A-Mark: wholesaler strikes gold with precious metals.

A - MARK Wholesaler strikes gold with precious metals 

Steven Markoff objects to the terms child prodigy and corporate genius - "those are fighting words," he laughed - yet he now controls a $1 billion- gross- per- year company which e founded at age 16.

His corporate child, Santa Monica-based A-Mark Precious Metals Inc., has grown into one of the largest wholesalers of precious metals since it was founded in 1965.

Markoff has seen a dramatic change in the public's attitude toward gold as an investment. "When I started, if a person bought a gold bar, the person whp bought it was considered illegal under the law. Today, if your portfolio doesn't include gold, you're considered silly," said Markoff, the company's chairman.

A-Mark's clients, however, are not primarily individuals. They are banks, brokerage houses, refiners, jewelers, investment advisers, coin dealers and government mints. "Everyone knows everyone else," he said of this most insular of industries.

Markoff said that change in the price of precious metals and in the economy - and political turmoil in general - are good for business. "This business is responsive to the volatility for gold. If there is peace and tranquility, it's bad for business. High anxiety leads to turnover he said.

Markoff laments the rising price of refining gold and that "peace and tranquility seem to have broken out worldwide" as two negative developments for his business.

The company buys and sells some of the world's most popular gold coins, including Canadian Maple Leafs, Australian Nuggets, U.S. Eagles, United Kingdom Brittanias, South African Krugerrands, Austrian Coronas and Gold Coins of Mexico.

The purity of these coins varies, ranging from the .9999 fine Canadian Maple Leaf and Australian Nugget to the .900 fine Mexican coins. The company also sells gold bullion, bars and wafers, including many under the Johnson Matthey and Credit Suisse names.

The precious metals market has changed since Markoff entered it over a quarter of a century ago. "Since I've gotten into it, it's gone from a cottage industry to a fairly established market with very large players," he said.

A-Mark was one of the first major dealing houses to supply gold coins and bars to mutual funds holding physical gold. The same services are extended to banks, brokerage houses and coin dealers.

In silver, the company offers coins including the American Silver Eagle, the Mexican Libertad and the Canadian Maple Leaf; bars, ingots and medallions ranging in size from 1-ounce pure silver coin to 1,000- ounce Good Delivery bars.

The medallions include a variety of hallmarks, including A-Mark's liberty Silver, and 100-ounce silver bars with the A-Mark, Engelhard and Johnson Matthey hallmarks.

Also available are U.S. silver coin bags containing 90 percent or 40 percent silver-clad or silver dollars with a face value of $1,000. The 90 percent bags are filled with Mercury and Roosevelt Dimes, Standing Liberty Quarters and Washington Quarters, Liberty Walking Half Dollars, Franklin Half Dollars and Kennedy Half Dollars minted before 1965. Each bag of coins contains about 715 ounces of fine silver.

The 40 percent silver bags contain circulated U.S. Kennedy Half Dollars minted between 1965 and 1969 and contain approximately 295 troy ounces of fine silver.

The dollar bags contain pre-1935 Peace Silver Dollars and pre-1921 Morgan Silver Dollars, with 765 troy ounces of fine silver in each bag. Various silver storage plans are also available.

In platinum, A-Mark markets most major coins, ranging in size from one-tenth of an ounce to 1 ounce and including the Australian Koala, the Canadian Maple Leaf and the Isle of Man Noble.

Platinum bars and plates include Johnson Matthey bars and Good Delivery 50-ounce platinum plates. A storage program similar to that of gold and silver is offered.

Part of A_Mark's success may stem from its support for its dealers. Dealers receive support in advertising, collateral materials, public relations and special promotions, which often feature sales contests and incentive programs.

The company also offers several customer service programs. Under a consignment program, customers are provided enough precious metal to maintain constant inventories at a significant savings vs. bank rates.

A-Mark's Vaulting program enables manufacturers to store a portion of their inventories with A-Mark as collateral and receive an equivalent amount of metal for their ongoing manufacturing needs for a fee. Participants in the company's Moneyline program can make purchases by company check.

For industries, the company provides poor metal, casting grain, kilo bars, and refining services and may agree to buy back the gold. Under the Deferred Delivery program, customers can warehouse inventory pending future delivery by making a down payment on metals and having A-Mark finance the balance at competitive rates. This allows customers to lock in a price and defer delivery for a period of time.

Markoff has devoted some of his time to reforming society. In 1987, he co-founded the Association of Media Accuracy, dedicated to pinpointing "the best pros and cons" on various societal issues.

The association sporadically publishes a 70-page booklet which is distributed free to opinion-makers throughout the state.

The booklet, which has dealt with issues such as use of nuclear power and the recall campaign against former California Supreme Court Justice Rose Bird, "separates the wheat from the chaff on social issues." said Markoff.