, or even
dogs, as a physical representation of Anubis, and
interactions with these animals was seen as an
auspicious event.
Anubis stands alongside his Scales of Justice,
used to weigh the hearts of the deceased. For
Egyptians, every action was dictated by the desire
to reach the afterlife. Anubis was the guide to
reach that destination; therefore, he was greatly
revered.
Fascination with Egyptian mythology has been
prevalent throughout history. The nature of the
gods and goddesses, in addition to the artwork
from this time period, create ample opportunity
for stunning designs to impress even the most
discerning bullion collector. Expert sculptor, Heidi
Wastweet, brings her immensely talented eye for
high relief design to the Egyptian Gods series.
The designs featured in the series are brilliant
on paper, but the ultra high relief techniques
Wastweet uses to create these rounds make the
designs absolutely breathtaking.
Two designs will be released, annually,
highlighting one of the most exciting time periods
in history. Keep checking ProvidentMetals.com to
see whos next!

PROVIDENT METALS | P R O D U C T S P O T L I G H T

Elemetal Direct | 9

C O M P A N Y F O C U S | ELEMETAL DIRECT

REFINING THE FUTURE

Elemetal Direct is a network of

direct-to-customer
precious metal recycling
locations streamlined
to serve the market
with rapid liquidity.
10 | Elemetal Direct

REFINING THE

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MINT

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REFINING

VAULT
Elemetal Vault offers a new level of security and liquidity to all
gold and silver investors. Using our proprietary web application,
investors can quickly trade and store physically allocated gold and
silver 24-hours a day with no commissions and no hidden fees.
Because of our relationship with Elemetal, we are able to take
bulk bullion directly from our refinery to the vault. Elemetal Vault
is your destination for allocated bullion investment.

2016 | All Rights Reserved | Elemetal LLC

844.435.9879 | elemetal.com/vault

C O M P A N Y F O C U S | ELEMETAL DIRECT

ELEMETAL DIRECT
ABOUT US
Our expansive network of stores gives us the unique ability to serve your precious metals needs
conveniently, wherever you are. Whether youre in Anchorage or Atlanta, Honolulu or Houston we have a
store near you waiting to provide industry-leading turnaround on your recycled or scrap metal.
Elemetal Direct delivers the highest level of integrity as we continue to grow and find new and exciting
ways to serve the precious metals industry at large. We are Elemetal, and we are refining the future.

WHAT WE BUY
Elemetal Direct specializes in processing high-grade precious metals
originating from the following sources:
GOLD
Karated scrap jewelry in any form, filings, grindings, dental gold and alloys, casting trees, casting
grain, fine gold grain, gold ingots, and gold bullion and coins

SILVER
Sterling silver jewelry in any form, scrap silver jewelry, sterling silver flatware and hollowware, electrolytic
silver, filings, grindings, dental silver and alloys, silver casting trees, silver casting grain, fine silver grain, silver
ingots, and silver bullion and coins

PLATINUM
Platinum jewelry in any form, bench filings, grindings, platinum thermocouple wire, crucibles, catheters,
medical platinum, platinum laboratory ware, platinum flake, platinum foil, platinum casting trees, and platinum
bullion and coins

PALLADIUM
Palladium jewelry in any form, bench filings, grindings, palladium casting trees, casting grain, fine grain, palladium
bullion, palladium dental scrap, and palladium bullion and coins

ADDITIONAL SERVICES INCLUDE

Stone-removal for diamonds and other
gemstones from all jewelry
Refining of floor sweeps, bench sweeps,
polishings, filters, and sink collections
12 | Elemetal Direct

In addition to high-grade refining

and services, we are proud to
offer intermediate and low-grade
refining services through Elemetal
Recycling.

ELEMETAL DIRECT | C O M P A N Y F O C U S

TURNAROUND
Product/Metal

Walk In

Mail In

Gold

< 1 Hour

1-2 Days

Silver

< 1 Week

< 1 Week

Platinum

1-2 Days

1-2 Days

Palladium

1-2 Days

1-2 Days

Stone Removal

2-4 Days

2-4 Days

Gold Filled

2-3 Weeks

2-3 Weeks

Sweeps

7-10 Days

7-10 Days

DIVERSE SETTLEMENT OPTIONS

Check

Wire

ACH

Bullion Trade

Pool

Metal Exchange

Elemetal Direct | 13

C O M P A N Y F O C U S | ELEMETAL DIRECT

ELEMETAL DIRECT LOCATIONS

Check elemetal.com to find the

Elemetal Direct store nearest you!
CONTACT ELEMETAL DIRECT

MAIL

PHONE

WEBSITE

directsales@elemetal.com

800-889-0396

elemetal.com/direct

14 | Elemetal Direct

I N D U S T R Y N E W S | ANTI-MONEY LAUNDERING

Anti-Money Laundering
Dealers in Precious Metals, Stones, or Jewels
By Laura Goldzung

OVERVIEW
Money laundering isnt just a worry for banks many small
businesses are touched by money launderers. Dealers in precious
metals, stones or jewels are especially vulnerable.
Precious gems are often smuggled, stolen and traded in the black
market in countries around the world and then used in money
laundering schemes. The characteristics of jewels, precious
metals and precious stones that make them valuable, warns
the U.S. Department of Treasury, also make them potentially
vulnerable to those seeking to launder money.
Money laundering begins with the commission of a crime that
produces ill-gotten funds. The perpetrator then processes this
dirty money through a series of transactions intended to cleanse
it so that it appears to have resulted from legal activities.
There is no one single method of laundering money it may involve
other individuals, businesses and companies. However, one
constant remains: The funds need to be washed.
16 | Elemetal Direct

Bill LeRoy

Dealers of precious metals, stones or jewels can be drawn into

money laundering schemes, for example, by criminals who use
dirty money to buy gold coins, diamonds or other gems. The
money launderer then resells the coins or gems and introduces the
proceeds into the financial system as supposedly clean money.
It is critical to understand how it can happen to your business and
how to avoid it. Here are factors that may indicate a transaction is
designed to involve a dealer in money laundering:
Payment is made with large amounts of cash; multiple or
sequentially-numbered money orders, travelers checks or
cashiers checks; or through third-parties;
The customer of supplier is unwilling to provide complete or
accurate contact information, financial references, or business
affiliations;
The customer or supplier attempts to maintain a high degree
of secrecy about a transaction, such as requesting that normal
business records not be kept;
Purchases or sales are unusual for the particular customer or
supplier, or type of customer or supplier;
Purchases or sales dont conform to industry practice.

REFINING THE

FUTURE

CAPITAL

DIAMOND

DIRECT
Our expansive network of stores gives us the unique ability to serve
you conveniently wherever you are. Whether youre in Anchorage

MINT

or Atlanta, Honolulu or Houston, there is an Elemetal Direct

store near you waiting to provide industry-leading turnaround on
recycled or scrap metal. Elemetal Direct delivers the highest level
of integrity
as we continue to grow and find new and exciting ways
RECYCLING
to serve the precious metals industry at large.

REFINING

VAULT

2016 | All Rights Reserved | Elemetal LLC

800.889.0396 | elemetal.com/direct

I N D U S T R Y N E W S | ANTI-MONEY LAUNDERING
The USA PATRIOT Act and the U.S. Bank Secrecy Act requires
all dealers in precious metals, stones, or jewels to have a
comprehensive Anti-Money Laundering program.
A dealer is defined as a person or entity that purchases at least
$50,000 worth of covered goods AND sells at least $50,000 worth
of covered goods during the preceding calendar or tax year. The
Financial Crimes Enforcement Network (FinCEN) defines covered
goods as:
Jewels
Precious metals
Precious stones
Finished goods that derive 50 percent or more of their value
from jewels, precious metals or precious stones contained in
or attached to the finished goods. (Finished goods include,
but are not limited to, jewelry, numismatic items, and antiques.)
In addition to AML compliance, dealers are subject to Office of
Foreign Assets Control (OFAC) sanctions screening as required
by the U.S. Treasury. Failure to comply with AML or OFAC
requirements may result in criminal and civil penalties. Both the IRS
and the state where you conduct business will perform periodic
examinations, and a review of your AML compliance program will
be included.
Dealers are expected to have a reasonably designed compliance
program tailored to their business. It should begin with a risk
assessment and then meet the four pillar requirements:
1. Written policies, procedures and internal controls.
2. Appointment of a compliance officer.
3. Provision of ongoing AML training for appropriate personnel.
4. Independent testing on a periodic basis.

Designating a compliance officer who is familiar with the regulatory

requirements will go a long way to protecting you from regulatory
risk. Simply appointing personnel with no experience will not serve
you well in the long run.
You must protect your firm from all risk -- reputational, operational,
credit and regulatory. Your AML compliance program should inform
your overall risk management program.
Dealers in precious metals, gems and jewelry may not be
prepared to demonstrate their AML program to banks.
Banks typically require their dealer-clients to provide a copy of
their AML program and policies in order to continue their banking
relationship. The U.S. Commerce Department has determined
that the jewelry business is high risk, triggering certain obligations
on banks, including monitoring jewelry and precious metal dealer
clients for compliance.
Banks will ask to see dealers documented AML Program and
Policy and may even require the review of the dealers independent
test report. This will ensure to them that the dealer is meeting its
regulatory obligations.
The AML Program fails to offer adequate training.
An AML compliance program must contain four pillars, which
includes policies, procedures and internal controls; designation of
a compliance officer; training; and independent testing. Training
is a key driver that advances the ability to detect unusual activity.
Front-line personnel are often the first point of contact with potential
money laundering and fraud, and it is essential they be educated
on red flags common to dealers. Having controls in place that
include any red flags or suspicions is the first important step to
maintaining an effective AML program.

COMMON PROBLEMS

Dealers in precious metals, gems and jewelry may be

confused as to whether they are subject to regulations.

It is often difficult to understand and monitor the risks

inherent to dealers in precious metals, gems and jewelry.

Regulatory rules apply to dealers in covered goods. Covered

goods include jewels, precious metals and precious stones, and
finished goods (including but not limited to, jewelry, numismatic
items, and antiques) that derive 50 percent or more of their value
from jewels, precious metals, or precious stones contained in or
attached to such finished goods.

It is critical that a risk assessment be completed to keep up

with AML regulations as well as changes in the business or
customer activity. A risk-based approach should be built on sound
foundations; effort must first be made to ensure that the risks are
well understood. As such, a risk-based approach should be based
on an assessment of threats. This is true whenever a risk-based
approach is applied, at any level.
Developing a risk assessment of a firms customer market will
provide the foundation for designing the compliance program.
Both the risk assessment and the compliance program should be
reviewed and updated according to risk no less than annually.

KEY TRENDS
Technology advancements and innovations have increased
the size and sophistication of criminal enterprise.

Dealers in precious metals, gems and jewelry often

struggle to keep up with regulatory change.

These changes have created the need for new regulations and risk
mitigation efforts by institutions and organizations subject to AML.
For example, the use of international ACH transfers, remote deposit
capture, mobile phone payments and the changing payments
landscape, along with other technology innovations, present
potential risks that require careful and thoughtful consideration.

Its simply not enough to establish an AML compliance program

and have a compliance officer manage it. No AML program can
remain static. It is a regulatory expectation that AML compliance
programs will be modified and updated in response to changes in
regulations and the business of the firm.

If you conduct business using advanced payment systems,

for example, be sure these processes are reflected in your risk
assessment and that the controls to mitigate such risk are among
your AML compliance policies.

18 | Elemetal Direct

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

Elemetal Direct | 19

I N D U S T R Y N E W S | ANTI-MONEY LAUNDERING
Dealer to dealer transactions are considered low risk.
It stands to reason that dealers doing business with other dealers
are low risk. Why? Because each dealer, as required by law, is
required to have a reasonably designed AML compliance program.
As long as each has an AML program in place, each dealer can be
confident that internal controls are in place to identify and mitigate
any potential money laundering risk.
Before conducting business with any dealer, be sure to request
an AML Certification Letter, one that states the dealer is in full
compliance with the regulatory requirements under the law
requiring the AML compliance program.

RISKS AND OPPORTUNITIES

Risks
Criminal and civil penalties for the institution as well as for
individuals
Regulatory changes continue and compliant dealers must
be prepared to meet the changes.
Regulatory changes and modification of existing rules whether
from FinCEN, OFAC or others require close attention and the
fine tuning of systems, training personnel and other compliance
program elements. FinCENs guidance indicates there many
institutions subject to AML compliance programs that are not
maintaining adequate AML programs and are subsequently facing
sanctions by regulators.
Dealers are facing Title 31 examinations by the IRS.
The IRS is the examining authority for AML compliance programs
for dealers. The IRS will notify a dealer that it plans to examine
the business, a process commonly known as the Title 31 exam.
Examiners will visit for a period commensurate with the size of the
institution.
Examiners will request documentation supporting your program
including but not limited to:
AML compliance manual containing policies, procedures and
internal controls;designation of and resume of compliance
officer;
AML training program materials and proof of training for
appropriate personnel;
Report from independent audit and testing performed;
Customer due diligence;
Reporting requirements;
Record keeping and other documentation as requested.
Of particular interest will be reporting of large cash/cash equivalent
transactions those over $10,000. The IRS reviews receipts of
cash payments that require the filing of the Form 8300 form. They
review books and records, including bank statements, to make this
determination. Failure to file the 8300 can result in fines, penalties
and, in extreme cases, criminal prosecutions.
When all is said and done, the IRS will submit a report of its findings
and the dealer must resolve any outstanding matters while tracking
any corrective actions until complete.
20 | Elemetal Direct

Reputational and financial risk to the institution

Opportunities
Harnessing efficiencies by combining resources and IT
systems to monitor for anti-money laundering and anti-fraud
Protecting the integrity of the financial system
Helping to protect your business from financial losses and
reputational exposure
Protecting your customers from falling prey to criminal activity
Skills
Experience working in the Compliance Department of a
financial institution
Other related compliance or oversight experience
Regulatory experience
Certification from an AML association

ANTI-MONEY LAUNDERING | I N D U S T R Y N E W S

DEFINED TERMS

RESOURCES - RECOMMENDED WEBSITE

Bank Secrecy Act

The Bank Secrecy Act of 1970 (or BSA, or otherwise known as the
Currency and Foreign Transactions Reporting Act) requires financial
institutions in the United States to assist U.S. government agencies
to detect and prevent money laundering.
Specifically, the act requires financial institutions to keep records
of cash purchases of negotiable instruments, and file reports of
cash purchases of these negotiable instruments of more than
$10,000 (daily aggregate amount), and to report suspicious activity
that might signify money laundering, tax evasion, or other criminal
activities. (Source: Wikipedia http://en.wikipedia.org/wiki/Bank_
Secrecy_Act)

AML Audit Services, LLC

http://www.amlauditservices.com
Financial Crimes Enforcement Network (FinCEN) Precious
Metals/Jewelry Industry Home
http://www.fincen.gov/financial_institutions/pmj/
Internal Revenue Service (IRS) Anti-Money Laundering
Compliance Program
http://www.irs.gov/irm/part4/irm_04-026-005.html#d0e1657
Internal Revenue Service (IRS) Penalties for Form 8300
http://www.irs.gov/Businesses/Small-Businesses-&-SelfEmployed/Form-8300-Penalties-Increase
Jewelers Vigilance Committee (JVC)
http://www.jvclegal.org/index.php?categoryid=347

FinCEN
The Bank Secrecy Act of 1970 (or BSA, or otherwise known as the
Currency and Foreign Transactions Reporting Act) requires financial
institutions in the United States to assist U.S. government agencies
to detect and prevent money laundering.
Specifically, the act requires financial institutions to keep records
of cash purchases of negotiable instruments, and file reports of
cash purchases of these negotiable instruments of more than
$10,000 (daily aggregate amount), and to report suspicious activity
that might signify money laundering, tax evasion, or other criminal
activities. (Source: Wikipedia http://en.wikipedia.org/wiki/Bank_
Secrecy_Act)
IRS
The Internal Revenue Service (IRS) is charged with examining
non-bank financial institutions including Precious Gems Dealers.
The examination is known as a Title 31 exam, and is conducted
periodically to ensure compliance with AML obligations under the
BSA and its promulgated regulations. (Source: IRS http://www.irs.
gov/irm/part4/irm_04-026-005.html#d0e1657)
OFAC
The Office of Foreign Assets Control (OFAC) of the US Department
of the Treasury administers and enforces economic and trade
sanctions based on US foreign policy and national security
goals against targeted foreign countries and regimes, terrorists,
international narcotics traffickers, those engaged in activities related
to the proliferation of weapons of mass destruction, and other
threats to the national security, foreign policy or economy of the
United States.
OFAC acts under Presidential national emergency powers, as
well as authority granted by specific legislation, to impose controls
on transactions and freeze assets under US jurisdiction. Many of
the sanctions are based on United Nations and other international
mandates, are multilateral in scope, and involve close cooperation
with allied governments. (Source: Treasury.gov website http://www.
treasury.gov/about/organizational-structure/offices/Pages/Office-ofForeign-Assets-Control.aspx)

Learn More
If you are a dealer in precious metals, stones or jewels, and
want to learn more about the requirements and best practices to
maintain an Anti-Money Laundering Compliance Program, or need
information about independent testing services or custom training
or keynote presentations, drop an email to info@amalausitservices.
comor call 800-870-8076.

ABOUT THE AUTHOR

Laura H. Goldzung, CFE,
CAMS, CFCF, CCRP is
President and Founder of
AML Audit Services, LLC
(AMLAS), a boutique
consultancy specializing in
independent testing for antimoney laundering compliance
programs for bank and nonbank
institutions, and serves as its
principal examiner. In addition,
her expertise includes custom
training, and compliance
consulting services, which includes design and development
of Bank Secrecy Act/Anti-Money Laundering and Anti-Fraud
compliance programs, risk assessment and analyses, remediation
and corrective action programs, and expert witness services. Ms.
Goldzung has worked with financial institutions that have been
referred to enforcement for BSA/AML violations, helping them to
bring their AML programs into compliance.
In a career spanning more than more than 35 years across multiple
sectors of the financial services industry, Ms. Goldzung has worked
in a variety of executive leadership roles. Since founding AMLAS,
she has co-created sector-specific compliance officer certification
programs and tours internationally presenting various AML/Fraud
topics for industry-leading organizations, and has authored a
number of articles on the topic of AML. Ms. Goldzung serves on a
variety of industry task forces and committees, and contributes to a
number of compliance, industry and university education programs.

Elemetal Direct | 21

E L E M E TA L C A P I TA L | MARKET OUTLOOK

Precious Metals Update:

Experts Bullish on Gold Outlook

By Louis Golino

fter a four-year bear market capped by a new low for spot

gold in December 2015, this year gold and silver have
staged an impressive comeback. In fact, so far gold is one
of the best-performing assets classes of 2016, having risen
as much 24% when it reached $1300 in the spring, compared to
a low of $1060 late last year, and even after retreating to $1260
at the time this is being written, that is a 19% gain for the year
compared to the stock market, which is virtually unchanged. Silver
has fared just as well, reaching as much as $17.
For the past several years financial and commodity markets have
been driven in great part by speculation about whether and when
the Federal Reserve would finally begin to start normalizing interest
rates. After over seven years of keeping rates close to zero,
towards the end of 2015 the Fed signaled that it believed the U.S.
economy was finally doing well enough that it could begin raising
rates, but only by a very small amount at least initially.
When the first small rate hike finally came in December, the world
did not collapse, but concerns about subsequent hikes did help

22 | Elemetal Direct

to suppress financial and commodity markets, including precious

metals. But over time as more negative data about the U.S.
economy has emerged such as the slowdown in job growth in
May, the prospect of much more in the way Fed rate hikes in
the near future seemed less likely. That view is further reinforced
by the economic situation around the world that is marked by
continuing low growth and high unemployment in many countries
and growing uncertainty about the outlook for trade, economic
stability, and peace.
RISING RATES AND GOLD
Experts such as Jeff Nichols and Mike Fuljenz note that the
mainstream financial press continues to be confused about how
rising rates affect gold, which they note has historically performed
best during periods of rising rates.In each major case in recent
decades when interest rates were increased, gold prices either
held firm or increased substantially.

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E L E M E TA L C A P I TA L | MARKET OUTLOOK
Several examples from these two experts support that view, as
does the fact that in the months since the December 2015 rate
hike, gold has gone back into a bull cycle.

currency deprecation that reduced incomes and other factors

producing less demand in India.

First, in the late 1970s, when rates got as high as 20%, gold
rose from its government-set level of $35 an ounce to $850 in
1980. Then from December 1986 to September 1987 the Fed
raised rates from, 5.875% to 7.25% and gold rose from $391
to $465; from February 1984 to February 1995 rates went
from 3.25% to 6% and gold rose from $370 to $390; a similar
modest increase was seen from June 1999 to May 2000 when
rates were again raised; and finally from June 2004 to June
2006, the Fed raised rates 17 times from 1% to 5.25% and gold
went from $395 to $613.

RISING SALES OF PHYSICAL METALS

The key monetary issue affecting gold prices, according to Nichols,

is not nominal interest rates set by the Fed, but the real rate taking
into account inflation, which though still modest, is rising.
Nichols and Fuljenz and other long-term precious metals
watchers are very bullish about precious metals, especially gold,
for the remainder of 2016 and for the coming years. Nichols, for
example, sees the possibility of gold surpassing its all-time high
of $1924 a year from now and going even higher in the coming
years.

The World Gold Council noted that demand in 2016 hit its
second-highest level ever, which is reflected in very strong sales
of physical bullion.
Demand has definitely been on the rise this year for physical
precious metals, especially with investors continuing to become
more and more concerned that the so-called paper market
for metals is on the verge of collapse with the highest levels of
leverage ever seen. The day of reckoning for the paper market is
the event long-term bulls have been waiting for, and some people
believe it could happen soon.
Major mints this year have all been reporting record demand for
bullion coins. For example, at the U.S. Mint sales of gold coins are
roughly twice the level they were at this time last year, and sales of
silver coins are at comparable levels on track for a new record level
of sales for the American Silver Eagle coin of probably more than
50 million pieces.

Many major banks that issue gold price projections are more
cautious but still much more bullish than in the recent past.

At the Royal Canadian Mint sales records are also being broken
and supplies are getting tight with first quarter silver sales reaching
a new record of 10.6 million ounces and sales of gold coins also
up considerably.

The key factors that support thestrongly bullish long-term

perspective are primarily: a supply crunch, demographic trends,
rising investment and physical demand, safe-haven demand,
financial and geopolitical uncertainty, and the rising role of China
in the gold trade.

And holdings in exchange traded funds are up 25% this year in

response to concerns about negative interest rates in Europe
and Japan.

Mark Wayne

RISING UNCERTAINTY

SUPPLY CRUNCH AND DEMOGRAPHICS

A supply crunch has been building for several years in gold
because the spot price has been too low to support much mine
production and many companies have had to close mines. In
addition, the other sources of supply, which are gold recovered
from old jewelry that is refined, and the re-sale of bullion coins
and bars, also suggest both a continuing supply crunch and a
substantial shift in ownership as investors in the West have sold
to buyers in the East.

Financial and geopolitical uncertainty have clearly been on the rise

in recently. Almost a decade after the start of the great economic
crisis that began in 2007, most of the world is still struggling to
boost growth and continues to rely on unusual economic tools like
low interest rates and negative rates.
Then there are the numerous geopolitical crises from the war in
Syria to ISIS and other terror threats, and now there is a new factor,
the rise of renegade GOP presidential candidate Donald Trump.

As Nichols notes, Western investors and institutional speculators

(hedge funds, bullion banks, etc.) have little long-term
commitment to gold, and they have been selling to buyers
mainly in China and India. And those buyers as well as some
central banks and wealthy individuals who own large amounts
are unlikely to sell unless prices reach levels far above the 2011
high of $1924.

Some analysts have been pointing out that Trumps political

ascendancy has been one of several factors that have rattled
global financial markets, which has been bullish for gold, and if
he were elected to office, even greater economic uncertainty and
turmoil such as possible trade wars that could ensure if his views
were translated into policy might lead more people to seek the
relative safety of gold.

Demographic trends are related to the shift in ownership since

population growth and the rise of the middle class in countries
such as China, India, and Mexico, among others, is an
important factor supporting long-term demand as individuals in
those countries seek to preserve their wealth.

A final factor contributing to increased global uncertainty is the

prospect of Brexit, i.e., the British referendum on whether to
leave the European Union. Opinion is presently rather evenly
divided, but if Brexit were to occur, most economists believe it
would be very disruptive to the British and global economies.
In fact, the June Fed meeting will be held on the eve of the
referendum and if polls remain close, the Fed is not likely to
raise rates for fear it could exacerbate the economic turmoil that
may come from Brexit.

In the short-term, however, as some other analysts note, there

has been some movement of gold back to Western countries
from the East as a result of Chinese economic turmoil and
24 | Elemetal Direct

MARKET OUTLOOK | E L E M E TA L C A P I TA L

SAFE-HAVEN DEMAND
And this points to another bullish factor, rising safe-haven demand,
which is tied closely to all the rising uncertainty in financial markets
and politico-military conflicts around the world, and even the
recently leaked Panama Papers that revealed how many of the
worlds wealthiest and most connected people try to hide their
assets. Gold provides a level of anonymity that private bankers
such as those in Switzerland and elsewhere no longer do.
CHINAS ROLE
In addition, there is the enormous increase in the role China now
plays in the world economy and in particular in the gold market
and gold production. China is now the worlds largest producer
of gold and has one of the largest gold reserves in the world. It
also recently launched its own gold exchange in Shanghai and a
Yuan-denominated gold fix that competes with the London gold fix,
which is when the worlds leading banks involved in the gold trade
agree on the price of gold each day.
The Chinese gold fix will be set twice daily, which how the London
fix works, and it will be based on prices for a 1 kilo-contract of gold
traded by 18 members of the Shanghai Gold Exchange.

the focal point for the gold market continues to shift from the West
to the East. China is clearly using its gold to increase its role in the
global economy and is believed to favor some kind of eventual
gold-backed currency.
OUTLOOK
All the developments discussed above are supportive of a bullish
long-term outlook for gold way above current price levels.
To be clear, some big players in finance such as Goldman Sachs
are not nearly as bullish on near-term prices as experts on metals
are, which is usually the case. There tends to be a bias against
gold and other precious metals among large bank and financial
analysts compared to those people who have spent decades
focusing specifically on precious metals.
As for the rest of 2016, the consensus appears to be for gold to be
in the $1250-1400 range with the possibility of a breakout above
those levels if some of black swan events like a Trump win in
November and Brexit come to pass, or if the combination of rising
demand and a supply crunch produce the perfect storm.
Conor Dullaghan

Experts believe that in the short-term the Chinese gold fix would
not have a very large impact, but that over time it will, especially as

Elemetal Direct | 25

N U M I S M A T I C N E W S | LIBERTY CENTENNIAL

LIBERTY CENTENNIAL
GOLD COINS
By Louis Golino

s my previous article in the spring issue discussed,

2016 is a year marked by several numismatic
anniversaries. But this year it is not just modern coin
that are being feted with special issues. Three of the
most beloved classic U.S. coins with Liberty-themed designs
are also being honored this year.
Just as all Americans treasure the pursuit of liberty, collectors
of American coins have always been strongly attracted to the
theme of liberty as represented on coins in the allegorical form
of Lady Liberty, the personification of our most-cherished ideal
and in many ways the founding concept of our country.
So it comes as no surprise that whether one is an older
collector who first started assembling sets of silver coins from
change, or a younger collector born long after the switch to clad
coinage, coins with Liberty designs on them have always had
huge aesthetic and symbolic appeal.
Last year the U.S. Mint proposed issuing solid gold versions of
the three Liberty-themed silver coins that debuted in 1916, the
Mercury, or Winged Liberty, dime, Standing Liberty quarter, and
Walking Liberty half dollar. This program smartly capitalizes on
the long-standing nostalgia of collectors for these iconic and
classic coins.

26 | Elemetal Direct

The Liberty dime and Walking Liberty half dollar were designed
by acclaimed American sculptor Adolph Weinman, while the
Standing Liberty quarter was designed by Herman MacNeil.
From the beginning the Mints plan was to issue the gold versions
of these coins in the same size as the originals with inscriptions
added for the weight, fineness, and metal*; with respective
weights of one-tenth, one-quarter and one-half of an ounce of
gold, which means they would also need to be thinner than the
originals that weighed more; in gold because Congress has broad
authority to strike gold coins; and as business strike coins rather
than proofs to keep them consistent with the original coins.
The gold dimes, which were released on April 21 at $205 each,
appeared to have sold their entire mintage of 125,000 coins in
less than an hour. The day after the release the Mint announced
that initial sales were 122,510 coins, and no additional coins
have yet been offered by the Mint, though officials there say
they are working to make them available at a later date. In
addition, since the initial release several thousand coins have
been returned either for quality issues, or because the buyer
decided they did not need as many coins as they originally
purchased. As of May 17, over 7,000 coins remained unsold,
although some portion of those coins will not be resold since it
is Mint policy not to recycle coins with problems.

LIBERTY CENTENNIAL | N U M I S M A T I C N E W S

DIFFERENCES WITH ORIGINAL ISSUES

The gold dimes are a bit smaller in both thickness and diameter
compared to the originals. The 2016 coin has a thickness of
1.19 millimeters (.047 inch) and a diameter of 16.5 millimeters
(.065 inch), while the 1916 coins dimensions were respectively
1.35 mm (.053 inch) and 17.9 mm (.705 inch).
Collectors initially expressed disappointment that the gold
tribute dime is not a faithful replica of the original because of
the differences in its dimensions compared to the original silver
coins, but when they saw the coins in hand, most people were
no longer concerned about the slight difference in size, which is
not very noticeable.
Another issue is that collectors noticed that some of the details
seemed weaker such as in the hair and the wings of the cap on
Liberty and that the bands on the fasces on the reverse appear
not to be what are known as full bands on the silver coins,
meaning the lines on the bands are not distinct and clear.
Mint officials explained why this happened to the author, noting
both technical differences in coin production processes now
compared to 100 years ago and the limitations of the small size
of the gold dimes: In 1916, only certain levels of detail were
able to be machined into hubs/dies by the Janvier transfer

engraving machines. When finer details were required, such as

those found in the original Mercury Dime, that detail had to be
hand scribed into the tooling by artisans of the day. This hand
scribing of additional detail in the tooling stage was phased out
many years ago. The current digital process enables the Mint
to achieve very high levels of detail. However, coin diameter,
coupled with the physical limitations of milling steel hubs/dies
while trying to achieve fidelity of detail, are all connected. Some
limitations in detail achieved are inherent in the process.
A much larger concern, one expressed by numerous collectors
and media analysts as well as some dealers, is that the coins
carried a much too high household limit of 10 coins. Dealers
typically use their employees and family members, and also
their customers in many cases, to get around such limits. This
enables them to obtain thousands of coins in many instances,
which makes it harder for the average collector to order any,
especially for a high-demand item like the gold dimes.
In addition, Mint officials provided the following explanation as
to why the coins had to be made smaller than the original 1916
silver issues: We used a planchet we had already developed
so as not to incur additional costs. The 2016 Mercury Dime
Centennial Gold Coin is struck on a 1/10 ounce .9999 fine
24-karat gold planchet that is approximately 10% smaller in
diameter compared to the 1916 Mercury Dime. In an effort to
Elemetal Direct | 27

N U M I S M A T I C N E W S | LIBERTY CENTENNIAL
This coin is without question popular among
collectors who love the classic liberty design, and
it will likely remain that way since it appeals to both
modern and classic U.S. coin collectors and is more
affordable than other popular numismatic releases.
Of the three centennial gold coins it is the one with
by far the most accessible price-point, which means
a greater number of collectors could afford it than will
be able to afford the other two centennial gold -coins
coming soon. For these reasons the coin should
indeed remain in demand over the long haul like other
popular modern issues that reuse classic designs.
Ian Russell, president and CEO of Great Collections,
an online auction company that sells a lot of modern
U.S. issues, noted: There is routinely a lot of
interest in the first few days, while major dealer and
wholesalers balance their positions. Sometimes, like
the 2009 Ultra High Relief gold double eagle, there
is constant demand (that continues to build), and I
think this is one of those coins. I can see all Mercury
dime collectors wanting one. Its a low price point
compared to many other recent gold coins (like the
JFK, High Relief and so forth).
Mr. Russell also agreed with those who say the
household limit of 10 coins was too high.

GOLD QUARTERS AND HALF

DOLLARS

faithfully execute the original 1916 design, the Mercury Dime

scan data was scaled down to the 1/10th ounce planchet size.
When the tooling subsequently milled, the overall result was
softening detail fidelity because the finish cutter diameter could not
fit completely into all of the finer detail points found in the 1/10th
ounce size design.
We are currently evaluating the next generation of microscope
scanning technology which will enable us to capture accurate
detail from coins & dies down to the 1/10th ounce range. This is
emerging, state-of-the-art technology. Future programs should not
be limited by current technical scanning limitations.

GOLD DIME AFTERMARKET

Retail prices for the gold dimes initially reached the $300 level
with examples graded mint state or specimen 70 going for
$400 and up, but subsequently the ungraded coins came
down to the $250 level and coins in the top grade came down
to about $300. That was not surprising given the large number
of coins issued.
28 | Elemetal Direct

The Mint has been unusually tight-lipped about its

plans for the higher-demand numismatic releases of
2016 with most of these issues still not listed with
actual release dates on its online product schedule
for the year. This has been a source of frustration for
collectors, who are eager to find out when these coins
are going to be available and trying to budget for them,
which is much easier to do with advance notice.
The Standing Liberty quarter designed by Herman MacNeil
occupies an important place in U.S. numismatics in part
because the version issued in 1916 featured a bare-breasted
Liberty, which was then covered for the 1917 and subsequent
issues. Many people believe that was done because the partial
nudity offended some people, but the true reasons for the
changed design were related to the fact that the U.S. was then
at war. According to a 1979 article in Coins magazine by Ray
Young: If Liberty was going to stand up to her foes, she should
do so fully-protectednot naked to her enemies. Thus the
war probably had much more to do with the change than any
alleged public indignation.
The gold version of this coin will contain a quarter of an ounce of
gold. As of the time of writing it has not yet been released and
still has does not even a release date. It is expected to be very
popular with collectors, as were the gold dimes, but will carry a
price tag of $460 if gold is between $1200 and $1250 per ounce
when the coin is released. That is similar to the cost of $5 gold
commemorative coins and still within the reach of many collectors.

Elemetal Direct | 29

N U M I S M A T I C N E W S | LIBERTY CENTENNIAL

The Mint displayed an example of the gold quarter in late April

at the Central States Numismatic Society coin show in Illinois,
which led many people to think the coin would be released
soon after since that is what happened when the gold dime was
displayed in March at a coin show in Baltimore, Maryland.
It is noteworthy that the coin displayed featured not only the
original design with the uncovered breast, but that it also
seemed to have what numismatists call a full head, which
seemed to bode well for those who want to see all the details of
the original silver coins on the gold tribute pieces.
Collectors have reacted very positively to the example that
was displayed at the coin show, which was photographed by
Thomas Uram, President of the Pennsylvania Association of
Numismatists, and shared with the numismatic media.
But as of early June there was still no information forthcoming
from the Mint, including the mintage and whether the household
limit would be reduced. And based on what the Mint said about
the small planchet size being an issue in terms of reproducing
some of the finer details of the original silver dime issues,
collectors have also been eager to find out if the larger size of
the quarter would mean all the details would be captured on the
quarter, but that too could not yet be ascertained.
Weinmans Walking Liberty half dollar is the most well-known
and probably most popular of all classic U.S. silver coins, which
30 | Elemetal Direct

is one of the reasons it was chosen to appear in modified form

as the obverse of the American Silver Eagle, the U.S. Mints
flagship bullion coin issued since 1986 that dominates the world
bullion coin market.
The cost of the gold version of this iconic coin that will contain
three-quarters of an ounce of gold will be $865 if spot gold is
between $1200 and $1250, which will undoubtedly result in
smaller orders and likely a smaller overall maximum mintage than
the dimes and quarters, but again no information has yet been
provided by the Mint.
The 2016 Liberty centennial gold issues will each likely remain
highly popular and widely collected coins for many years to
come irrespective of short-term price gyrations.
But collectors will probably want to be cautious about
purchasing graded examples.
The portion of gold dimes submitted for grading that were
graded at the highest level of mint state or specimen 70 is in the
neighborhood of 90%, which strongly suggests that the overall
quality of those coins is very high. Hopefully the same will be true
of the gold quarters and halves as well, and that means buyers
would be advised not to pay a lot for graded specimens.

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Elemetal Capital is a full-service trading firm making continuous
liquidity available to our partners in the precious metals industry.

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As the wholesale distributor for the entire Elemetal family of

companies, Elemetal Capital focuses on physical metal trading,
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all major
gold, silver, platinum, and palladium products, we are
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EXECUTIVE MINUTE

Happy Summer to all of you and your families during this

hot time of year. Hopefully youre staying cool and getting
in a lot of great family time and relaxation.

It has been a full year since our launch of our re-branding

effort, One Elemetal. Our transition has gone very well and
everyone on our team is pumped up to bring you great service
and products the rest of this year and into 2017. Elemetal can
truly bring you a world-class experience in every facet of the
precious metals chain.
There are a lot of cool things were working on for you this year
at Elemetal. New products at Provident, a newer location for
Recycling, and cool new opportunities for Diamond.
One of these cool developments has been the new Elemetal
Diamond App! This application provides access to information
for all of your diamond needs. Obtain quotes on your single
stones; view our current melee pricing indications; send us
images and descriptions of your finished jewelry; request
packing lists and shipping labels; and view our single stone
inventory.
For more information on this great addition to our lineup,
please visit http://elemetaldiamondapp.com/
32 | Elemetal Direct

One year into the new era at Elemetal and we are seeing
great success. None of it would be possible without you
our customer and partner. Keep all of your questions and
concerns (and business!) coming our way. The Elemetal team is
dedicated to making your experiences with us the best-in-class.
To sum up, a favorite quote of mine from Henry Ford that Ive
used before and Ill use again now is Coming together is a
beginning. Keeping together is progress. Working together is
success. We value our relationship with you and thank you for
your business.

MARK WAYNE

Corporate Vice President

Elemetal, LLC

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Elemetal Refining sets itself apart from others in the industry by
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from a variety of sources to 99.99% pure gold and 99.9% pure silver.
Elemetal Refining upgrades impure metals to fine products through
a host of unique processes including pyro-metallurgical, mechanical,
and chemical-refining circuits. We are leading the way in precious
metals refining to bring our timeless industry into the 21st century.

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