Month: June 2012

By MoneyMorning.com.au

Words, indeed, are powerful things. As an Englishman in America, my personal favorite is freedom.

It’s embodied by those words penned so long ago by a young Thomas Jefferson…

It’s the idea that “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”

That’s not only the foundation for what I believe, but it’s also the basis for how I invest.

It’s a technique I call “Liberty Investing.”

As such I like to invest in countries and companies whose operations are compatible with freedom, as defined by the Founding Fathers and the best U.S. political and economic traditions.

To me, this is ultimately the right way to run both societies and companies. And when we follow them, our returns will be consistently superior over the long term.

I often look for a number of characteristics in the countries where I invest.

For instance, market signals should be paramount and government participation in the markets should be relatively low. The Heritage Foundation Index of Economic Freedom is a good measure of this.

Each country should also have a high level of integrity-meaning they follow the rule of law. A good score on Transparency International’s Corruption Perceptions Index is a good measure of this.

They should also be generally free and democratic, and should have a fairly small government and moderate taxation. Interest rates also should be above the level of inflation, so they don’t deprive their economies of domestic savings.

Finally the local bureaucracy should be reasonable to deal with. The World Bank has an Ease of Doing Business Survey that tells you this.

You see how this freedom-based investing technique works?

They’re also fairly unlikely to expropriate your investments, and will maintain your right to property.

That’s why I’m suddenly more interested in investing in Latin America. To tell you the truth, you should be too.

Here’s why.

Liberty Investing in Latin America

Latin America as a whole has averaged 4% real growth in the last decade, far more than you would have gotten in Europe, North America or even much of Asia outside of China and India.

That gives us the kind of growth we need to watch our investments grow.

Yet the region remains a minefield for investors.

Certain populist governments have been expropriating companies, making property rights extremely vulnerable.

However there are a few bright spots. Namely they are countries where things are improving -albeit gradually.

Given these trends, the region is too good to pass up – even though it does still carry risks.

A Liberty Investor’s Tour of Latin America

Bearing those in mind, here’s a Liberty Investor’s tour of Latin America as I see it.

Investing in Argentina and Venezuela: Other than both countries being democracies, they obey none of the Liberty Investing criteria. Foreign investments are not safe from expropriation while both countries score low on integrity and have governments that dominate every sector of their economies.

Interest rates in both countries are below the level of inflation, and the local bureaucracies are arbitrary and chauvinistic. Finally, the government overrules the free market in both countries at every opportunity.
Mark this Pair: “Not a Chance”

Investing in Brazil: This darling of the international investment community is also not suited for a Liberty Investor. Until recently interest rates were well above inflation, but the government has lowered them several times and plans to lower them further.

Government in Brazil is too large, and meddles in many sectors of the economy, seeking to build Brazilian champions in such areas as shipbuilding.

Until 2009, the resource sector was fairly safe from government meddling, but that is no longer the case. Finally the World Bank ranks Brazil an appalling 126th on its Ease of Doing Business survey, below Russia.
Mark this one: “I Don’t Think So”

Investing in Mexico: Ranks 54th on the Heritage Foundation’s Index of Economic Freedom, which is not too bad. Mexico is also above Brazil on the corruption index and a respectable 53rd on the Ease of Doing Business Index.

On the other hand, in sectors such as energy, the government is completely dominant, more so than in Brazil. Mexico has an election in July, which could go either way.
Mark this one: “Avoid for Now”

Investing in Peru: This one ranks a high 42nd on the Index of Economic Freedom and 41st on the World Bank Ease of Doing Business Index. Its government is relatively small, and the market sector dominant, although current policy is to increase government participation.

On the other hand, interest rates are below the inflation rate and the current president Ollanta Humala is left-of-center. Overall, Peru is acceptable, but no more than that at this stage.
Mark this one: “A Maybe Later”

Investing in Colombia: This one is similar to Peru, but better. It has rankings of 45th on the Index of Economic Freedom and 42nd on the Ease of Doing Business. Like Peru, it has a relatively small government, but unlike Peru the government is strongly pro-market.

Add to this the fact that it has recently signed a free trade agreement with the United States, and is enjoying an oil and infrastructure boom, and you can see the investment opportunities in Colombia are very interesting indeed.
Mark this one: “A Buy”

Investing in Chile: Finally, there’s Chile. It has a stellar ranking of 7th on the Heritage Foundation index – three places above the United States.

It also ranks above the U.S. on the Corruption Perceptions Index, but is only 39th on the Ease of Doing Business index, with construction permits being a particular problem area. Its government is small by global standards and its taxation moderate, with a privatized social security system that has been a model to many other countries.

Only interest rates are a problem, with the central bank rate below 1% while inflation is running at around 4%. Still, like Colombia, Chile is an excellent home for your investments.
Mark this one: “A Buy” as well.

Freedom is a simple word, but a powerful force. Follow it and you can change the world as well as your investments. It is only when you lose sight of it that the train comes off the tracks.

Martin Hutchinson
Contributing Editor, Money Morning

Publisher’s Note: This article originally appeared in Money Morning (USA)

From the Archives…

How Bad Monetary Policy Will End the Welfare State
2012-06-01 – Dan Denning

The Setting Sun of the Japanese Economy
2012-05-31 – Greg Canavan

The US Dollar – The “Strongest of the Weak”
2012-05-30 – Kris Sayce

Europe’s Energy Resource Puzzle
2012-05-29 – Kris Sayce

The Market Has Crashed, But This Graphite Stock Has More Than Doubled
2012-05-28 – Dr. Alex Cowie

A Liberty Investor’s Guide to Latin America

EURUSD’s bounce from 1.2288 extends to as high as 1.2585. Another rise to test 1.2670 key resistance would likely be seen later today, as long as this level holds, the price action from 1.2288 could be treated as consolidation of the downtrend from 1.3283, and another fall towards 1.2000 is still possible after consolidation. On the upside, a break above 1.2670 will indicate that the downward movement from 1..3283 has completed at 1.2288 already, the the following upward movement could bring price back to 1.3000 zone.

Daily Forex Forecast

In the United States, the belt-tightening has just begun
June 07, 2012

By Elliott Wave International

Since the start of the European sovereign debt debacle, the word “austerity” has been bandied about a lot.

It wasn’t an everyday word, and may send some people to the dictionary. Merriam-Webster defines “austerity” this way: enforced or extreme economy.

But even knowing this definition might leave one wondering how “austerity measures” relate to Europe’s debt crisis. The Associated Press (5/13) provided this overview:

Austerity has been the main prescription across Europe for dealing with the continent’s nearly 3-year-old debt crisis, brought on by too much government spending. But what does it mean for the average European? Imagine paying sales tax of 23 percent or more. Or having your wages cut by 15 percent. Austerity comes in many forms: higher taxes, fewer state benefits, more job cuts, working longer until retirement, you name it.

How about America? Will austerity measures be imposed on the world’s largest economy? Well, a Marketwatch columnist says “America’s new Age of Austerity is already here…Yes, America is already in a depression.” (5/29)

We agree. In fact, Robert Prechter said as much in the September 2011 Elliott Wave Theorist:

Bulls say the economy is in recovery, albeit a weak one. Bears are calling for a “double dip” recession, like the back-to-back recessions of 1980 and 1982. But, as is often the case, we disagree with both camps: The economic contraction of 2007-2009 was not a recession; the respite since then is not the start of a new economic expansion; and the economy is not going to have another “dip” into recession. The economy has been sliding into depression.

The signs of an American austerity are becoming widely visible. And nowhere is this belt-tightening more evident than in state and local governments. Recent years have seen a multitude of stories that describe reduced services. And in the overall economy, we’re seeing a de-leveraging of debt. Unemployment remains relatively high. Here’s a CNBC headline from today (5/30):

Sign of the Times: 20,000 Apply for 877 Auto Job Openings

This story about a new automobile plant in Montgomery, Alabama is one of many like it that feature jobless or under-employed individuals standing in line.

Above I showed the September 2011 quote from Robert Prechter. Yet he actually foretold much of what is financially happening today in his 2002 book Conquer the Crash.

That’s right. Ten years ago, he described what this age of austerity would look like. Much of what he described looks just like what is going on today. But how about the rest of what’s described in Conquer the Crash?

Yes, there’s more. You see, Prechter pointed out much more than what unfolded in the 2007-2009 financial crisis. Do yourself the biggest of favors and learn what he has to say. Be one of the few who are prepared vs. the majority who will be caught off-guard.

How? Right now, Elliott Wave International is offering a special FREE report with 8 lessons from Conquer the Crash to help you prepare for your financial future.

In this 42-page report, you’ll get valuable lessons on:

• What to do with your pension plan
• How to identify a safe haven (a safe place for your family)
• What should you do if you run a business
• Calling in loans and paying off debt
• Should you rely on the government to protect you?
• Money, Credit and the Federal Reserve Banking System
• Can the Fed Stop Deflation?
• A Short List of Imperative Do’s and Don’ts

It’s not too late to prepare yourself for what’s ahead. Get Your FREE 8-Lesson Conquer the Crash Report Now

By Central Bank News
    The United States economy should continue to expand at a moderate pace in the next few quarters but the situation in Europe poses significant risks and the Federal Reserve stands ready too take appropriate action, Chairman Ben Bernanke said.
     Speaking to U.S. lawmakers, Bernanke said U.S. households continue to spend, consumer sentiment is still noticeably higher than last year and demand for U.S. exports has held up.

By Central Bank News

By The Sizemore Letter

Have you ever noticed that new “premium” vodka brands seem to pop up every other year, yet the quality scotch brands you see on shelves today are the same ones you might have seen in your grandfather’s liquor cabinet?

There is a reason for that. Vodka is colorless, flavorless and can be mass produced from scratch in a matter of days. For that matter, you can make it in your bathtub over a long weekend with basic ingredients from your kitchen.

Making an enjoyable scotch, on the other hand, takes years. In fact, whisky cannot technically be called “scotch” at all unless it has been aged in an oak cask for a minimum of three years.

Of course, if you offer a gentleman a scotch that has only been aged three years, he might take it as an insult. A decent scotch—be it blended or single malt—will generally be aged anywhere from 12 to 25 years or more.

Anyone can start an exclusive new vodka brand given a sufficient pool of capital. Consider the example of Grey Goose. The American billionaire Sidney Frank created the brand in 1997 and sold it to Bacardi just seven years later for a quick $2 billion. Had he opted instead to create a new scotch brand, he would not have lived long enough to enjoy its success. When the late Mr. Frank passed away in 2006, his first batch of scotch would have still needed another 5 years or more of aging to be taken seriously.

This is a significant barrier to entry for would-be newcomers. Imagine an enterprising scotch enthusiast attempting to start his own distillery today. What bank or venture capital firm would put up the money to get a distillery of any size in production given that the company wouldn’t have a sellable product for at least a decade?

Perhaps you could get the enterprise off the ground faster by buying existing aged inventory from a small independent distillery, but this is not something that would be feasible on an industrial scale. At best you would have a small craft business.

This brings me to a recent headline on Diageo (NYSE:$DEO) the British-based international spirits conglomerate and owner of the ubiquitous Jonnie Walker brand. In addition to Johnnie Walker, Diageo owns the J&B scotch, Crown Royale Canadian whiskey, Ketel One and Smirnoff vodka, Jose Cuervo tequila, and Bailey’s Irish Cream brands (among many others) and acts as distributor for the assorted cognacs of Moet Hennessy.

Diageo is investing $1.5 billion to expand its scotch production over the next five years. The news sent shares of Diageo’s stock price higher as investors interpreted the announcement as a bullish call on the company’s future.

Think about it. Diageo’s management must feel pretty confident about the future to expand its scotch operations on a grand scale. While some of the production used for the lower end Red Label line might be available in as little as 3-5 years, it will be at least 12 years before any whisky made in the new distilleries will be eligible to be used in a bottle of Black Label—and nearly three decades before it could be used in a bottle of the ultra-high-end Blue Label.

I have every reason to believe that this optimism is warranted. Over the past 5 years, the company has grown its top-line sales by over 50 percent—and the past five years have been rather challenging for most consumer-related businesses.

Much of this growth has been due to high demand from emerging markets—which already constitute 40 percent of Diageo’s sales and continue to take a bigger slice every year.

Call it the legacy of the British Empire. The United Kingdom controlled 25 percent of the world’s land mass at its apogee, and its influence spread far wider. And everywhere those ambitious British colonials went, they brought with them a thirst for scotch whisky. Outside of the United States—where Kentucky bourbon whiskey and Tennessee whiskey are popular—scotch is generally the only game in town.

As incomes continue to rise in China, India, Latin America and other brand-conscious emerging markets, so do standards of taste. Ordering a premium spirit or offering a bottle as a gift is a sign that you have “made it” in life. This is a long-term macro theme with decades left to run—which is perfect for Diageo’s premium scotch production timeline.

I should also add that Diageo is an International Dividend Achiever, meaning that the company has raised its dividend for a minimum of five consecutive years. I expect Diageo to continue raising its dividend at a nice clip in the years ahead. The stock currently yields 3.0 percent.

I won’t say this about too many companies, but Diageo is a stock that you can buy and forget. I recommend the stock for your core, long-term portfolio—and I also recommend you take the time to enjoy a bottle of Black Label, preferable with full-bodied cigar. And if Diageo performs as I expect, use your dividend proceeds to upgrade to a bottle of Blue Label.

Disclosures: Sizemore Capital is currently long DEO. This article first appeared on InvestorPlace.

SUBSCRIBE to Sizemore Insights today via e-mail.

Article by Investment U

When interest rates rise, many bond investors will get slaughtered. Protect yourself from the coming bond market collapse with this new investor's guide.

The so called “flight to safety” that’s going on right now is more like a mad dash to insolvency.

Macro-economic pressures worldwide have created a rush to any “secure” investment. U.S. treasuries and the German Bund are the favorites, but all bonds have been under huge buying pressure.

This massive money shift from risk to so called “safety” has driven up prices of all debt – not just U.S. and German sovereign debt – to levels most of us have never witnessed.

When the 10-year dipped below 2% several weeks ago the entire money world took a collective step back. The resounding response from the street, “Is this really happening?”

As I am writing this the 10-year treasury is now below 1.5%. Yes it is happening!

Paying Premiums No One Ever Dreamed Possible

For those of you who may not understand bonds as well as other parts of the markets, when the prices of bonds go up, the yields come down. Right now we are paying prices for bonds that border on ridiculous. At 1.5% on the 10-year treasury investors are paying premiums no one ever dreamed were possible.

Does anyone remember what happened to housing prices and the stock market in 2008 when those prices were ridiculous?

That’s right! It has to happen here, too.

Before I get too far into the Armageddon awaiting buyers of treasuries and other interest rate sensitive investments that are paying record low rates, let me assure you, there are ways to own bonds and ride out the coming debacle… and still make money.

When rates move up there is however, no way to avoid a drop in the market values of all bonds and interest sensitive investments. All bonds will take a hit when this downward trend in interest rates reverses.

How much of a hit you take and how much you make while you ride out the storm is the real issue. Holding bonds when their market value is down is no big deal if you are making enough on the minimum expected annual return (MEAR) to make it worth the wait.

Investors who are buying into this flight to safety in U.S. treasury bonds that are paying 1.5% and less will be stuck at 1.5% probably for the full maturity – 10 years.

1.5% for 10 years! Are you kidding me? That’s worse than a bad marriage!

The worst part of it all is the drop in the value of treasuries. When rates run up and bond market values drop it will scare most holders to sell at losses… big losses. The first time a monthly statement shows a big drop in value in what most assumed were guaranteed investments, most will sell. Believe me; they will sell as if their bonds were on fire.

Losses in Treasuries? You bet!

If you sell any bond before maturity you only get the market value. Any bond! And a 30-year treasury will lose as much as 35% to 40% of its market value with a three-point increase in rates.

Three points may sound like a lot but all treasuries were paying three points higher in November 2007 and the 10-year was above 5.3% in June 2007. That’s almost four points higher than it is now.

This drop in bond prices has to happen and it’ll be a blood bath!

Where’s the Safety?

By now I hope the idea of holding a bond for 10 years at 1.5% seems ridiculous. When you consider how much you can lose in treasuries just in the dip in market value, and how much potential income you lose over 10 years at 1.5%, you have to be asking yourself, where’s the safety?

When you look at the money reality of 2.5% on the 30-year treasury and 1.5% on the 10-year, how can what’s happening be considered anything but a flight to poverty?

If treasuries were paying 8% or 10% I could justify holding them and riding out the rough spots, and riding it out is the only way to make money during the correction that’s coming.

How to Ride it Out

If you discipline yourself to own short maturities, stagger your maturities by having at least one bond maturing each year, and own small positions to gain the same advantage diversification gives you in stocks, you will have done all you can to limit your downside when rates run up.

But short maturities are a double edged sword. The shorter the maturity the less a bond will drop when rates run up. But shorter maturities also pay lower interest rates.

That’s why it’s a real balancing act to make this work.

The solution is to buy bonds that have a little lower credit rating. Companies that are still good credit risks, but ones that Wall Street typically avoids – considering they stick with mainly AAA and AA bonds.

AAA corporate bonds pay less than 1%. No one will sit on a bond at 1% when rates start to move up.

But for instance, one bond that I’ve had my eye on is a BBB+ rated bond from Morgan Stanley (cusip: 61748aae6). The bond pays around 5.1% for less than a two-year holding period. Its maturity is April 4, 2014.

A 5.1% rate isn’t huge, but the maturity is short enough that you won’t see a huge drop in value when rates move up. Plus, you’ll be getting your principal back in less than two years to buy into a rising rate market and it’s almost 10 times what you’re getting in money markets.

The biggest selling point for this bond is it’s BBB+, investment grade! The credit quality should be good enough for almost any portfolio.

And if you’re willing to take on a bit more risk, there’s even more lucrative opportunities… two of which I share with Investment U Plus subscribers in today’s issue. (red text only for IUD versions)

What You’ll Gain From This Method

But by staying disciplined with short, staggered maturities in lower rated bonds, you’ll be able to:

• Limit your downside risk due to interest rate increases.
• Return your principal in a short amount of time and make cash available to buy into a rising interest rate environment.
• Pay far above what other bonds are earning or will earn.
• Limit your market exposure by limiting how long your money is in the market.
• And most importantly, pay you enough to allow you to ride out the storm and not sell at a loss when rates start to move up.

This whole scenario is based on the assumption that if you earn enough in your MEAR, market fluctuations don’t matter. Most bond investors are very comfortable riding out a spike in interest rates if their portfolio continues to return above market rates.

Like I said, it’s a balancing act. But, if you plan on staying out of the stock market’s insane volatility and still make enough money to survive, you will have to do some balancing.

Short maturities, staggered maturities, small positions… that’s how you’ll be able to ride this out.

Good Investing

Steve McDonald

P.S.  We’ve been inundated with e-mails from our readers who don’t want to risk their retirement in the current market – and I don’t really blame them. So in just a few weeks, I’ll be initiating a new trading service aimed at safely and successfully investing outside of the stock market.

But in the meantime, I’m providing Investment U Plus subscribers with two more viable bond options (along with cusips) that fit my criteria for of short, staggered maturities with interest rates ranging from 9.14% to 14.7%.

To receive these recommendations along with other daily picks from our team of experts, click here to learn more about subscribing to Investment U Plus.

Article by Investment U

By The Sizemore Letter

“A few years ago, I said: if people do not watch it, Europe will become an open-air museum for traveling Chinese. Well, we are halfway there.”

The quote above was from a Financial Times interview with Johann Rupert, Chairman of the Swiss-based Richemont (Switzerland:CFR), the second largest luxury goods group in the world (see “Tourist Buyers Pose Sales Conundrum”).

The outlook for Europe is not particularly good these days. Even if the Eurozone survives its current crisis—and I believe it will—real domestic growth will be hard to come by going forward.

Debt deleveraging, aging demographics, and—in some cases—shrinking populations suggest that Europe may never again be a major engine of consumer demand, or at least not in the lifetimes of most people reading this article.

Many demographers have warned that Europe risked becoming a “cultural theme park” for American, Chinese, and other foreign tourists, or an “open air museum” as Mr. Rupert suggests. “Giant luxury shopping mall” might be a better description, however.
Mr. Rupert ought to know. Though Richemont is based in Europe, the biggest buyers of the group’s expensive wares—which include the Cartier and Mont Blanc brands among many others—are Chinese nationals.

Richemont is not alone. Barron’s recently reported that Italian luxury group Prada (Hong Kong:1913) gets 37% of its revenues from Europe, but only 17% of that is actually sold to Europeans. Most of the rest is sold to Asian and specifically Chinese tourists. Counting the nationality of the buyer rather than the location of the sale, 57% of the group’s revenues are estimated to come from non-Japanese Asians and another 12% come from Japan. All told, nearly 70% of Prada’s sales go to the East.

Precise figures are impossible to come by, but it is believed that half of the luxury goods sold in Europe in 2011 were to tourists from mainland China. And this does not include sales made in stores within China itself, which are growing at a startling clip.

Though the United States has its share of luxury brands, such as handbag maker Coach (NYSE:$COH), the luxury goods industry is concentrated in Europe, which also happens to be ground zero of the biggest sovereign debt crisis in generations. And with this crisis comes incredible opportunity.

I’ve never been comfortable investing heavily in emerging markets. The lack of transparency and corporate governance was always a sticking point for me. I’ve always preferred to invest indirectly, through the shares of Western firms with a large and growing presence in emerging markets (call it “Emerging Markets through the back door”).

The luxury goods sector is particularly well suited for this strategy because not only does it target emerging market consumers, it targets wealthy emerging market consumers that tend to weather economic storms better than the rest.

In recent articles, I have suggested that readers accumulate shares of European and particularly Spanish blue chips on dips (see “How to Invest for European Armageddon”). Today, I recommend that readers take their pick of Europe’s finest luxury goods companies.

For those investors with access to foreign markets, I recommend shares of both Prada and Richemont. Swatch Group (Switzerland:UHR), the maker if the Omega brand worn by Daniel Craig as James Bond, is also a fine choice.

For those limited to stocks trading in the U.S. market, the shares of the LVMH Moet Hennessey Louis Vuitton ADR (Pink:$LVMUY) are a fine option as well. The shares are liquid enough for most investors to trade without any issues, but investors trading in large lots should use a limit order nonetheless.

China’s economy is slowing, and this has caused a stampede out of most luxury names in the second quarter. Alas, it is remarkable how short some investors’ memories can be.

We’ve seen this movie before. Last summer luxury firms sold off heavily as well, as…you guessed it…fears of a European meltdown and a slowing in China caused investors to dump the sector. But then, a funny thing happened. The slowdown in luxury sales never materialized and 2011 proved to be the strongest year in history for the sector.

Will 2012 prove to be as good of a year for the sector? Only time will tell, but I have no reason to believe this time will be different. Take advantage of any short-term weakness to accumulate shares of high-profile European luxury brands.

Disclosures: Sizemore Capital currently holds positions in COH and LVMUY. This article first appeared on MarketWatch.

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 7 June, 08:35 EST

WHOLESALE MARKET gold prices eased back from an earlier rally Thursday lunchtime in London, trading at $1623 per ounce as the Euro currency slipped from a 1-week high $1.26 after new data showed US jobless claims continuing to fall.

The Bank of England left UK monetary policy unchanged at its scheduled monthly meeting, but the People’s Bank of China surprised analysts by cutting interest rates for the first time since early 2009.

European stock markets bounced further from their 3-year lows, and Brent crude oil – the European benchmark – rallied after slipping once more near 16-month lows at $100 per barrel.

The price of silver bullion jumped within 25¢ of Wednesday’s 1-month high near $30 per ounce.

“Gold’s performance over the past month has not been positive but has been the best of the bad bunch,” writes Walter de Wet at Standard Bank today.

“However, movements in the US Dollar [are] only a short-term driver of gold prices…As a result, we believe that turning structurally bearish on gold purely because of a stronger Dollar (or weaker Euro) would be wrong [and] continue to look for a gold price above $1900 in Q4.”

“The gold bulls are desperately hoping for further mention of some form of stimulus,” writes Marex Spectron’s David Govett in a note, looking to US Federal Reserve chairman Ben Bernanke’s appearance at the Senate today.

“If however, as I personally believe, the Fed leaves things as they are for the time being, this will be viewed as negative and gold will fall.”

Over in Europe today, Spain successfully raised €2 billion ($2.6bn) in new government bonds, but at a cost of 6.04% annual interest on 10-year debt.

Commenting at his monthly press conference Wednesday after leaving Eurozone rates and bank-support lending unchanged, “Some of the problems in the Euro area have nothing to do with monetary policy,” said European Central Bank president Mario Draghi.

“I don’t think it is right for monetary policy to fill other institutions’ lack of action.”

Today’s Financial Times leads with un-sourced comments that “Unlike earlier bailouts for Greece, Portugal and Ireland, the proposed Spanish rescue would require few austerity measures beyond reforms already agreed with the EU.”

Such austerity as has already happened means Madrid – which needs perhaps €400 billion ($500bn) on some estimates to recapitalize its domestic banks – “could even dispense with the close monitoring by international lenders that has proved contentious in Athens and Dublin.”

The Wall Street Journal meantime reports that China Investment Corp. – the sovereign wealth fund running much of Beijing’s public savings – now deems the risk of a Eurozone break-up “too big” and has cut its holdings of Euro-denominated stocks and bonds.

After announcing a drop of one-sixth in its Euro debt holdings yesterday, Kazakhstan’s central bank today said it will buy gold worth some $1 billion to raise the proportion of bullion in its reserves from 12% to 15%.

At current gold prices, the move should take Kazakhstan’s official holdings from 98 to some 120 tonnes.

“Quantitative easing in Europe will infuse liquidity and add little bit more confidence,” said commodities researcher Amrita Sen of Barclays Capital to CNBC-TV18 in India this morning.

“The continued flight from capital and risky assets should benefit gold prices.”

Gold prices for Indian consumers – the world’s heaviest buyers – yesterday reached new record highs, hitting some INR 30,400 per 10 grams and rising at an average annual rate of 28% since the Western world’s banking crisis began in June 2007.

China’s gold imports through Hong Kong were reported earlier this week to have hit 102 tonnes in April, some 60% higher from a year earlier but below the record set last November when re-exports of 34 tonnes are included.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

A global recovery was witnessed during the 2nd part of the FY 2009-10 and on the back of it 2010-11 kicks off much but the equity market no more delayed to take the cue at a much earlier stage. Since June 2009 to March 2010 a trend remain bound to the range could be seen in the market and it ranged from 4500 – 5300 on the Nifty Index. This particular trend in the movement has been pointed out as a consolidation based on a broad scale after the market recovered at a high pace from the trough levels encountered during the recession period.

The promising part is that the market condition again came back to the 5300 level at Nifty and a breakout is varying much on the go. Hence this is the time to be prudent enough to explore the various sectors and the industries in order to find out opportunities to put the hard earned money in the highly profitable sectors. Here are few choices for you to decide on which had been the high flying sectors during 2010-11 and were considered as the winners. Hope this will help you to gather little insight to help in your investment.

The growth story of India is certainly indebted to the increasing rate of power generation in the country. It can be well said that energy is one of the components that has largely contributed to the development of the country.

One of the important objectives targeted by the government of India is electricity for all and the deadline is 2012, which will be by the end of the 11th Five year plan. With an exponential increment in the demand of electricity is leading to greater opportunities for the investors to plough the mullah in both private and public sector. The power sector in India is thus gaining more significance with each passing day. The thermal power plants based on generation of coal is at present accounting for about 2/3rd of the energy requirement of the country and the increasing awareness of the government about generating power by means of cleaner nuclear power plants is also on the rise.

On the other hand investment in the Indian education sector is another lucrative option and is going to reap huge profit if the money will be ploughed in a planned manner. One must explore the roots of the Indian education sector and find out as many options as possible and then zero on a decision. The financial services sector is another nice option. As it is often been said that the banking industry reflects the financial health of the country and even enables the trading activities to greater scale. The banking sector in India emerged in flying colors during the recent crisis struck the global economy and that too on the back of the stipulations laid y the Central bank. Therefore the financial services sector in India has indeed facilitated the quick, hassle free transactions and other developments by means of offering unmatched services.

About the Author

Harjeet is an Indian – born mass-market novelist, who covers the world internet related topics . He writes columns and articles for various websites and internet journals in the domain of Investing in India and Investment options.