Buying Gold | Woman gets 30 months behind bars for defrauding Dallas investors <b>...</b> | News2Gold |
- Woman gets 30 months behind bars for defrauding Dallas investors <b>...</b>
- <b>Buy Gold</b> Now? What Every Income Investor Needs To Know <b>...</b>
- Citigroup: Don't be tempted to <b>buy gold</b> stocks – by David Berman <b>...</b>
- Peter Schiff: No one is <b>buying gold</b> with bitcoins at Euro Pacific Metals
| Woman gets 30 months behind bars for defrauding Dallas investors <b>...</b> Posted: 29 May 2014 12:50 PM PDT
Smith, 49, tried to flee before she was indicted last fall, but was caught by FBI agents at JFK International Airport as she attempted to board a flight to Ghana. Warren Michael Hills, Smith's accomplice, had been caught in New Orleans a few weeks earlier. He was sentenced earlier this year to 13 months in federal prison. Smith and Hills, 54, have each been ordered to pay $464,035 in restitution. The twosome pleaded guilty in January to one count of conspiracy to commit wire fraud. They admitted to deceiving investors into purchasing gold from the country of Ghana, knowing that the investors would not receive their entire purchase. Federal authorities say the pair would invite would-be investors to visit Ghan to prove that their offer was legitimate. Investors wired money to a Ghana bank account, but only received a fraction of their gold. "Although both Smith and Hills knew that the investors had fully paid for all of their promised gold, they also knew that all of the promised gold was ultimately never going to be shipped to them," says a release from the U.S. Attorney's Office. "Rather than be truthful to the investors, Smith and Hills made false representations to them promising the remaining gold would be shipped. Smith and Hills caused substantial monetary losses to investors, including approximate total net losses of $113,483 to investor P.G. and approximately total net losses of $325,000 to investor M.W." . Bookmark the .  |
| <b>Buy Gold</b> Now? What Every Income Investor Needs To Know <b>...</b> Posted: 27 May 2014 07:23 AM PDT Summary
With gold currently trading near its all in sustaining cost (AISC) to produce, there is now an opportunity for income investors to own gold for the dual purpose of maintaining 2 years of cash liquidity to hedge against sharp short term market crashes and to generate monthly cash income at the same time. This is an attractive strategic alternative to holding cash or short term monetary instruments which currently pay extremely low yields. (image source: biostockspro.com) Gold has traditionally been a safe haven asset to hedge against inflation, government instability, and disaster shocks where a readily liquid hard asset is advisable. Through the ages right up to the present time, people have held gold in various forms for this purpose. These include coins, jewelry, ingots, depositary receipts, and gold mines. With the exception of gold mine shares (and mutual funds of such shares) which may pay dividends, each of these forms share some negative traits:
All of these elements combine to make holding physical gold a wasting asset with maintenance expenses and lost opportunity costs of non-performing assets slowly eating away at their value. For each and all of these reasons, gold has not been attractive as an asset class to income investors. When picking an asset to place near term defensive living expenses (2 years of basic needs) cash or demand savings, short term bonds, and time deposits with an interest yield have been the traditional choice for the income investor. The ultra low yield environment persisting since the global financial crisis of 2009 continues to make these investment classes painfully poor options for income investors. Several factors are currently present that offer the income investor a new alternative to the traditional ultra low yield choices for their liquid cash reserve. The sustained pullback of gold, currently at a New York spot price of $1293.00, to near the average AISC production costs for the major gold producers which is now exceeding $1200 per troy ounce sets the likely long term floor on gold and makes sustained departures below these AISC prices unlikely. Erwin Lubbers observes in his recent analysis of gold price trends at goldresearcher.com:
This current threshold pricing of Gold suggests a strategy of using SPDR Gold Shares (GLD) (an ETF of gold depositary receipts) as a suitable risk asset to use for short term defensive cash instead of actual cash, bank deposits, or short term bonds. Buying the GLD shares and concurrently selling at the money near term covered call contracts on those holdings generates an attractive yield rate at this time while maintaining the defensive cash liquidity desired in the case of market shocks. Because gold prices are expected to be more stable than equities and bonds, or even rise in times of global crisis, disaster, or inflation, the units will likely be called away from you if such events arise. The effect is to convert your gold holdings back into the cash asset you would be holding if you had not shifted from the liquid cash investment into the gold units. However, unlike holding the cash or low yield deposits, you are earning a much more attractive yield on the covered call option premiums you receive in using this strategy. There is added downside risk to capital preservation with this strategy because you are exposed to the fluctuating market price of gold. However, the downside risk is sharply reduced during periods of market crisis when gold is expected to rise. Thus, your risk is least when the likelihood of call away conversion and your desire to shift back to cash is highest. This is a good tradeoff in the current market price environment. The GLD ETF avoids the negative features of holding gold cited above except for some of the storage cost features. The GLD manager sells off a small amount of the total gold reserves each year to cover storage and management costs. This generally is about 0.4%. A current example of employing this strategy is to allocate a defensive 2 years of bare minimum cost of living expense to buying gold. We will use $60,000 in this example. GLD closed Friday May 23, 2014 at the time this article was written at $124.51. Therefore, $60,000/$124.51 = 481.89 units of GLD. We round up to 500 units in 100 share lots so as to have round lots to write our covered calls with. $124.51 * 500 = $62,255. At the same time, the Friday afternoon trading price for 6/21/2014 $125.00 calls was $1.53 premium for the standard 100 share contracts and $1.31 bid on the premium on the 10 share GLD7 mini options. The sale of 5 call contracts of the standard GLD 100 share lot options generates $153 * 5 = $765.00 cash income for the 27 day contract. This is an absolute yield of 1.23% and an annualized rate of return on our invested funds of [(1.23%/27 days)*365] = 16.63%, a much higher yield rate than available from any deposit savings, money market, or similar risk level bond. This example shows how moving our defensive cash reserve into gold currently adds to monthly income for investors who follow a dividend income investment strategy. It does so while managing risk through a strategy anticipating call away in up-trending markets of either normal trend or, even more importantly, those triggered by market crises. Each month a new covered call contract is written at the $125 strike, if the shares have not been called away. If they have been called away in the absence of a broader market shock, then a new long GLD position is bought for the round lot $60,00+/- position and covered call contracts at the money are sold anew. This way, the 2-year defensive cash is maintained at its same general level regardless of the upward trending price of gold. There is a very important limiting caveat for this strategy when used by dividend income investors. The downside risk is only manageable and acceptable when the price of gold is near its AISC of production. If and when gold moves significantly above that price point, the downside risk of a sharp and sustained fall in gold prices due to a deflating bubble becomes too great of a risk to expose defensive cash reserves to. Options trading is always best done inside a tax preference account (IRA, ROTH, SIMPLE, etc.). Tax consequences of call-aways should always be considered when selecting appropriate Strike prices and contract lengths. In addition to the current threshold pricing of gold near its AISC production price, the current global political crises; Chinese economic weakness and Renminbi currency instability; and potential re-emergence of eurozone issues with Greek, Spanish, Portuguese, and Irish debt; make gold likely to further limited downside risk to current gold pricing. I hope you will have an interest in my recent series and current new series where I detail the use of covered option writing to boost yields on quality dividend income equities. Simply click on the bold link labeled FOLLOW above the title at the top of this article to get an email notice of my new articles when they are published. You will need to be sure that in your account SETTINGS/EMAIL ALERTS/DAILY EMAILS that you have checked the AUTHOR ALERTS box. Click here for a link to the index of my past and future articles. I am not a licensed securities dealer or advisor. The views here are solely my own and should not be considered or used for investment advice. As always, individuals should determine the suitability for their own situation and perform their own due diligence before making any investment. Disclosure: I am long GLD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. I am also short the 6/21/2014 $125 covered calls as described in the article strategy. Want more from this author? Follow and be the first to know when they publish.  (2,023 followers)
You will now receive new articles by this author via email. |
| Citigroup: Don't be tempted to <b>buy gold</b> stocks – by David Berman <b>...</b> Posted: 29 May 2014 03:17 PM PDT The Globe and Mail is Canada's national newspaper with the second largest broadsheet circulation in the country. It has enormous influence on Canada's political and business elite. After getting slaughtered last year, gold mining stocks are showing modest gains in 2014 and are also outperforming gold by a narrow margin. That's the good news. The bad news? Gold miners are still burning through cash, making them unattractive investments. "Understandably, many shareholders are toiling with the idea of buying into gold equities given the past 12-month's decline in share prices," said Johann Steyn, an analyst at Citigroup, in a note. "We continue our theme of 'don't be tempted.'" But rather than condemning all gold miners, Mr. Steyn holds out some hope for a select few that show more promise than their peers. These rare opportunities include Goldcorp Inc. and Barrick Gold Corp. His negative assessment of gold miners in general comes at a time when the sector has been bloodied beyond recognition. When the price of gold fell 29 per cent in 2013, the NYSE Arca Gold Bugs index of 18 global producers plunged nearly 55 per cent, approaching 10-year lows. According to Mr. Steyn, the decline didn't merely reflect the skittishness of investors but rather the "intrinsically bad fundamentals" of the industry – which is probably why he subtitled his report "A Leopard Cannot Change Its Spots." Gold itself isn't the threat here. Indeed, he argues that the price of gold should average $1,337 (U.S.) an ounce in the second half of the year, marking an improvement from the current price of $1,256 an ounce, due in part to geopolitical risks and demand from China. He expects gold to rise modestly again to $1,365 an ounce in 2015 – down from the high of $1,900 an ounce in 2011, but at least stable. Nor are companies spending freely these days. The top 10 producers have cut capital expenditures by 25 per cent, exploration expenditures by 33 per cent and corporate expenditures by 8 per cent. But rather than leaving gold miners looking leaner and meaner and worthy of investor attention in the event of an upturn in the gold price, Mr. Steyn estimates that 75 per cent of the industry is still burning through cash – and additional cost-cutting is going to be hard to do without closing mines. For the rest of this article, click here: http://www.theglobeandmail.com/globe-investor/inside-the-market/citigroup-dont-be-tempted-to-buy-gold-stocks/article18913615/#dashboard/follows/ |
| Peter Schiff: No one is <b>buying gold</b> with bitcoins at Euro Pacific Metals Posted: 30 May 2014 08:30 AM PDT Peter Schiff's Euro Pacific Capitals made headlines when it announced a partnership with BitPay to process bitcoin transactions for gold and silver bullion. This story went viral because Schiff has previously lambasted the peer-to-peer decentralized digital currency. Speaking with CNBC on Thursday, Schiff noted that not a lot of customers are purchasing gold with bitcoins. "You know, last I checked we only had one person who bought gold with bitcoin." The video posted also discussed the United States economy and stock market. Like this article? Get ECN delivered to your inbox daily. Subscribe here. |
| You are subscribed to email updates from buying gold - Google Blog Search To stop receiving these emails, you may unsubscribe now. | Email delivery powered by Google |
| Google Inc., 20 West Kinzie, Chicago IL USA 60610 | |
0 Comment for "Buying Gold | Woman gets 30 months behind bars for defrauding Dallas investors ... | News2Gold"