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Monex From coin shop to billion-dollar business. By Max Donner  California is the Golden State and Orange County, home to America's oldest and largest diversified services firm for gold investors, is preserving that heritage. Monex, a precious metals company, has been a pillar of the Newport Beach business community for the past three decades. Today, favorable market conditions are accelerating the company's growth while strong traditions of innovation and market leadership have earned it an AAA rating. Monex began in 1967 as a modest coin shop in nearby Long Beach, which founder and Chairman Louis Carabini acquired based on his own interest in coin collecting. Business boomed in the 1970s as inflation, wary investors sought a safe haven in gold and precious metals and the company relocated to Newport Beach. Over the past two years, many investors have been searching for alternatives to often disappointing returns in the stock and bond markets, and Monex is experiencing a second boom. Annual transaction volume now exceeds $1 billion dollars, and the Monex Group of companies collectively employs a team of 125 workers. While Monex has grown to become one of the largest companies in Orange County, it has kept many of the hallmarks of a small entrepreneurial company and used them to continue its expansion. "To be competitive, you want to foster the entrepreneurial spirit throughout the enterprise," says Director Micheal Carabini, who views Monex as a team of teams. At Monex, the atmosphere of an entrepreneurial company has combined with the stability of a family company. Monex employees are motivated every day by the role model of Chairman Louis Carabini, 74, who is the epitome of a dedicated business owner. The elder Carabini now looks to his son, Michael, to handle an increasing share of the responsibilities in his role as chief operating officer of companies in the Monex Group. "When you are a family organization you end up doing everything," says Michael Carabini, as he describes his career at Monex. He actually started behind the counter at the first coin shop. Now his elder daughter is following the family tradition at Monex in her first job. Michael Carabini credits the company's family atmosphere with giving employees a sense of belonging. He cites his personal assistant, Pat Caparelli, who has been with the company for 25 years. The Carabini family's commitment to sharing success among all the company's employees has encouraged this kind of team loyalty, which in turn has retained team expertise. A good team has built a strong foundation, but efficiency and product innovation have been essential for Monex to surpass its competition. Thirty years ago, Monex needed 11 offices and several hundred bookkeepers to handle and document precious metals sales and purchases. A state-of-the art private telecommunications network and computer automation of trading data have enabled the company to consolidate facilities at one location in Newport Beach. Likewise, Newport Beach-based account managers provide expertise and service to clients across America by phone. American investors in gold and precious metals often prefer Monex because of the company's innovative approach to the marketplace. The company was a leader in offering leveraged contracts for purchase of precious metals in the 1980s and has continued to roll out new programs tailored to the diverse needs of different kinds of investors. Customers can choose to have their precious metals purchases held for safekeeping or delivered to them personally. They can likewise choose from a range of currency in different denominations like the South African gold Krugerrand, Canadian Gold Maple Leaf or ten-ounce gold bullion bars. They even have the option of buying coins in fractional amounts for their accounts. By establishing Monex Credit Company, the Monex Group has been able to offer investors both choices for buying gold and for using their gold as collateral to make other purchases with a special account called the Atlas Account. Investor accounts support many of the alternatives individual customers look for. One is limit orders to buy precious metals at a set price different than the market price. There are also several programs that IRA account holders can use to diversify part of their retirement savings with gold holdings on a tax-deferred basis. Entrepreneurship and innovation have made Monex a billion dollar company, but that still puts it in the minor leagues in competition with retail investment powerhouses like Merrill Lynch and Smith Barney. Michael Carabini is confident that Monex is well-positioned against these firms, whose brokers have traditionally promoted stocks and bonds and do not have competitive expertise regarding precious metals investments. He says, "When you are small, you need to be very smart and very nimble in your business strategy and marketing to carve out your corner in the investment ring." More recently, Monex leveraged its nimbleness and expertise to launch an internal start-up, Monaco Financial, a specialized dealer in rare coins. This new line of business combines the age-old fascination of collecting rare coins with the advanced technology of database management to allow collectors to purchase authenticated collectable coins electronically. Second generation family entrepreneur Michael Carabini has championed the start-up with his own enthusiasm for collecting rare coins. The entrepreneurial spirit at Monex has grown to include community involvement as well. Last year, Michael Carabini was honored with the "Entrepreneurship in Giving" Award for his championship of a novel approach to raising funds for Mission Hospital in Mission Viejo. Monex sponsors a local bicycle racing team to compete in SoCal Cup racing. Team members all participate in raising funds for the hospital and wear uniforms bearing Monex emblems to recognize the company's contributions. It is only natural that Monex aims to set a gold standard with its own marketing strategy since its primary product, precious metals, has been the namesake of the most popular market segmentation programs - silver, gold and platinum. The foundation of marketing at Monex is dedicated customer service - 80 percent of its clients come back with repeat orders and more than 10 percent of new customers are referred by current customers. Winning more new customers is important for Monex to continue growing and the company works hard to get its message across to serious investors. "Gold itself tells a story," says Micheal Carabini, who favors multiple media to tell the story. Monex has been a charter advertiser on CNN Headline News with 60-second spots it produces in-house at the Newport Beach office. Some ads are scripted and some are spontaneous, but all broadcast vivid images of shiny gold bars worth hundreds of thousands of dollars. This age- old motif carries through the company's print ads and brochures, building a simple, consistent image of gold as a store of wealth. While marketing at Monex starts with building awareness, the company retains serious investors' interest and loyalty by positioning itself as an information resource on the subject of precious metals investing. The company has sponsored a series of reports on the market outlook for gold and has now expanded to producing audio CDs on the subject. The research reports are backed by a storehouse of knowledge and statistics helpful to precious metals investors. The company is currently recommending that investors allocate at least a fraction of their total portfolios to gold and precious metals and sees demand buoyed by China's recent decision to establish a gold exchange for individual investors. The tradition of innovation at Monex extends to financial strategy. The company started with the backing of Farmers and Merchants Bank of Lake Forest, which became the first local bank to make commercial loans using gold coins and bullion as collateral. Then Monex became the first company in America to issue precious-metal asset- backed investment certificates to raise additional capital. The securities are currently rated AAA by Standard & Poor's. This is the highest rating and is reserved only for top-tier borrowers. The company's financial integrity has been recognized by the Austrian State Mint, the primary source of gold coins held in investor accounts, which includes Monex in the elite circle of blue-chip financial institutions it accredits. Earning an AAA rating is just one of many ways that Monex is setting a gold standard. From philanthropy to employee retention, from new product development to investor communications, Monex is earning its position as an industry leader. OCM Max Donner is a writer specializing in business and technology. Letters to the editor go to: Feedback@ocmetro.com.
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