http://www.sedar.com/issuers/company_issuers_b_en.htm
1.
What is SEDAR?
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2.
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3.
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8.
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In developing SEDAR, the Canadian Securities Administrators tried to balance the needs of filers seeking a way to efficiently file their documents on SEDAR against the desire to make the documents easily available to the public. When SEDAR was first initiated, CDS determined that the three most common electronic document formats used by filers were MS Word, WordPerfect and PDF. The decision was made to adopt these common formats as the standard for SEDAR filings. With Release 6 of the SEDAR filing application in September, 1999, PDF is now the only acceptable filing format for filers' documents. Because documents filed previous to this date remain in their original filing format, some of the documents you retrieve are in MS Word or WordPerfect.
9.
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10.
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11.
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12.
What are the current CDS filing fees?
CDS charges an annual continuous disclosure fee to each issuer. This fee is paid by a reporting issuer upon receipt of a pro-rated invoice issued by CDS following the filing of its initial filer profile and in each subsequent calendar year, by electronic payment at the time the issuer's annual financial statements are filed with the securities commissions. All issuers are subject to GST and some provincial taxes may also apply (QST or HST). The filing fees charged are determined by issuer type:
Single Jurisdiction Issuers
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In addition to the annual continuous disclosure fee, certain filings made with the securities commissions are also subject to CDS fees. Click here for a complete listing.
13.
How do I update my company profile?
Your company's profile is stored on the SEDAR filing application server and can be accessed by any company that has purchased the SEDAR software. If your company subscribes to the SEDAR software, you can modify your profile using the Update function in the Profile Management module. If your company utilizes a SEDAR filing agent to undertake your SEDAR filings to the securities commissions, please advise your agent to make the necessary changes to the profile. The updates made to the profile appear on the SEDAR Web site the following day.
For example, a profile update made through SEDAR on a Friday will appear on the Web site as of the Saturday.
Showing posts with label Reference. Show all posts
Showing posts with label Reference. Show all posts
Thursday, November 19, 2009
CONGO MINING BRC-DIAMONDS
http://www.brc-diamondcore.com
Dr Michiel (Mike) de Wit
President & CEO
Mike de Wit, President of BRC DiamondCore, has extensive experience in the diamond industry, having begun his career as an exploration geologist for the Geological Survey in South Africa prior to joining De Beers, where he worked for 29 years. Dr de Wit managed various exploration programs for De Beers in Africa which led to a number of kimberlite discoveries. Prior to his most recent appointment as general manager for De Beers in the DRC, Dr de Wit was responsible for all exploration programs for De Beers in Africa. In addition to MSc degrees in geophysics and sedimentology from the Universities of Pretoria and Reading (UK) respectively, Dr de Wit holds a PhD degree from the University of Cape Town. He brings some 31 years of exploration experience to the Company. Dr De Wit is based in Kinshasa, DRC
Arnold T. Kondrat
Director
The principal founder of BRC Diamond, Mr. Kondrat is also the founder and Executive Vice President of Banro Corporation, a gold exploration company based in the DRC, and Director and President of privately-held Sterling Portfolio Securities Inc., a Toronto-based venture capital company. He has been involved in corporate finance activities for more than 20 years
Brian Scallan
Vice President Finance
Mr Brian Scallan, BSc (Chem Eng) BCom (Economics) MBA, is a Director and Vice President Finance of BRC DiamondCore Limited. His career started as a chemical engineer at the Council for Scientific and Industrial Research in South Africa. After completing a degree in economics and an MBA he practiced as a management consultant for a period of 7 years concentrating on marketing and strategy work. He joined Standard Merchant Bank to design and implement its marketing strategy and was a member of the Bank's senior management committee. He transferred to operations becoming Head of Structured Trade and Commodity Finance. He was also involved with major mining project finance activities in Uganda and the Democratic Republic of Congo. After 15 years with the Standard Bank Group he consulted in project finance, primarily mining projects in Africa. More recently he was Head of Funding for Nikanor PLC prior to its takeover by Katanga Mining Ltd. He has consulted to Banro Corporation in respect to its funding requirements
Danie van der Merwe
Group Operating Manager
Mr van der Merwe has extensive experience in the diamond mining sector in the areas of metallurgy, engineering and mining production. He previously managed Saxendrift on the Middle Orange River for Trans Hex and the Koidu Kimberlite Project in Sierra Leone. Mr. van der Merwe holds a National Technical Diploma in Mechanical Engineering and has completed numerous supplementary courses including courses in metallurgy, diamond recovery systems, as well as safety and management. He is based on site in the Northern Cape Province of South Africa
Martin Jones
Vice President, Corporate Development
Mr Jones has over 25 years experience in corporate and investor communications. Prior to joining the Company, he was a partner with Advance Planning/MS&L, where he consulted to a number of Canada's leading corporations. For a number of years, he worked in the public affairs department of Imperial Oil. He holds a similar position with Banro Corporation.
Donat K. Madilo
Treasurer
Mr. Madilo has over 17 years experience in finance and administration. He holds a Bachelor of Commerce (Honors) from Institut Supérieur de Commerce de Kinshasa, a B.Sc. (Licence) in Applied Economics from University of Kinshasa and a Master's of Science in Accounting (Honors) from Roosevelt University in Chicago. He is also the Chief Financial Officer of Banro Corporation
Edmond Thorose
Geology, alluvial
Mr. Thorose graduated from the University of Toronto with a BSc. (hons) degree in geology and also holds an MBA from York University in Toronto. Edmond has nine years of exploration experience in gold and diamonds and has worked in the DRC for the last two years. He is based in the DRC.
Fabrice Matheys
Geology, kimberlite
Mr Matheys holds an MSc in exploration geology from Rhodes University in South Africa and has 16 years of field experience, mainly with De Beers. He has an intimate knowledge of the DRC, having worked for the last three years in that country. He is based in the DRC.
Corporate Office:
Address: 1 First Canadian Place
100 King St. West Suite 7070, P.O. Box 419
Toronto, ON
Canada M5X 1E3
Telephone: 416-366-2221 416-366-2221
Fax: 416-366-7722
Toll Free: 1-800-714-7938 1-800-714-7938
Johannesburg Office:
Address: Ruimsig Office Estate Building 6, Unit 4
193 Hole in One St (Cnr Peter Road)
Ruimsig, Johannesburg
Telephone: +27 11 9582885 +27 11 9582885
Fax: +27 110582617
Postal Address: Postnet Suite 585,
private bag X09
Weltevreden Park
1715 South Africa
Kinshasa Office:
Address: Boulevard du 30 juin
Immeuble SN Bruxelles (Ex-SABENA)
quatrième (4ème) étage, Appartement n°4, Commune de la Gombe
Kinshasa
Telephone: +243 819971037 +243 819971037
Fax: 416-352-1484
Bankers: TD Canada Trust
Address: 141 Adelaide St. West
Toronto, ON
Canada M5H 3V1
Transfer Agent: Equity Transfer & Trust Company
Address: 200 University Avenue
Suite 400
Toronto, ON
Canada M5H 4H1
Auditors: Deloitte & Touche LLP
Address: Suite 1400 BCE Place
181 Bay Street
Toronto, ON
Canada M5J 2V1
Legal Counsel: MacLeod Dixon LLP
Address: TD Centre, CN Tower
100 Wellington Street West P.O. Box 128
Toronto, ON
Canada M5K 1H1
Dr Michiel (Mike) de Wit
President & CEO
Mike de Wit, President of BRC DiamondCore, has extensive experience in the diamond industry, having begun his career as an exploration geologist for the Geological Survey in South Africa prior to joining De Beers, where he worked for 29 years. Dr de Wit managed various exploration programs for De Beers in Africa which led to a number of kimberlite discoveries. Prior to his most recent appointment as general manager for De Beers in the DRC, Dr de Wit was responsible for all exploration programs for De Beers in Africa. In addition to MSc degrees in geophysics and sedimentology from the Universities of Pretoria and Reading (UK) respectively, Dr de Wit holds a PhD degree from the University of Cape Town. He brings some 31 years of exploration experience to the Company. Dr De Wit is based in Kinshasa, DRC
Arnold T. Kondrat
Director
The principal founder of BRC Diamond, Mr. Kondrat is also the founder and Executive Vice President of Banro Corporation, a gold exploration company based in the DRC, and Director and President of privately-held Sterling Portfolio Securities Inc., a Toronto-based venture capital company. He has been involved in corporate finance activities for more than 20 years
Brian Scallan
Vice President Finance
Mr Brian Scallan, BSc (Chem Eng) BCom (Economics) MBA, is a Director and Vice President Finance of BRC DiamondCore Limited. His career started as a chemical engineer at the Council for Scientific and Industrial Research in South Africa. After completing a degree in economics and an MBA he practiced as a management consultant for a period of 7 years concentrating on marketing and strategy work. He joined Standard Merchant Bank to design and implement its marketing strategy and was a member of the Bank's senior management committee. He transferred to operations becoming Head of Structured Trade and Commodity Finance. He was also involved with major mining project finance activities in Uganda and the Democratic Republic of Congo. After 15 years with the Standard Bank Group he consulted in project finance, primarily mining projects in Africa. More recently he was Head of Funding for Nikanor PLC prior to its takeover by Katanga Mining Ltd. He has consulted to Banro Corporation in respect to its funding requirements
Danie van der Merwe
Group Operating Manager
Mr van der Merwe has extensive experience in the diamond mining sector in the areas of metallurgy, engineering and mining production. He previously managed Saxendrift on the Middle Orange River for Trans Hex and the Koidu Kimberlite Project in Sierra Leone. Mr. van der Merwe holds a National Technical Diploma in Mechanical Engineering and has completed numerous supplementary courses including courses in metallurgy, diamond recovery systems, as well as safety and management. He is based on site in the Northern Cape Province of South Africa
Martin Jones
Vice President, Corporate Development
Mr Jones has over 25 years experience in corporate and investor communications. Prior to joining the Company, he was a partner with Advance Planning/MS&L, where he consulted to a number of Canada's leading corporations. For a number of years, he worked in the public affairs department of Imperial Oil. He holds a similar position with Banro Corporation.
Donat K. Madilo
Treasurer
Mr. Madilo has over 17 years experience in finance and administration. He holds a Bachelor of Commerce (Honors) from Institut Supérieur de Commerce de Kinshasa, a B.Sc. (Licence) in Applied Economics from University of Kinshasa and a Master's of Science in Accounting (Honors) from Roosevelt University in Chicago. He is also the Chief Financial Officer of Banro Corporation
Edmond Thorose
Geology, alluvial
Mr. Thorose graduated from the University of Toronto with a BSc. (hons) degree in geology and also holds an MBA from York University in Toronto. Edmond has nine years of exploration experience in gold and diamonds and has worked in the DRC for the last two years. He is based in the DRC.
Fabrice Matheys
Geology, kimberlite
Mr Matheys holds an MSc in exploration geology from Rhodes University in South Africa and has 16 years of field experience, mainly with De Beers. He has an intimate knowledge of the DRC, having worked for the last three years in that country. He is based in the DRC.
Corporate Office:
Address: 1 First Canadian Place
100 King St. West Suite 7070, P.O. Box 419
Toronto, ON
Canada M5X 1E3
Telephone: 416-366-2221 416-366-2221
Fax: 416-366-7722
Toll Free: 1-800-714-7938 1-800-714-7938
Johannesburg Office:
Address: Ruimsig Office Estate Building 6, Unit 4
193 Hole in One St (Cnr Peter Road)
Ruimsig, Johannesburg
Telephone: +27 11 9582885 +27 11 9582885
Fax: +27 110582617
Postal Address: Postnet Suite 585,
private bag X09
Weltevreden Park
1715 South Africa
Kinshasa Office:
Address: Boulevard du 30 juin
Immeuble SN Bruxelles (Ex-SABENA)
quatrième (4ème) étage, Appartement n°4, Commune de la Gombe
Kinshasa
Telephone: +243 819971037 +243 819971037
Fax: 416-352-1484
Bankers: TD Canada Trust
Address: 141 Adelaide St. West
Toronto, ON
Canada M5H 3V1
Transfer Agent: Equity Transfer & Trust Company
Address: 200 University Avenue
Suite 400
Toronto, ON
Canada M5H 4H1
Auditors: Deloitte & Touche LLP
Address: Suite 1400 BCE Place
181 Bay Street
Toronto, ON
Canada M5J 2V1
Legal Counsel: MacLeod Dixon LLP
Address: TD Centre, CN Tower
100 Wellington Street West P.O. Box 128
Toronto, ON
Canada M5K 1H1
Gold. How much of it does the USA actually have in Fort Knox and elsewhere?
Three United States Gold Scenarios
Stewart Dougherty (Courtesy Green Party of Colorado)
For 72 years, the building at the intersection of Bullion Boulevard and Gold Vault Road in Fort Knox, Kentucky has symbolized the financial strength of the United States of America. The United States Bullion Depository, better known as Fort Knox, is said to contain 147.3 million troy ounces of gold, over half the nation's total reported gold bullion holdings of 261.5 million troy ounces. The remaining 114 million ounces are said to be stored at the Denver and Philadelphia Mints, the West Point Bullion Depository, and the San Francisco Assay Office. Assuming a price of $1,000 / ounce, the nation's gold is worth $261.5 billion. If the metal is actually there, it represents the largest sovereign stockpile of gold bullion in the world.
However, the gold holdings of the U.S. have not been audited in more than 50 years. One reason given for the lack of an audit is that it would be "too expensive" to conduct one. An audit would cost a few million dollars, at most, so using cost as a reason for not performing it strains belief when placed in the context of the country's Fiscal Year 2009 deficit of $2,000,000,000,000.00+, and federal debt of $11,600,000,000,000.00+. It is curious that one of the few places within the government where costs appear to be of concern relates to an audit of the one, true monetary asset possessed by the American people.
Even the Treasury Department's clandestine $50 billion Exchange Stabilization Fund (ESF), which is only one-fifth the value of America's reported gold holdings, undergoes an annual audit. For fiscal year 2008, this audit was conducted by KPMG, a well-known, independent CPA firm. KPMG's 2008 ESF audit uncovered "significant deficiencies," "material weaknesses," a "weak control environment," and "several control deficiencies." If a Treasury organization subject to annual audits could fail its recent exam as broadly as that, what are we to assume about the safety and security of the people's gold supply, which, like the national money geyser, the Federal Reserve Bank is never audited? And if the ESF is audited each year, what legitimate rationale can there be for not auditing the nation's gold supply? Something isn't adding up. In such a situation, inferential analysis can provide value, which you will see as this article progresses.
The financial events of the past year demonstrate beyond any reasonable doubt that the United States government is now of Wall Street, by Wall Street and for Wall Street, in general, and of, by and for Goldman Sachs, in particular. This inversion of power and privilege was partly brought about by an explosion in government debt. The government relies on Wall Street to roll over existing and sell new debt issues. Debt is now hitting the market like a tidal wave, given the country's record-shattering deficits and costly Wall Street bailouts. If the paper cannot be sold at expected interest rates, then the debt-addicted system will go into seizure.
The radical empowerment and enrichment of Wall Street has transformed our democracy into an aristocracy, making the debt dealers the nation's new royalty, the government its feudal barons, and the citizens mere serfs who endlessly sweat and toil in fields of debt weeds that grow so fast they can never, ever be harvested.
Predictably, in such an aristocracy, an iron curtain of secrecy and non-transparency has descended across the land, separating Wall Street and government on one side, and the people on the other. While the people are deluged with generally useless government data that numbs their minds (as an example, a recent search of the Federal Reserve web site for "United States government 2008 financial statement" produced an unmanageable avalanche of 520,817 entries), simple, truly important information, such as audited gold reserve statistics, accurate monetary aggregates like M3, the names of taxpayer-funded TARP, TALF and other bailout recipients, and audited Federal Reserve Bank financials, is kept a state secret, using the hackneyed excuse that "it's for the people's good." Autocracies have always tried to convince the masses that ignorance is freedom, and that knowledge is enslavement.
The colossal conflict of interest that has developed between government -Wall Street axis, which hides behind the iron curtain of secrecy, and the citizens who stand in front of it now requires the people to-second guess everything they are told, for their own protection. The financial interests of a government controlled by avaricious, bonus-focused financiers are directly opposed to those of the people, since government revenues come directly from the people. What the government gains, the people lose, in the zero sum game of government finance. Which brings us to a more detailed examination of the people's gold.
For the past 28.5 years, from 1980 through June, 2009, the United States government's gold holdings have been reported as being essentially constant, at around 262 million ounces. Gold hit a nominal price high of $850.00 per ounce in January, 1980, when a severe recession was developing. (Compared to today, 1980 looks like the bubbliest part of the Roaring 1920s.) Inflation-adjusted (using government CPI figures, which are hotly debated), that price would now exceed $2,400 per ounce, whereas the current market price is only $950.00 per ounce. As GATA (www.gata.org) has demonstrated beyond any doubt, U.S. Treasury and Federal Reserve officials actively monitor and seek to suppress the gold price, because a rising price can signal fiscal, economic and/or fiat currency distress, things that are bad for markets and embarrassing for governments. (GATA's work in this area has been nothing short of heroic, and is well worth examining in detail.) For gold to be selling today at only 40% of its 1980 inflation-adjusted price, in the midst of the worst financial crisis in the nation's history, is curious.
While the United States gold supply is said to be constant, the holdings of many other nations, with the general exception of export-rich Asian countries, has declined, oftentimes radically. According to the World Gold Council, Canada's gold reserves are down 99.5% from 1980 to today; Australia's are down 68%; Austria's are down 57%; Belgium's are down 79%; The Netherlands' are down 55%; Portugal's are down 45%; Spain's are down 38%; Norway's are down 100%; Sweden's are down 30%; the United Kingdom's are down 47%; South Africa's are down 67%; Argentina's are down 60%; Mexico's are down 92%; Brazil's are down 41%; and the European Central Bank's are down 33% (since 1999, its first reporting year). Even Switzerland, a country with a long-term affinity for gold, has slashed its reserves by 60%. Official world gold holdings (held by all nations plus international financial organizations such as the BIS, the IMF and the ECB) are down 17%, despite large gold reserve increases by countries such as China, Taiwan, India and Russia that moderated the larger percentage declines in the many nations noted above.
However, the United States' gold holdings are said to be down a mere 1% during this 28.5 year period, even though the country's debt has surged from $712 billion to $11.6 trillion and its unfunded contingent liabilities have exploded to more than $90,000,000,000,000.00. So while other countries with far less debt and far better balance sheets slashed their gold holdings to raise money for various government purposes, the United States, with its surging debt and staggering deficits did not. Inconsistencies like this are worth exploring; sometimes they represent golden opportunities.
If the United States were a corporation or an individual, it would be considered completely non-credit worthy given its disastrous finances. The U.S.A. would not qualify for an Exxon credit card, let alone for the trillions of dollars it is borrowing in the global bond market. One way those in financial distress can obtain credit is to post bona fide collateral. Some consider a country's future tax receipts to be a form of collateral, but in the case of the United States, this is not so, because according to the Congressional Budget Office, the country will run multi-hundred billion dollar annual deficits for the next 70 years and beyond. So according to the CBO, the nation's future tax revenues are already spent. Hypothetically, the nation could sell its national parks, or its mineral and/or energy rights, but this would be a radical, last ditch solution that has not even been publicly debated. For all practical purposes, the country's only true collateral is the gold in Fort Knox and related depositories.
Those who are lending the United States money, by buying its Treasuries and other debt instruments, must be competent capitalists. If they have billions to lend, they obviously know how to earn and manage money. These lenders simply cannot be oblivious to America's financial situation, and must certainly understand the concept of collateral.
As of July 17, 2009, the nation's top few bullion banks were short 19.5 million ounces of gold on the futures exchanges. This highly concentrated short position was reportedly held by 4 or fewer major money-center banks. At a gold price that day of roughly $940.00 / ounce, the dollar value of this short position was $1,833,000,000.00, or $1.83 billion. A mere $10.00 / ounce decline in the price of gold would give the banks a profit of $195,000,000.00. A price increase of the same amount would produce a loss of $195,000,000.00, in other words, serious money in either direction. Given the financial crisis and the myriad problems affecting the banks, such as toxic derivatives and non-performing loans, why they would risk $1.8 billion on naked gold shorts in the world's most volatile financial casino, the commodities and precious metals futures market, is difficult to understand, unless they know things or have other advantages that the rest of the marketplace does not.
In inferential analysis, we look at what might appear to be unrelated facts to see if, in reality, there might be connecting strands among them. These connections help explain situations that otherwise defy logic. Even though isolated facts might be mute and uninteresting, they often tell an important story when combined. Sometimes, conjoined facts sing like canaries. We believe events in the gold market are trying to tell a tale, and we posit three general scenarios relating to the nation's gold reserves: Fort Knox, Fort Hocks and Fort Shocks.
FORT KNOX. In this scenario, the citizens of the United States own the exact amount of gold that is reported by the Treasury Department and the Federal Reserve: 261.5 million ounces. The gold supply is owned free and clear by the United States and its citizens. It is not swapped, hypothecated, pledged, exchanged, leased, sold, claimed, conditionally offered or in any other way compromised with respect to ownership. A full audit of the gold would prove that it exists strictly in bullion form (with no "paper bullion" or third party warehouse receipts) in the stated depositories. Based on recent fiscal, financial, monetary and economic developments, we view this scenario as possible, but extremely unlikely.
FORT HOCKS: In this scenario, an audit will show that a significant portion of the citizens' gold has been mobilized by the Treasury and / or the Federal Reserve; in other words, that it has been hocked at the global financial system's pawn shop. There are many possible means by which this could have happened; we list only a few.
The gold backstops favored bullion banks' trading activities: In this scenario, the government has contracted with a small number of favored bullion banks to have them manipulate the gold price so it remains within federal targets. They would achieve this by large-scale shorting and related market-intervention techniques. This helps explain why a small number of major NYC money center banks are currently short 19.5 million ounces of gold, which would otherwise be a reckless, irresponsible gamble with shareholder assets, and a possible violation of the banks' fiduciary duty, particularly in the current financial crisis. The banks have been guaranteed that if an exogenous event increases the gold price, their short positions will be "backstopped" by U.S. gold reserves. In other words, if a major bank failure, terrorist event, natural catastrophe, war or other major domestic or international event drives the gold price higher, exposing the banks to trading losses on their shorts, then the government will supply them with the bullion needed to close out their positions and cancel their losses. This is entirely consistent with the recent bailouts, where the government has purchased the banks' toxic assets with taxpayer money, sterilizing their losses at citizen expense.
This scenario creates a money machine for the bullion banks. They can short gold with a government guarantee against losses, and can cover at lower prices, after they have driven the longs out of their positions. Operating like this, they can profit on up and down price moves, since they will create them. As noted above, the profits generated from these types of "bear raids" and subsequent "bull covers" can be enormous. ($195,000,000.00 for every $10.00 price decline given the bullion banks' current short position.) The banks can launch these raids repeatedly at virtually no risk, since dumping large amounts of gold onto the futures market creates predictable price declines. However, if the government needs to backstop the banks (due to trades gone wrong that are backstopped and insured), then the gold must come from the United States' gold reserve. There have been hundreds of $10.00 and dozens of $50 - 100.00+ price declines during the current bull market, indicating that the bullion banks have potentially made tens of billions of dollars' worth of profits, given that they have consistently been short the gold market during these price episodes. If they have not been profiting from these short positions, why would they have continued to hold them for years, and continue to hold them today? One further point: since futures represent a zero-sum game, where every profit means an identical loss for another party, any bank gains have come at the direct expense of other investors who have been losing in a rigged, corrupt casino that is riddled with fraud.
Leasing for profit: In this scenario, the government has leased all or a portion of the nation's gold to earn interest on its value, or simply to mobilize the gold as a way for bullion banks to keep the price within targets. However, in this case there is no government "backstop" or guarantee if the bullion banks' shorts go bad; the banks are responsible for their own trades. In this case, the government assumes counterparty risk, because if the bullion banks' naked shorting operations produce losses, then the banks may be unable to return the borrowed gold to the government. This is a Las Vegas gamble on the part of the bullion banks and the government. However, if the government is willing to lend large quantities of gold to the bullion banks, this will give the banks enormous leverage in the marketplace, and the ability to drive down the price of gold, thereby generating significant profits at the longs' expense. The banks are fully exposed to the risk that exogenous events could increase the price of gold, creating losses on their short positions. However, if the gold price does increase, the banks might be able to "double down" by borrowing additional bullion from the government, in an ongoing effort to crush the price. With potentially tens of millions ounces at their disposal from the United States, plus additional gold possibly available from other central banks, producers and operators of the new Exchange Traded Funds, the shorts could cause serious price damage, though they would have to take risks to win. As in scenario #1 above, the profits from such trading operations are potentially huge. Leasing has existed in the market for years, with gold supplied by central banks and miners. Much of this hedging activity has been curtailed with respect to miners, but due to the culture of secrecy and non-transparency at central banks, their exact activities are an unreported state secret and a mystery. Recent government rhetoric about transparency has clearly been disingenuous.
The government is actively trading gold. In this scenario, the government is trading gold on the futures exchanges, for profit and to control the price, either directly (under a secret trading name) or indirectly (using proxies), and either on-shore or offshore. This activity could be conducted by the Working Group on Financial Markets or some other government-funded financial entity. Any trading losses could be settled by delivering to the exchange(s) gold from the United States' official reserve.
FORT SHOCKS: In this general scenario, and audit would reveal that America's gold is gone, either in whole, or in part. It might have been sold outright, pledged to counterparties, or otherwise distributed. The belief that there are millions of ounces of gold in Ft. Knox would therefore be a great American delusion. America's gold could have been sold or exchanged in several ways. Here are a few:
Foreign purchasers of U.S. Treasury and/or Agency debt simultaneously demanded the right to purchase U.S. gold, to offset currency and other risks associated with the debt. In this scenario, China, Japan and/or other governments demanded and won the right to purchase "x" ounces of United States gold for every "y" dollars of United States debt. This would compensate the debt purchasers for likely dollar devaluation given current fiscal deficits and fast-growing national indebtedness. This would also provide debt purchasers with some insurance against default, since default would most likely result in a rising gold price. Since the U.S. economy is now completely debt-based, maintaining an orderly debt market is the nation's top fiscal and financial priority. Selling national gold to keep the debt market functioning smoothly would be considered by authorities a small price to pay.
Backstopping guarantees were invoked. In this scenario, recent rallies in the gold market caught the bullion banks short, and enabled them to receive gold from the government as part of the backstopping guarantees they negotiated. This gold was used by the banks to settle their short positions and cover losses. This gold would be sold into the open market, and never returned to the official U.S. reserve.
Government sold gold to raise cash. Over the 50 year non-audit period, government needed money and did not want to issue additional debt at the time. Therefore, it sold gold into the market to raise funds, just as numerous other central banks have done in recent years.
Gold leases with a "cash settlement" option. In this case, the government leased gold to third parties, such as bullion banks, with a "cash settlement" option, as opposed to demanding that the gold be returned at the termination of the leases. For whatever reasons, the bullion banks exercised the cash settlement option, and did not return the borrowed gold. In this scenario, the gold would never be returned to the official U.S. reserve.
A portion of the gold supply has been stolen, or has otherwise disappeared. The Royal Mint of Canada announced in June, 2009 that 17,500 ounces of Mint gold had been lost or stolen. This disappearance was confirmed during an audit of the Mint by Deloitte & Touche, CPAs, under the direction of the Auditor General of Canada. (If Canada audits its gold, why doesn't the United States?) Regarding security, the Mint's web site states: "The rigour of our production standards is equalled by the stringency of our security protocols. The refinery is a restricted environment controlled by security personnel supported by state-of-the-art surveillance technology." If it could happen there, could it not happen here, particularly over a period of 50 years? This is exactly why you conduct audits.
All or a portion of the gold simply cannot be accounted for. In this scenario, the paper trail for the nation's gold fails, with errors, gaps and inconsistencies, and no one even begins to know how to re-create it. If gold is missing, no one knows when it went so or how to find it, since there are so many years (50) to account for. This would be similar to the $50+ billion in cash that is missing in Iraq. That money was stolen recently, and even so, no one can account for or find it.
Implications. If the Fort Knox scenario prevails, it is a non-event. Since there is no change in the nation's gold supply, the status quo is maintained.
If the Fort Hocks scenario prevails, then the government has orchestrated a market manipulation scandal that is equivalent in nature to Enron, Worldcom, Madoff and all the other frauds in the sordid panoply, but that dwarfs them in dollar value and sheer, outright dishonesty. The revelation that a first world government had deliberately engineered such a market manipulation, resulting in tens of billions of losses to honest investors, while simultaneously producing epic, illicit profits for favored inside traders would be a shock to all markets and investors. An insider trading scandal of such alarming, unprecedented proportions would constitute an inexcusable abuse of power, and represent fraud and corruption on a third world scale. It would not just damage the reputations of America's monetary institutions, it would destroy them.
If the Fort Shocks scenario prevails, it would have severe implications for the dollar, because it would demonstrate that the United States' financials are deliberately distorted for monetary and political reasons. Even though the dollar amount of this scandal ($262 billion) would be miniscule in comparison with the government's 2009 deficit ($2 trillion), debt ($11.6 trillion) and combined debt and unfunded contingent liabilities ($90 trillion), it might serve as a tipping point, where faith in America's finances and confidence in its government are lost. If America's gold reserve position is a lie, then what else has been distorted, and where, if anywhere, is the truth?
Keep in mind that the fiscal year, 2009 deficit is currently running at $5,479,000,000.00 per DAY. So even if the Fort Knox scenario prevails and the 261.5 million ounces of citizen gold are safe and accounted for, their dollar value is completely destroyed by only 47 days' worth of deficits. America's gold cannot protect it from the national wealth wipeout that intensifies each and every day.
The United States could put these concerns to rest simply by auditing the gold and publicly reporting the findings. And yet, despite repeated attempts by such organizations as GATA to get them to do that, they refuse. Why? Is it because Treasury and Federal Reserve officials know that the results would be explosive, and similar to what has been outlined in the Fort Hocks and Fort Shocks scenarios above?
If it becomes known that the United States has surreptitiously hocked or sold its citizens' gold, the price per ounce would most likely explode. Conceivably, gold would have its first $500 up day as people threw in the towel on other forms of "money" they could no longer understand or trust.
While inferential analysis is not used to prove a hypothesis (there are other forms of analysis that can offer proofs, when the facts exist to create them), it can be extremely useful in pointing to the truth when important facts about a situation are not available or revealed. Even though this report does not prove the hypothesis that the United States' gold position is compromised, perhaps radically, the risk/reward dynamics of this situation are so interesting that we believe it is worth paying attention to the opportunity they provide.
July 23, 2009
Stewart Dougherty is a specialist in inferential analysis, the practice of identifying patterns and trends in specific, contemporary events and then extrapolating their broader implications and likely effects upon the future. Dougherty was educated at Tufts University (B.A.), and Harvard Business School (M.B.A. and an academic Fellow). He can be reached at trident888@cs.com. He is not affiliated with or compensated by those he references or recommends. He does not offer investment or trading advice, and nothing in this article should be construed as such. The reader has permission to share or post this article provided that the content is not changed and the author is acknowledged. Copyright 2009 by Stewart Dougherty, with all rights reserved.
GOLD
Gold is a chemical element in the periodic table that has the symbol Au (L. aurum) and atomic number 79. A soft, shiny, yellow, dense, malleable, ductile (trivalent and univalent) transition metal, gold does not react with most chemicals but is attacked by chlorine, fluorine and aqua regia. The metal occurs as nuggets or grains in rocks and in alluvial deposits and is one of the coinage metals.
For millennia, gold has served as money and is also used in jewellery, dentistry, and in electronics. Gold forms the basis for a monetary standard used by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS). Its ISO currency code is XAU.
Notable characteristics
Gold is a metallic element with a characteristic yellow color, but can also be black or ruby when finely divided, while colloidal solutions are intensely colored and often purple. These colors are the result of gold's plasmon frequency lying in the visible range, which causes red and yellow light to be reflected, and blue light to be absorbed. Only silver colloids exhibit the same interactions with light, albeit at a shorter frequency, making silver colloids yellow in color.
It is the most malleable and ductile metal known; a single gram can be beaten into a sheet of one square metre, or an ounce into 300 square feet. A soft metal, gold will readily form alloys with many other metals. This can be done to increase its strength, or create several exotic colors, sold for instance in the western United States to the tourist trade as "Black Hills" gold. Adding copper yields a redder metal, iron blue, Silver produces green, aluminium purple, platinum metals white, and natural bismuth together with silver alloys produce black. Native gold contains usually eight to ten per cent silver, but often much more — alloys with a silver content over 20% are called electrum. As the amount of silver increases, the color becomes whiter and the specific gravity lower.
Gold is a good conductor of heat and electricity, and is not affected by air and most reagents. Heat, moisture, oxygen, and most corrosive agents have very little chemical effect on gold, making it well-suited for use in coins and jewelry; conversely, halogens will chemically alter gold, and aqua regia dissolves it.
Common oxidation states of gold include +1 (gold(I) or aurous compounds) and +3 (gold(III) or auric compounds). Gold ions in solution are readily reduced and precipitated out as gold metal by the addition of virtually any other metal as the reducing agent. The added metal is oxidized and dissolves allowing the gold to be displaced from solution and be recovered as a solid precipitate.
Recent research undertaken by Frank Reith of the Australian National University shows that microbes play an important role in the formation of gold deposits, transporting and precipitating gold to form grains and nuggets that collect in alluvial deposits.
Applications
Pure gold is too soft for ordinary use and is hardened by alloying with silver, copper, and other metals. Gold and its many alloys are most often used in jewelry, coinage and as a standard for monetary exchange in many countries. Because of its high electrical conductivity and resistance to corrosion and other desirable combinations of physical and chemical properties, gold also emerged in the late 20th century as an essential industrial metal.
Gold can be made into thread and used in embroidery.
Gold performs critical functions in computers, communications equipment, spacecraft, jet aircraft engines, and a host of other products.
The resistance to oxidation of gold has led to its widespread use as thin layers electroplated on the surface of electrical connectors to ensure a good connection.
Gold is used in restorative dentistry especially in tooth restorations such as crowns and bridges.
Colloidal gold (a gold nanoparticle) is an intensely colored solution that is currently studied in many labs for medical, biological and other applications. It is also the form used as gold paint on ceramics prior to firing.
Chlorauric acid is used in for toning the silver image.
Gold(III) chloride is used as a catalyst in organic chemistry. It is also the usual starting point for making other gold compounds.
Gold is used as a coating enabling biological material to be viewed under a scanning electron microscope.
Many competitions and honors, such as the and the Nobel Prize, award a gold medal to the winner (with silver to the second-place finisher, and bronze to the third.)
Since it is a good reflector of both infrared and visible light, it is used for the protective coatings on many artificial satellites.
Disodium aurothiomalate is a treatment for rheumatoid arthritis (administered intramuscularly). It inhibits lymphocyte proliferation, lysosomal enzyme release, the release of reactive oxygen species from macrophages, and IL-1 production. However, it can also cause photosensitive rashes, gastrointestinal disturbance, and kidney damage.
The gold isotope Au-198, (half-life: 2.7 days) is used in some cancer treatments and for treating other diseases.
Gold flake is used on and in some gourmet sweets and drinks. Called varak or (varaq) in India. Having no reactivity it adds no taste but is taken as a delicacy. Some use it as an excuse to create super-expensive delicacies ($1,000 cocktails). For similar reasons, it also used as the basis for some superstitious, over the top, health claims. Only the salts and radioisotopes (mentioned above) have any evidence of medicinal value.
White gold (an alloy of gold with platinum, palladium, nickel, and/or zinc) serves as a substitute for platinum.
Green gold (a gold/silver alloy) is used in specialized jewelry while gold alloys with copper (reddish color) are more widely used for that purpose (rose gold).
History
Gold (Sanskrit jval, Greek χρυσος [khrusos], Latin aurum for "shining dawn", Anglo-Saxon gold, Chinese 金 [jīn],Japanese 金 [kin]) has been known and highly valued since prehistoric times. It may have been the first metal used by humans and was valued for ornamentation and rituals. Egyptian hieroglyphs from as early as 2600 BC describe gold, which king Tushratta of the Mitanni claimed was as "common as dust" in Egypt. Egypt and Nubia had the resources to make them major gold-producing areas for much of history. Gold is also mentioned several times in the Old Testament. The south-east corner of the Black Sea was famed for its gold. Exploitation is said to date from the time of Midas, and this gold was important in the establishment of what is probably the world's earliest coinage in Lydia between 643 and 630 BC.
The European exploration of the Americas was fueled in no small part by reports of the gold ornaments displayed in great profusion by Native American peoples, especially in Central America, Peru, and Colombia.
Gold has long been considered one of the most precious metals, and its value has been used as the standard for many currencies (known as the gold standard) in history. Gold has been used as a symbol for purity, value, royalty, and particularly roles that combine these properties.
Gold in antiquity was relatively easy to obtain geologically; however, 75% of all gold ever produced has been extracted since 1910. It has been estimated that all the gold in the world that has ever been refined would form a single cube 20 m (66 ft) a side.
The primary goal of the alchemists was to produce gold from other substances, such as lead — presumably by the interaction with a mythical substance called the philosopher's stone. Although they never succeeded in this attempt, the alchemists promoted an interest in what can be done with substances, and this laid a foundation for today's chemistry. Their symbol for gold was the circle with a point at its center (☉), which was also the astrological symbol, the Egyptian hieroglyph and the ancient Chinese character for the Sun (now 日).
During the 19th century, gold rushes occurred whenever large gold deposits were discovered, including the California, Colorado, Otago, Australia, Witwatersrand, Black Hills, and Klondike gold rushes.
Because of its historically high value, much of the gold mined throughout history is still in circulation in one form or another.
Value
Like other precious metals, gold is measured by troy weight and by grams. When it is alloyed with other metals the term carat or karat is used to indicate the amount of gold present, with 24 carats being pure gold and lower ratings proportionally less. The purity of a gold bar can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995.
The price of gold is determined on the open market, but a procedure known as the Gold Fixing in London, originating in 1919, provides a twice-daily benchmark figure to the industry.
Historically gold was used to back currency in an economic system known as the gold standard in which one unit of currency was equivalent to a certain weight of gold. As part of this system, governments and central banks attempted to control the price of gold by setting values at which they would exchange it for currency. For a long period the United States government set the price of gold at $20.67 per troy ounce ($664.56/kg) but in 1934 the price of gold was set at $35.00 per troy ounce ($1125.27/kg). By 1961 it was becoming hard to maintain this price, and a pool of US and European banks began to act together to defend the price against market forces.
On March 17, 1968, economic circumstances caused the collapse of the gold pool, and a two-tiered pricing scheme was established whereby gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to fluctuate; this two-tiered pricing system was abandoned in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a reserve asset although the level has generally been declining. The largest gold depository in the world is that of the U.S. Federal Reserve Bank, in New York.
Since 1968 the price of gold on the open market has ranged widely, with a record high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Fixing). Prices have risen to the $500/oz mark in late 2005, due to a depreciation of the US dollar and inflation due to rising energy costs.In January 2006 the goldprice rose above $555/oz and many observers think that fears of a nose-diving dollar will send the price of gold even much higher.
Gold and the money supply
In January 1959 US M3 money supply was $288.8 billion, and the Official Gold Holdings of the United States was then 17,335.1 Tonnes, or about 557 million ounces (there are 32,150.7 Troy Ounces in a Tonne). That means that in 1959, there were $518 in circulation for every ounce of gold reserves held by the USA. Although the theoretical price should then have been $518 per ounce, the actual price, as fixed under the gold standard was only $35 an ounce.
By August 2005, the US M3 money supply had risen to $9,873.9 billion, whilst at the same time the Official Gold Holdings of the United States had fallen to just 8,133.5 Tonnes, or about 261 million Troy Ounces. This means that today, in 2005, there are $37,831 in circulation for every ounce of gold held by the United States.
The above numbers show the falling influence of gold in the monetary system of the world today. Goldbugs believe, or even hope, that one day gold's importance will return as the printing of paper money gets out of control and we end in a hyper-inflationary fiat money collapse.
Restrictions on gold ownership
Because of its use as a reserve store of value, the possession of gold is sometimes restricted or banned. Within the United States, the private possession of gold except as jewelry and coin collecting was banned between 1933 and 1975. President Franklin D. Roosevelt expropriated gold by Executive Order 6102, and President Richard Nixon closed the gold window by which foreign countries could exchange American dollars for gold at a fixed rate.
Return of a gold standard?
In the first few years of the 21st century, reports started to circulate that Malaysia was planning a return to the gold standard -- to issue and use gold dinars as currency in international trade. The purported purpose of this move would be to reduce dependence on the United States dollar as a reserve currency, and to establish a non-debt-backed currency in accord with Islamic law against the charging of interest. Nonetheless, gold dinar currency has not yet emerged. Privately issued digital gold currency attempt to replicate a gold standard.
Gold in investment portfolios
As a tangible investment gold is sometimes held as part of a portfolio because over the long term gold has an extensive history of maintaining its value. It has in the last century gained ground in relation to fiat currencies owing to inflation. Gold becomes particularly desirable in times of extremely weak confidence and during hyperinflation because gold maintains its value even as fiat money becomes worthless. People who enjoy investing in gold are known as goldbugs.
Futures contracts based on gold currently trade on various exchanges around the world. In the US this occurs primarily on COMEX (Commodity Exchange) which is a subsidiary of the New York Mercantile Exchange. Speculation about the future price of gold and other commodities is carried on at COMEX. Recently, gold-based ETFs like GLD have emerged as a more convenient investment vehicle.
In some countries such as Switzerland, it is possible to hold physical gold as part of an investment portfolio, due to the absence of taxes and narrow bid-ask spreads, however in other countries portfolio managers sometimes hold gold shares or gold bullion securities as a proxy for the metal itself. Exchange Traded Funds such as Gold Bullion Securities are securities sponsored by the World Gold Council and which are fully backed up by allocated gold held by a custodian. The main Gold Bullion Securities are as follows:
New York Stock Exchange (NYSE), Symbol:GLD (Streettracks Gold Shares, ISIN No. US8633071043)
London Stock Exchange (LSE) Symbol GBS (Gold Bullion Securities ISIN No. GB00B00FHZ82)
Euronext France Symbol:GBS (Gold Bullion Securities ISIN No. GB00B00FHZ82 )
Australian Stock Exchange (ASX), Symbol:GOLD (Gold Bullion Securities ISIN No. AU00000GOLD7)
Johannesburg Securities Exchange (JSE), Symbol:GLD (New Gold Debentures ISIN No. ZAE000060067 )
Occurrence
Due to its relative chemical inertness gold is usually found as the native metal or alloy. Occasionally large accumulations of native gold (also known as nuggets) occur but usually gold occurs as minute grains. These grains occur between mineral grain boundries or as inclusions within minerals. Common gold associations are quartz often as veins and sulfide minerals. The most common sulfide associations are pyrite, chalcopyrite, galena, sphalerite, arsenopyrite, stibnite and pyrrhotite. Rarer mineral associations are petzite, calaverite, sylvanite, muthmannite, nagyagite and krennerite.
Gold is widely distributed in the Earth's crust at a background level of 0.03 g/1000 kg (0.03 ppm by weight). Hydrothermal ore deposits of gold occur in metamorphic rocks and igneous rocks; alluvial deposits and placer deposits originate from these sources.
The primary source of gold is usually igneous rocks or surface concentrations. A deposit usually needs some form of secondary enrichment to form an economically viable ore deposit: either chemical or physical processes like erosion or solution or more generally metamorphism, which concentrates the gold in sulfide minerals or quartz. There are several primary deposit types, common ones are termed reef or vein. Primary deposits can be weathered and eroded, with most of the gold being transported into stream beds where it congregates with other heavy minerals to form placer deposits. In all these deposits the gold is in its native form. Another important ore type is in sedimentary black shale and limestone deposits containing finely disseminated gold and other platinum group metals.
Gold occurs in sea water at 0.1 to 2 mg/t (0.1 to 2 ppb by weight) depending on sample location.
Production
Economic gold extraction can be achieved from ore grades as little as 0.5 g/1000 kg (0.5 ppm) on average in large easily mined deposits, typical ore grades in open-pit mines are 1–5 g/1000 kg (1-5 ppm), ore grades in underground or hard rock mines are usually at least 3 g/1000 kg (3 ppm) on average. Ore grades of 30 g/1000 kg (30 ppm) are usually needed before gold is visible to the naked eye, therefore in most gold mines you will not see any gold. It is claimed, that all the gold that has been mined throughout the history of mankind could be incorporated in a solid ball with a diameter of 27 metres.
Since the 1880s South Africa has been the source for a large proportion of the world's gold supply. Production in 1970 accounted for 79% of the world supply, producing about 1,000 tonnes, however production in 2004 was 342 tonnes. This decline was due to the increasing difficulty of extraction and changing economic factors affecting the industry in South Africa.
The city of Johannesburg was built atop the world's greatest gold finds. Gold fields in the Orange Free State and the Transvaal are deep and require the world's deepest mines. The Second Boer War of 1899–1901 between the British Empire and the white Boers was at least partly over the rights of miners and possession of the gold wealth in South Africa.
Other major producers are Canada, United States and Western Australia. Mines in South Dakota and Nevada supply two-thirds of gold used in the United States. Siberian regions of the USSR also used to be significant in the global gold mining industry. Kolar Gold Fields in India is another example of a city being built on the greatest gold deposits in India. In South America, the controversial project Pascua Lama aims at exploitation of rich fields in the high mountains of Atacama, at the border between Chile and Argentina.
The idea of producing gold out of lesser metals or other cheap substances has fascinated people throughout the centuries. Scientists, kings and charlatans obsessed with the secret art of alchemy accidentally invented practically useful materials (e.g. porcelain), while searching in vain for the philosopher's stone, which was supposed to turn mercury into gold. Modern science has since proven the impossibility of making gold from other elements via chemical reactions.
However, it is possible to obtain infinitesimally small amounts of gold by artificial nuclear transformations in particle accelerators The gold isotopes produced would likely be radioactive. No economically feasible method to manufacture gold artificially has been found and published yet. The possibility of cheap man-made gold would have unforeseen economic and consequences.
The world's oceans hold a vast amount of gold, but in very low concentrations (perhaps 1-2 parts per billion). Fritz Haber (the German inventor of the Haber process) attempted commercial extraction of gold from sea water in an effort to help pay Germany's reparations following the First World War. Unfortunately, his assessment of the concentration of gold in sea water was unduly high, probably due to sample contamination. The effort produced little gold and cost the German government far more than the commercial value of the gold recovered. No commercially viable mechanism for performing gold extraction from sea water has yet been identified.
Compounds/isotopes
Although gold is a noble metal, it can form many compounds, auric chloride (AuCl3) and chlorauric acid (HAuCl4) being the most common. Gold compounds can be aurous (univalent, +1) or auric (trivalent, +3). Gold also can under extreme conditions form a +5 state with fluorine (gold pentafluoride, AuF5), as well as (unusually for a metal), a -1 state. Such compounds containing the Au- anion are called aurides and include caesium auride, CsAu, rubidium auride, RbAu, and tetramethylammonium auride, (CH3)4N+ Au-.
Gold also forms:
The AuCl4- ion after dissolving in aqua regia
Gold halides (F,Cl,Br,I)
Gold chalcogenides (O, S, Se,Te)
Gold cluster compounds
Gold hydrazide: an olive-green powder, AuN2H3, one of several explosive compounds known archaically as aurum fulminans
There is only one stable isotope of gold, and 18 radioisotopes with Au-195 being the most stable with a half-life of 186 days.
Precautions
The human body doesn't absorb gold very well, thus compounds of gold are not normally very toxic. Liver and kidney damage has, however, been reported for up to 50% of arthritis patients treated with gold-containing drugs. Gold used in dentistry is widely regarded as the safest form of restorative material, as well as the most successful.
Symbolism
Gold has been associated with the extremities of utmost evil and great sanctity throughout history. The Golden Calf is a widely-recognised symbol of idolatry and revolt against God. In Communist propaganda, the golden pocket watch and its fastening golden chain were the characteristic accessories of the class enemy, the bourgeois and the industrial tycoons. American Indians of the Sioux tribe called it "The yellow metal that makes the white man crazy"
On the other hand, eminent orators such as John Chrysostom were said to have a mouth of gold with a silver tongue. Gold is associated with notable anniversaries, particularly in a 50 year cycle, such as a golden wedding anniversary, golden jubilee, etc.
Great human achievements are frequently rewarded with gold, in the form of medals and decorations. Winners of races and prizes are usually awarded the gold medal (such as the Olympic Games and the Nobel Prize), while many award statues are depicted in gold (such as the Academy Awards, the Emmy Awards and the British Academy Film Awards).
Medieval kings were inaugurated under the signs of sacred oil and a golden crown, the latter symbolizing the eternal shining light of heaven and thus a Christian king's divinely inspired authority. Wedding rings are traditionally made of gold; since it is long-lasting and unaffected by the passage of time, it is considered a suitable material for everyday wear as well as a metaphor for the relationship. In Orthodox Christianity, the wedded couple is adorned with a golden crown during the ceremony, an amalgamation of symbolic rites.
The symbolic value of gold varies wildly around the world, even within geographic regions. For example, gold is quite common in Turkey but considered a most valuable gift in Sicily.
79
platinum ← gold → mercury
Ag
↑
Au
↓
Rg
periodic table
Name, Symbol, Number
gold, Au, 79
Chemical series
transition metals
Group, Period, Block
11, 6, d
Appearance
metallic yellow
Atomic mass
196.966569(4) g/mol
Electron configuration
[Xe] 4f14 5d10 6s1
Electrons per shell
2, 8, 18, 32, 18, 1
Physical properties
Phase
solid
Density (near r.t.)
19.3 g/cm³
Liquid density at m.p.
17.31 g/cm³
Melting point
1337.33 K
(1064.18 °C, 1947.52 °F)
Boiling point
3129 K
(2856 °C, 5173 °F)
Heat of fusion
12.55 kJ/mol
Heat of vaporization
324 kJ/mol
Heat capacity
(25 °C) 25.418 J/(mol·K)
Vapor pressure
P/Pa
1
10
100
1 k
10 k
100 k
at T/K
1646
1814
2021
2281
2620
3078
Atomic properties
Crystal structure
cubic face centered
Oxidation states
3, 1
(amphoteric oxide)
Electronegativity
2.54 (Pauling scale)
Ionization energies
1st: 890.1 kJ/mol
2nd: 1980 kJ/mol
Atomic radius
135 pm
Atomic radius (calc.)
174 pm
Covalent radius
144 pm
Van der Waals radius
166 pm
Miscellaneous
Magnetic ordering
no data
Electrical resistivity
(20 °C) 22.14 nΩ·m
Thermal conductivity
(300 K) 318 W/(m·K)
Thermal expansion
(25 °C) 14.2 µm/(m·K)
Speed of sound (thin rod)
(r.t.) (hard-drawn)
2030 m/s
Young's modulus
78 GPa
Shear modulus
27 GPa
Bulk modulus
220 GPa
Poisson ratio
0.44
Mohs hardness
2.5
Vickers hardness
216 MPa
Brinell hardness
2450 MPa
CAS registry number
7440-57-5
Notable isotopes
Main article: Isotopes of gold
iso
NA
half-life
DM
DE (MeV)
DP
195Au
syn
186.10 d
ε
0.227
195Pt
196Au
syn
6.183 d
ε
1.506
196Pt
β-
0.686
196Hg
197Au
100%
Au is stable with 118 neutrons
198Au
syn
2.69517 d
β-
1.372
198Hg
199Au
syn
3.169 d
β-
0.453
199Hg
WEDDING RINGS
A wedding band, or wedding ring consists of a precious metal ring, usually worn on the base of the ring finger -- the fourth finger (with the thumb counted as the first finger). Such a ring symbolises marriage: a spouse wears it to indicate a marital commitment to fidelity. The European custom of wearing such a ring has spread widely beyond Europe.
Traditional customs
Pre-wedding customs
According to some customs, the wedding ring forms the last in a series of gifts which also may include the engagement ring, traditionally given as a betrothal present, and the promise ring, often given when serious courting begins. (Other (more recent) traditions (and the jewelry trade) seek to expand the idea of a series of ring-gifts with an eternity ring, which symbolises the renewal or ongoing nature of a lasting marriage, sometimes given after the birth of a first child, and a trilogy ring (usually) dsplaying three brilliant cut round diamonds each, in turn, representing the past, present and future of a relationship.)
An European tradition encourages the engraving of the name of one's intended spouse and the date of one's intended marriage on the inside surface of wedding rings, thus strengthening the symbolism and sentimentality of the rings as they become family heirlooms.
Wedding ceremony customs
The best man has a traditional duty to keep track of a marrying couple's wedding ring(s) and to produce them at the symbolic moment of the giving and receiving of the ring(s) during the traditional marriage ceremony.
In more grandiose weddings, a ring bearer (usually a young boy) may assist in the ceremonial of parading the ring(s) into the ceremony, often on a special cushion or pillow(s).
Post-wedding customs
Before medical science discovered how the circulatory system functioned, people believed that a vein of blood ran directly from the fourth finger on the left hand to the heart. (This belief allegedly dates to the 3rd century BC in Greece.) Because of the hand-heart connection, people named the putative vein descriptively vena amori, Latin for "the vein of love". Due to this tradition, it became accepted to wear the wedding ring on this finger. By wearing rings on the fourth finger of their left hands, a married couple symbolically declares their eternal love for each other. This has now become a matter of tradition and etiquette.
In most Western cultures, the wedding ring is worn on the left hand. In some countries, however (such as Germany, Norway, and Chile), it is worn on the right hand. Orthodox Christians, East Europeans and Jews also wear the wedding band on the right hand traditionally.
Etiquette frowns severely on the making of sexual overtures to a man or woman wearing a wedding ring.
Contemporary usage
In the United Kingdom and the United States in past generations women wore wedding bands much more commonly than men did. Today, both partners often wear wedding rings, but where occupations or professions forbid or discourage the wearing of jewellery (as in the cases of actors, police and electrical workers) either marriage partner may not wear a ring. In addition, people often remove wedding rings for comfort or safety. So it commonly occurs for chaste married people not to wear a wedding ring. Either partner may wear a wedding ring on a chain around the neck, thus conveying the socially equivalent message to wearing it on a finger.
One interpretation states that the woman wears the wedding ring below the engagement ring, thus making it closer to the heart. Purists hold this practice, though common, as incorrect: they claim no ring should fit above the wedding ring, which should be worn alone.
Materials
Most religious marital ceremonies accept a band of any material (even a rubber band) to symbolise the taking of marriage vows, with unusual substitutions permitted in marriages under unusual circumstances. When people marry on shipboard and cannot obtain or adjust a metal ring of appropriate size, the partners often use rubber bands.
To make wedding rings jewellers most commonly use a precious yellow alloy of gold, hardened with copper, tin and bismuth. Platinum and white alloys of gold class as equivalent or superior to gold. Titanium has recently become a popular material for wedding bands, due to its durability, affordability, and gunmetal grey color. The least expensive material in common use is nickel silver for those who prefer its appearance or cost. Silver, copper, brass and other corroding metals do not occur as frequently because they stain the skin. Marrying couples seldom use stainless steel (which does not count as a precious metal). Aluminum or poisonous metals are almost never used. Rings made by either spouse rank highest; and as a result become so precious to the couple that any material becomes acceptable, even if practically unwearable.
Styles, patterns, fashions
The plain gold band is the most popular pattern. Medical personnel commonly wear it because it can be kept very clean. Woman usually wear narrow bands, while men wear broader bands.
In France and French-speaking countries, a common pattern consists of three interleaved rings. They stand for "faith, hope and love", where love equates to that particular type of perfect love indicated by the ancient Greek word agape. Provocatively, this pattern slides off quickly, because the rings flow over each other.
A traditional Irish wedding ring, the Claddagh ring, has become popular in the United States and Australia as well, thanks to Irish immigration to those countries.
Men in Greek, Italian and Anatolian cultures sometimes receive and wear puzzle rings -- sets of interlocking metal bands that one must arrange just so in order to form a single ring. Women wryly give them as a test for their mens' chastity. Even when the man masters the puzzle, he still cannot remove and replace the ring quickly!
In North America, many married women wear two rings on the same finger: an engagement ring and a plain wedding band. Couples often purchase such rings as a pair of bands designed to fit together.
Quote
"With this ring I thee wed." -- from the traditional Church of England marriage-ceremony formula.
For millennia, gold has served as money and is also used in jewellery, dentistry, and in electronics. Gold forms the basis for a monetary standard used by the International Monetary Fund (IMF) and the Bank for International Settlements (BIS). Its ISO currency code is XAU.
Notable characteristics
Gold is a metallic element with a characteristic yellow color, but can also be black or ruby when finely divided, while colloidal solutions are intensely colored and often purple. These colors are the result of gold's plasmon frequency lying in the visible range, which causes red and yellow light to be reflected, and blue light to be absorbed. Only silver colloids exhibit the same interactions with light, albeit at a shorter frequency, making silver colloids yellow in color.
It is the most malleable and ductile metal known; a single gram can be beaten into a sheet of one square metre, or an ounce into 300 square feet. A soft metal, gold will readily form alloys with many other metals. This can be done to increase its strength, or create several exotic colors, sold for instance in the western United States to the tourist trade as "Black Hills" gold. Adding copper yields a redder metal, iron blue, Silver produces green, aluminium purple, platinum metals white, and natural bismuth together with silver alloys produce black. Native gold contains usually eight to ten per cent silver, but often much more — alloys with a silver content over 20% are called electrum. As the amount of silver increases, the color becomes whiter and the specific gravity lower.
Gold is a good conductor of heat and electricity, and is not affected by air and most reagents. Heat, moisture, oxygen, and most corrosive agents have very little chemical effect on gold, making it well-suited for use in coins and jewelry; conversely, halogens will chemically alter gold, and aqua regia dissolves it.
Common oxidation states of gold include +1 (gold(I) or aurous compounds) and +3 (gold(III) or auric compounds). Gold ions in solution are readily reduced and precipitated out as gold metal by the addition of virtually any other metal as the reducing agent. The added metal is oxidized and dissolves allowing the gold to be displaced from solution and be recovered as a solid precipitate.
Recent research undertaken by Frank Reith of the Australian National University shows that microbes play an important role in the formation of gold deposits, transporting and precipitating gold to form grains and nuggets that collect in alluvial deposits.
Applications
Pure gold is too soft for ordinary use and is hardened by alloying with silver, copper, and other metals. Gold and its many alloys are most often used in jewelry, coinage and as a standard for monetary exchange in many countries. Because of its high electrical conductivity and resistance to corrosion and other desirable combinations of physical and chemical properties, gold also emerged in the late 20th century as an essential industrial metal.
Gold can be made into thread and used in embroidery.
Gold performs critical functions in computers, communications equipment, spacecraft, jet aircraft engines, and a host of other products.
The resistance to oxidation of gold has led to its widespread use as thin layers electroplated on the surface of electrical connectors to ensure a good connection.
Gold is used in restorative dentistry especially in tooth restorations such as crowns and bridges.
Colloidal gold (a gold nanoparticle) is an intensely colored solution that is currently studied in many labs for medical, biological and other applications. It is also the form used as gold paint on ceramics prior to firing.
Chlorauric acid is used in for toning the silver image.
Gold(III) chloride is used as a catalyst in organic chemistry. It is also the usual starting point for making other gold compounds.
Gold is used as a coating enabling biological material to be viewed under a scanning electron microscope.
Many competitions and honors, such as the and the Nobel Prize, award a gold medal to the winner (with silver to the second-place finisher, and bronze to the third.)
Since it is a good reflector of both infrared and visible light, it is used for the protective coatings on many artificial satellites.
Disodium aurothiomalate is a treatment for rheumatoid arthritis (administered intramuscularly). It inhibits lymphocyte proliferation, lysosomal enzyme release, the release of reactive oxygen species from macrophages, and IL-1 production. However, it can also cause photosensitive rashes, gastrointestinal disturbance, and kidney damage.
The gold isotope Au-198, (half-life: 2.7 days) is used in some cancer treatments and for treating other diseases.
Gold flake is used on and in some gourmet sweets and drinks. Called varak or (varaq) in India. Having no reactivity it adds no taste but is taken as a delicacy. Some use it as an excuse to create super-expensive delicacies ($1,000 cocktails). For similar reasons, it also used as the basis for some superstitious, over the top, health claims. Only the salts and radioisotopes (mentioned above) have any evidence of medicinal value.
White gold (an alloy of gold with platinum, palladium, nickel, and/or zinc) serves as a substitute for platinum.
Green gold (a gold/silver alloy) is used in specialized jewelry while gold alloys with copper (reddish color) are more widely used for that purpose (rose gold).
History
Gold (Sanskrit jval, Greek χρυσος [khrusos], Latin aurum for "shining dawn", Anglo-Saxon gold, Chinese 金 [jīn],Japanese 金 [kin]) has been known and highly valued since prehistoric times. It may have been the first metal used by humans and was valued for ornamentation and rituals. Egyptian hieroglyphs from as early as 2600 BC describe gold, which king Tushratta of the Mitanni claimed was as "common as dust" in Egypt. Egypt and Nubia had the resources to make them major gold-producing areas for much of history. Gold is also mentioned several times in the Old Testament. The south-east corner of the Black Sea was famed for its gold. Exploitation is said to date from the time of Midas, and this gold was important in the establishment of what is probably the world's earliest coinage in Lydia between 643 and 630 BC.
The European exploration of the Americas was fueled in no small part by reports of the gold ornaments displayed in great profusion by Native American peoples, especially in Central America, Peru, and Colombia.
Gold has long been considered one of the most precious metals, and its value has been used as the standard for many currencies (known as the gold standard) in history. Gold has been used as a symbol for purity, value, royalty, and particularly roles that combine these properties.
Gold in antiquity was relatively easy to obtain geologically; however, 75% of all gold ever produced has been extracted since 1910. It has been estimated that all the gold in the world that has ever been refined would form a single cube 20 m (66 ft) a side.
The primary goal of the alchemists was to produce gold from other substances, such as lead — presumably by the interaction with a mythical substance called the philosopher's stone. Although they never succeeded in this attempt, the alchemists promoted an interest in what can be done with substances, and this laid a foundation for today's chemistry. Their symbol for gold was the circle with a point at its center (☉), which was also the astrological symbol, the Egyptian hieroglyph and the ancient Chinese character for the Sun (now 日).
During the 19th century, gold rushes occurred whenever large gold deposits were discovered, including the California, Colorado, Otago, Australia, Witwatersrand, Black Hills, and Klondike gold rushes.
Because of its historically high value, much of the gold mined throughout history is still in circulation in one form or another.
Value
Like other precious metals, gold is measured by troy weight and by grams. When it is alloyed with other metals the term carat or karat is used to indicate the amount of gold present, with 24 carats being pure gold and lower ratings proportionally less. The purity of a gold bar can also be expressed as a decimal figure ranging from 0 to 1, known as the millesimal fineness, such as 0.995.
The price of gold is determined on the open market, but a procedure known as the Gold Fixing in London, originating in 1919, provides a twice-daily benchmark figure to the industry.
Historically gold was used to back currency in an economic system known as the gold standard in which one unit of currency was equivalent to a certain weight of gold. As part of this system, governments and central banks attempted to control the price of gold by setting values at which they would exchange it for currency. For a long period the United States government set the price of gold at $20.67 per troy ounce ($664.56/kg) but in 1934 the price of gold was set at $35.00 per troy ounce ($1125.27/kg). By 1961 it was becoming hard to maintain this price, and a pool of US and European banks began to act together to defend the price against market forces.
On March 17, 1968, economic circumstances caused the collapse of the gold pool, and a two-tiered pricing scheme was established whereby gold was still used to settle international accounts at the old $35.00 per troy ounce ($1.13/g) but the price of gold on the private market was allowed to fluctuate; this two-tiered pricing system was abandoned in 1975 when the price of gold was left to find its free-market level. Central banks still hold historical gold reserves as a reserve asset although the level has generally been declining. The largest gold depository in the world is that of the U.S. Federal Reserve Bank, in New York.
Since 1968 the price of gold on the open market has ranged widely, with a record high of $850/oz ($27,300/kg) on 21 January 1980, to a low of $252.90/oz ($8,131/kg) on 21 June 1999 (London Fixing). Prices have risen to the $500/oz mark in late 2005, due to a depreciation of the US dollar and inflation due to rising energy costs.In January 2006 the goldprice rose above $555/oz and many observers think that fears of a nose-diving dollar will send the price of gold even much higher.
Gold and the money supply
In January 1959 US M3 money supply was $288.8 billion, and the Official Gold Holdings of the United States was then 17,335.1 Tonnes, or about 557 million ounces (there are 32,150.7 Troy Ounces in a Tonne). That means that in 1959, there were $518 in circulation for every ounce of gold reserves held by the USA. Although the theoretical price should then have been $518 per ounce, the actual price, as fixed under the gold standard was only $35 an ounce.
By August 2005, the US M3 money supply had risen to $9,873.9 billion, whilst at the same time the Official Gold Holdings of the United States had fallen to just 8,133.5 Tonnes, or about 261 million Troy Ounces. This means that today, in 2005, there are $37,831 in circulation for every ounce of gold held by the United States.
The above numbers show the falling influence of gold in the monetary system of the world today. Goldbugs believe, or even hope, that one day gold's importance will return as the printing of paper money gets out of control and we end in a hyper-inflationary fiat money collapse.
Restrictions on gold ownership
Because of its use as a reserve store of value, the possession of gold is sometimes restricted or banned. Within the United States, the private possession of gold except as jewelry and coin collecting was banned between 1933 and 1975. President Franklin D. Roosevelt expropriated gold by Executive Order 6102, and President Richard Nixon closed the gold window by which foreign countries could exchange American dollars for gold at a fixed rate.
Return of a gold standard?
In the first few years of the 21st century, reports started to circulate that Malaysia was planning a return to the gold standard -- to issue and use gold dinars as currency in international trade. The purported purpose of this move would be to reduce dependence on the United States dollar as a reserve currency, and to establish a non-debt-backed currency in accord with Islamic law against the charging of interest. Nonetheless, gold dinar currency has not yet emerged. Privately issued digital gold currency attempt to replicate a gold standard.
Gold in investment portfolios
As a tangible investment gold is sometimes held as part of a portfolio because over the long term gold has an extensive history of maintaining its value. It has in the last century gained ground in relation to fiat currencies owing to inflation. Gold becomes particularly desirable in times of extremely weak confidence and during hyperinflation because gold maintains its value even as fiat money becomes worthless. People who enjoy investing in gold are known as goldbugs.
Futures contracts based on gold currently trade on various exchanges around the world. In the US this occurs primarily on COMEX (Commodity Exchange) which is a subsidiary of the New York Mercantile Exchange. Speculation about the future price of gold and other commodities is carried on at COMEX. Recently, gold-based ETFs like GLD have emerged as a more convenient investment vehicle.
In some countries such as Switzerland, it is possible to hold physical gold as part of an investment portfolio, due to the absence of taxes and narrow bid-ask spreads, however in other countries portfolio managers sometimes hold gold shares or gold bullion securities as a proxy for the metal itself. Exchange Traded Funds such as Gold Bullion Securities are securities sponsored by the World Gold Council and which are fully backed up by allocated gold held by a custodian. The main Gold Bullion Securities are as follows:
New York Stock Exchange (NYSE), Symbol:GLD (Streettracks Gold Shares, ISIN No. US8633071043)
London Stock Exchange (LSE) Symbol GBS (Gold Bullion Securities ISIN No. GB00B00FHZ82)
Euronext France Symbol:GBS (Gold Bullion Securities ISIN No. GB00B00FHZ82 )
Australian Stock Exchange (ASX), Symbol:GOLD (Gold Bullion Securities ISIN No. AU00000GOLD7)
Johannesburg Securities Exchange (JSE), Symbol:GLD (New Gold Debentures ISIN No. ZAE000060067 )
Occurrence
Due to its relative chemical inertness gold is usually found as the native metal or alloy. Occasionally large accumulations of native gold (also known as nuggets) occur but usually gold occurs as minute grains. These grains occur between mineral grain boundries or as inclusions within minerals. Common gold associations are quartz often as veins and sulfide minerals. The most common sulfide associations are pyrite, chalcopyrite, galena, sphalerite, arsenopyrite, stibnite and pyrrhotite. Rarer mineral associations are petzite, calaverite, sylvanite, muthmannite, nagyagite and krennerite.
Gold is widely distributed in the Earth's crust at a background level of 0.03 g/1000 kg (0.03 ppm by weight). Hydrothermal ore deposits of gold occur in metamorphic rocks and igneous rocks; alluvial deposits and placer deposits originate from these sources.
The primary source of gold is usually igneous rocks or surface concentrations. A deposit usually needs some form of secondary enrichment to form an economically viable ore deposit: either chemical or physical processes like erosion or solution or more generally metamorphism, which concentrates the gold in sulfide minerals or quartz. There are several primary deposit types, common ones are termed reef or vein. Primary deposits can be weathered and eroded, with most of the gold being transported into stream beds where it congregates with other heavy minerals to form placer deposits. In all these deposits the gold is in its native form. Another important ore type is in sedimentary black shale and limestone deposits containing finely disseminated gold and other platinum group metals.
Gold occurs in sea water at 0.1 to 2 mg/t (0.1 to 2 ppb by weight) depending on sample location.
Production
Economic gold extraction can be achieved from ore grades as little as 0.5 g/1000 kg (0.5 ppm) on average in large easily mined deposits, typical ore grades in open-pit mines are 1–5 g/1000 kg (1-5 ppm), ore grades in underground or hard rock mines are usually at least 3 g/1000 kg (3 ppm) on average. Ore grades of 30 g/1000 kg (30 ppm) are usually needed before gold is visible to the naked eye, therefore in most gold mines you will not see any gold. It is claimed, that all the gold that has been mined throughout the history of mankind could be incorporated in a solid ball with a diameter of 27 metres.
Since the 1880s South Africa has been the source for a large proportion of the world's gold supply. Production in 1970 accounted for 79% of the world supply, producing about 1,000 tonnes, however production in 2004 was 342 tonnes. This decline was due to the increasing difficulty of extraction and changing economic factors affecting the industry in South Africa.
The city of Johannesburg was built atop the world's greatest gold finds. Gold fields in the Orange Free State and the Transvaal are deep and require the world's deepest mines. The Second Boer War of 1899–1901 between the British Empire and the white Boers was at least partly over the rights of miners and possession of the gold wealth in South Africa.
Other major producers are Canada, United States and Western Australia. Mines in South Dakota and Nevada supply two-thirds of gold used in the United States. Siberian regions of the USSR also used to be significant in the global gold mining industry. Kolar Gold Fields in India is another example of a city being built on the greatest gold deposits in India. In South America, the controversial project Pascua Lama aims at exploitation of rich fields in the high mountains of Atacama, at the border between Chile and Argentina.
The idea of producing gold out of lesser metals or other cheap substances has fascinated people throughout the centuries. Scientists, kings and charlatans obsessed with the secret art of alchemy accidentally invented practically useful materials (e.g. porcelain), while searching in vain for the philosopher's stone, which was supposed to turn mercury into gold. Modern science has since proven the impossibility of making gold from other elements via chemical reactions.
However, it is possible to obtain infinitesimally small amounts of gold by artificial nuclear transformations in particle accelerators The gold isotopes produced would likely be radioactive. No economically feasible method to manufacture gold artificially has been found and published yet. The possibility of cheap man-made gold would have unforeseen economic and consequences.
The world's oceans hold a vast amount of gold, but in very low concentrations (perhaps 1-2 parts per billion). Fritz Haber (the German inventor of the Haber process) attempted commercial extraction of gold from sea water in an effort to help pay Germany's reparations following the First World War. Unfortunately, his assessment of the concentration of gold in sea water was unduly high, probably due to sample contamination. The effort produced little gold and cost the German government far more than the commercial value of the gold recovered. No commercially viable mechanism for performing gold extraction from sea water has yet been identified.
Compounds/isotopes
Although gold is a noble metal, it can form many compounds, auric chloride (AuCl3) and chlorauric acid (HAuCl4) being the most common. Gold compounds can be aurous (univalent, +1) or auric (trivalent, +3). Gold also can under extreme conditions form a +5 state with fluorine (gold pentafluoride, AuF5), as well as (unusually for a metal), a -1 state. Such compounds containing the Au- anion are called aurides and include caesium auride, CsAu, rubidium auride, RbAu, and tetramethylammonium auride, (CH3)4N+ Au-.
Gold also forms:
The AuCl4- ion after dissolving in aqua regia
Gold halides (F,Cl,Br,I)
Gold chalcogenides (O, S, Se,Te)
Gold cluster compounds
Gold hydrazide: an olive-green powder, AuN2H3, one of several explosive compounds known archaically as aurum fulminans
There is only one stable isotope of gold, and 18 radioisotopes with Au-195 being the most stable with a half-life of 186 days.
Precautions
The human body doesn't absorb gold very well, thus compounds of gold are not normally very toxic. Liver and kidney damage has, however, been reported for up to 50% of arthritis patients treated with gold-containing drugs. Gold used in dentistry is widely regarded as the safest form of restorative material, as well as the most successful.
Symbolism
Gold has been associated with the extremities of utmost evil and great sanctity throughout history. The Golden Calf is a widely-recognised symbol of idolatry and revolt against God. In Communist propaganda, the golden pocket watch and its fastening golden chain were the characteristic accessories of the class enemy, the bourgeois and the industrial tycoons. American Indians of the Sioux tribe called it "The yellow metal that makes the white man crazy"
On the other hand, eminent orators such as John Chrysostom were said to have a mouth of gold with a silver tongue. Gold is associated with notable anniversaries, particularly in a 50 year cycle, such as a golden wedding anniversary, golden jubilee, etc.
Great human achievements are frequently rewarded with gold, in the form of medals and decorations. Winners of races and prizes are usually awarded the gold medal (such as the Olympic Games and the Nobel Prize), while many award statues are depicted in gold (such as the Academy Awards, the Emmy Awards and the British Academy Film Awards).
Medieval kings were inaugurated under the signs of sacred oil and a golden crown, the latter symbolizing the eternal shining light of heaven and thus a Christian king's divinely inspired authority. Wedding rings are traditionally made of gold; since it is long-lasting and unaffected by the passage of time, it is considered a suitable material for everyday wear as well as a metaphor for the relationship. In Orthodox Christianity, the wedded couple is adorned with a golden crown during the ceremony, an amalgamation of symbolic rites.
The symbolic value of gold varies wildly around the world, even within geographic regions. For example, gold is quite common in Turkey but considered a most valuable gift in Sicily.
79
platinum ← gold → mercury
Ag
↑
Au
↓
Rg
periodic table
Name, Symbol, Number
gold, Au, 79
Chemical series
transition metals
Group, Period, Block
11, 6, d
Appearance
metallic yellow
Atomic mass
196.966569(4) g/mol
Electron configuration
[Xe] 4f14 5d10 6s1
Electrons per shell
2, 8, 18, 32, 18, 1
Physical properties
Phase
solid
Density (near r.t.)
19.3 g/cm³
Liquid density at m.p.
17.31 g/cm³
Melting point
1337.33 K
(1064.18 °C, 1947.52 °F)
Boiling point
3129 K
(2856 °C, 5173 °F)
Heat of fusion
12.55 kJ/mol
Heat of vaporization
324 kJ/mol
Heat capacity
(25 °C) 25.418 J/(mol·K)
Vapor pressure
P/Pa
1
10
100
1 k
10 k
100 k
at T/K
1646
1814
2021
2281
2620
3078
Atomic properties
Crystal structure
cubic face centered
Oxidation states
3, 1
(amphoteric oxide)
Electronegativity
2.54 (Pauling scale)
Ionization energies
1st: 890.1 kJ/mol
2nd: 1980 kJ/mol
Atomic radius
135 pm
Atomic radius (calc.)
174 pm
Covalent radius
144 pm
Van der Waals radius
166 pm
Miscellaneous
Magnetic ordering
no data
Electrical resistivity
(20 °C) 22.14 nΩ·m
Thermal conductivity
(300 K) 318 W/(m·K)
Thermal expansion
(25 °C) 14.2 µm/(m·K)
Speed of sound (thin rod)
(r.t.) (hard-drawn)
2030 m/s
Young's modulus
78 GPa
Shear modulus
27 GPa
Bulk modulus
220 GPa
Poisson ratio
0.44
Mohs hardness
2.5
Vickers hardness
216 MPa
Brinell hardness
2450 MPa
CAS registry number
7440-57-5
Notable isotopes
Main article: Isotopes of gold
iso
NA
half-life
DM
DE (MeV)
DP
195Au
syn
186.10 d
ε
0.227
195Pt
196Au
syn
6.183 d
ε
1.506
196Pt
β-
0.686
196Hg
197Au
100%
Au is stable with 118 neutrons
198Au
syn
2.69517 d
β-
1.372
198Hg
199Au
syn
3.169 d
β-
0.453
199Hg
WEDDING RINGS
A wedding band, or wedding ring consists of a precious metal ring, usually worn on the base of the ring finger -- the fourth finger (with the thumb counted as the first finger). Such a ring symbolises marriage: a spouse wears it to indicate a marital commitment to fidelity. The European custom of wearing such a ring has spread widely beyond Europe.
Traditional customs
Pre-wedding customs
According to some customs, the wedding ring forms the last in a series of gifts which also may include the engagement ring, traditionally given as a betrothal present, and the promise ring, often given when serious courting begins. (Other (more recent) traditions (and the jewelry trade) seek to expand the idea of a series of ring-gifts with an eternity ring, which symbolises the renewal or ongoing nature of a lasting marriage, sometimes given after the birth of a first child, and a trilogy ring (usually) dsplaying three brilliant cut round diamonds each, in turn, representing the past, present and future of a relationship.)
An European tradition encourages the engraving of the name of one's intended spouse and the date of one's intended marriage on the inside surface of wedding rings, thus strengthening the symbolism and sentimentality of the rings as they become family heirlooms.
Wedding ceremony customs
The best man has a traditional duty to keep track of a marrying couple's wedding ring(s) and to produce them at the symbolic moment of the giving and receiving of the ring(s) during the traditional marriage ceremony.
In more grandiose weddings, a ring bearer (usually a young boy) may assist in the ceremonial of parading the ring(s) into the ceremony, often on a special cushion or pillow(s).
Post-wedding customs
Before medical science discovered how the circulatory system functioned, people believed that a vein of blood ran directly from the fourth finger on the left hand to the heart. (This belief allegedly dates to the 3rd century BC in Greece.) Because of the hand-heart connection, people named the putative vein descriptively vena amori, Latin for "the vein of love". Due to this tradition, it became accepted to wear the wedding ring on this finger. By wearing rings on the fourth finger of their left hands, a married couple symbolically declares their eternal love for each other. This has now become a matter of tradition and etiquette.
In most Western cultures, the wedding ring is worn on the left hand. In some countries, however (such as Germany, Norway, and Chile), it is worn on the right hand. Orthodox Christians, East Europeans and Jews also wear the wedding band on the right hand traditionally.
Etiquette frowns severely on the making of sexual overtures to a man or woman wearing a wedding ring.
Contemporary usage
In the United Kingdom and the United States in past generations women wore wedding bands much more commonly than men did. Today, both partners often wear wedding rings, but where occupations or professions forbid or discourage the wearing of jewellery (as in the cases of actors, police and electrical workers) either marriage partner may not wear a ring. In addition, people often remove wedding rings for comfort or safety. So it commonly occurs for chaste married people not to wear a wedding ring. Either partner may wear a wedding ring on a chain around the neck, thus conveying the socially equivalent message to wearing it on a finger.
One interpretation states that the woman wears the wedding ring below the engagement ring, thus making it closer to the heart. Purists hold this practice, though common, as incorrect: they claim no ring should fit above the wedding ring, which should be worn alone.
Materials
Most religious marital ceremonies accept a band of any material (even a rubber band) to symbolise the taking of marriage vows, with unusual substitutions permitted in marriages under unusual circumstances. When people marry on shipboard and cannot obtain or adjust a metal ring of appropriate size, the partners often use rubber bands.
To make wedding rings jewellers most commonly use a precious yellow alloy of gold, hardened with copper, tin and bismuth. Platinum and white alloys of gold class as equivalent or superior to gold. Titanium has recently become a popular material for wedding bands, due to its durability, affordability, and gunmetal grey color. The least expensive material in common use is nickel silver for those who prefer its appearance or cost. Silver, copper, brass and other corroding metals do not occur as frequently because they stain the skin. Marrying couples seldom use stainless steel (which does not count as a precious metal). Aluminum or poisonous metals are almost never used. Rings made by either spouse rank highest; and as a result become so precious to the couple that any material becomes acceptable, even if practically unwearable.
Styles, patterns, fashions
The plain gold band is the most popular pattern. Medical personnel commonly wear it because it can be kept very clean. Woman usually wear narrow bands, while men wear broader bands.
In France and French-speaking countries, a common pattern consists of three interleaved rings. They stand for "faith, hope and love", where love equates to that particular type of perfect love indicated by the ancient Greek word agape. Provocatively, this pattern slides off quickly, because the rings flow over each other.
A traditional Irish wedding ring, the Claddagh ring, has become popular in the United States and Australia as well, thanks to Irish immigration to those countries.
Men in Greek, Italian and Anatolian cultures sometimes receive and wear puzzle rings -- sets of interlocking metal bands that one must arrange just so in order to form a single ring. Women wryly give them as a test for their mens' chastity. Even when the man masters the puzzle, he still cannot remove and replace the ring quickly!
In North America, many married women wear two rings on the same finger: an engagement ring and a plain wedding band. Couples often purchase such rings as a pair of bands designed to fit together.
Quote
"With this ring I thee wed." -- from the traditional Church of England marriage-ceremony formula.
Dubai gold refiner looking for West African mined gold suppliers
One of Dubai's two gold refiners is actively seeking new supplies in West Africa as it builds a new trading team to help it become a “mini bullion bank”
Author: Jonathan Leff
Posted: Monday , 29 Sep 2008
KYOTO, JAPAN (Reuters) -
Al Ghurair Giga Gold, one of two major refiners in the fast-growing Dubai gold market, has begun building a trading team to help it become a "mini-bullion bank" as soon as next year, a top executive said on Sunday.
The refinery, launched in 2004 as a venture between the prominent Al Ghurair family and Pakistan conglomerate Giga Group, is also embarking on a search for mined gold supply in West Africa, balancing out its heavy reliance on recycled gold in Dubai, General Manager Corey Keller told Reuters.
Al Ghurair Giga has already started putting together its trading team internally and hopes to be offering brokerage services by the end of next year, he said.
"We're building a mini-bullion bank within our facility," Keller, who joined the company in January, said on the sidelines of the London Bullion Market Association's annual conference. "We want to generate more income beyond pure refining."
He declined to say how big he expected the trading team to be or when it might be fully in place, but said he expected the group to be a viable competitor to the major global players who currently dominate large-scale spot trade in Dubai.
Global gold trading giants including ScotiaMocatta, the precious metals trading arm of Canada's Bank of Nova Scotia, Britain's HSBC Holdings and South Africa's Standard Bank are already active in the Gulf.
Keller said Al Ghurair Giga Gold, which operates as part of the Dubai Metals and Commodities Centre (DMCC), had no intention of seeking seats on any of the major global gold exchanges or trading in London for now, but saw plenty of scope to grow in a region that has a rich history in the bullion trade.
Dubai has in recent years joined the club of major gold trading centres such as London, New York and Hong Kong thanks to proximity to the world's biggest gold consumer, India, and an aggressive drive to become a regional commodities hub.
It has the highest concentration of jewellery shops in the world, generating trade worth $35 billion last year -- around one-fifth of global jewellery trade.
Entering into the trading sphere will allow Al Ghurair Giga Gold to connect local medium-tier merchants to the global market, and would help drive profits beyond low-margin pure refining.
Processing rates at Al Ghurair Giga Gold leapt this year as surging prices encouraged scrap owners to sell physical supply, giving the refinery ample affordable feedstock.
After running about 15 tonnes in the first quarter and 28 tonnes year to date, Keller said they could hit 50 tonnes by the end of the year if prices accelerated.
After a major upgrade in November-December, the plant will have a capacity of some 1.8 tonnes a day, he said.
"Whether we can fill it up or not is something else."
To help offset the volatile flow of scrap gold supplies, Keller's next focus is trying to develop a regular source of mined gold, with West Africa at the top of the list.
"Mali is the next logical step," he said.
Apart from Emirates Gold, two more refineries are being built in Dubai, one by the gold and jewellery maker ARY Traders and the second by Al Gairth. Both are due to come on stream in 2009.
© Reuters 2008. All Rights Reserved.
Refinery NameContact NameTelephone NumberEmail AddressRemarks
Al Ghaith Gold DMCCMohamad Hassan El Zubair (04) 341 9662 (04) 341 9662ghaith_g@emirates.net.aeExpected to shift operations to DMCC area in second quarter 2010
Al Ghurair Giga Gold DMCCCorey Keller (04) 390 4040 (04) 390 4040Corey.Keller@al-ghurair.comDGD status for gold. Operationl since June 2004
Emirates Gold DMCCHilda LimMohamad ShakarchiSameer Kharsa (04) 367 9030 (04) 367 9030uaegold@emirates.net.aeDGD status for gold and silver. Operational since November 2004
INDUSTRY ORGANIZATIONS
INDUSTRY ORGANIZATIONS
AGS - American Gem Society
The American Gem Society was established in 1934 with the vision of creating an association dedicated to setting and maintaining the highest possible standards of business ethics and professionalism in the jewelry industry.
www.ags.org
AGTA - American Gem Trade Association
The American Gem Trade Association (AGTA) is an association of North American trade professionals dedicated to promoting the long term stability and integrity of the natural colored gemstone, pearl, and cultured pearl industry.
www.agta.org
BJA - British Jewellers` Association
The BJA is the voice of the manufacturing jewellery industry in the UK. It has provided strong leadership for the industry for over 100 years and today, perhaps more than ever before, is involved in taking those decisions, which will shape the industry`s future.
www.bja.org.uk
Borsa Diamanti d`Italia
Founded in 1926, the objective of Borsa Diamanti d`Italia is to foster and promote the interests and development of the diamond, precious stone and related jewellery industries in Italy.
www.borsadiamantiditalia.it
BVGD - Belgium Polished Diamond Dealers Association
The Belgian Polished Diamond Dealers Association, represents the interests of the Belgian dealers, exporters and importers of polished diamonds. The BVGD is the sole professional organization recognized by the government to speak on behalf of the polished diamond dealers. Our By-Laws are reviewed by the Council of State.
www.bvgd.be
CIBJO - The World Jewellery Confederation
CIBJO is an international confederation of national jewellery trade organizations. CIBJO`s purpose is to encourage harmonisation, promote international cooperation in the jewellery industry, and to consider issues which concern the trade worldwide.
www.cibjo.org
CJA - Canadian Jewellers Association
Our history begins in Toronto, November 15, 1884 with the formation of the Jewellers Security Alliance of Canada, the forerunner Canadian Jewellers Association. Its purpose was to help jewellers strengthen their security measure generally discourage jewellery store thefts.
www.canadianjewellers.com
DDC - Diamond Dealer`s Club of New York
The DDC is the largest, oldest and most respected diamond bourse, known throughout the world for its safe, secure environment for business transaction as well as a neutral location where buyers feel comfortable doing business on their terms.
www.nyddc.com
DDE - Dubai Diamond Exchange
The Dubai Diamond Exchange (DDE) is the first diamond bourse within the Arab region, serving a broader region of growing trade flows beyond the Middle East. The Exchange facilitates the trade of rough and polished diamonds in and through the region.
www.dde.ae
DFHK - Diamond Federation of Hong Kong
The Diamond Federation of Hong Kong, China, is the joined force of two well known diamond associations in Hong Kong, namely, the Diamond Importers Association and the Hong Kong Diamond Bourse.
www.diamondfederationhk.com
AGS - American Gem Society
The American Gem Society was established in 1934 with the vision of creating an association dedicated to setting and maintaining the highest possible standards of business ethics and professionalism in the jewelry industry.
www.ags.org
AGTA - American Gem Trade Association
The American Gem Trade Association (AGTA) is an association of North American trade professionals dedicated to promoting the long term stability and integrity of the natural colored gemstone, pearl, and cultured pearl industry.
www.agta.org
BJA - British Jewellers` Association
The BJA is the voice of the manufacturing jewellery industry in the UK. It has provided strong leadership for the industry for over 100 years and today, perhaps more than ever before, is involved in taking those decisions, which will shape the industry`s future.
www.bja.org.uk
Borsa Diamanti d`Italia
Founded in 1926, the objective of Borsa Diamanti d`Italia is to foster and promote the interests and development of the diamond, precious stone and related jewellery industries in Italy.
www.borsadiamantiditalia.it
BVGD - Belgium Polished Diamond Dealers Association
The Belgian Polished Diamond Dealers Association, represents the interests of the Belgian dealers, exporters and importers of polished diamonds. The BVGD is the sole professional organization recognized by the government to speak on behalf of the polished diamond dealers. Our By-Laws are reviewed by the Council of State.
www.bvgd.be
CIBJO - The World Jewellery Confederation
CIBJO is an international confederation of national jewellery trade organizations. CIBJO`s purpose is to encourage harmonisation, promote international cooperation in the jewellery industry, and to consider issues which concern the trade worldwide.
www.cibjo.org
CJA - Canadian Jewellers Association
Our history begins in Toronto, November 15, 1884 with the formation of the Jewellers Security Alliance of Canada, the forerunner Canadian Jewellers Association. Its purpose was to help jewellers strengthen their security measure generally discourage jewellery store thefts.
www.canadianjewellers.com
DDC - Diamond Dealer`s Club of New York
The DDC is the largest, oldest and most respected diamond bourse, known throughout the world for its safe, secure environment for business transaction as well as a neutral location where buyers feel comfortable doing business on their terms.
www.nyddc.com
DDE - Dubai Diamond Exchange
The Dubai Diamond Exchange (DDE) is the first diamond bourse within the Arab region, serving a broader region of growing trade flows beyond the Middle East. The Exchange facilitates the trade of rough and polished diamonds in and through the region.
www.dde.ae
DFHK - Diamond Federation of Hong Kong
The Diamond Federation of Hong Kong, China, is the joined force of two well known diamond associations in Hong Kong, namely, the Diamond Importers Association and the Hong Kong Diamond Bourse.
www.diamondfederationhk.com
DMMC
Gold Bars Worldwide www.goldbarsworldwide.com
Dubai Trade www.dubaitrade.ae
Dubai Chamber of Commerce & Industry www.dcci.gov.ae
Dubai Customs www.dxbcustoms.gov.ae
Dubai Ports Authority www.dpa.co.ae
Jafza International www.jafza-intl.com
Jebel Ali Free Zone www.jafza.co.ae
Department of Economic Development www.dubaided.gov.ae
Dubai Government Portal www.dubai.ae
Central Bank of the UAE www.cbuae.gov.ae
Al Ameen www.alameen.ae
Jumeirah Lakes Towers www.jlt.ae
Diamonds & Coloured Stones:Kimberley Process www.kimberleyprocess.com
World Diamond Council www.worlddiamondcouncil.com
World Federation of Diamond Bourses www.worldfed.com
Gemological Institute of America (GIA) www.gia.edu
Polishedprices.com www.polishedprices.com
Diamond Facts www.diamondfacts.org
Gold & Precious Metals:Gold Fields Mineral Services (GFMS) www.gfms.co.uk
London Bullion Market Association www.lbma.org.uk
The Bulliondesk.com www.thebulliondesk.com
World Gold Council www.gold.org
Gold & Jewellery Group www.dubaicityofgold.com
Commodities:Dubai Gold & Commodities Exchange - DGCX www.dgcx.ae
London Metal Exchange www.lme.co.uk
International Tea Committee www.inttea.com
Energy:International Energy Agency www.iea.org
Energy Information Administration www.eia.doe.gov
Organization of the Petroleum exporting countries www.opec.org
Friday, October 30, 2009
business evaluation
Step 1: Idea Evaluation
Overview
How do you determine if a business idea is really worth the effort necessary to turn it into a business?
The answer to this question is highly dependent on the level of fundamental knowledge about the business and the ability to turn that knowledge into a profitable business venture.
It is critical to do an early and accurate self-assessment of the business climate for the idea and available resources. This early analysis is an important step in building confidence and knowledge of the business and will be critical in securing business partners, financing and even customers.
Spend time considering the questions in this section which will help to evaluate the level of preparedness for taking an idea beyond the conceptual stage. Taking the time to build a strong understanding of the business at this stage provides some of the most affordable risk-management. Detailed feasibility and market studies will come later; this process is designed to evaluate basic enterprise knowledge.
After reviewing the list of questions in the following activity, you will be asked to determine the amount of time it will take to research and become comfortable with the concepts. You will also need to make an estimate of the cost, if any, associated with finding the answers to the topics covered in these questions.
When you are ready to start the activities for this section, click on the button below
Step 1: Idea Evaluation
Evaluation
There are four main areas you need to consider when evaluating your idea. (Score yourself on each question from 1-5)
Business Experience:
Are necessary business skills and experience present to take this idea to the market? 12345
Is necessary capital identified and readily available if the enterprise starts? 12345
Competition:
Is there currently another business(s) using your concept? If so: Why is your idea better or different? 12345
Customer Base:
Can a potential customer base be clearly identified? 12345
How will the business capture customers who are presently patronizing established competitors? 12345
What are the recent consumer trends in this area? 12345
Market Potential:
Is market potential large enough to be profitable? 12345
Is there a niche market that is not being satisfied? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 1: Idea Evaluation
Summary & Conclusion
If you have areas in the above analysis that rank less than a four consider seeking out additional information before proceeding. Consider subscribing to trade publications, joining related associations or attending trade shows to build knowledge of the business you’re entering.
In the world of business and marketing, if your idea looks like it is going to be anything less than an ideal opportunity for you, be willing to let go of it. Invest your dollars, ingenuity, and effort where you can realize the greatest returns.
Step 2: Organization
Overview
One of the most important decisions entrepreneurs make is how to legally set up their businesses. The choice can be a wise move or a costly mistake with regard to taxes paid, protection from liability, and the amount of resultant flexibility in running the operation.
The form of organization selected depends on the following factors:
ORGANIZATION FACTORS
Capital structure
Tax considerations
Management method
Number of people associated in the venture
Kind of business or operation
Cost and formality of the organization
Ability and/or desire of owners to isolate personal assets from claims of the business' creditors
Perpetuation of the business
The initial choice of a business form, even if it achieves optimum results in the start-up phase, may require adjustment or alteration as the business matures. It is important to periodically re-examine the appropriateness of the type selected.
Basic types of business structure
SOLE PROPRIETORSHIP
This is the easiest and least costly way of starting a business. A sole proprietorship can be formed by finding a location and opening the door for business. There are likely to be fees to obtain business name registration, certificate and other necessary licenses. Attorney's fees for starting the business will be less than the other business forms because less preparation of documents is required and the owner has absolute authority over all business decisions.
COOPERATIVE
A cooperative business belongs to the people who use it. The member/owners use the cooperative as a source for the goods and services they need. Member/owners share in the control of their cooperative, meet at regular intervals, review detailed reports, and elect directors from among themselves. The directors in turn hire management to oversee the day-to-day affairs of the cooperative in a way that serves the members' interests.
Over the last twenty years, "New Generation" cooperatives have evolved to provide more specialized services than those typically offered by traditional cooperative models. Although still member/owner organizations, the structures of value added cooperatives differ from those of traditional cooperatives in several ways:
LIMITED LIABILITY COMPANY
Limited Liability Companies (LLCs) are a hybrid form of entity that combines some characteristics of a corporation with other characteristics of a partnership. The LLC offers limited liability for all of its members and the option of centralized management (which the LLC may choose not to adopt). The LLC also offers partnership tax status with flexibility in handling varied contributions and types of capital. The LLC requires a tailored agreement that spells out all details, whereas corporations may often be formed with standardized documents.
GENERAL PARTNERSHIP
A general partnership can be formed simply by an oral agreement between two or more persons, but a legal partnership agreement drawn up by an attorney is highly recommended. Legal fees for drawing up a partnership agreement are higher than those for a sole proprietorship, but may be lower than incorporating. A partnership agreement could be helpful in solving any disputes. However, partners are responsible for the other partner's business actions, as well as their own.
Step 2: Organization
Overview (continued)
LIMITED PARTNERSHIP
Limited Partnerships are much the same as Limited Liability Companies, but must include one partner (the general partner) having unlimited liability for the debts of the partnership. Special rules govern whether a corporate general partner is carrying enough risk to qualify the entity as a partnership versus a corporation for tax purposes.
LIMITED LIABILITY PARTNERSHIP
Limited Liability Partnerships (LLPs) are general partnerships that have chosen LLP status. Partners of an LLP have unlimited liability for their own actions but limited liability for the actions of their partners. LLP status may work for businesses that have typically been conducted as general partnerships and whose partners now wish to limit their potential liability for each others' actions. Special rules govern the LLP election by partnership of licensed professionals.
CORPORATION
Think of a corporation as legally separate from its shareholders. This is the most important feature distinguishing it from a partnership or proprietorship. It is definitely best to seek legal counsel when setting up a corporation.
This type of business is usually the most costly to form, especially if organizational problems are complex. People usually incorporate to limit personal liability for the debts and liabilities of the business. However, with many new businesses this limit of personal liability applies only to judgments brought against the company for negligence, defective products or frivolous suits.
In fact, the owner(s) of a new business will usually remain liable for the repayment of loans and other debts because most major creditors, especially lenders, will try to limit their risks by requiring owners to pledge their personal assets as security for a debt. In some cases, an officer or employee of a corporation may also be personally liable for failure to withhold taxes.
A corporation is a separate legal entity and a more structured form of business. It can continue to function even without the existence of original ownership or other key individuals. It also has advantages in terms of enabling employees to participate in various types of insurance and profit sharing. A corporation has more flexibility in terms of different approaches to taxation.
"S" CORPORATION
The "S" corporation provides the benefits of incorporation while also eliminating federal corporate income tax by passing the tax liability directly to the stockholders. The IRS allows all profits to pass through to the shareholders personal tax returns. "S" status is available to small companies with up to 35 individual shareholders. "S" corporations can only issue one class of stock, no corporate shareholders are allowed, and all shareholders must be U.S. citizens or taxpayers.
"C" CORPORATION
If a corporation does not qualify for "S" corporation status to be taxed as a small business, then it must be treated as a "C" corporation. The decision to be a "C" corporation is one of default - a corporation is automatically a "C" corporation unless it obtains approval from the Internal Revenue Service to be taxed under a different provision. If the corporation will offer its stock to the public via a stock exchange, for example, it would not qualify as an "S" corporation. Limited Liability Companies are not part of this discussion because they are taxed as partnerships and enjoy pass-thorough taxation similar to "S" corporations but without the restrictions, including the number and qualification of shareholders
Step 2: Organization
Evaluation
Answer each question on a scale of 1-5 based on the level of confidence that each factor has been considered in selecting the appropriate business structure.
Has capital availability and financial risks been identified? 12345
Have tax consideration been considered as part of the business structure? 12345
What business management system and structure best serves the business? 12345
What is the cost of establishing the business structure? 12345
Does the business structure provide adequate risk management and protection? 12345
Will the business structure allow for an easy exit strategy? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 3: Feasibility
Overview
How does a Feasibility study differ from a business plan? The separate roles of the feasibility study and the business plan are frequently misunderstood. Although various components are common to both the feasibility study and the business plan, not all of the information developed in the feasibility study will be incorporated into the business plan and vice versa.
FEASIBILITY STUDYBUSINESS PLAN
The feasibility study is conducted during the deliberation phase of the project development cycle - prior to completing the business plan.
A feasibility study is an analytical tool typically prepared by someone not directly associated with the project.
A thorough feasibility effort includes several scenarios for the decision-makers in determining the practicality and profitability of a proposed project idea.
The feasibility study is only applicable for project development
The business plan reflects the intended responses to the critical issues identified in the feasibility study.
The business plan is generally created internally by the main parties involved in the business.
The business plan elaborates on the most promising scenario. By the time the business plan is created, focus has been set on the most opportune concept.
The business plan is a blueprint for project management
Step 3: Feasibility
Evaluation
A feasibility study can be divided into two major phases: (Score yourself on each question from 1-5)
1. Analysis of Directly Influencing Factors
Market Determination - Determines the potential market for the proposed product.
Markets – Determined potential market for the proposed product? 12345
Market entry – Determined method and cost of introducing the product to consumers? 12345
Raw Product Supply - Determines economic availability of sufficient raw product.
Determined the amount of raw product supply available and the amount needed for 12345
Determined the risk factors that may effect raw product supply and developed solutions? 12345
Production Process - Determines facility needs, capital and financing requirements, potential costs and returns. 12345
Facility needs – Determined specific facilities (buildings, equipment and rolling stock) required? 12345
Investment capital needs – Determined initial investment requirements for facilities? 12345
Labor needs – Determined specific quantity and types of labor required? 12345
Cost of operation – Developed the cost budget to include costs of labor and management, raw material and operational and fixed components? 12345
Profitability – Determined potential profit by estimating returns and comparing with cost budgets. Also includes break-even analysis and preparation of projected income statement, balance sheet and cash flow statement? 12345
2. Analysis of Environmental Concerns
Availability of site - Determine adequacy of site in physical, ecological and economic terms? 12345
Availability of services - Determine adequacy and cost of required services such as utilities, financial services and educational services? 12345
Governmental structure - Determine type of governmental policies in area as they affect operations, such as assessment policies, taxes and zoning ordinances? 12345
Availability of transport facilities - Determine adequacy and cost of transportation facilities to be used by the firms? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 3: Feasibility
Summary & Conclusions
What if the feasibility study indicates the idea may not work?
Feasibility studies do not become suddenly negative or positive. Instead, as research accumulates, the scales will gradually begin to tip one way or another. Often times, a failing scenario can be readily altered to restore a favorable balance. For instance, a concept that shows an inability to service intended debt loads might be made favorable if the owners provide more private capital and therefore avoid the costs of interest on borrowed monies. Costs of labor can be reduced by increased volunteerism, lack of market access might be solved by increasing the trade area, and so forth.
The best advice may be to work through problem scenarios completely before trying to force your project ahead. There is an old saying in the business world that goes something like, "The easiest way to avoid a bad situation in business is to avoid getting into it in the first place." Any producer who has ever been stuck axle-deep in a mudhole has found themselves wishing they would have heeded the signs that the ground was probably too wet to safely travel on. Avoiding a problem is virtually always easier than curing one after-the-fact. If the feasibility study says your idea will not be profitable - be wise and beware.
Where do I go for technical assistance for Feasibility Studies?
Where is there help?
There is an abundance of available business assistance. As you begin your search for people and agencies that can help you with the feasibility stage, begin by looking locally, then regionally, followed by searching for state and federal forms of assistance. Looking for help in this manner provides a logical process that tends to ensure you are absolutely getting all of the help that is out there for you. Finally, starting at home puts you in stride with the way many assistance programs are structured. Federal assistance is sometimes contingent on state participation; state participation sometimes requires regional and local support, etc.
The Agricultural Marketing Resource Center web site has information from each state that will help find resources for financing.
http://www.agmrc.org/agmrc/directories/
Step 4: Planning
Overview
Why do I need a business plan?
There are several very good reasons to prepare a business plan. The primary one is to enhance the opportunity for success. Other reasons include:
WHY PLAN?
A well-assembled business plan provides a roadmap for business leadership.
A good plan will help business management stay on track while negotiating changes in directly influencing factors and environmental conditions.
The business plan assists financing. Whether you are a small business start-up, or an established concern, banks and other financial institutions want to see that you know where you are, where you are going and how you are going to get there.
The plan will show how much money is needed, when it will be needed, and how to get it; in other words, the business plans shows how to finance your operation.
A well-defined business plan facilitates thorough consideration of all aspects of the type of business that is being started.
Business plans raise the questions that need answers in order to achieve business success.
It establishes a system of checks and balances that will reduce business management errors.
A business plan establishes benchmarks that help to keep a business under control.
Planning helps develop the competitive spirit management must have to always be prepared and ready to operate.
The exercise of completing a business plan protects against oversight as it promotes careful consideration of the entire business process.
An excellent business plan will cause a thorough analysis and understanding of competitors.
Business plans facilitate a process that tends to eliminate emotion in reaching "LAUNCH", "HOLD", or "CANCEL" business decisions
Step 4: Planning
Evaluation
What are the parts of a good business plan? (each question will be scored 1-5)
No two business plans will look exactly alike, although all business plans tend to share certain common elements. A business plan usually is divided into four distinct sections plus supporting documents:
Description of the Business
A detailed description has been written that contains information about the products, markets and/or services of the business and the company’s location? 12345
Description of the Marketing Plan
Has the customers likes, dislikes and expectations for the product been determined? 12345
Has a marketing strategy been developed to fill the customer’s needs? 12345
Description of the Management Plan
Does management have the ability to manage employees, finances and make decisions? 12345
Financial Management Plan
Do key people have a strong understanding of accounting and financial principals? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 4: Planning
Summary & Conclusions
Business plans should be written by the principals involved in the new venture because they are the ones with the vision of what the company should look like. A business plan requires information be gathered from many different areas of knowledge and experience. It is rare for any one person to possess all the skills necessary to create a well written and complete business plan. It is very important for the key planners to realize their skill limits. When necessary hire skilled people with the necessary experience.
Where do I go for assistance in writing a Business Plan?
The Agricultural Marketing Resource Center web site has information from each state that will help find resources for writing business plans.
The Agricultural Marketing Resource Center web site has information from each state that will help find resources for writing business plans
Step 5: Capital
Overview
What are some key considerations regarding financing?
The search for financing is similar to any other aspect of your business in that it takes time and effort to research the sources right for you. Examine your needs, plan how the funding will be utilized, and study what is available. The ability to secure sufficient funds to start and grow your business depends strongly on your preparation and demonstrated capacity to manage those funds efficiently and effectively.
Sufficient and ready capital is essential.
While poor management is cited most frequently as the catalyst for business failures, inadequate or ill-timed financing is a close second. It is simply not enough to have sufficient financing. You need to have the knowledge and planning ability to manage it well. That means avoiding such common mistakes as securing the wrong type of financing, overestimating or underestimating the amount required or the cost of borrowing money, and then finding it difficult to repay
Step 5: Capital
Evaluation
Before inquiring about financing, answer the following questions: (each question will be scored 1-5)
Is the management team knowledgeable about the sources of equity and borrowed capital? 12345
Are the uses for capital well defined and correctly timed? 12345
Do the uses for capital mesh with the business plan? 12345
Will future profits be able to timely pay lenders or dividends to stockholders? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 5: Capital
Summary & Conclusion
How do the sources of financing differ? Not All Money Is The Same
There are two types of financing: equity and debt financing. When looking for financing to meet your needs, it is important to consider your company's debt-to-equity ration - the measurement between dollars you've borrowed and dollars you have injected into the business. The more money owners invest in their business, the easier it is to attract financing.
If your firm has a high proportion of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt- to-equity, experts advise that you increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged to the point of jeopardizing your company's survival.
Equity Financing
Most small or growth-stage businesses use equity financing in a limited way. As with debt financing, most of the time additional equity comes from non-professional investors such as friends, relatives, employees, customers or industry colleagues. However, the most common source of professional equity funding is that group of investors known as venture capitalists.
Venture capitalists are institutional risk takers and may be groups of wealthy individuals, government-assisted sources or major financial institutions. Most specialize in one or a few closely related industries. While public perception of venture capitalists may be of deep-pocketed financial gurus looking for "that hot new business" in which to invest their money, in reality they most often prefer three-to-five-year old companies that offer the potential to become major regional or national concerns and return higher-than-average profits to their shareholders.
Venture capitalists may scrutinize thousands of potential investments annually, while investing ultimately in only a handful. The possibility of a public stock offering is critical to venture capitalists. Quality management, a competitive or innovative advantage, and growth of the industry are also major concerns.
Venture capitalists differ in their approach to management of the business in which they invest. They generally prefer to passively influence a business, but will react when a business does not perform as expected and may insist on changes in management or strategies.
Relinquishing some of the decision making and some of the potential for profits comprise the major downside to equity financing. If venture capital financing still seems like the ideal source of funding for your business, you may contact these investors directly, although they are known to make most of their investments through referrals.
Debt Financing
There are many potential sources for debt financing. Banks, savings and loans, commercial finance companies and the U.S. Small Business Administration (SBA) and U.S. Department of Agriculture Rural Development are among the traditional sources. Over the last decade, the growing recognition of the contributions small firms make to the economy has stimulated the development of an increasing array of programs offered by state and local governments.
There is another important source for financing frequently overlooked by small business owners and prospective entrepreneurs. Family members, friends, and former associates are a potential financing source, especially where the capital requirements are smaller.
Traditionally, banks have been the major source of small business funding. Their principal role has been as a short-term lender offering demand loans, seasonal lines of credit and single purpose loans for machinery and equipment. Banks generally have been reluctant to offer long-term loans to small firms.
The USDA or SBA guaranteed lending program provides banks (and non-bank lenders) with the incentive to make long-term loans to small firms by reducing their risk and leveraging the funds they have available.
Whether pursuing a loan from a traditional lender or a government lender, prospective borrowers should be equipped with a business plan, profit and loss statements, tax returns for the last three years and a current balance sheet, and should be able to articulate the need for the loan and demonstrate the ability for repayment. Evidence of strong management is another plus. These requirements will vary if one business is a start-up compared to an existing business. Established businesses are expected to provide one-third of the equity injection, while the requirement for start-ups could be 50 percent or more.
In addition to the equity injection, lenders commonly require the borrower's personal guarantees to protect the lender in case of default. This ensures that the borrower has a sufficient personal interest at stake to give paramount attention to the business. For most borrowers this is a scary, but inherently necessary disposition.
Step 6: Marketing
Overview
Marketing is a “first, last, and always” consideration. Before production starts, make sure a market has been established. A fact that too many businesses discover too late, is that the world will not necessarily beat a path to their door just because they offer a better mousetrap. Although the product may be the best on the market, a good marketing program is essential for a business venture to realize its fullest potential. It may be necessary to do some test marketing or hire the services of a professional marketing organization.
Fundamentals of a good marketing strategy
The best marketing strategy will yield whatever level of sales it takes to make a business profitable. Identifying the fundamentals of the best strategy for any business venture calls for merging a thorough understanding of the needs of the potential buyers with a clear picture of the capabilities of the new business.
Five characteristics of the process managed within the Marketing Plan
Identification - Methods should be established to constantly scan the marketplace for areas of threat or opportunity. An up-to-date marketing plan should afford a head start on opportunity and an ability to handle threats prior to reaching crisis stage.
Analysis - Marketing priorities are set based on potential and customer demands. The ranking of priorities can be established by asking six questions:
How quickly will the marketing opportunity/threat develop?
How will it impact our products and operations?
How likely is it that it will come to be of major importance?
How would our investors expect us to act in relation to this marketing opportunity/threat?
What is our ability to react to this opportunity/threat?
What are the costs of not reacting to it?
Obviously, those opportunities/threats with the greatest bottom-line impact need to be addressed within the overall marketing plan as quickly as possible.
Strategy - The third step in the marketing process, developing strategy, is typically a committee exercise that includes top management, production, finance, and any other areas affected by the opportunity/threat.
Action - Marketing activities are a synchronized and integrated response to the nature of the marketplace. A marketing campaign constantly coordinates all available business capabilities. Some marketing activities might be short-lived while others might carry on over a longer period.
Evaluation - Evaluation is considered by some to be the final step of the process. Others argue that constant evaluation is the process. The point is: regular evaluation of the marketing plan is vital to making sure the marketing process being carried out is helping the business achieve its maximum potential
Step 6: Marketing
Evaluation
Score yourself from 1 to 5 on each question.
Have target markets been identified, prioritized and quantified? 12345
How much of the budget will be spent on market? 12345
Have the main competitors, and their strengths and weakness been identified? 12345
Have patents, branding or special labeling been examined? 12345
Has pricing been set based on market research and cost of production? 12345
What benefits does the customer receive by using this product? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 6: Marketing
Summary & Overview
Other Considerations
Marketing is an unending process that continues throughout the life of a business. As a primary component of the business plan, the marketing plan needs to be continually reviewed to ensure every opportunity is being capitalized on. Even though production may be contractually committed at a set rate for periods of time, the marketing process is committed only to constantly seeking greater opportunities for business growth and expansion
Step 7: Production
Overview
First, keep in mind that no two businesses are going to share precisely the same concerns. The following discussion is meant to be general in nature.
As an overall concern, managing per unit cost of production will likely be the greatest challenge. Managing cost means gaining a total understanding of each and every fixed and variable expense to manufacture or offer the product or service.
The second greatest challenge is often identifying where assistance is needed and then finding and hiring that help, whether it is in the form of consultants or laborers, for instance.
There are many reasons for starting a business but if making money isn’t the most important reason, it is a safe assumption that it won’t (make money, that is). One of the ways to help manage production costs and to manage for success is by implementing business strategies like those included in most business Quality Management Systems.
Those principles are as follows:
Customer Focus: Clearly understand what the customer wants and what is important to them.
Leadership: Management needs to be actively involved and understand all aspects of the business.
Engaged Employees: All people involved in the business clearly understand the goals of the business
Process Approach: Each stage of the business is linked and managed as a process.
Systems approach to management: Each stage of the business is managed to maximize efficiency.
Continual Improvement: The business has a goal of continually improving – both quality and efficiency.
Factual decision making: Records are carefully kept and evaluated to make logical business decisions.
Strong business relationships: The business builds strong relationships with suppliers and buyers to strengthen both businesses
Step 7: Production
Evaluation
Answer each question on a scale of 1-5 based on your level of completion.
Has an organizational flow chart been developed showing accountability for all employees. 12345
Have training programs, employee benefits packages, employment guidelines and schedules been developed. 12345
Has an employment pool for labor and services been identified? 12345
Are company goals, quality policies and expectations developed for employees? 12345
Is a system in place to monitor and communicate with customers? 12345
Management is committed to the business, employees and customers? 12345
Appropriate recordkeeping and evaluation systems are identified? 12345
A list of service providers and suppliers has been established and evaluated? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Results
Gantt Chart
A gantt chart is a way to organize your tasks. Each slider represents a task. Drag them to the left and right to put them in the order you want to complete each task. Then do each task in the order you've chosen here.
Idea
Organization
Feasibility
Planning
Capital
Marketing
Production
Overview
How do you determine if a business idea is really worth the effort necessary to turn it into a business?
The answer to this question is highly dependent on the level of fundamental knowledge about the business and the ability to turn that knowledge into a profitable business venture.
It is critical to do an early and accurate self-assessment of the business climate for the idea and available resources. This early analysis is an important step in building confidence and knowledge of the business and will be critical in securing business partners, financing and even customers.
Spend time considering the questions in this section which will help to evaluate the level of preparedness for taking an idea beyond the conceptual stage. Taking the time to build a strong understanding of the business at this stage provides some of the most affordable risk-management. Detailed feasibility and market studies will come later; this process is designed to evaluate basic enterprise knowledge.
After reviewing the list of questions in the following activity, you will be asked to determine the amount of time it will take to research and become comfortable with the concepts. You will also need to make an estimate of the cost, if any, associated with finding the answers to the topics covered in these questions.
When you are ready to start the activities for this section, click on the button below
Step 1: Idea Evaluation
Evaluation
There are four main areas you need to consider when evaluating your idea. (Score yourself on each question from 1-5)
Business Experience:
Are necessary business skills and experience present to take this idea to the market? 12345
Is necessary capital identified and readily available if the enterprise starts? 12345
Competition:
Is there currently another business(s) using your concept? If so: Why is your idea better or different? 12345
Customer Base:
Can a potential customer base be clearly identified? 12345
How will the business capture customers who are presently patronizing established competitors? 12345
What are the recent consumer trends in this area? 12345
Market Potential:
Is market potential large enough to be profitable? 12345
Is there a niche market that is not being satisfied? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 1: Idea Evaluation
Summary & Conclusion
If you have areas in the above analysis that rank less than a four consider seeking out additional information before proceeding. Consider subscribing to trade publications, joining related associations or attending trade shows to build knowledge of the business you’re entering.
In the world of business and marketing, if your idea looks like it is going to be anything less than an ideal opportunity for you, be willing to let go of it. Invest your dollars, ingenuity, and effort where you can realize the greatest returns.
Step 2: Organization
Overview
One of the most important decisions entrepreneurs make is how to legally set up their businesses. The choice can be a wise move or a costly mistake with regard to taxes paid, protection from liability, and the amount of resultant flexibility in running the operation.
The form of organization selected depends on the following factors:
ORGANIZATION FACTORS
Capital structure
Tax considerations
Management method
Number of people associated in the venture
Kind of business or operation
Cost and formality of the organization
Ability and/or desire of owners to isolate personal assets from claims of the business' creditors
Perpetuation of the business
The initial choice of a business form, even if it achieves optimum results in the start-up phase, may require adjustment or alteration as the business matures. It is important to periodically re-examine the appropriateness of the type selected.
Basic types of business structure
SOLE PROPRIETORSHIP
This is the easiest and least costly way of starting a business. A sole proprietorship can be formed by finding a location and opening the door for business. There are likely to be fees to obtain business name registration, certificate and other necessary licenses. Attorney's fees for starting the business will be less than the other business forms because less preparation of documents is required and the owner has absolute authority over all business decisions.
COOPERATIVE
A cooperative business belongs to the people who use it. The member/owners use the cooperative as a source for the goods and services they need. Member/owners share in the control of their cooperative, meet at regular intervals, review detailed reports, and elect directors from among themselves. The directors in turn hire management to oversee the day-to-day affairs of the cooperative in a way that serves the members' interests.
Over the last twenty years, "New Generation" cooperatives have evolved to provide more specialized services than those typically offered by traditional cooperative models. Although still member/owner organizations, the structures of value added cooperatives differ from those of traditional cooperatives in several ways:
LIMITED LIABILITY COMPANY
Limited Liability Companies (LLCs) are a hybrid form of entity that combines some characteristics of a corporation with other characteristics of a partnership. The LLC offers limited liability for all of its members and the option of centralized management (which the LLC may choose not to adopt). The LLC also offers partnership tax status with flexibility in handling varied contributions and types of capital. The LLC requires a tailored agreement that spells out all details, whereas corporations may often be formed with standardized documents.
GENERAL PARTNERSHIP
A general partnership can be formed simply by an oral agreement between two or more persons, but a legal partnership agreement drawn up by an attorney is highly recommended. Legal fees for drawing up a partnership agreement are higher than those for a sole proprietorship, but may be lower than incorporating. A partnership agreement could be helpful in solving any disputes. However, partners are responsible for the other partner's business actions, as well as their own.
Step 2: Organization
Overview (continued)
LIMITED PARTNERSHIP
Limited Partnerships are much the same as Limited Liability Companies, but must include one partner (the general partner) having unlimited liability for the debts of the partnership. Special rules govern whether a corporate general partner is carrying enough risk to qualify the entity as a partnership versus a corporation for tax purposes.
LIMITED LIABILITY PARTNERSHIP
Limited Liability Partnerships (LLPs) are general partnerships that have chosen LLP status. Partners of an LLP have unlimited liability for their own actions but limited liability for the actions of their partners. LLP status may work for businesses that have typically been conducted as general partnerships and whose partners now wish to limit their potential liability for each others' actions. Special rules govern the LLP election by partnership of licensed professionals.
CORPORATION
Think of a corporation as legally separate from its shareholders. This is the most important feature distinguishing it from a partnership or proprietorship. It is definitely best to seek legal counsel when setting up a corporation.
This type of business is usually the most costly to form, especially if organizational problems are complex. People usually incorporate to limit personal liability for the debts and liabilities of the business. However, with many new businesses this limit of personal liability applies only to judgments brought against the company for negligence, defective products or frivolous suits.
In fact, the owner(s) of a new business will usually remain liable for the repayment of loans and other debts because most major creditors, especially lenders, will try to limit their risks by requiring owners to pledge their personal assets as security for a debt. In some cases, an officer or employee of a corporation may also be personally liable for failure to withhold taxes.
A corporation is a separate legal entity and a more structured form of business. It can continue to function even without the existence of original ownership or other key individuals. It also has advantages in terms of enabling employees to participate in various types of insurance and profit sharing. A corporation has more flexibility in terms of different approaches to taxation.
"S" CORPORATION
The "S" corporation provides the benefits of incorporation while also eliminating federal corporate income tax by passing the tax liability directly to the stockholders. The IRS allows all profits to pass through to the shareholders personal tax returns. "S" status is available to small companies with up to 35 individual shareholders. "S" corporations can only issue one class of stock, no corporate shareholders are allowed, and all shareholders must be U.S. citizens or taxpayers.
"C" CORPORATION
If a corporation does not qualify for "S" corporation status to be taxed as a small business, then it must be treated as a "C" corporation. The decision to be a "C" corporation is one of default - a corporation is automatically a "C" corporation unless it obtains approval from the Internal Revenue Service to be taxed under a different provision. If the corporation will offer its stock to the public via a stock exchange, for example, it would not qualify as an "S" corporation. Limited Liability Companies are not part of this discussion because they are taxed as partnerships and enjoy pass-thorough taxation similar to "S" corporations but without the restrictions, including the number and qualification of shareholders
Step 2: Organization
Evaluation
Answer each question on a scale of 1-5 based on the level of confidence that each factor has been considered in selecting the appropriate business structure.
Has capital availability and financial risks been identified? 12345
Have tax consideration been considered as part of the business structure? 12345
What business management system and structure best serves the business? 12345
What is the cost of establishing the business structure? 12345
Does the business structure provide adequate risk management and protection? 12345
Will the business structure allow for an easy exit strategy? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 3: Feasibility
Overview
How does a Feasibility study differ from a business plan? The separate roles of the feasibility study and the business plan are frequently misunderstood. Although various components are common to both the feasibility study and the business plan, not all of the information developed in the feasibility study will be incorporated into the business plan and vice versa.
FEASIBILITY STUDYBUSINESS PLAN
The feasibility study is conducted during the deliberation phase of the project development cycle - prior to completing the business plan.
A feasibility study is an analytical tool typically prepared by someone not directly associated with the project.
A thorough feasibility effort includes several scenarios for the decision-makers in determining the practicality and profitability of a proposed project idea.
The feasibility study is only applicable for project development
The business plan reflects the intended responses to the critical issues identified in the feasibility study.
The business plan is generally created internally by the main parties involved in the business.
The business plan elaborates on the most promising scenario. By the time the business plan is created, focus has been set on the most opportune concept.
The business plan is a blueprint for project management
Step 3: Feasibility
Evaluation
A feasibility study can be divided into two major phases: (Score yourself on each question from 1-5)
1. Analysis of Directly Influencing Factors
Market Determination - Determines the potential market for the proposed product.
Markets – Determined potential market for the proposed product? 12345
Market entry – Determined method and cost of introducing the product to consumers? 12345
Raw Product Supply - Determines economic availability of sufficient raw product.
Determined the amount of raw product supply available and the amount needed for 12345
Determined the risk factors that may effect raw product supply and developed solutions? 12345
Production Process - Determines facility needs, capital and financing requirements, potential costs and returns. 12345
Facility needs – Determined specific facilities (buildings, equipment and rolling stock) required? 12345
Investment capital needs – Determined initial investment requirements for facilities? 12345
Labor needs – Determined specific quantity and types of labor required? 12345
Cost of operation – Developed the cost budget to include costs of labor and management, raw material and operational and fixed components? 12345
Profitability – Determined potential profit by estimating returns and comparing with cost budgets. Also includes break-even analysis and preparation of projected income statement, balance sheet and cash flow statement? 12345
2. Analysis of Environmental Concerns
Availability of site - Determine adequacy of site in physical, ecological and economic terms? 12345
Availability of services - Determine adequacy and cost of required services such as utilities, financial services and educational services? 12345
Governmental structure - Determine type of governmental policies in area as they affect operations, such as assessment policies, taxes and zoning ordinances? 12345
Availability of transport facilities - Determine adequacy and cost of transportation facilities to be used by the firms? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 3: Feasibility
Summary & Conclusions
What if the feasibility study indicates the idea may not work?
Feasibility studies do not become suddenly negative or positive. Instead, as research accumulates, the scales will gradually begin to tip one way or another. Often times, a failing scenario can be readily altered to restore a favorable balance. For instance, a concept that shows an inability to service intended debt loads might be made favorable if the owners provide more private capital and therefore avoid the costs of interest on borrowed monies. Costs of labor can be reduced by increased volunteerism, lack of market access might be solved by increasing the trade area, and so forth.
The best advice may be to work through problem scenarios completely before trying to force your project ahead. There is an old saying in the business world that goes something like, "The easiest way to avoid a bad situation in business is to avoid getting into it in the first place." Any producer who has ever been stuck axle-deep in a mudhole has found themselves wishing they would have heeded the signs that the ground was probably too wet to safely travel on. Avoiding a problem is virtually always easier than curing one after-the-fact. If the feasibility study says your idea will not be profitable - be wise and beware.
Where do I go for technical assistance for Feasibility Studies?
Where is there help?
There is an abundance of available business assistance. As you begin your search for people and agencies that can help you with the feasibility stage, begin by looking locally, then regionally, followed by searching for state and federal forms of assistance. Looking for help in this manner provides a logical process that tends to ensure you are absolutely getting all of the help that is out there for you. Finally, starting at home puts you in stride with the way many assistance programs are structured. Federal assistance is sometimes contingent on state participation; state participation sometimes requires regional and local support, etc.
The Agricultural Marketing Resource Center web site has information from each state that will help find resources for financing.
http://www.agmrc.org/agmrc/directories/
Step 4: Planning
Overview
Why do I need a business plan?
There are several very good reasons to prepare a business plan. The primary one is to enhance the opportunity for success. Other reasons include:
WHY PLAN?
A well-assembled business plan provides a roadmap for business leadership.
A good plan will help business management stay on track while negotiating changes in directly influencing factors and environmental conditions.
The business plan assists financing. Whether you are a small business start-up, or an established concern, banks and other financial institutions want to see that you know where you are, where you are going and how you are going to get there.
The plan will show how much money is needed, when it will be needed, and how to get it; in other words, the business plans shows how to finance your operation.
A well-defined business plan facilitates thorough consideration of all aspects of the type of business that is being started.
Business plans raise the questions that need answers in order to achieve business success.
It establishes a system of checks and balances that will reduce business management errors.
A business plan establishes benchmarks that help to keep a business under control.
Planning helps develop the competitive spirit management must have to always be prepared and ready to operate.
The exercise of completing a business plan protects against oversight as it promotes careful consideration of the entire business process.
An excellent business plan will cause a thorough analysis and understanding of competitors.
Business plans facilitate a process that tends to eliminate emotion in reaching "LAUNCH", "HOLD", or "CANCEL" business decisions
Step 4: Planning
Evaluation
What are the parts of a good business plan? (each question will be scored 1-5)
No two business plans will look exactly alike, although all business plans tend to share certain common elements. A business plan usually is divided into four distinct sections plus supporting documents:
Description of the Business
A detailed description has been written that contains information about the products, markets and/or services of the business and the company’s location? 12345
Description of the Marketing Plan
Has the customers likes, dislikes and expectations for the product been determined? 12345
Has a marketing strategy been developed to fill the customer’s needs? 12345
Description of the Management Plan
Does management have the ability to manage employees, finances and make decisions? 12345
Financial Management Plan
Do key people have a strong understanding of accounting and financial principals? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 4: Planning
Summary & Conclusions
Business plans should be written by the principals involved in the new venture because they are the ones with the vision of what the company should look like. A business plan requires information be gathered from many different areas of knowledge and experience. It is rare for any one person to possess all the skills necessary to create a well written and complete business plan. It is very important for the key planners to realize their skill limits. When necessary hire skilled people with the necessary experience.
Where do I go for assistance in writing a Business Plan?
The Agricultural Marketing Resource Center web site has information from each state that will help find resources for writing business plans.
The Agricultural Marketing Resource Center web site has information from each state that will help find resources for writing business plans
Step 5: Capital
Overview
What are some key considerations regarding financing?
The search for financing is similar to any other aspect of your business in that it takes time and effort to research the sources right for you. Examine your needs, plan how the funding will be utilized, and study what is available. The ability to secure sufficient funds to start and grow your business depends strongly on your preparation and demonstrated capacity to manage those funds efficiently and effectively.
Sufficient and ready capital is essential.
While poor management is cited most frequently as the catalyst for business failures, inadequate or ill-timed financing is a close second. It is simply not enough to have sufficient financing. You need to have the knowledge and planning ability to manage it well. That means avoiding such common mistakes as securing the wrong type of financing, overestimating or underestimating the amount required or the cost of borrowing money, and then finding it difficult to repay
Step 5: Capital
Evaluation
Before inquiring about financing, answer the following questions: (each question will be scored 1-5)
Is the management team knowledgeable about the sources of equity and borrowed capital? 12345
Are the uses for capital well defined and correctly timed? 12345
Do the uses for capital mesh with the business plan? 12345
Will future profits be able to timely pay lenders or dividends to stockholders? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 5: Capital
Summary & Conclusion
How do the sources of financing differ? Not All Money Is The Same
There are two types of financing: equity and debt financing. When looking for financing to meet your needs, it is important to consider your company's debt-to-equity ration - the measurement between dollars you've borrowed and dollars you have injected into the business. The more money owners invest in their business, the easier it is to attract financing.
If your firm has a high proportion of equity to debt, you should probably seek debt financing. However, if your company has a high proportion of debt- to-equity, experts advise that you increase your ownership capital (equity investment) for additional funds. That way you won't be over-leveraged to the point of jeopardizing your company's survival.
Equity Financing
Most small or growth-stage businesses use equity financing in a limited way. As with debt financing, most of the time additional equity comes from non-professional investors such as friends, relatives, employees, customers or industry colleagues. However, the most common source of professional equity funding is that group of investors known as venture capitalists.
Venture capitalists are institutional risk takers and may be groups of wealthy individuals, government-assisted sources or major financial institutions. Most specialize in one or a few closely related industries. While public perception of venture capitalists may be of deep-pocketed financial gurus looking for "that hot new business" in which to invest their money, in reality they most often prefer three-to-five-year old companies that offer the potential to become major regional or national concerns and return higher-than-average profits to their shareholders.
Venture capitalists may scrutinize thousands of potential investments annually, while investing ultimately in only a handful. The possibility of a public stock offering is critical to venture capitalists. Quality management, a competitive or innovative advantage, and growth of the industry are also major concerns.
Venture capitalists differ in their approach to management of the business in which they invest. They generally prefer to passively influence a business, but will react when a business does not perform as expected and may insist on changes in management or strategies.
Relinquishing some of the decision making and some of the potential for profits comprise the major downside to equity financing. If venture capital financing still seems like the ideal source of funding for your business, you may contact these investors directly, although they are known to make most of their investments through referrals.
Debt Financing
There are many potential sources for debt financing. Banks, savings and loans, commercial finance companies and the U.S. Small Business Administration (SBA) and U.S. Department of Agriculture Rural Development are among the traditional sources. Over the last decade, the growing recognition of the contributions small firms make to the economy has stimulated the development of an increasing array of programs offered by state and local governments.
There is another important source for financing frequently overlooked by small business owners and prospective entrepreneurs. Family members, friends, and former associates are a potential financing source, especially where the capital requirements are smaller.
Traditionally, banks have been the major source of small business funding. Their principal role has been as a short-term lender offering demand loans, seasonal lines of credit and single purpose loans for machinery and equipment. Banks generally have been reluctant to offer long-term loans to small firms.
The USDA or SBA guaranteed lending program provides banks (and non-bank lenders) with the incentive to make long-term loans to small firms by reducing their risk and leveraging the funds they have available.
Whether pursuing a loan from a traditional lender or a government lender, prospective borrowers should be equipped with a business plan, profit and loss statements, tax returns for the last three years and a current balance sheet, and should be able to articulate the need for the loan and demonstrate the ability for repayment. Evidence of strong management is another plus. These requirements will vary if one business is a start-up compared to an existing business. Established businesses are expected to provide one-third of the equity injection, while the requirement for start-ups could be 50 percent or more.
In addition to the equity injection, lenders commonly require the borrower's personal guarantees to protect the lender in case of default. This ensures that the borrower has a sufficient personal interest at stake to give paramount attention to the business. For most borrowers this is a scary, but inherently necessary disposition.
Step 6: Marketing
Overview
Marketing is a “first, last, and always” consideration. Before production starts, make sure a market has been established. A fact that too many businesses discover too late, is that the world will not necessarily beat a path to their door just because they offer a better mousetrap. Although the product may be the best on the market, a good marketing program is essential for a business venture to realize its fullest potential. It may be necessary to do some test marketing or hire the services of a professional marketing organization.
Fundamentals of a good marketing strategy
The best marketing strategy will yield whatever level of sales it takes to make a business profitable. Identifying the fundamentals of the best strategy for any business venture calls for merging a thorough understanding of the needs of the potential buyers with a clear picture of the capabilities of the new business.
Five characteristics of the process managed within the Marketing Plan
Identification - Methods should be established to constantly scan the marketplace for areas of threat or opportunity. An up-to-date marketing plan should afford a head start on opportunity and an ability to handle threats prior to reaching crisis stage.
Analysis - Marketing priorities are set based on potential and customer demands. The ranking of priorities can be established by asking six questions:
How quickly will the marketing opportunity/threat develop?
How will it impact our products and operations?
How likely is it that it will come to be of major importance?
How would our investors expect us to act in relation to this marketing opportunity/threat?
What is our ability to react to this opportunity/threat?
What are the costs of not reacting to it?
Obviously, those opportunities/threats with the greatest bottom-line impact need to be addressed within the overall marketing plan as quickly as possible.
Strategy - The third step in the marketing process, developing strategy, is typically a committee exercise that includes top management, production, finance, and any other areas affected by the opportunity/threat.
Action - Marketing activities are a synchronized and integrated response to the nature of the marketplace. A marketing campaign constantly coordinates all available business capabilities. Some marketing activities might be short-lived while others might carry on over a longer period.
Evaluation - Evaluation is considered by some to be the final step of the process. Others argue that constant evaluation is the process. The point is: regular evaluation of the marketing plan is vital to making sure the marketing process being carried out is helping the business achieve its maximum potential
Step 6: Marketing
Evaluation
Score yourself from 1 to 5 on each question.
Have target markets been identified, prioritized and quantified? 12345
How much of the budget will be spent on market? 12345
Have the main competitors, and their strengths and weakness been identified? 12345
Have patents, branding or special labeling been examined? 12345
Has pricing been set based on market research and cost of production? 12345
What benefits does the customer receive by using this product? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Step 6: Marketing
Summary & Overview
Other Considerations
Marketing is an unending process that continues throughout the life of a business. As a primary component of the business plan, the marketing plan needs to be continually reviewed to ensure every opportunity is being capitalized on. Even though production may be contractually committed at a set rate for periods of time, the marketing process is committed only to constantly seeking greater opportunities for business growth and expansion
Step 7: Production
Overview
First, keep in mind that no two businesses are going to share precisely the same concerns. The following discussion is meant to be general in nature.
As an overall concern, managing per unit cost of production will likely be the greatest challenge. Managing cost means gaining a total understanding of each and every fixed and variable expense to manufacture or offer the product or service.
The second greatest challenge is often identifying where assistance is needed and then finding and hiring that help, whether it is in the form of consultants or laborers, for instance.
There are many reasons for starting a business but if making money isn’t the most important reason, it is a safe assumption that it won’t (make money, that is). One of the ways to help manage production costs and to manage for success is by implementing business strategies like those included in most business Quality Management Systems.
Those principles are as follows:
Customer Focus: Clearly understand what the customer wants and what is important to them.
Leadership: Management needs to be actively involved and understand all aspects of the business.
Engaged Employees: All people involved in the business clearly understand the goals of the business
Process Approach: Each stage of the business is linked and managed as a process.
Systems approach to management: Each stage of the business is managed to maximize efficiency.
Continual Improvement: The business has a goal of continually improving – both quality and efficiency.
Factual decision making: Records are carefully kept and evaluated to make logical business decisions.
Strong business relationships: The business builds strong relationships with suppliers and buyers to strengthen both businesses
Step 7: Production
Evaluation
Answer each question on a scale of 1-5 based on your level of completion.
Has an organizational flow chart been developed showing accountability for all employees. 12345
Have training programs, employee benefits packages, employment guidelines and schedules been developed. 12345
Has an employment pool for labor and services been identified? 12345
Are company goals, quality policies and expectations developed for employees? 12345
Is a system in place to monitor and communicate with customers? 12345
Management is committed to the business, employees and customers? 12345
Appropriate recordkeeping and evaluation systems are identified? 12345
A list of service providers and suppliers has been established and evaluated? 12345
Activity:
Estimated time needed to improve response level to the questions above. Days
Estimated budget needed to increase understanding of the questions above. Dollars
Results
Gantt Chart
A gantt chart is a way to organize your tasks. Each slider represents a task. Drag them to the left and right to put them in the order you want to complete each task. Then do each task in the order you've chosen here.
Idea
Organization
Feasibility
Planning
Capital
Marketing
Production
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