Most people who have speculated in gold have done so out of a fear that the U.S. dollar will collapse in value. Their conviction is that as the dollar is fiat currency backed only by the promises of our government, government spending in the current economic crisis must dilute the value of the dollar. This may well be so; but it brings to mind the story of a gambler in the old west who stormed out of a gambling house raging, “The game is fixed!”. Fixed or not, however, two nights later a friend spied him back in the gambling house. Curious, the friend approached the gambler and asked, “Don’t you think the game is rigged?” The gambler shrugged his shoulders and replied, “Oh, it is; but it’s the only game in town.” The Chinese, of course, know that the size of the American economy makes the U.S. China’s most valuable trading partner; so their government ignores the price of gold and pegs their currency to the U.S. dollar – and China happily continues to export to us.

Ours is the world’s largest economy; and while the dollar may not be the only game in town, it is so important a part of the world’s economy (not just in trade, but in widely held U.S. money, bonds, stocks and other assets) that if the dollar tumbles in value all other currencies (they’re fiat currencies as well) must also fall in value. In these circumstances, the most holding gold as an asset can do for its owner is to maintain his wealth; but what if there is no catastrophic failure of the dollar? Certainly, it is in the profound interest of the Government to guard against this to preserve its credit; and current debate in Congress over the future of the Federal Reserve system gives clear evidence that our usually inept and lackadaisical legislature wants to protect the value of the dollar. Here’s where the gold speculator is at risk. Gold is a non-performing asset. Unlike dividend paying shares of stock in a corporation, gold’s value is locked into its sale. You can make no money, if money is to be made, until you sell it; which brings us to the crux of the problem for those speculating in gold. The speculator needs to know when to fold his hand.

In normal times 80% of the world’s gold supply goes into either jewelry or (mostly east of Suez) is hoarded; and in normal times India consumes close to a fifth of the world’s gold supply. But these are not normal times. Speculation in gold has driven gold prices so high that world wide demand for gold jewelry has virtually collapsed. In India, where traditionally 1 out of every 9 ounces of gold produced world wide has gone into bridal jewelry, gold purchases in the first half of this year slumped by about 57%. Chinese demand for gold bullion and jewelry (their mines, incidentally, produce more than half of the world’s gold) has – so far – increased enough to take up most of the slack in Indian consumption; but of course, their ability to buy gold rests on their trade with the U.S. and the American dollar. Hence, a collapse of the dollar would certainly be contrary to China’s general interests. So who does benefit from the current run-up in gold prices? Obviously, those who are smart enough, or lucky enough, to sell before the price of gold collapses. That is, it is clear we are witnessing a “bubble” in the price of gold – prices fueled not by any real use for the metal but fueled, only, by speculative demand. When speculative demand collapses, the price of gold must collapse to some value that gold users can accept; and those who have not unloaded their high priced gold must suffer. What, then, is the answer for those who wish to guard against the devaluation of their gold? Pasta!

Speculators arise! Pasta is your future! Unlike gold, pasta can be consumed and yield some nutritional benefit to the consumer. What is more, wheat harvested and stored in the ancient Middle East (but discovered in our own time) has been found to be “alive”; so in as much as pasta (carefully stored) can easily outlive any one of us, it has lasting value at least as great as that of gold. Not only that, pasta has world wide acceptance that is, in the ultimate, greater than that of gold (Ask a starving man anywhere on Earth if he wants a bar of gold or a bowl of pasta). In fact, in a world with shrinking water resources, it is clear to me that in the foreseeable future pasta must out perform gold as an investment. You heard it here first.

There is nothing speculative about the Hearts On Fire diamond. Its price hasn’t “ballooned” through speculation and its superior beauty remains unquestioned. It will say “I love you” better than any other diamond there is; and that is solid emotional value. Each is cut by a master craftsman using the most technologically advanced tools in the industry; and like a perfect rose, everyone who sees it knows at once that he or she is seeing the best, most beautiful diamond there is. Make your statement this Christmas with the gift that will last forever, Hearts On Fire! Start your shopping now at our website, hurstsberwynjewelers.com; then phone us at 708.788.0880 for an appointment to select your gift of Hearts On Fire. We’re Hursts’ Berwyn Jewelers, and we have the stuff of her dreams waiting here just for you.

Back when “J. Lo” received a pink diamond engagement ring many consumers were jolted into an awareness that diamonds are sometimes found in attractive colors other than “white” or colorless. Needless to say, awareness sparked a demand; but as “bubble-gum” pink diamonds are quite rare (the annual production of “pinks” that could be cut into a diamond weighing a couple of carats or more would fit in the palm of your hand), price made demand short lived. Nonetheless, demand encouraged fraud artists, both polished and bumbling.

One of the bumblers offered a large “pink” diamond to a U.S. jeweler at a “too good to be true” price; and he bit on it. After the sale had been concluded and the seller long gone, the jeweler began to fear that he might have been bamboozled; so he sent the diamond to the Gemological Institute of America’s Gem Lab. It took but a few minutes in the lab to establish that the back of the diamond had been carefully painted with pink nail polish. To the jeweler’s dismay, he was compelled to recognize that his greed had triumphed over good sense. Of course, more sophisticated jewelers have received the attention of more polished con artists.

A few years back an American gem dealer was offered a parcel of fancy yellow diamonds at so low a price that it put him immediately on guard. He insisted that he would only purchase the parcel if the GIA’s lab identified their color as natural. The over-confident seller agreed and off to the GIA they went. On first examination there was nothing unusual about them; but careful microscopic inspection revealed some pitted and frosted surfaces at the junctions of their crown facets (the ones on top). This is a phenomenon usually associated with a cut diamond’s exposure to high heat; and it is technically possible to heat treat inexpensive brown diamonds in such as fashion as to change their color to a desirable yellow. Spectroscopic analysis would establish the truth. If the diamonds had been heat treated, there would be an anomalous component to the diamonds’ color – a line at 985 nanometers that has never appeared in any natural colored diamond. The line was there and the deal did not go through. As the fraud was “high tech” in character, however, it did raise the question of the origin of the diamonds; and the finger pointed east.

In the last years of the Soviet Union, there had been intensive research into the manufacture of synthetic diamonds (to be used as the base for military grade microcircutry). After its collapse, some of the laboratories that had been involved in the work continued it in the hope that they might successfully produce gem quality diamonds; and they have enjoyed some success. Most of their diamonds are small and in varying degrees, included, off color and somewhat magnetic; but they can be treated using heat, pressure, controlled atmosphere and sometimes radiation to produce a whole array of colors. Almost ironically, market prices seem to indicate (to me, anyway) that it is less costly to “treat” (and thus tint) inexpensive natural diamonds using the same technology. As a result, if you want small colored diamonds as accents to a design, and aren’t picky about their origins, they can easily be found in the market. Larger laboratory “colored” diamonds up to one carat in weight are also regularly on the market, but their acceptance in the market has been relatively poor. Larger laboratory enhanced “colorless” diamonds are another matter.

When a diamond is brown, its color is usually the result of a “twisted” crystalline structure; and it is possible to “straighten” the crystal using heat and pressure. The process is not inexpensive and diamonds so treated are a bit more brittle than untreated diamonds; so it is most commonly used to treat larger (more than 1 carat) diamonds that are also quite free of internal inclusions. When successfully undertaken, however, brown diamonds become “cinderella” colorless diamonds – beautiful gems that usually sell for considerably less than comparable untreated diamonds. Of course con artists have taken note of all of the technology that has recently gone into diamonds; so, “Caveat emptor.” Unless you have a high tech gem lab at your disposal, it is more important than ever to know your jeweler.

We’re Hursts’ Berwyn Jewelers, and we offer you Hearts On Fire diamonds. The only thing “unnatural” about them is their rare beauty. Each is cut to standards of proportion, symmetry and polish that far exceed even the pickiest gem lab’s standards for perfection. The result is blazing beauty that will set the woman who owns one (or many!) apart from all her friends. Check out our Hearts On Fire collection on line at hurstsberwynjewelers.com; then phone us at 708.788.0880 for an appointment to select the perfect gift – the brilliant stuff of her dreams.