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A-Mark Financial Corporation - Golden Opportunities: 1965 to the Mid-1980s

Golden Opportunities: 1965 to the Mid-1980s

Steven C. Markoff laid the groundwork for A-Mark Financial Corporation when he was yet a teenager, according to the Los Angeles Business Journal. A coin collector, Markoff established A-Mark Coin Company in 1965 and entered the rare coins and precious metals trading business. In 1972, the U.S. Treasury granted A-Mark a special license for dealing in gold. When gold ownership was extended as a right to all U.S. citizens in 1974, the company seized the opportunity to expand its business.

The company reached an industry high watermark in 1976, purchasing the LaVere Redfield silver dollar collection. The 11-ton, $7.3 million cash purchase consisted of 411,000 coins.

Four years later came another boon: The price of silver skyrocketed. The metal became very precious at $50 an ounce. Family heirlooms and coin collections were melted down to take advantage of the 1980 price surge, the Houston Chronicle recounted. During the year A-Mark traded millions of ounces of silver. In 1981, the company minted its first proprietary one-ounce silver bar.

A-Mark Precious Metals, Inc. sales topped $1 billion for 1983. The following year, the company began encapsulating and certifying gold coins through its Guaranteed U.S. Gold program. Also in 1984, A-Mark received designation as exclusive distributor for the Mexican one-ounce Silver Coin Libertads by Banco de Mexico, the Mexican central bank.

Another precious metal took center stage in the mid-1980s. The majority of the world's platinum supply came from South Africa. Fear of economic sanctions directed toward South Africa in response to their apartheid policies had driven up the price on the metal during the summer of 1986. No large supplies of platinum were in existence nor were there substitutes for its use in products such as the catalytic converter, an air pollution device. Moreover, investors had taken a shine to the metal.

"Growing investor demand for the metal comes at the same time as supplies are threatened, says Bruce Kaplan, senior vice president of A-Mark Precious Metals Inc. of Beverly Hills, Calif. Until about two years ago, platinum was considered strictly an industrial metal, Kaplan says," David Flaum reported for the Houston Chronicle.

Gold had no such supply shortage problems. But prices were rising, in response to fears related to the mounting federal deficit and the potential for defaults among debtor nations, such as Mexico. A-Mark continued to build its connections in the market, receiving rights as Exclusive Western Hemisphere Distributor of Australian Gold Coin Nugget Proof sets by Australia's Gold Corporation during 1986.

Silver, on the other hand, was in a slump caused by the oversupply created as the decade began. Kaplan told the Houston Chronicle the traditional gold-to-silver price ratio of 35:1 had shot up to 70:1. "That is 'causing speculators to salivate,'" he said. Compounding oversupply problems was several years of downturn in industrial use, although the metal had begun seeing an upswing during 1985. Silver was found in medical, photographic, and electrical component applications.