Forex – the market in which currencies are traded, is the largest, most liquid market in the world. The liquidity of the Forex market is due to the constant rise of offer and demand. The number of traders and brokers, as well as the large number of currencies traded leads …
Forex – the market in which currencies are traded, is the largest, most liquid market in the world. The liquidity of the Forex market is due to the constant rise of offer and demand. The number of traders and brokers, as well as the large number of currencies traded leads to almost $2 trillion trading value per day worldwide. For traders, it may be a real challenge to find the best Forex broker, especially if they don’t know what to look for. Although Forex brokers may appear the same for the untrained eye, they are fundamentally different, in terms of leverage, spreads – the only fees for trading Forex, currencies traded, trading notifications, free demo accounts and many more. You can see how finding the best broker to suit your needs can be tricky. The first thing you need to do is get acquainted with the Forex terminology, research the markets and different brokers. Once you’ve done that, look for a Forex broker that offers tutorials, webinars and other free or paid trading educational materials. This will prepare you for the best, most profitable Forex trading experience. Second, look for a broker that offers a free demo account, because trading with such an account will be as good of a teacher as it gets, giving you the opportunity to experiment with different trading platforms and instruments. Also, a large leverage will increase your potential profits as a trader.
WHAT IS A GOOD FOREX BONUS?
Looking further into your Forex trading future, the smart thing is to choose a bonus which will allow you to juggle with the numerous trading pairs and instruments available. Therefore, by choosing a bonus on your first deposit, you will have a larger trading capital to begin with. Depending on the amount you decide to start trading with, Forex brokers offer either immediate or pending bonuses. The instant Forex bonus will be credited to your real trading account, to be withdrawn once certain conditions are met. The pending bonus amount is credited to your bonus account and is gradually transferred to your real-money account. Also, another trait of the best Forex bonuses is the amount of TP (trading points) which is needed to be able to withdraw your bonus amount. These points are gained and determined by the traded amounts. Every instrument gives different Tpoints per traded amount, so choose one that will suit you best. One of the best sites to offer superb forex bonuses is www.bestforexbonus.net there you can always find up to date offers and deals.
HOW TO TRADE WITH THE BEST FOREX BROKER AND BONUS?
Now that you have chooses the best Forex broker and the most suitable bonus, the next step is to get to know the broker and the trading instruments, as well as the notifications and warning calls offered. These will help you to manage your trading positions, either by automatically closing them, under certain conditions or notifying you when margin levels or trading returns have been reached. By setting certain values for these functions, the Forex platform that you use will automatically close your trading positions, when they reach a loss or return previously set. Choose these parameters wisely and the risk of trading Forex will be kept under control and your profit will increase.
Ok, you’ve decided to take the plunge and start your own business – but you have no idea where to begin. From what business to start to how to raise the money for it, the sheer array of options can be daunting.
Luckily, Startups has a range of resources available to take that nascent entrepreneurial desire through the stages it needs to become a viable business.
We’ve addressed all the essential questions you should pose when you’re thinking about how to start your own business. Click the links below to read further on a topic.
What business should I start?
If you’re keen to be your own boss but are asking ‘what business should I start?’ there’s a multitude of options available, including those that support the lifestyle you want to lead or make extra cash to supplement your household income.
Part-time businesses: If you want to run a business while keeping up with other commitments, why not start a part-time business?
Franchising: Consider starting a franchise to run your own business with the training and support of a big-name brand behind you.
Buying a business: Buying an existing business is another popular option that can carry less risk than starting afresh.
Start-ups you can run from home: Modern technology means an office environment is no longer necessary – many businesses can be run entirely from home.
Budget businesses: Budget-conscious entrepreneurs needn’t limit their options; you can start many businesses for under £10,000.
Tech start-ups: The UK’s tech industry is enjoying an unprecedented vogue; there has never been a better time to start a tech start-up.
Popular industries: Other popular sectors to start a business include green businesses, service and retail ventures, and online businesses – check our business ideas section for many more.
What should I do before I start a business?
Choose a business structure: Are you going to be a sole trader, in a partnership, or even start as a PLC? You will need to decide what business structure you adopt early on.
Market research: Thoroughly research your market to assess the viability of your business idea.
Write a killer business plan: Writing a business plan is essential. Read up on the 12 common elements strong business plans share – make sure you have a clear roadmap before starting out. This is especially important as you may show this business plan to potential investors.
Think about your branding: Believe it or not, a business’ name, logo and business cards can be the difference between failure and success.
Set up a website: Learn how to register a domain name and build a well-designed website for your business.
Get your head around your start-up’s finances: Learn how to deal with bookkeeping and cashflow issues for the first time – you may well need to take on an accountant.
How do I raise finance for my business?
Investigate potential grants: Small business grants are extremely useful, but can be difficult to come by.
Apply for a bank loan: Although bank lending to small business is falling, most businesses end up approaching the bank at some point. Read our step-by-step guide to maximise your chances of approval.
Get funding from the government: The government operates various initiatives to help start-ups get off the ground. As a starting point, see whether the government’s new business bank can help you, as well as initiatives such as the Start-Up Loans scheme.
Ask for help from your friends and family: It’s not hard to see why many entrepreneurs start with personal finance or the assistance of friends and family, but try not to put your house, or anyone else’s, on the line.
Consider invoice financing: If you’re finding bank loans difficult to come by, look into invoice finance as an alternative funding option.
Seek investment: Angel investors can not only provide funding but valuable mentoring, support and advice to early-stage businesses; be wary of giving away too much equity early on, however.
Raise finance from the crowd: If you have an idea that you think will be popular with the masses, peer-to-peer crowdfunding is enjoying an explosion in popularity.
How do I set up my business?
Understand the basics for setting up: Learn how to set up a company.
Alert HMRC: Contact the HMRC to tell them you’ll be setting up as self-employed.
Set up business banking: Get set up with a business bank account.
Get equipped: Think about what equipment you will need to start your business. Vans are a necessary purchase for many start-ups, especially in the trade sectors, whilst equipment such as PCs, printers and smartphones are more or less essential, so read our guides to ensure you make the right choice.
Consider a virtual office: If you plan to set up a home office, look into whether a virtual office is right for you.
Find premises: If you need external premises, buying property is a huge step; unless you’re absolutely committed, leased premises or serviced offices are normally more suitable.
Location, location, location: If you’re starting a retail business, location is crucial. Make sure you’re in the know and have explored all avenues before committing to a property.
What regulations and practical issues should I be aware of before starting?
Protect your intellectual property: If you have a technology or ideas-based business, or even a simple company logo, make sure you protect your ideas by familiarising yourself with intellectual property law.
Understand tax law: Whether you’re in business on your own account or already have employees, a knowledge of tax law is essential.
Get insurance: Prepare for the unknown by taking out business insurance, and be aware of the different insurance types available.
Comply with regulations: Don’t forget about your obligations under UK health and safety regulations. This is especially important if you plan to take on employees.
How do I source suppliers and wholesalers?
Source the best suppliers: You can source suppliers at trade fairs and exhibitions – but before entering into any agreement, ensure you negotiate protection for your business through a supply contract.
Pick a manufacturer: If you have a product that needs to be made on a large scale, make sure you follow our tips on choosing a manufacturer for your business’ product.
Look into wholesaling: Learn what wholesaling is and whether it can benefit your business.
Consider sourcing from overseas: Don’t forget that overseas suppliers can often be more cost-effective; read our tips on what to consider when sourcing products from abroad.
How do I recruit a team?
Ensure the timing is right: Ask yourself some key questions before deciding whether the time is right to hire an employee – don’t rush into it.
Write a compelling job description: Learn how to write the perfect job description to make sure you attract the best and brightest talent.
Pose the right questions: Discover the best questions to ask during an interview – and the questions you should never ask.
Investigate employment options: Read up on the different employment options for staff – is your business more suitable for permanent employees, part-timers or freelancers?
Take heed of employment law: Ignore employment law at your peril, or your business could find itself confronted with expensive and potentially ruinous legal proceedings.
Offer training: Set up your new employees with the tools for success through training schemes.
How do I begin to sell my products?
Tell the world what you’ve got: You need to know how you will promote your product and who you will target – learn about the three key selling techniques as a starting point.
Get your product into stores: If you’re targeting retailers, follow our tips on securing deals with retailers and getting your product stocked in stores.
Keep up-to-date on e-commerce: E-commerce and selling online are crucial and you should be aware of the ins and outs of internet sales.
Brush up on selling techniques: Read our guides on how to sell to get in-depth advice on the techniques available.
Tell the world: Learn how to raise awareness of your brand by marketing your business.
Where do I get further advice and support?
Get in-depth information: Startups has a range of in-depth start-up guides for setting up in a whole variety of sectors, which cover costs, customers, potential pitfalls and more.
Be inspired: Read up on our success stories covering some of the UK’s brightest entrepreneurs to see how they overcame some of the early challenges they faced and grew into household names.
Chat with other entrepreneurs: Connect with other business owners and seek support and advice through the Startups Forum.
Land is one of the most solid investments available. It will always be worth something, and there’s little chance of it being stolen. Raw land is undeveloped property with no buildings or other structures — it is still in its natural state. If you’re thinking about investing in it, the trick isn’t so much about buying at a good price, but selling at the right time for a good profit. Investing in raw land is for people who can afford to wait years until someone comes calling for the land. It’s not a good idea for people who want to do a quick flip or need to develop an immediate income stream.
Raw land values increase at a faster rate at the center of a growing city or around the perimeter of cities. But, any raw land in an area showing population growth is worth investment consideration because such growth attracts developers. The whole idea of investing in raw land is to chose property that will appreciate in value and attract a buyer who will pay more for it down the road.
Raw Land vs Developed Property
Investing in raw land is less costly than buying developed real estate in the same area simply because there are no improvements on raw land. However, banks are a bit more cautious about fronting money for raw land that is not being used for any income-producing purpose and will usually ask for a higher down payment — sometimes up to 50 percent of the land purchase. On the other hand, mortgage loans typically require a 20 percent down payment or less. Land loans also have shorter maturities — 10 to 15 years versus 30 years for mortgage loans. You can also expect to pay higher interest rates for raw land than you would for mortgages.
Economies at all levels are vulnerable to boom and bust cycles. Local economies are often tied to a major industry. The area may have a spike in population growth and lots of land and home sales for several years. Those boom years are followed by too much product on the market and a sharp decline in sales. You are more likely to make money on raw land if you buy during the bust cycles and sell during the boom cycles.
Be leery of buying from owners who have held the property for only a short time, especially if the owner is a builder or developer. If they’re trying to sell fast, it likely means they have inside knowledge that the land isn’t as valuable, or won’t be as valuable, as they thought. Raise another red flag on any property priced too low for the market. That can mean the land has fallen outside the path of progress.
You also need to visit the land itself, even if it means a road trip. Never invest in raw land based solely on photos in a slick sales brochure. Do a thorough investigation and don’t allow a high-pressure salesman to rush you into a decision.
Raw land is a long term investment, For that reason, it’s a good option for people who are least 10 years away from retirement and want to diversify their assets. It’s not an ideal investment for pre-retirees who can’t hold the property long enough to reap the benefits of rising values.
No matter what line of business you go into, you will need startup capital to get your business going. Some typical startup costs facing new business owners include:
- Electronic equipment: computer, printer, scanner, fax machine, photocopier, etc.
- Furniture and fixtures: desk, lamps, bookshelves
- Office supplies
- Reference books
- Manufacturing machinery and equipment
- Advertising: domain name, domain hosting, mailers, website design, etc.
- Operating Space
- Corporation fees
- Legal fees
- Security deposit for renting a business location
What you need to buy can also depend on the degree to which you want to separate your business from your personal life. Many people will use their personal vehicle, cell phone and a room in their home to meet these needs inexpensively. Incorporating to separate your business assets and liabilities from your personal ones also costs money, but it offers an extra layer of protection if your business fails.
You should also consider operating costs that you’ll pay regularly in the course of running your business. Some of these may be required before you set up shop and on an ongoing basis thereafter, like insurance, membership fees and dues, loan payments, and employee wages. Make sure that you are managing your money well so that these regular payments won’t put a kink in your cash flow. In fact, regular payments link payroll and insurance are a frequently cited source of cash flow problems that leave new businesses short of working capital. At least at the beginning stages of your company, it might be a good idea to look into some of the small business financing options like asset based loans and invoice factoring. These options can get you the working capital you need when cash flow slows to a trickle.
Sources of Startup Capital
How much money you can afford to risk on your business from your personal savings and how much money you need to open for business will determine whether you need to look elsewhere to raise startup capital. Let’s consider the pros and cons of each potent
If you’re starting a business that requires significant financial investment up front, finding a source of funding can be a challenge, especially since the average cost of starting a business is $30,000. This is particularly true for young entrepreneurs who lack a strong credit history or don’t want the hassle of dealing with banks or private lenders.
Once these startup entrepreneurs are done considering their options, it’s not unusual for them to ask friends or family for startup cash. After all, unlike private investors or banks, these people know and trust you. It’s possible they can get you quicker access to cash with fewer flaming hoops to jump through. On the flipside, if your business fails or you are tardy in repaying the money, you may be headed for some conflict with the aforementioned family and friends.
So what’s the protocol for approaching an informal investor such as a friend, mentor, or even a family member? How do you work with them once you’ve secured an investment? Here are some key factors to consider:
1. Choose your Financier Carefully – Don’t just turn to Dad or your best friend because that’s who you know. Select someone with solid business skills who knows the risks and benefits of what they are getting into. Remember, if your business doesn’t work out and you can’t repay your obligations, relationships will suffer. At the very least, narrow your list down to friends or family who have faith that you will succeed, who understand your plans and are clear about the risks.
2. Demonstrate Passion and Due Diligence – Having an idea is one thing but proving that your idea is viable is another. Be sure you’ve done your research and due diligence before presenting your idea and asking for money. It’s a good idea to write a business plan, even if it’s a mini-plan that demonstrates the steps you’ve taken to research your market and work out your potential profitability. Most important, it should spell out what you need the money for. These business planning guides from SBA can help.
3. Be Realistic About How Much Money You Need – Instead of asking for the maximum, consider what you need to get you to a certain point in your business plan. For example, if you need cash to buy inventory, assess your costs and ask for the minimum that you need to get you through three months. Once you have shown your ability to repay that initial investment, you’ll be in a better position to ask for more money should you need it. And always remember to show and communicate your business progress along the way, even if it’s correcting mistakes you’ve made with your business strategy.
4. Decide What You Want – A Loan or a Share in the Business? – Think carefully about this one. A loan will require repayment over time (which you’ll need to be confident you can do) while a direct investment in your business is usually made in exchange for an active role in how the business is run. The latter can be helpful if you need mentoring guidance or “skin in the game” from someone who knows the business and can help you succeed. However, think hard about whether you want your family or a friend involved in your business operations on a day-to-day basis. Likewise, what are the emotional consequences if you are unable to repay the loan? These are all things to think about.
5. Use a Peer-to-Peer Lending Service – To help keep business and emotions separate, consider structuring a loan through a peer-to-peer (P2P) lending company. P2P firms don’t provide the loan; instead they act as an intermediary or broker between you and the person who has given you the loan. You and your lender decide on the repayment terms and the P2P company manages the loan repayment on your behalf – for a fee. This eliminates the inconvenience of writing a check each month and also gives your lender confidence that he will actually see money being repaid without having to chase you.
6. Come up with an Agreement With a Repayment Plan – Even thought you may know your lender or investor well, remember that this is a business agreement. Treat it as such. The agreement should detail your business plan, how the funds will be used, how progress will be measured, and how repayment will be made. If the investment is a stake in your company as opposed to a loan, clearly outline the potential risks so your family and friends are 100 percent sure about what they are getting into.
The markets are in a state of ecstasy, but investors may be underestimating lurking danger.
CNNMoney took a look at a slew of recent data on stock valuations and corporate sentiment, and while the prospects for global economic growth remain robust, savvy investors need to stay vigilant.
Here are the most four worrying signs for the markets right now:
1. Addiction to the Fed stimulus: Simply put, the financial markets are hooked on easy money, and that has caused them to ignore real economic and geopolitical vulnerabilities, according to an annual report released Sunday by the Bank for International Settlements (BIS), an organization of of central banks.
While the Federal Reserve and other central banks are widely credited with shoring up the financial system after the crisis by keeping interest rates low and driving investment into stocks, investors may have gotten ahead of themselves.”It is hard to avoid the sense of a puzzling disconnect between the markets’ buoyancy and underlying economic developments globally,” the report said.
The BIS noted that investors aggressive search for yield has driven them into riskier European and emerging market bonds, as well as lower rated corporate debt. That has left them exposed to a host of problems should interest rates rise quickly or economic conditions deteriorate.
“Countries could at some point find themselves in a debt trap: seeking to stimulate the economy through low interest rates encourages even more debt, ultimately adding to the problem it is meant to solve,” asserted the BIS.
2. Stocks are downright expensive: According to a popular metric of market valuation, stocks are trading at lofty levels previously experienced leading up market crashes. According to the Shiller PE Ratio, which tracks inflation-adjusted earnings over the past 10 years, the S&P 500 is currently trading at over 26 times earnings. The long-term average, going back more than 130 years, is 16.5.
The Shiller price-to-earnings ratio rose above 25 for the first time in 1901, then again in 1929. At the height of the tech stock craze in 2000, the ratio hit a record peak of 44 before the market collapsed. It was back above 25 in 2003 and stayed around that level until 2007 — shortly before the so-called Great Recession.
According to research by Credit Suisse, once it rises above 26, U.S. stock market returns are typically negative for the next five years.
3. Markets are far outpacing actual growth: Stocks are priced in the stratosphere compared to the overall health of the U.S. economy. David R. Kotok, Chairman and Chief Investment Officer at Cumberland Advisors in Sarasota, Florida, says that the only other time the total valuation of the stock market relative to U.S. growth domestic product (GDP) was higher was at the peak of the tech bubble.
“We think the probability of a correction is rising. It is very hard to pinpoint,” Kotok explained in a research note Sunday.
Still, Kotok is stripping out the first quarter’s decline in GDP for his calculations, and he admits that “GDP is not a perfect trading guide.”
Related: 3 reasons not to freak out about -2.9% GDP
But “it does express that, when stocks are highly priced in the aggregate relative to GDP, the probability is higher that markets are becoming fully valued.”
Worst Q1 GDP since recession
4. Corporate leaders aren’t so optimistic anymore: In a survey revealed Monday by accounting and consulting behemoth Deloitte, Chief Financial Officers in the United States have lowered their earnings expectations for the year, with CFOs in manufacturing feeling particularly pessimistic.
CFOs’ expectations for capital spending also fell, the Deloitte survey found.
“Net optimism is holding steady, but lower earnings and capital spending growth expectations suggest U.S. CFOs are factoring in bumps that were not on their radar screens three months ago,” said Deloitte’s Sanford Cockrell III in a press release.
That’s a wrap! The first half of 2014 on Wall Street is officially in the books — and performance was solid despite a lackluster finale on Monday.
Here’s what you need to know:
1. By the numbers: Both the Dow Jones Industrial Average and S&P 500 lost ground slightly on Monday after flirting with record highs previously.
But the S&P 500 has already logged 22 record highs this year alone, ending the first half up 6%. While that first-half rally trailed last year’s performance, it still easily bested the Dow’s narrow gain of just 1.5%.
Interestingly, that’s the biggest halftime lead by the S&P 500 over the Dow since 2009 and the seventh-biggest since 1929, according to Bespoke Investment Group.
Meanwhile, the Nasdaq landed safely in the green on Monday, leaving it up a healthy 5.5% so far this year.
Tech stocks outperformed on Monday, as evidenced by the 0.5% gain for CNNMoney’s Tech30. Standouts included Apple (AAPL, Tech30), SINA (SINA, Tech30) and BlackBerry (BBRY, Tech30). Then there was GoPro (GPRO), in a league of its own, continuing its red hot start as a public company. After zooming last week, the wearable camera maker popped another 13% today.
2. More housing hopes: Wall Street briefly cheered new signs of progress in the very important housing market. The National Association of Realtors said U.S. pending home sales jumped 6.1% in May, representing the biggest monthly increase since April 2010. Economists had been anticipating a more modest increase.
The bullish housing news lifted shares of home builders like Lennar (LEN) and PulteGroup (PHM).
3. Stock movers — Yahoo, American Apparel, GoPro: Yahoo (YHOO, Tech30) enjoyed a 2.5% bump after the Internet company was upgraded to “overweight” by Piper Jaffray.
While Yahoo’s core business remains “challenged,” analyst Gene Munster said his bullish call is based on the belief that the company’s stake in Alibaba is “undervalued.” Last week, the Chinese e-commerce giant revealed plans to list its highly anticipated initial public offering on the New York Stock Exchange.
Yahoo is Alibaba West
American Apparel (APP) dropped 6% after the company announced plans to adopt a shareholder rights plan in an effort to prevented ousted chairman (and founder) Dov Charney from seizing control. The sell-off follows a surge of nearly 30% on Friday.
Related: Founders in hot water at American Apparel, Lululemon
It was truly a great leap for MannKind (MNKD). Shares soared nearly 10% after the company said the Food and Drug Administration approved a powder form of insulin that is inhaled. The stock is up 113% year to date.
PPG Industries (PPG) logged a 3% gain after unveiling plans to acquire a Mexican coatings company for about $2.3 billion.
Bank of New York Mellon (BK) advanced 3.5% as activist investor Nelson Peltz and his Trian Partners revealed a $1.05 billion stake in the financial company.
4. Investors yawn at Facebook, BNP headlines: Facebook (FB, Tech30) is in hot water after it was revealed the social network conducted a ‘mood’ experiment on users without their knowledge or explicit consent. Facebook’s terms of service give the company permission to conduct this kind of research, but many users have reacted with anger.
Wall Street, however, was unmoved by the drama. Facebook’s stock closed down less than 0.5% after posting gains earlier in the day.
The U.S. Department of Justice is expected to announce a multi-billion dollar settlement with French banking giant BNP Paribas (BNPQY) on Monday. The bank has been subject to a long running criminal investigation over accusations that it breached U.S. sanctions on Iran, Sudan and other countries. Shares of BNP rose ever so slightly in Paris.
5. Dubai crumbles, Bulgaria booms: Investors continue to give Dubai’s stock market a big thumbs down.
The DFM General Index plunged 4.4% on Monday due to worries about property stocks, especially contracting giant Arabtec Holdings. Dubai plummeted 22% in June, its worst month since 2008.
On the other hand, Bulgaria’s stock market raced almost 6% higher after the European Union gave the green light to the country providing $2.3 billion in state aid for banks. The move follows a series of arrests of men accused of fueling bank runs.
Both European and Asian markets closed mixed. The main loser of the day was Australia’s ASX All Ordinaries index, which dropped by 0.9%.
Argentina’s markets fell just modestly even as the country faces a Monday deadline to pay two groups of bondholders. The way things unfold from here will determine Argentina’s ability to move past its 2001 default and regain access to foreign funds.
Gold fell by 28% in 2013. That’s a huge reversal of a decade-plus trend. Between 2001 and 2012, gold managed positive gains every single year, a track record unmatched by any major asset. The precious metal went from a low of $255 in April 2001 to a high of $1,900 in September 2011, for a peak return of 745%.
Since then, gold has given back 35% from its $1,900 high, leading many to call the end of the gold bull market.
But is it really finished?
By looking at history and numerous indicators, I’ve found a different story.
One that will jumpstart your 2014 profits…
Simple Economics Guarantees a Gold Rally
Fundamental drivers for gold are so numerous I hardly know where to start.
Unprecedented quantitative easing (money printing) and ultra-low interest rate policies imposed by central banks – especially in the United States, Japan, Europe and China – are in the news every day.
Here are several others that aren’t grabbing headlines yet, but shouldn’t be ignored.
Shuttering Operations: It’s no secret that falling gold prices have made numerous mines unprofitable. That’s pressured management at those mining companies to rationalize their operations. Producing gold at a loss doesn’t make for happy shareholders.
So mines are being put on care and maintenance, seriously cutting into gold production worldwide. Evy Hambro, who manages BlackRock Inc.’s $8 billion World Mining Fund, said gold supply could fall “quite rapidly” as producers restrict output at higher-cost mines.
Fewer Discoveries: Lower gold prices have meant, of course, lower profits. So, miners are cutting back on expenses that aren’t immediately accretive, affecting the development of mine expansions, new projects, and exploration. That’s inevitably going to mean fewer ounces available to mine in the near and medium terms than would have been the case without this gold price rout. There were half as many drills looking for precious metals in the first 9 months of 2013 versus 2012.
High-Grading: In response to lower prices, gold miners have resorted to mining higher-grade ores while leaving behind low-grade ores. That allows them to be more profitable on ounces produced this way, but it means much higher prices will be needed to go back to the lower-grade ores. In some cases, these may never even be mined out at all.
Physical Asian Buying: Asia loves gold, and that trend continues. In the first nine months of 2013, India and China together had bought 1,500 tonnes (1,653 short tons) of gold, easily dwarfing Western purchases. When Indian, Chinese, and central bank buying are combined, they account for nearly the entire annual world gold production.
Overall, gold fundamentals have not only remained intact, they’ve continued to improve. So it’s easy to project them to push higher gold prices in the future. They’ve got the laws of economics behind them…
Gold Hits the Same Bottom – Twice
An important part of technical analysis involves analyzing price action. And gold’s had plenty of that over the past year.
Most significant was the massive price drop in mid-April when a black swan crash-landed on the gold market.
Over just two trading days, gold futures prices shed 13%, falling from $1,575 to $1,375. That $200 cliff dive was the largest two-day drop in 33 years.
By late June the price had fallen further still, to $1,180 per ounce. So far, that’s been the low.
Recent news of the Fed’s QE tapering again weighed on gold in late December, causing it to momentarily drop to $1,182, then immediately reverse upward by $32.
While it’s still early to say for sure, that may have been a “double bottom” – dropping twice to the same level without moving further down – hit in June then in December. This increases the chances that the $1,180 level is the low for gold prices in this drawn-out consolidation process.
There are strange times. Killer bacteria and a German-Spanish “cucumber war” dominate the headlines for weeks. It comes to the illness and death into perspective by the EHEC pathogen. Politicians, central bankers and the media say about the future of the euro: If Greece does not help the European Monetary Union will be destroy. Greece is without debt restructuring and without giving the creditor to large portions of their claims. The policy was transfigured by Greece, Portugal and Ireland in regards to rescue for euro bailout; especially Germans have learned the lesson.
The Euro-scepticisms is palpable. Suddenly politicians must change their lines of argument to stop the conflagration of euro scepticism that prevails in the country. There is talk now for better fiscal discipline, which going to enforce it in the peripheral member states in the south and northwest of the euro zone. They staged again, instead of their responsibility to demand.
Involve private creditors at the expense of the Greek debt crisis
What do you think about the renewed demand from Finance Minister Wolfgang Schäuble to involve private creditors at the expense of the Greek debt crisis? It comes to a term extension held by the banks, which according to Greek government bonds would lead to ECB that the rating agencies would lower the credit ratings for Greece. Apparently, the ECB sees its fundamental commitment to an independent monetary policy at risk. To rescue bankrupt states and incur corresponding losses in is not one of their missions. For the ECB refinancing operation cause losses if both, the banks that the bonds have provided as collateral, as well as the Greek government will become insolvent.
To secure the ECB, states could adopt the euro zone to the ECB a guarantee. Economically, it is no risk, because they are the owners of the ECB. The ECB could then refinance the Greek banks at current levels, even in the event of a debt restructuring. The independence of monetary policy would be maintained. If private investors want to participate in the losses, which shall become known, we must not allow now to get off.
Because this exit would mean that, the expiring bonds would be financed with tax money from other countries in the euro zone.
“The euro does not lead to an agreement, but the division of Europe”, in 1998, warned the sociologist Lord Ralf Dahrendorf. His exhortations were then unheard. 13 years later, but they threaten to become real and Europe is facing a crucial test. Despite all promises, Greece failed to chart a credible austerity and eliminate supply-policy failures. Interest groups and elites were able to enforce their pension rights continues. Now suffer especially the Greek taxpayers.
Simultaneously suffers the image of Germany, especially among the Greeks. Once again, the banks will protect and transfer the risk to the taxpayer. What we finally need is a European strategy. This must include a final cure of the SGP, the consistent establishment and implementation of the no-bailout principle, a time limit for rescue tools and a courageous rescue of Greece (including refinancing). Otherwise, we experience more disintegration by nationalistic prejudices – and then the European governments were actually the gravedigger Europe.
On further financial assistance to Greece
With today’s decision of the Bundestag on further financial assistance to Greece, end the future stability rules for the euro countries. From July 2013, the European Stability Mechanism (ESM) replace the existing temporary auxiliary systems and complement the Maastricht criteria and the Stability and Growth Pact. The core idea of the ESM, heard in the case of a de facto sovereign default may grant, under severe budget constraints grants. The principle of liability is one of the pillars of the social market economy.
Without competition, freedom of contract and just liability, the market cannot provide credible information. The de facto socialization of the risk of sovereign debt of Greece is so far not only a consequence but also just cause to lower interest rates in the past or the excessive debt. The liability principle should be enshrined in the ESM with the creditor participation strengthened in future sovereign defaults again.
After EMS rules, it would have in a negative debt sustainability. To come to a hearing to the debtor with its creditors would grant the ESM it only if creditors to waive some of their demands. Bond yields would be higher and would dampen excessive debt early. In the case of Greece, it is running but now is quite different. Here, the creditor will only be encouraged to extend their loan terms.
Schäuble calls this “soft restructuring”. In fact, that is good and windfall for all those who benefit from high borrowing rates. The history of the euro is a series of unpunished infringements of the law.