I've been watching this story develop over the last few days. National Gold Exchange ("The World's Largest Rare Foreign And United States Gold Coin And Silver Currency Wholesaler" according to their website) in Tampa, FL has filed for Chapter 11 bankruptcy protection. (Chapter 11 bankruptcy allows a debtor to reorganize.) The trouble started when the owner reportedly sold $15 million of coins that were pledged as collateral to secure a $35 million loan. He reportedly used the $15 million to build a $25 million 28,893 square foot mansion. He then reportedly cooked the books to try to hide his misdeed. He was done in by the lawyer for a former business partner in a business deal gone bad. National Gold Exchange seeks court protection Major Gold Dealer in Hot Water With Bank Over $25 Million Tampa Home
The problem is that like Berny Madoff, they get away with their crimes for years, and then don't have the bucks to make restitution. The defrauded bullion buyers in this case won't have their claims wiped out legally by the bankruptcy court, but realisticly they have only three chances of being made whole: Slim Fat None.
Half-price sale! (Not sure if its compounded losses from numismatic failure and Florida RE) http://www.dailymail.co.uk/news/article-2299383/Disgraced-Florida-gold-dealers-faux-British-mansion-slashed-half-original-25million-asking-price.html
Hobo, I didn't read everything, but do you know if the owner also filed personal bankruptcy? Someone correct me if I'm wrong, but as far as I know, Florida still has a law on the books which excludes the residence from personal bankruptcy proceedings. It happened once before a decade or two back. A New Jersey businessman made huge loans and quietly established Florida residency by purchasing a multi-million dollar thoroughbred ranch in North Florida. He then filed for bankruptcy and the courts couldn't touch the ranch. Chris
I'm curious about Mark Yaffe. Bear in mind that in 1988, $8,000 bought about 18 ozt Au so $16k was 36 ozt of Gold (in 2012 worth @$1669/ozt: ~$60,084.) In 1989 that Morgan $1 MS-66 1902-S Bid 8 grand and flipped for 16 grand is now worth.... 8 grand (maybe LESS!) http://www.ebay.com/itm/Rare-Bella-1902-S-1-MORGAN-PCGS-MS66-Gem-grade-San-Francisco-Silver-Dollar-coin-/221194816069 In Gold, that's a stunning -87% numismatic LOSS on a rare Morgan. So much for the "value" of rare US coins over time, eh? This was from a 1989 interview: http://www.nationalsilverdollarroundtable.org/?p=1162 >>BAIR: How do you see institutional money influencing the rare coin market? Highfill: It can control us, but we can’t control it. The coin market can be taken away from us – at least we know it now – and the coin dealers will become the dinosaurs. The only people who will survive will be the ones who know the most. Expertise will still be needed, of course, so I can see John Dannreuther of David Hall on a one million dollar a year retainer. There can’t be an actual yuppie market. Do you know what a “yuppie market” is? That’s the idea a lot of beginners have. Give me a population report and an ANE machine and I-are-a-coin-dealer. Many people think it’s that simple. Here’s what happens with that kind of thinking. If they don’t know coins and only know the bid prices of coins, they miss the whole market. The rare coin market, anyway. Mark Yaffe bought an MS-66 1902-S Morgan for $14,000 and sold it to another dealer for $16,000. Bid was $8,000. Try to explain that transaction to someone who doesn’t know rare coins. The other 1885-CC dollar and the 1883-O dollar have about the same population in MS-65. Yet, the 1885-CC sells for three times as much. I don’t pay three times as much because I’m stupid. I pay it because 1885-CC dollars sell. 1883-O dollars don’t sell. Popularity of the coin isn’t written into the population reports. As I said the ones who know the most will survive. The multi-megabucks are coming, and with it is the $5,000 1881-S dollar in MS-65. By the year 2000, that coin will be $5,000. A constant supply and an increase in demand equal UP. It will happen because the whole world will be involved in rare coin investment, and the best bet in that whole world is United States coins. << A decade later? Try more like $172. SOLD on via a nearlytransparent & fair mkt you couldn't even imagine back then, something called "eBay".... 172 bucks, chief! http://www.ebay.com/itm/1881-S-Morgan-Silver-Dollar-PCGS-MS-65-superb-Gem-BU-OGH-SPARKLING-LUSTER-/360619232041 Factoring 'target GAIN' as anticipated (promised) investment return, that Morgan lost a whoppin' -97% of its value. OUCH! "Rare Morgans" have proven a disastrous investment for those who drank the KoolAid then. Please don't believe coin-hustlers and other numismatic liars.
This is peanuts. LIBOR fraud was for trillions of dollars. Has anybody been prosecuted for MF Global? No. If you hear about someone getting in trouble it's because they aren't a big enough fish to be above the law. The fractional reserve banking system is a ponzi scheme too, but nobody in charge of that will do time like Mr. Madoff.
