Tag Archive | "London Stock Exchange Group Plc"

Pound and Multi Currency Portfolios Pounded


There is opportunity because the British pound and multi currency portfolios that are short the US dollar have been pounded.

multi-currency-chart

This a six month pound US dollar from finance.yahoo.com as of last week.

This year Merri and I have the delightful task of flying to England for our youngest daughter’s wedding. Way to go Ellie!  It looks like our stay will really be inexpensive.  A hotel that would have cost $200 a night might be (according to Morgan Stanley)  as little as $129.

There are numerous reasons we’ll see below for the weak British pound.  Britain has many problems.  However problems create opportunity or as the British would say “Where there is muck, there is brass”.

So let’s take a look at the pound.

I asked Thomas Fischer at Jyske Global Asset Management for their view and he wrote:  We were contemplating selling pounds in our managed Forex Portfolio but decided not to take a position as it seems a little oversold at the current level (against the USD). Morgan Stanley has a target of 1.29 in the fourth quarter of 2010. The current level is 1.47.   Analysts at BCA think the budget published on June 22nd could be a decider for the direction of GBP.  They  also thinks the pound is  oversold at current levels but feel that a disappointing budget and a possible downgrading from Fitch could mean trouble for the UK economy and the British  pound.

A look at economic data in the Economist shows that Britain is currently low man on the currency fundamental totem pole.

Compared to the US, China, Japan, Canada and the Eurozone Britain has the worst budget balance by far.  The low interest rate on the pound does not compensate for this fact.  However the trade and current-account balances are very good compared to the US. These balances normally have a very negative influence on a currency’s parity so this fact is an indicator of strength.

multi-currency-economic-data

The British economy does not look in a strong position to pull the pound up by its boot straps.

multi-currency-economic-data

Britain’s GDP has dropped.  Industrial production is lagging.   Inflation is higher than in the other countries of this comparison.  Lower unemployment is the only positive factor and 8% is not a good unemployment rate… just not as bad as the US and euro zone.

The stress on BP over the Gulf oil spill also has the short term potential of pushing the pound down even further.

The downwards pressure is most likely to be emotional rather than real. However BP is a huge firm and as the chart from www.finance.yahoo.com shows  BP’s share value in New York as of last Friday fell over 50 percent from the beginning of the Gulf oil spill in April.

bp-chart

Some analysts say the crisis could lead to the takeover or even the bankruptcy of BP which is a global company traded both in London and New York but is seen as one of Britain’s most valuable companies.

There is a huge exposure of British pension funds to BP.  The view that BP is British creates a British pound concern if the company is being continually beaten up by the press.

BP is the third largest oil company in the world, after ExxonMobil and Royal Dutch Shell, with 80,000 employees worldwide as of last December, sales of $239 billion in 2009 and a market value — even after the recent losses — of more than $100 billion.

At a time when Britain is desperate to reduce its deficit, BP is a huge contributor to British tax revenue, paying nearly $1.4 billion in taxes on its profits last year.  They are Britain’s largest tax payer.

Its reputation for large, reliable dividends have made it a favorite of pensions… especially British pensions.

BP’s dividend payments accounted for nearly 13 percent of the dividends handed out by British companies last year, according to FairPensions, a London-based charity.

So continual bad news about BP could be depressive on the pound. This is where opportunity may arise.

BP is British yes, but also has extensive holdings in the United States.  It merged with Amoco, the former Standard Oil of Indiana, in 1998, and about 40 percent of its shares are held by American investors.  It owns a refinery in Texas City, Tex., that is one of the world’s largest, and a 50 percent interest in the Trans Alaska Pipeline, in addition to a huge gasoline marketing operation.

So bad BP news is bad economic news long term.

When incorrect short term news drives the market, opportunity is created and there is a risk that BP’s bad news will over influence selling of the British pound.  Watch for this and if you see it, buy pound investments… maybe even BP.

I asked JGAM their opinion and they replied:

We do not have BP in our portfolio but it is an interesting case. Morgan Stanley is positive on BP and has a target of 600p which was the price at the beginning of the year. The current price is 370 so a good potential. I have attached the Morgan Stanley analysis.

Morgan Stanley says on June 14, 2010: BP plc. BP has indicated this morning that the LMRP containment cap, installed on June 3, is now collecting c.21kboe/d of oil/gas (15kb/d oil plus nat gas that is being flared).  The first planned addition to the LMRP, taking hydrocarbons from the choke line of the failed BoP to the surface via a separate riser, is expected to begin operations in the next few days.  In addition, BP plans to add another 10kb/d of oil processing capacity by the end of June, bringing total processing capacity to 38kb/d – which equates to the high end of the range regarding estimated flow rates, now sitting at c.40kb/d.  BP puts costs to date at $1.6bn, while press reports (e.g. FT, June 14, 2010) suggest the US administration wants an independent third party to administer an escrow account set aside to meet claims.

Valuation methodology and risks: We set our 600p price target based on a DCF valuation at the forward curve (LT $85/bbl). Our DCF assumes a WACC
of 7.5% and a 2% terminal growth rate. We estimate Macondo costs to be c.$14bn and assume a 30% depreciation in the value of the GoM portfolio due to the moratorium to offshore drilling.

Key risks: A more extensive period of uncertainty regarding how and when the oil flow from the Macondo well will be controlled and then ‘killed off’.

Clean-up costs may escalate off the back of a more active hurricane season.

Although BP offers one of the highest dividend yields among the integrateds, its quarterly dividend payment may be increasingly influenced by the political environment.

Having said all this, BP shares could be very attractive because these shares offer good value.

BP is not like GM was… an icon whose times had past. BP is a well funded, successful, globally diversified firm with one huge problem that it appears to be able to afford.

BP pledged to put 20 billion dollars into an escrow account last week.  That is a lot of money… yet is only about a year’s profit for BP. Let’s say they have to triple this amount and pay out 6o billion. This is only three year’s profit for the firm… so, if the share were fairly priced before the spill they are a good buy at half the price even without a profit for three years.

Let me hastily add that I will NOT be investing in BP shares.  Merri and I have given our investment advisers a block long ago.. no pharmaceutical… no alcohol…. not tobacco… no weapons… no oil. So even if BP  was just another oil company… without a terrible corporate culture, I would not be buying.

However I recognize that others have different views so do write about shares I personally won’t buy… for example I often look at Novo Nordisk, the large Danish pharmaceutical company and feel I would not be diligent if I did mention the potential in a BP share speculation.

There may be extra opportunity in many UK companies right now due to the depressive effect of the BP scandal.  BP has lost half its share value. The  London Stock Exchange has also declined since the beginning of the oil spill as we can see on this one year chart of the Financial Times Stock Exchange 100 Index.

ft-index chart

The UK stock market was a good value market even before this decline. We saw in our last major market value update that the London Stock Exchange is one of six top value major markets in the world.

The UK market offers the highest Cash-Flow Return on Equity and Return on Equity.

multi-currency-economic-data

Watch for arbitrage opportunities… where the pound falls so quickly that the price of BP shares listed in London are lower than the BP share listed in the USA.

This is a big enough company that big traders will equalize the BP pound versus dollar price so you would have to be quick if this situation arises.  The more likely opportunity is that emotion over the disaster from the oil spill combined with a weak British pound will make BP shares an extra good value.

I personally am looking at Impax Environmental Markets Trust.  Impax Environmental Markets (LSE: IEM) is a large British investment trust dedicated to alternative energy, water treatment and waste technology. Established in 2002, the company is a constituent of the FTSE 250 Index.

Here is a five year chart of the share price.

impax chart

An investment trust is the British equivalent of a closed end mutual fund.

This fund is dedicated to the environmental and clean tech sectors, with a focus on alternative energy, water and waste. This sector offers some of the most compelling investment opportunities of the 21st century as the world responds to the problems caused by environmental degradation, resource scarcity and climate change.  Impax’s team of professionals have many years of experience in the financial and environmental sectors so they can understand and take advantage of the investment opportunities arising from these growing markets.  Impax is the only pure play environmental investment trust and Impax has a team of 17 investment managers who specialize in finding good environmental opportunities.

Learn more about environmental investing in Copenhagen.

Join Merri and me in Copenhagen for another big value.  The strong US dollar makes this the year to enjoy Europe and Thomas Fischer at Jyske just sent me this note: Gary due to the increasing US dollar the fee for our August seminar in Copenhagen for Americans has dropped from about $2,050 to $1,700, a 15% discount.

I love attending these seminars because of the great speakers and this year one speaker will be Bjorn Lomborg known as the “Skeptical Environmentalist.”

Lomborg is a Danish author, academic, and environmental writer. He is an adjunct professor at the Copenhagen Business School, director of the Copenhagen Consensus Centre and a former director of the Environmental Assessment Institute in Copenhagen.  I have spoken with him at one seminar before and his ideas are worth the trip across the Atlantic.

He became internationally known for his best-selling and controversial book “The Skeptical Environmentalist”.

In 2002, Lomborg and the Environmental Assessment Institute founded the Copenhagen Consensus, which seeks to establish priorities for advancing global welfare using methodologies based on the theory of welfare economics.  You can see some of his ideas at a youtube video here.

See details about Jyske’s bi annual Copenhagen seminar here Global Wealth Management Seminar.

Gary

How We Can Serve You

How to Have Real Safety

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There are only three reasons why we should invest.  We invest for income.  We invest to resell our investments for more than we had invested.  We invest to make our world a better place.

We should not invest for fun, excitement or to get rich quick, or in a panic due to market corrections.

This is why the core Pi model portfolio (that forms the bulk of my own equity portfolio) consists of 19 shares and this position has not changed in over two years.  During these two years we have been steadily accumulating the same 19 shares and have not traded once.

The portfolio has done well in 2017, up 22.6%, better than the DJI Index.

motif

However one or even two year’s performance is not enough data to create a safe strategy.

The good value portfolio above is based entirely on good value financial information and mathematically based safety programs developed around models that date back 91 and 24 years.

The Pifolio is a theoretical portfolio of MSCI Country Benchmark Index ETFs that cover all the good value markets developed combining my 50 years of investing experience with study of the mathematical market value analysis of Keppler Asset Management and the mathematical trend analysis of Tradestops.com.

In my opinion, Keppler is one of the best market statisticians in the world.  Numerous very large fund managers, such as State Street Global Advisers, use his analysis to manage over $2.5 billion of funds.

The Pifolio analysis begins with Keppler who continually researches international major stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  He compares each major stock market’s history.

Fwd: keppler

Michael Kepler CEO Keppler Asset Management.

Michael is a brilliant mathematician.  We have tracked his analysis for over 20 years.   He continually researches international major stock markets and compares their value based on current book to price, cash flow to price, earnings to price, average dividend yield, return on equity and cash flow return.  He compares each stock market’s history.  From this, he develops his Good Value Stock Market Strategy and rates each market as a Buy, Neutral or Sell market.  His analysis is rational, mathematical and does not cause worry about short term ups and downs.  Keppler’s strategy is to diversify into an equally weighted portfolio of the MSCI Indices of each BUY market.

This is an easy, simple and effective approach to zeroing in on value because little time, management and guesswork is required.  You are investing in a diversified portfolio of good value indices.

A BUY rating for an index does NOT imply that any stock in that country is an attractive investment, so you do not have to spend hours of research aimed at picking specific shares.  It is not appropriate or enough to instruct a stockbroker to simply select stocks in the BUY rated countries.  Investing in the index is like investing in all the shares in the index.  You save time because all you have to do is invest in the ETF to gain the profit potential of the entire market.

To achieve this goal of diversification the Pifolio consists of Country Index ETFs.

Country Index ETFs are similar to an index mutual fund but are shares normally traded on a major stock exchange that tracks an index of shares in a specific country.  ETFs do not try to beat the index they represent.  The management is passive and tries to emulate the performance of the index.

A country ETF provides diversification into a basket of equities in the country covered.  The expense ratios for most ETFs are lower than those of the average mutual fund as well so such ETFs provide diversification and cost efficiency.

Here is the Pifolio I personally use.

70% is diversified into Keppler’s good value (BUY rated) developed markets: Australia, Austria, France, Germany, Hong Kong, Italy, Japan, Norway, Singapore and the United Kingdom.

30% of the Pifolio is invested in Keppler’s good value (BUY rated) emerging markets: Brazil, Chile, China, Colombia, the Czech Republic, South Korea, Malaysia and Taiwan.

The Pifolio consists of iShares ETFs that invested in each of the MSCI indicies of the good value BUY markets.

For example, the iShares MSCI Australia (symbol EWA) is a Country Index ETF that tracks the investment results the Morgan Stanley Capital Index MSCI Australia Index which is composed mainly of large cap and small cap stocks traded primarily on the Australian Stock Exchange mainly of companies in consumer staples, financials and materials. This ETF is non-diversified outside of Australia.

iShares is owned by Black Rock, Inc. the world’s largest asset manager with over $4 trillion in assets under management.

Pi uses math to reveal the best value markets then protects its positions using more math created by Richard Smith founder and CEO of Tradestops.com to track each share’s trend.

We use Smith’s  algorithms that calculate momentum of the good value markets.

dr richard smith

The Stock State Indicators at Tradestops.com act as a full life-cycle measure that indicates the health of each stock. They are designed to tell you at a glance exactly where any stock stands relative to Dr. Smith’s proprietary algorithms.

Kepppler’s analysis shows the value of markets.  The SSI signal indicates the current trend of each stock (performing well, or in a period of correction, or stopped out).

The SSI tells you one of five things:

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Akey component of the Stock State Indicator (SSI) system is momentum based on the latest 521 days of trading.  A stock changes from red to green in the SSI system only after it has already gone up a healthy amount and has started a solid uptrend.

How SSI Alerts Are Triggered

If the position has already moved more than its Volatility Quotient below a recent high, the SSI Stop Loss will trigger.  This is an indicator that the position has corrected more than what is normal for this stock.  It means to take caution.

Below is an example of how SSIs work.  This example shows the Developed Market Pifolio that we track at Tradestops.com.

tradestops

Equal Weight Good Value Developed Market Pifolio.

At the time this example was copied, all the ETFs in the Developed Market Pifolio (above) currently had a green SSI.

We do not know when the US market will fall.  We only do know that it will.  We also do not know if, when the US market corrects, global markets will follow or rise instead.

The fact that the Pifilios are invested in good value markets reduces long term risk.

Additional protection is added by using trailing stops based on the 521 day momentum of each stock in the Pifolio.

Take for example the graph below from our Tradestops account that shows the iShares MSCI United Kingdom ETF.  This ETF had a green SSI and a Volatility Index (VQ) of 13.26%.  This means the share can move 13.26% before there is a trend shift.

tradestops

iShares MSCI United Kingdom ETF (Symbol EWU)

Pi purchased the share at$31.26 and in this example the share was $34.43 and rising.  Tradestop’s algorithms suggested that if the price drops to $31.69 its momentum would have stopped and it would have shifted into trading sideways.   The stop loss price is currently $29.86.  If EWU continues to rise, both the yellow warning and the stop loss price will rise as well.

When the US stock market bull ends, know one knows for sure how long or how severe the correction will be.

When the bear arrives, what will happen to global and especially good value markets?

No  one knows the answer to this question.

What we do know is that the equally weighted, good value market Pifolios have the greatest potential long term and that math based trailing stops can be used to protect against a secular global stock market correction when it comes.

My fifty years of global investing experience helps take advantage of numerous long term cycles that are part of the universal math that affects all investments.

What you get when you subscribe to Pi.

You immediately receive a 120 page basic training course that teaches the Pi Strategy.   You learn all the Pi strategies, what they are, how to use them and what each can do for you, your lifestyle and investing.

You also begin receiving regular emailed Pifiolio updates and online access to all the Pifolio updates of the last two years.  Each update examines the current activity in a Pifolio, how it is changing, why and how the changes might help your investing or not.

Included in the basic training is an additional 120 page PDF value analysis of 46 stock markets (23 developed markets and 23 emerging stock markets).  This analysis looks at the price to book, price to earnings, average yield and much more.

You also receive two special reports.

In the 1980s, a remarkable set of two economic circumstances helped anyone who spotted them become remarkably rich.  Some of my readers made enough to retire.  Others picked up 50% currency gains.  Then the cycle ended.  Warren Buffett explained the importance of this ending in a 1999 Fortune magazine interview.  He said:  Let me summarize what I’ve been saying about the stock market: I think it’s very hard to come up with a persuasive case that equities will over the next 17 years perform anything like—anything like—they’ve performed in the past 17!

I did well then, but always thought, “I should have invested more!”  Now those circumstances have come together and I am investing in them again.

The circumstances that created fortunes 30 years ago were an overvalued US market (compared to global markets) and an overvalued US dollar.  The two conditions are in place again!

30 years ago, the US dollar rose along with Wall Street.  Profits came quickly over three years.  Then the dollar dropped like a stone, by 51%  in just two years.  A repeat of this pattern is growing and could create up to 50% extra profit if we start using strong dollars to accumulate good value stock market ETFs in other currencies.

This is the most exciting opportunity I have seen since we started sending our reports on international investing ideas more than three decades ago.  The trends are so clear that I have created a short, but powerful report “Three Currency Patterns for 50% Profits or More.”   This report shows how to earn an extra 50% from currency shifts with even small investments.  I kept the report short and simple, but included links to 153 pages of  Good Value Stock Market research and Asset Allocation Analysis.

The report shows 20 good value investments and a really powerful tactic that shows the most effective and least expensive way to accumulate these bargains in large or even very small amounts (less than $5,000).  There is extra profit potential of at least 50% so the report is worth a lot.

This report sells for $29.95 but in this special offer, you receive the report, “Three Currency Patterns for 50% Profits or More” FREE when you subscribe to Pi.

Plus get the $39.95 report “The Platinum Dip 2018” free.

With investors watching global stock markets bounce up and down, many missed two really important profit generating events over the last two years.  The price of silver dipped below $14 an ounce as did shares of the iShares Silver ETF (SLV).   The second event is that the silver gold ratio hit 80, compared to a ratio of 230 only two years before.

In September 2015, I prepared a special report “Silver Dip 2015” about a silver speculation, leveraged with a British pound loan, that could increase the returns in a safe portfolio by as much as eight times.  The tactics described in that report generated 62.48% profit in just nine months.

I have updated this report and added how to use the Dip Strategy with platinum.   The “Platinum Dip 2018” report shares the latest in a series of long term lessons gained through 40 years of speculating and investing in precious metals.  I released the 2015 report, when the gold silver ratio slipped to 80.  The ratio has corrected and that profit has been taken and now a new precious metals dip has emerged.

I have prepared a new special report “Platinum Dip 2018” about a leveraged speculation that can increase the returns in a safe portfolio by as much as eight times.

You also learn from the Value Investing Seminar, our premier course, that we have been conducting for over 30 years.  Tens of thousands of delegates have paid up to $999 to attend.  Now you can join the seminar online FREE in this special offer.

This three day course is available in sessions that are 10 to 20 minutes long for easy, convenient learning.   You can listen to each session any time and as often as you desire.

The sooner you hear what I have to say about current markets, the better you’ll be able to cash in on perhaps the best investing opportunity since 1982.

seminars

Tens of thousands have paid up to $999 to attend.

In 2018 I celebrate my 52nd anniversary in the investing business and 50th year of writing about global investing.  Our reports and seminars have helped readers have better lives, with less stress yet make fortunes during up and down markets for decades.  This information is invaluable to investors large and small because even small amounts can easily be invested in the good value shares we cover in our seminar.

Stock and currency markets are cyclical.  These cycles create extra profit for value investors who invest when everyone else has the markets wrong.  One special seminar session looks at how to spot value from cycles.  Stocks rise from the cycle of war, productivity and demographics.  Cycles create recurring profits.  Economies and stock markets cycle up and down around every 15 to 20 years as shown in this graph.

stock-Charts

The effect of war cycles on the US Stock Market since 1906.

Bull and bear cycles are based on cycles of human interaction, war, technology and productivity.  Economic downturns can create war.

The chart above shows the war – stock market cycle.  Military struggles (like the Civil War, WWI, WWII and the Cold War: WW III) super charge inventiveness that creates new forms of productivity…the steam engine, the internal combustion engine,  production line processes, jet engines, TV, farming techniques, plastics, telephone, computer and lastly during the Cold War, the internet.  The military technology shifts to domestic use.  A boom is created that leads to excess.  Excess leads to correction. Correction creates an economic downturn and again to war.

Details in the online seminar include:

* How to easily buy global currencies, shares and bonds.

* Trading down and the benefits of investing in real estate in Small Town USA.  We will share why this breakout value is special and why we have been recommending good value real estate in this area since 2009.

* What’s up with gold and silver?  One session looks at my current position on gold and silver and asset protection.  We review the state of the precious metal markets and potential problems ahead for US dollars.  Learn how low interest rates eliminate  opportunity costs of diversification in precious metals and foreign currencies.

* How to improve safety and increase profit with leverage and staying power.  The seminar reveals Warren Buffett’s value investing strategy from research published at Yale University’s website.  This research shows that the stocks Buffet chooses are safe (with low beta and low volatility), cheap (value stocks with low price-to-book ratios), and high quality (stocks of companies that are profitable, stable, growing, and with high payout ratios). His big, extra profits come from leverage and staying power.  At times Buffet’s portfolio, as all value portfolios, has fallen, but he has been willing and able to wait long periods for the value to reveal itself and prices to recover.

keppler asset management chart

This chart based on a 45 year portfolio study shows that holding a diversified good value portfolio (based on a  good value strategy) for 13 month’s time, increases the probability of out performance to 70%.  However those who can hold the portfolio for five years gain a 88% probability of beating the bellwether in the market and after ten years the probability increases to 97.5%.

Time is your friend when you use a good value strategy.  The longer you can hold onto a well balanced good value portfolio, the better the odds of outstanding success.

Learn how much leverage to use.  Leverage is like medicine, the key is dose.  The best ratio is normally 1.6 to 1.  We’ll sum up the strategy; how to leverage cheap, safe, quality stocks and for what period of time based on the times and each individual’s circumstances.

Learn to plan in a way so you never run out of money.  The seminar also has a session on the importance of having and sticking to a plan.  See how success is dependent on conviction, wherewithal, and skill to operate with leverage and significant risk.  Learn a three point strategy based on my 50 years of investing experience combined with wisdom gained from some of the world’s best investment managers and economic mathematical scientists.

The online seminar also reveals  the results of a $80,000 share purchase cost test that found the least expensive way to invest in good value.  The keys to this portfolio are good value, low cost, minimal fuss and bother.  Plus a great savings of time.  Trading is minimal, usually not more than one or two shares are bought or sold in a year.  I wanted to find the very least expensive way to create and hold this portfolio so I performed this test.

I have good news about the cost of the seminar as well.   For almost three decades the seminar fee has been $799 for one or $999 for a couple. Tens of thousands paid this price, but online the seminar is $297.

In this special offer, you can get this online seminar FREE when you subscribe to our Personal investing Course.

Save $468.90 If You Act Now

Subscribe to the first year of The Personal investing Course (Pi).  The annual fee is $299, but to introduce you to this online, course that is based on real time investing, I am knocking $102 off the subscription.  Plus you receive FREE the $29.95 report “Three Currency Patterns for 50% Profits or More”, the $39.95 report “Silver Dip 2017” and our latest $297 online seminar for a total savings of $468.90.

ecuador-seminar

Triple Guarantee

Enroll in Pi.  Get the basic training, the 46 market value report, access to all the updates of the past two years, the two reports and the Value Investing Seminar right away. 

#1:  I guarantee you’ll learn ideas about investing that are unique and can reduce stress as they help you enhance your profits through slow, worry free, easy diversified investing.

If you are not totally happy, simply let me know.

#2:  I guarantee you can cancel your subscription within 60 days and I’ll refund your subscription fee in full, no questions asked.

#3:  You can keep the two reports and Value Investing Seminar as my thanks for trying.

You have nothing to lose except the fear.   You gain the ultimate form of financial security as you reduce risk and increase profit potential.

Subscribe to Pi now, get the 130 page basic training, the 120 page 46 market value analysis, access to over 100 previous Pifolio updates, the “Platinum Dip 2018” and “Three Currency Patterns For 50% Profits or More” reports, and value investment seminar, plus begin receiving regular Pifolio updates throughout the year.

Subscribe to a Pi annual subscription for $197 and receive all the above.

Gary


International Gold Review


This international gold review is a followup to yesterday’s message about maintaining control over your wealth.

Jyske Global Asset Management just changed its gold position so we should take a new look at gold.

Most major governments have deficits in their budget.  This forces them to borrow or print money that is not backed by productivity.  When this happens long term, the purchasing power of  money created in this way, loses purchasing power.

Any form of exchange must possess five qualities to be considered real money that will store value and purchasing power.  These five values that money must be are durable, divisible, portable, desirable and rare.

When a government creates a currency with no production to back it, then that currency loses its rarity and its purchasing power falls.

Gold is one long term way to combat the risk of a falling currency.

Gold is real money because it has all five qualities of real money.

Make no mistake… when it is rare… paper money is better money than gold… because it is more divisible and portable.   Electronic money available in a credit card is even better… the most portable and divisible of all… IF THE CURRENCY MAINTAINS ITS RARITY.

Regretfully for the dollar, euro, yen and many other major currencies, this has not been the case…  so gold still has a place in our portfolios.  Gold as a commodity fits the five standards best of all and for thousands of years has been used as a form of money.

In a moment we’ll look at what might happen to the price of gold in the months ahead.

First, because many readers have asked about bringing gold into Ecuador, I checked with out attorney Andres Cordova in Quito.  Here is his reply: Dear Gary:  After reviewing applicable legislation, we’ve found that there is no restriction on the introduction of gold or coins to Ecuador.

The introduction of such, however, does carry a tariff that is to be charged in accordance to weight or monetary amount. Furthermore, there’d need to be a customs filing in which the gold presentation is to be declared, such as ingots, jewelry, dust, etc. Furthermore, an explanation of where does such gold / coins come from needs to be consigned in such form. If gold is brought with the traveler, then such must be specified in the customs form that each passenger gets before landing in Ecuador.

Gold and coins would pay a tariff of 0.5% and 12% VAT.  However, if we could know exactly what the person intends on bringing to Ecuador we can better review applicable taxes and tariffs. Best regards,  Andres

For those that want physical gold in Ecuador, there is gold mining in Ecuador and are gold dealers. I do not know any  personally. But there are many places with signs that they buy gold. I am researching this and will post a password protected message for our Ecuador Living subscribers.  You can subscribe to Ecuador Living so you’ll receive this report when it is published.

There are three other ways to hold gold than in bullion and coins. These alternatives are less expensive than bullion and avoid the hassle and dangers of carry heavy, valuable precious metals on your person and across borders.  Plus they avoid this Ecuador tax.  We’ll review these options after we examine what might happen to gold’s price in the days ahead.

This article is from the Asset Strategies Alert:

When gold breached the $1,000/oz mark in February of 2008, the mass media were full of reports of unprecedented coin demand and long wait times for bullion buyers. You couldn’t open the paper without seeing a piece about the gold rush.

Although the press has now set gold aside for hotter stories, I can tell you demand for gold coins continues at unprecedented levels worldwide, and production is still struggling to keep up. Take a look at these recent reports:

Sales of the Austrian Philharmonic gold coin soared 544% in the first two months of 2009 (vs. the same period the year before), with production at the country’s mint running quadruple its usual volume.

The demand for Krugerrands is at its highest level since 1986. The South African refinery recently doubled production of blank gold coins to 20,000 ounces per week.

China, now the fastest-growing market for gold, saw 2008 sales (measured in dollars) rise by 50% over the year before – and total sales in January 2009 were one billion yuan (US$146 million), 30% more than all of last year.

The U.S. Mint sold 193,500 one-ounce gold Eagles in the first seven weeks of 2009 – equaling the number shipped in all of 2007 and about matching the first half of 2008.
Russia’s Sberbank says it has “never seen such strong demand for investment coins.”

Swiss banks just reported they are running out of secure storage space for gold bullion held by investors and institutions in their vaults.

I have worked with Michael Checkan at Asset Strategies International, Inc. for many decades and any time I think of gold, I think of him.

Michael’s firm offers one of the the three gold alternatives… Precious Metals Certificate Programs.

Precious metals can be purchased and stored on your behalf through the Perth Mint Certificate Program.  This program offers storage for gold, silver, and platinum at the Perth Mint in Western Australia. This is the only government guaranteed precious metals program in the world… fully backed by the government of Western Australia, and has operated continuously from the same location for over 100 years.

This is an easy and low cost way to hold metals overseas.  You can learn more about these certificates from Asset Strategies with a toll-free call 1-800-831-0007 or 301-881-8600 or visit their website www.assetstrategies.com.

See an interview with Thomas Fischer of Jyske Global Asset Management and Rich Checkan of Asset Strategies here.

Jyske Global Asset Management (JGAM) agrees that gold is a good asset now.  All of JGAM’s portfolios  were overweight in gold last time I reviewed them. . The low risk portfolio had about 5% in gold…. medium risk about 9% and the high risk portfolios were holding about 15% gold.

However JGAM does not invest in physical gold or even undivided bullion. They invest in the ETFS Physical Gold shares.  This is a share traded mainly on the London Stock Exchange  (code PHAU) but also trades on Deutsche Borse (Xetra), NYSE-Euronext, and Borsa Italiana.

The ETFS Physical Gold provides an easy, simple, cost-efficient and secure way to access the
precious metals market.  This share provides a return equivalent to movements in the
gold spot price less fees because the shares are backed by physical allocated metal held by the
Custodian (HSBC Bank USA N.A.).  All the gold held are good delivery bars.

This is a very practical way to own gold, because you can buy the shares direct from any stock broker.   The shares are transferable or sold in the market.  These shares trade on the stock markets just like an equity and their pricing and tracking operate similar to an Exchange Traded Fund except the share tracks the price of physical gold, not a portfolio of equities.

Here is the five year simulated price of these shares from the fund’s fact sheet.

gold-chart

Other ETfs that invest in physical gold are SPDR Gold Shares (GLD) listed on the New York Stock Exchange  in November of 2004, and traded on NYSE Arca since December 13, 2007, as well as  Singapore Stock Exchange, Tokyo Stock Exchange and the Stock Exchange of Hong Kong.

Here is a chart of the SPDR five year performance.

gold-shares

Another ETF that invests in gold is iShares Comex Trust (IAU).

I have just competed a full gold report for our multi currency subscribers that provides a  third alternative to gold bullion and coins.

In the multi currency gold report, I describe the recent change in JGAMs gold position, the profit they made and how Jyske Bank Private Bank and Jyske Global Asset Management can buy gold alternatives.

You can subscribe to our multi currency service and get this report here.

Deficit spending by the major governments around the world has reduced the integrity of the world’s currency system. All currencies risk losing purchasing power.  Gold long term is one way to combat this risk.

Gary

The greatest asset of all is the ability to earn wherever you live, which brings everlasting wealth.

This is why we offer our course Tangled Web… How to Have an Internet Business.

A clear mind and healthy body are also a vital assets… plus a second language is a powerful diversification tool.

This is why I am giving everyone who enrolls in our North Carolina or Ecuador International Business & Investing seminar in October or November our “Tangled Web… How to Have an Internet Business Course” (offered at $299) free.

Here are comments from a reader about the way we help:  Thank you for your inspiration and information outlining foreign banking and retirement.  Your comments and suggestions are welcome for planning the steps to evaluate the early stages of living abroad.

Sept. 17-21 Ecuador Super Thinking + Spanish Course

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Join us with Jyske. Learn more about global investing, how to have an international business and diversification in Ecuador at the seminar.

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