GOLD JEWELRY SALES TO RISE IN SOUTH KOREA
South Korea soon will be the third largest consumer market in Asia and a key market for gold jewelry, according to Far Eastern press reports.
The country has a fast-growing economy, but its jewelry market had been hampered by high tariffs and restrictive laws that now are being liberalized.
Most of the 80 to 160 tons of gold jewelry sold in South Korea yearly is made from metal smuggled into the country. And most of the jewelry made from the smuggled gold doesn’t carry the national 10% value-added tax.
LONRHO, GENCOR IN RUSSIAN VENTURE
Lonrho, a London-based holding company, and Gencor, a South African mining group, have teamed up to explore and develop gold deposits in Russia, reports the Financial Times of London.
Lonrho Director Joseph Platts-Mills says the joint venture could identify as much as 2,000 metric tons of gold reserves in Russia and surrounding republics.
He says the venture has the technology to explore and extract gold in very difficult and unusual places. This technology includes the new Biox process, which uses bacteria to break down ore and release the gold inside.
U.S. RESCINDS MOST OF BULLION TAX PLAN
The U.S. Treasury Department has withdrawn most of a controversial proposal to impose a 7.8% tariff on gold bars imported into the U.S. Large bullion bars used by the jewelry, industrial and financial communities have been exempted, leaving only small finished “mint” bars that banks produce for investors.
The original proposal would have taxed any gold bars bearing an assayer’s mark, serial number, fineness and weight, including those used for jewelry manufacturing. The U.S. Customs Service said such marks constitute a fabricated product, not a raw material, and should be subject to tariff.
But John Lutley, president of the Gold Institute and one of the principal lobbyists against the proposal, argued the tariff would have “devastated the domestic gold trading markets, ended futures trading on the New York Commodity Exchange and raised the price of American-made gold jewelry.”
Once the government realized the effect the tariff would have on business, it withdrew most of the proposal. “Instead of a potential major problem, we now have a potential minor problem,” he says.
Even the tariff on minted bars is far from certain. The Treasury Department feels there’s not much logic to taxing one set of bars and not another, Lutley says, so it referred the matter to Congress. “This will delay any action for quite a long time,” he says.
Lutley says the proposal resulted from the U.S. and other countries setting uniform tariff categories in recent years. Bullion bars formerly were considered separately, but under the new system had to be denoted as “wrought” or “unwrought.” Because the bars have undergone processing and include assay marks and serial numbers, the Customs Service had said they are “wrought” items and thus subject to tariff.
AUSTRALIA LAUNCHES METALS PORTFOLIO
GoldCorp Australia has launched what it calls “the world’s first diversified precious metal portfolio.”
Called The Aussie, each portfolio contains two 1-kilogram 99.9% pure silver Kookaburra coins, one 2-oz. 99.99% gold Kangaroo coin and one 1-oz. 99.95% pure platinum Koala coin. All coins are legal tender bullion minted in Australia.
Don Mackay-Coghill, chief executive of GoldCorp Australia, says the coins were selected for three reasons:
· Their full range of precious metals.
· Their potential return to investors.
· Their performance relative to each other, which should reduce the portfolio’s volatility.
The Aussie is marketed through banks and precious metals houses. The retail price fluctuates with the market, but will likely be less than $2,000.