Family Money: Japan and the Dollar

By Leslie Wright

Many investors are confused by what they hear and read about Japan, and specifically, what is likely to happen this year to the Japanese stock market.

One commentator says money is pouring back into Asia and the Nikkei is going to rise strongly, and the next day another says there’s no real strength to sustain the tentative recovery we saw last year.

Who do you believe? And anyway, does it matter?

Well, it matters a lot. Because Japan is the second largest stock market in the world in terms of capitalisation, what happens there will inevitably have an effect on the rest of the world’s economy - just as events in the United States do. And sooner or later these effects will filter down to you and me here in Pattaya.

Last week and the week before, I offered my views on what I believe may happen in various markets during this year. But since in the case of Japan this opinion differs from that of many mainstream analysts, some readers have asked me to explain my rationale for holding that view.

Burnt hedges

Huge losses were suffered last year by hedge funds in their futile attempt to sell the U.S. dollar against the Japanese yen.

Most took this stance based upon the narrow interpretation of the trade numbers, citing that the U.S. trade deficit with Japan was on the rise. It makes some sense to expect that a rising trade deficit means that the U.S. is sending more dollars to Japan and therefore they in turn will be selling more dollars.

However, global trade is less than 10% of GDP and trade itself is less than 13% of the entire U.S. GDP.

In other words, trying to forecast the fate of the dollar based solely upon trade statistics is not merely dangerous to one’s financial survival, it also illustrates one’s ignorance of the facts at hand.

It was this fundamentalist (and erroneous) view that led to losses on the part of the hedge funds in excess of $2 billion in the first half of 1999 - and they seem set on course to take another serious loss in the months ahead, along with the equity funds that have been rushing into Japan and Asia.

Balancing the accounts

The world has changed considerably since 1971 and the birth of the floating exchange rate system. The old fundamentalist theories must simply be thrown out the window. Not only are they dangerous, they often reflect what in fact is the opposite reality.

The two main accounts that all governments keep are known as the “current” and “capital” accounts. These two accounts balance so that when one moves into a deficit, the other moves into an equal surplus.

Many people wrongly refer to the “current” account as the “trade” account. This perhaps was a definition of pre-1971 global trends, but it certainly does not fit our modern economic situation.

The current account includes not merely trade but also all transfer payments, which includes dividends and interest.

Prior to 1971, 90% of global capital flows were trade related, and investment tended to remain very much at home.

In the post-1971 period, the fluctuations in currency values (which are inherent within a floating exchange rate system) have created the appearance of profit and loss when converted back to the base currency.

For example, in 1985 a major U.S. insurance company purchased a British insurance company when the pound was worth only $1.03. By 1987, the pound had recovered, rising to $1.90.

This fluctuation in the dollar/pound exchange rate resulted in a paper profit of 84% on their investment when the assets were shown on their books in dollars. However, the pound then fell back to $1.40, which produced a 26% loss on the very same assets. (And this same confusing profit/loss scenario equally applies to individuals’ investments denominated in currencies other than their base currency.)

Currency fluctuations nowadays can be as much as 40% over a two-year period, and have a significant impact upon all government statistics - including trade. What may appear to be a trade surplus is often a trade deficit.

In the case of Japan, if you subtract the rise in the value of the yen you will see that Japan is actually selling fewer goods - not more. Japanese manufacturers will quickly tell you that sales have declined, not risen. If Japan were enjoying a real rise in their trade exports, then why is the economy still in recession and unemployment rising?

In addition to the distortion that currency movements has added to the current account we also have the issue of globalisation within the investment community.

If we look at the current account closely, it becomes clear that the bulk of this statistic is transfer payments. In other words, accumulated buying of U.S. bonds produces an interest income that is then paid to the Japanese through the current account.

Because of this factor, a current account deficit no longer means what it once did prior to 1971.

Today, as foreign capital continues to pour into the United States to capture the huge interest rate differential (nearly twice that of Europe and ten times that of Japan), the greater the deficit becomes in the current account as the U.S. pays out more in interest.

The investment is reflected through the capital account (purchase of bonds, stocks, real estate, etc.), while the income on those investments then moves back through the current account.

Thus as more capital flows into the U.S., the dollar strengthens; but this inflow also tends to expand the current account deficit. Those who rush out to short the dollar simply because the current account deficit is rising fail to understand how these two accounts work under a floating exchange rate system.

Some analysts believe the dollar is poised to rise to at least 200 yen by 2003 due to the fact that the Japanese economy is not recovering. The extremely low levels of interest rates that have been the core policy of the Japanese government are in fact undermining the entire economy.

Japanese banks, pensions in trouble

While low interest rates were hoped to be the answer to the Japanese banking crisis, after more than five years of such a policy, the long-term damage to pension funds, life companies and the Postal Savings System are becoming incalculable.

The extremely low interest rate policy has now taken the banking crisis and spread it into virtually every sector within Japan. There is little hope for recovery when consumers live in fear of both their jobs and pensions.

All savings and pension funds need a base income of about 4% in order to meet future obligations. The primary concern in Japan now is that the pension funds are insolvent. Consumer confidence is starting to hit all-time lows in Japan and there is no hope in sight for the short-term.

Currently, Japan still represents 40% of total world cash savings. There has been no banking panic up till now because the government has stated that they will guarantee all deposits in Japan 100%.

However, the Japanese government announced last year that by April 1st 2001 all deposits in Japan would be insured only for the equivalent of $100,000. This move has already caused considerable alarm, so the Japanese government recently announced it plans to shelve this move, at least for the time being. (Sounds reminiscent of politically-motivated moving of goalposts somewhat closer to home, doesn’t it?)

However, if and when that plan does come into effect big-name Japanese corporations and high-net-worth private citizens will start pulling their cash out of the banks, to limit their risk.

In other words, the sizeable deposits in Japanese banks that once made them the largest institutions in the world will be forced into a consolidation phase. This may well start a banking panic in Japan, which will have a ripple effect throughout the world.

U.S. seen as safe haven

In order for Japan to recover, the dollar must strengthen - not weaken! A weak dollar raises the cost of production in Japan while a strong dollar lowers the cost structure in Japan, allowing corporate profits to rise. The market traders that have been rushing to buy Japanese stocks are doing so because they are looking at the currency as if it were a stock.

A strong economy is normally associated with a weak currency, while a strong currency produces deflation. The U.S. economy is strong, but corporate profits are starting to weaken due to the strong currency. While analysts expect the dollar to rise into 2003, the U.S. economy is likely to decline gradually and corporate profits will sink along with that trend.

The strong dollar in this case is a reflection that the balance of the world - Asia and Europe - are both in economic downward spirals.

This has resulted in the U.S. becoming the safe haven for capital for several years past, and it is this capital inflow that is pushing the dollar - and the stock market - higher. Ultimately, the upward pressure on the dollar is the mechanism that may finally cause a recession to be imported into the United States.

Political cross holdings

Many equity investors in Europe are not involved in the U.S. market. Value-seeking fundamentalists bypassed the U.S., opting since 1994 to invest in the Euro, Russia and Southeast Asia - and many got their fingers badly burned in the past couple of years by so doing. They missed the entire U.S. move and are not about to buy now.

Instead, they are rushing back to Asia and Japan looking for value. But just as their “value” interpretation of Russia failed, their bias against the U.S. is perhaps leading them once again to another huge loss in Asia and Japan.

About 40% of the Japanese market is held in what is known as “political cross holdings” of shares. Following World War II, the industrial corporations of Japan were unable to raise needed capital on their own. The Japanese banks were in a position to raise capital and they lent it to the corporations. In turn, cross-ownership of stocks between the banks and the corporations became the hallmark of the Japanese marketplace.

Today, this is seen as a major weakness because it has impacted the banks’ balance sheets on a market-to-market basis. The more the Nikkei declined, the more the banks lost and hence the less they lent, setting off a spiral of collapsing economic activity.

The government has been forced to set up loan programs for small businesses because they are unable to borrow from the banks. The stated policies amongst Japanese banks and corporations indicate they have resigned themselves to unwinding these cross-share holdings, which means that there is an overhead supply of shares that need to be sold. Hence the likelihood of a sustainable bull market emerging at this time is not very good.

Add to this the fact that analysts’ models reflect that a true recovery in Japan will not materialise for about another two years and the long-term trend is neutral at best. Even the IMF concluded last year that recovery in Japan is nearly two years away, while a former board member of the Federal Reserve has stated that the yen/dollar exchange rate should be at about 140 based upon current economic conditions.

No Asian recovery just yet

When the facts are looked at objectively, the optimistic analysis that has been used by the trading community as the reason to sell dollars against the yen doesn’t make sense, and it threatens any recovery by causing a further collapse in Japanese corporate earnings.

In turn this only increases unemployment and dampens any hope of recovery. In short, there is no indication of a real sustainable recovery in Japan or Asia, only short-term rallies driven more by speculative sentiment than fundamental economic principles. And reaction rallies within a broader bear market are always commonplace.

Last but not least, some analysts expect China to devalue the yuan no later than the end of this quarter - despite the Chinese leadership having stated several times that they won’t do so. This would have a serious impact both directly and indirectly, not only on the whole of Southeast Asia in terms of export competitiveness, but on Japan and in turn the rest of the world.

So in the end, a dollar rally into 2003 may keep the U.S. share market alive while it helps repair the damage in Japan and the third world by increasing their domestic profits. But a weaker dollar will undermine the entire world economy and threaten the U.S. bull market like no other event possible.

Leslie Wright is Managing Director of Westminster Portfolio Services (Thailand) Ltd., a firm of independent financial advisors providing advice to expatriate residents of the Eastern Seaboard on personal financial planning and international investments. If you have any comments or queries on this article, or about other topics concerning investment matters, contact Leslie directly by fax on (038) 232522 or e-mail [email protected]. Further details and back articles can be accessed on his firm’s website on www.westminsterthailand.com.

Editor’s note: Leslie sometimes receives e-mails to which he is unable to respond due to the sender’s automatic return address being incorrect. If you have sent him an e-mail to which you have not received a reply, this may be why. To ensure his prompt response to your enquiry, please include your complete return e-mail address, or a contact phone/fax number.

The Computer Doctor

by Richard Bunch

From Richard Lee Montgomery: In your reply to Simon Smith, Muang, http://www.pattayamail.com/336/columns.htm#hd2 you said go to http://thaigate.rd.nac sis.ac.jp/refer/thaiio.html for Thai Fonts. This site says its fonts are for Win3.x/95. Can they be downloaded and installed on a computer running Win98 (Western)? You also recommended going to Microsoft’s website. I for one am totally unable either to Navigate or to Explore Bill’s web; I get stuck on a wrong strand every time.

Thailand’s D.C. Embassy “What’s New” index http://www.thaiembdc.org/whatsnew/index.htm gives a shortcut to Internet Thai’s “How to Use Thai Fonts” http://www.inet.co.th/www/thai/thai_font.html which only gives instructions for Win98 Thai. INET then gives the same shortcut you did http://thaigate.rd.nacsis.ac.jp/refer/thaiio.html. The D.C. Embassy used to give a shortcut to Microsoft’s Thai Fonts page which I can’t find on my own, but that page explicitly stated it is not for Win98.

I went to your A.C.T. page http://www.act.co.th and clicked on your Get Internet Explorer 5.01 Now! shortcut and went to bed. Next morning, I installed IE5 and got a Welcome to Internet Explorer 5, Let’s Take a Tour, or words to that effect page; but did not have time to take that tour! Now I don’t know how to get that page back, do you?

This evening while viewing your pcdoctor column, I went to the IE5 toolbar, scrolled down from View to Encoding/More/Thai (Windows), and clicked. I also went to Tools, scrolled down to Internet Options/General/ Fonts, set for [Latin Based] Web [Times New Roman], Plain text [Courier New]; and for [Thai] Web [Cordia New], Plain text [-blank-].

Next, from Internet options General/Languages, I found both “English (United States)[en-us]” and “Thai>[th]” displayed in that window.

I checked http://www.ch7 .com for a Happy Thai New Year’s Greeting and to .../buddhism.htm for more Thai than I can handle right now as I only read at a 4th grade level, but at lest my computer seems able to read Thai on a page, although not on the placards that show when a page is ‘minimized.’

So, how do I get my computer to write Thai? I really don’t need an overlay, a keyboard map would do and I’d learn to touch-type.

Computer Doctor replies: To take your points one at a time as you appear to have been rather busy! The original site I quoted http://thaigate.rd.nacsis.ac.jp/refer/thaiio.html although saying for Win95 will quite happily run on Win98 and is by far the best solution for typing Thai I have come across. I recommend you take this route, you only need the small executable which is a TSR (Terminate and Stay Ready) program, the .DLL and DB fonts. A Thai/English keyboard will make the job of typing much easier.

I am sure Mr. Gates will be mortified that you find his website difficult to navigate, in any event I am glad you managed to download and install IE5. With regards to taking the tour, from within IE5, Tour is located on the Help menu.

With regards to reading Thai on web sites, you have followed the correct procedure, whether the language displays correctly though is to a certain extent governed by the web site itself, if this is note coded correctly then it will not display correctly on your system. It does seem that these sites are becoming fewer as web sites are revised. Notably, I find some of the government sites to be the worst offenders.

Send your questions or comments to the Pattaya Mail at 370/7-8 Pattaya Second Road, Pattaya City, 20260 or Fax to 038 427 596 or E-mail to [email protected]

Richard Bunch is Managing Director of Action Computer Technologies Co., Ltd.

Successfully Yours: Stéphane Bringer

by Mirin MacCartthy

Quietly smiling and almost shy, St้phane Bringer, the General Manager of the Woodlands Resort, is actually a very well-travelled young man.

Born in Rouen, France, he moved to Paris but later spent four years in Hong Kong with his family. Next it was off to Belgium where he finished school and university.

However, after two years in the cloistered halls, St้phane decided he was wasting his time studying science and the experience of summer jobs in hotels led him to change his career to hotelier.

He went to Switzerland for three years to study hotel management, and after his graduation in 1995 he applied to the Intercontinental Hotel chain for a management trainee programme. He was accepted and sent to the Siam Intercontinental in Bangkok. That was a concentrated year’s learning experience as he was rotated throughout every position in the hotel.

With that experience under his belt, the Intercontinental group then sent him to Cambodia to be part of the pre-opening team for their first five star hotel in Phnom Penh. St้phane recalls, “That was the most amazing experience I ever had. We had to start from the very beginning, for example the Cambodians didn’t even know what chips were. We had to teach them everything from service to food to cleaning, even personal hygiene. At that time I was twenty four and had a team of fifty people to manage. It was a very interesting experience!”

Then the Raffles Hotel Group invested $US40 million in the Grand Hotel D’Ankor in Cambodia and St้phane moved there with them. “My position there was exactly the same: pre-opening training, but this time it was even more of a challenge. There was nothing at all there, no supermarket, just a dirt road. Even the telecommunications wouldn’t work, so we were all using mobile phones. Every single thing for the hotel had to come by boat and then by buffalo cart.”

St้phane continued, “I stayed another year but after two years in Cambodia I had enough of that challenge. It was then I heard that the Woodlands Resort was looking for a manager and doing a renovation project and I knew I could bring my experience here.”

St้phane arrived at Woodlands in October 1998 and plans to stay at least another two years here. He likes the contrasts of Thailand. “You can see two very different ways of life beside each other, Western and Thai. There’s also some very rich and very poor people. And Pattaya is a very cosmopolitan city, there really is something here for everyone.”

In his rare, spare time off, St้phane enjoys the physical side of life, jogging and water-skiing. In Belgium, in fact, he used to run in marathons. He also participated in the Tour de Belgium marathon relay race, a four day stint.

However, his life now revolves mainly around his work. He starts every day at 6 a.m. and finishes at 9 p.m. “Every morning I am happy just to be going to work. If there ever were a day that I didn’t want to, then I would know there was a problem. As long as I am happy what I am doing then life is great. I think this is especially true in the hotel business - if you are happy then your staff are happy and your guests are happy also. At the end of the day, when I go home and I have had a wonderful day and I learnt a lot and am looking forward to the next day - then that is success.”

St้phane’s advice to other expats who want to follow a career of hotelier here in Thailand is: “Come here with a low profile and adapt yourself to the environment and what people need. I think the most important qualities to have are to be yourself and believe in what you are doing. Never underestimate others - you can always learn something from other people. Every day I am learning something.”

Young St้phane has obviously learned a lot with all his travelling. A very wise head on his youthful shoulders.

Snap Shots: School’s In!

Harry Flashman would like to thank all those keen photographers who contacted him during 1999 and expressed their interest in the weekly photography column. Thank you - it certainly gives a columnist the enthusiasm to carry on. Which leads Harry here on to the next stage - how many of you would be interested in a day’s “Hands On” photography class?

What is in mind, for the first course, would be a full day on portrait photography. After all, the most photographed subjects in the world are other human beings. The first half of the day would be devoted to the theory of lighting and photography, with the second half being practical application of the theories. I would expect to cover both artificial light sources, as well as ambient (sun) light. It would not be an expensive “high tech” course, but would utilise simple and inexpensive equipment (some of which you will make yourself) and learn some easily applied “pro” techniques.

Whilst there would undoubtedly be advantages for all photographers with all types of equipment, it would be necessary to limit a course of this type to SLR cameras. Much of the work would be using the camera in Manual mode and demonstrating the different effects that the photographer can produce. This includes deliberate over and under-exposure techniques, something you cannot easily do with a fully automatic point and shooter.

The pre-course level of photography knowledge required would not be, however, all that high. The idea of the exercise is to teach such things as Lens selection, Back lighting exposure techniques, Depth of Field, Selective focus, etc., as well as How to Pose the model and How to Light the model. All that really is a pre-requisite is that you have an SLR and you know where the various knobs and twiddly bits are. Bring your camera manual if you are at all unsure.

What Harry would provide would be a suitable venue where we could work both in and out of doors, a happy model, one who would sit there and not complain too much while we set up lights and diffusers, etc., as well as providing all the necessary know-how and lectures and throw in the processing of a couple of rolls of film for good measure.

What you would provide are yourselves as eager students, with an SLR and a couple of rolls of film. We would break for lunch as Harry gets irritable if he doesn’t eat. The concept would be that after all the lectures and then practical application we would finish the day with a critique of your final shots. (thank goodness for one hour processors!)

Now, how much for all this? Provided there are enough people who want this type of course (and it will be on a Sunday, too) it should be possible to do all this for around 1000 baht per head (which includes the D&P for your two rolls of film).

So just how many of you would like to do this next month? Let’s set the date as February 27th and the venue will be somewhere central in town. Please fax your expressions of interest to 427 596 or email [email protected]. Include your contact phone or fax number. If there are enough of you out there then we will do it.

Photoprocessing

My favourite photoprocessor girls are on the move again - The Royal Express on Beach Road (next to McDonalds) is moving to Second Road down near the “Made in Thailand” centre and the Golden Beach Hotel and next to an Internet cafe. I have had consistently good results from them - both in the processing and the sharpness of the prints, and their cheery faces brighten up any dull day. If you have found a good place for D&P then stick to them, but if you are not really satisfied and are looking, Harry can highly recommend this place. You never know, you could always bump into Harry as he flashes by in his trench coat!

Modern Medicine: GRRRRR - Rabies!

by Dr Iain Corness

The other night I managed to get bitten by a dog. This was unfortunately not a well cared for canis domesticus, but one not very well kempt street dog ordinaricus snarlicus aggressivus.

Not that I totally blame the dog. At the time of my meeting with it, it had just been bowled over by a baht bus and had fractured its pelvis and one of its hind legs. It was in no mood for human intervention, no matter how “well meaning” that intervention might have been.

Being just outside a bar in Jomtien helped, as immediate first aid was necessary. This took the form of a nip of whiskey poured over the bites and a beer poured down my throat to calm my insides. In the meantime, Mrs. Doc (also bitten) had mustered slave labour and said dog was now on a mat in the back of the car, to be taken to the vet’s if it survived the night. It did.

The vet was very helpful the next morning, confirming the injuries and adding that he also thought the dog had rabies. Rabies! Thank you very much, Dr. Vet. This is a lovely disease, which my good book told me is “invariably fatal once clinical symptoms develop, therefore prevention is of paramount importance.” Another reference source added the comforting news that the initial symptoms included pain at the site of the bite, proceeding to headache, fever, spreading paralysis with episodes of confusion, aggression, hallucinations and hydrophobia. I already had symptom number one and I wasn’t thirsty. A chill wind blew around me.

That morning I stood there before the mirror, foaming at the mouth while cleaning my teeth, and wondered if I should bite the boy at work as recompense for his terminal laziness.

Of course I had had all my rabies vaccinations. Had I thump. Like many things that doctors tell you, sometimes they are a tad too busy to follow the advice themselves. Guilty as charged, your honour!

I rang the vet again. “Can you test the dog for rabies please and let me know?” His reply was as cheerful as his initial news. “Any tests are inconclusive and even examination of the brain post mortem is not 100% certain.”

So it was off to hospital, with the attendant mutterings as to why I had not been vaccinated before, head hanging in shame and all the rest of it. Post exposure immunization schedule was of course necessary, and that is a course of five injections (after the initial dose, you get more at days 3, 7, 14 and 30).

The injections are not painful, it is the dragging backwards and forwards to the hospital Outpatient clinic that is a pain. But you do get to meet some lovely nurses.

Only one more to go and so far no frothing at the mouth, other than at toothbrush time, but the message is there for everyone. Get yourself vaccinated as a PRE-exposure preventive item. It does make sense. And while you are at it, how is your Tetanus, Polio, Hepatitis A and Hep B? Even if you have had the primary course, boosters are also necessary. See you at the Outpatient’s clinic!

Dear Hillary,

I must take exception to your response to Frances about driving in Pattaya (7 Jan). Almost all “educated” Thais I socialize and do business with are embarrassed by the poor drivers in Pattaya and the even poorer enforcement of the traffic laws. Your apparent “My Pen Rai” attitude in your response is part of the problem here. Seven years ago, the VP of the company I then worked for dismissed Thailand as quote, “Have you seen a Thai behind the wheel; they’re barbarians.” When a foreigner gets hurt on the streets of Pattaya, he goes home and tells his friends - possibly a million baht loss in tourist income. A foreigner gets killed and it makes the Western Papers - maybe a hundred million baht impact to Thailand.

As for “If you weren’t there in the first place the accident wouldn’t have happened” - if the Thai wasn’t acting like a two year old half-wit and showed some sense of social responsibility consistent with that of an emerging industrialized nation, the accident probably wouldn’t have happened either!

I, like most people, came to Pattaya for the climate and relaxation, not to be run down by some socially irresponsible idiot with a fourth world mentality. Overall, I enjoy living in Pattaya, but a more civilized attitude behind the wheel would go a long way to changing the backward, third world country image many westerners have of Thailand. In the future, I think that you should take this issue more seriously!

Most sincerely,
Mark

Dear Mark,

Did you honestly expect Hillary to change the driving standards here? Be real! Frances wanted to know “why”, not “how”. My Pen Rai is part of the “why” surely. However, Mark, there are people who do take this seriously - for example, the Jomtien-Pattaya Rotary Club and the Ge Laurent Foundation are sponsoring Driver Education in the schools - surely the best way to change the attitude of tomorrow’s drivers. Quite frankly, I do not think that your calling Thais “two year old half wits” or “socially irresponsible idiots” helps the problem much either. In the meantime, take a leaf out of Alan’s response and just walk everywhere, you’re safe 90% of the time on the footpaths.

Dear Hillary,

Reading the letter about traffic rules from ‘Francis’ in last Pattaya Mail reminds me of my first trip to Thailand, in 1990. I am a professional driver/rider having spent 15 years in the Sydney Highway Patrol, driving high-speed cars and motorcycles, and I thought I could handle anything, anywhere, until I arrived in Bangkok. What a lesson in life, the traffic terrified me, the taxi ride down to Pattaya was a nightmare. I kept my hands over my eyes and prayed to that great Motorcyclist in the sky to keep me safe. (You know the prayer you say when you get into one of those situations, “Please? If I get out of this one I will never speed again!”)

It was not until a couple of further experiences in the traffic that I realized a Great Truth, you grow up in the culture and conditions you are born into, and learn to cope with them. With great relief I found after a while, the perceived traffic chaos was in fact well ordered chaos. Most of the drivers and riders seemed to know what they were doing and appeared to avoid each other, most of the time. So I have now accepted, that in Thailand, the Thai drivers are much better at it than I am. As for the comment about the “Farang” always being in the wrong, it works both ways. I know that when an Asian driver is involved in a collision here in Auz they always cop the blame. I suppose it is easy to blame someone who doesn’t have a good command of the local language. I still don’t drive or ride in Pattaya. I am happy to pay the locals to do it for me, or walk (and that’s another story).

Alan

Dear Alan,

You got the picture! Hillary, too, has been known to utter that prayer on Sukhumvit Highway. Though the local traffic around Pattaya is a relative hay ride compared to Bangers you must admit.

GRAPEVINE

by Jan Olav Aamlid,
President House of the Golden Coin

It is not nice to disappoint people. But sometimes, in my profession I have to do it. Collectors and others come to my shop very excited about their coin collection and ask me to evaluate them. Unhappily I find a majority them to be fakes. Most holiday-makers today know that coins, antiques and other objects of fine arts offered on the streets or found in markets are counterfeits or nice imitations.

These venders are very professional in their operations. Some time ago a coin-collector came to see me. He was so eager to tell me that this time he had really hit the jackpot. He had been on vacation in Italy, and at a historical site the local guide hit a stone by accident. The collector was convinced he saw the guide picking up a handful coins appearing behind the stone. The guide looked surprised, studied the coins for a minute, put them in his pocket and continued with his duties as a guide.

The collector had seen from a distance that these had to be ancient coins. He knew from books that on this site some real numismatic treasures had been found. He approached the guide, and asked if he could have a look at what the guide just found behind the stone. He was shown the coins and recognized something he had seen in catalogues. The guide told him that in his many years as a guide, this was the first time he had seen such rarities. This afternoon he would see the curator at the museum. The guide hoped for a small reward. Anyway, according to the law, all coins found must to be handed over to the museum.

This coin is a decadrachm (ten drachma) of Syracuse in Sicily. The coin is from approx. 400B.C. and is struck in silver and the weight is about 40g. It is an unsigned work by the famous artist Euainetos. This coin is one of the masterpieces of the ancient world. On the obverse, it is a picture of a quadriga (four hours and a vessel) and the revers is a picture of the goddess Artemis-Arethusa with four dolphins around. This is a real coin and the value is about US$8,000.

The collector boasted about his collection back home, and asked if he could buy a couple of the coins. The guide gave him a lesson on morals and how he could not sell him the coins. But after reviewing the fact that he was a real collector, and the guide had a big family to support, an exception from the morals and law could be made. The coin-collector was allowed to pick out the two coins he liked the most. The deal had to be made in cash, so traveler’s checks were exchanged at a bank, and the guide paid.

After returning home, the coin-collector looked up the coins in auction-catalogues, and found that the coins had a value close to US$ 20,000. He wanted my help to put his great coins in an auction-sale to get the maximum out of his treasures.

Looking at his two coins for a moment, I had to disappoint him. The value of his two coins was worth no more than US$ 20 but that is to say if he could find someone wanting to have them. They would have made good testimonials of high-quality counterfeits in his collection. And the guide? Well, he is now placing some more coins under his lucky stone for the next tour group.

Copyright 1999 Pattaya Mail Publishing Co.Ltd.
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