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Thursday
Mar032011

Making the Chicken Run

By Doug Casey

With the U.S. government’s ever-increasing stranglehold on Americans’ assets, smart investors are now taking their wealth abroad. Doug Casey tells you how to do it, and why you shouldn’t put it off any longer.

“Making the chicken run” is what Rhodesians used to say about neighbors who packed up and got out during the ‘60s and ‘70s, before the place became Zimbabwe. It was considered “unpatriotic” to leave Rhodesia. But it was genuinely idiotic not to.

I’ve written many times about the importance of internationalizing your assets, your mode of living, and your way of thinking. I suspect most readers have treated those articles as they might a travelogue to some distant and exotic land: interesting fodder for cocktail party chatter, but basically academic and of little immediate personal relevance.

I’m directing these comments towards the U.S., mainly because that’s where the problem is most acute, but they’re applicable to most countries.

Rolling into 2011, the U.S. is in real trouble. Not as bad as Rhodesia 40 years ago, and definitely a different kind of trouble, but plenty serious. For many years, it’s been obvious that the country was eventually going to hit the wall, and now the inevitable is rapidly becoming imminent.

What do I mean by that? There’s plenty of reason to be concerned about things financial and economic. But I personally believe we haven't been bearish enough on the eventual social and political fallout from the Greater Depression. Nothing is certain, but the odds are high that the U.S. is going into a time of troubles at least as bad as any experienced in any advanced country in the last century.

I hate saying things like that, if only because it sounds outrageous and inflammatory and can create a credibility gap. It invites arguments with people, and although I enjoy discussion, I dislike arguing.

It strikes most people as outrageous because the long-running post-WW2 boom has been punctuated only by brief recessions. After 65 years, why should it ever end? The thought of a nasty end certainly runs counter to the experience of almost everyone now alive –  including myself – and our personal experience is what we tend to trust most. But it seems to me we're very close to a tipping point. Ice stays ice even while it’s being warmed – until the temperature goes over 32 F, where it changes very quickly into something very different.

First, the Economy

That point – economic bankruptcy accompanied by financial chaos – is quickly approaching for the U.S. government. With deficits over a trillion dollars per year for as far as the eye can see, the U.S. Treasury will very soon be unable to roll over its maturing debt at anything near current interest rates. The only reliable buyer will be the Federal Reserve, which can buy only by creating new dollars.

Within the next 24 months, the dollar is likely to start losing value rapidly and noticeably. Foreigners, who own over 7.3 trillion of them (including T-bills and other IOUs), will start panicking to dump them. So will Americans. The dollar bond market, today worth $36 trillion, will be devastated by much higher interest rates, a rapidly depreciating dollar, and an epidemic of defaults.

And that will be just the start of the trouble. Since the U.S. property market floats on a sea of debt (and is easy to tax), it’s also going to be hit very hard – again. This time by stifling mortgage rates. Forget about property owners paying their existing mortgages; many won’t be able to pay their taxes and utilities, and maintenance will be out of the question.

The pain will spread. Insurance companies are invested mostly in bonds and real estate; many will go bankrupt. The same is true of most pension funds. If the stock market doesn’t collapse, it will only be because money is looking for a place to hide from inflation. The payout for Social Security will drop significantly in real terms, if not in dollars. The standard of living of most Americans will fall.

This rough sequence of events has happened in many countries in recent decades, and they’ve survived the tough times. But it has the potential, at least in relative terms, to be more serious in the U.S. than it was in Argentina, Brazil, Serbia, Russia, Mozambique or Zimbabwe, for two main reasons.

First, many people in those countries knew they couldn’t trust their government and acted accordingly, even in contravention of the law, by accumulating assets elsewhere. So there was a significant pool of capital available for rebuilding. Americans, on the other hand, tend to be much more insular, law-abiding and trusting in their government. When they lose their U.S. assets, they'll have lost everything.

Second, those societies were significantly more rural than the U.S. is today. As in the America of 100 years ago, much of the population lived quite close to the land and had practical skills and habits that helped them get through the tough times. For 21st-century Americans, it's a different story. Shortages and disorder are going to hit commuters who live in suburbs, and urban dwellers who think milk appears in cartons magically, like a ton of bricks.

One thing you can absolutely count on is that everyone will look to the government to “do something." Americans really do think governments control the way the world works. Another certainty is that the U.S. government will “step in” massively, because everyone will want them to, and the politicians themselves believe they should. This will greatly aggravate the crisis and make it last much longer than necessary.

Then It Gets Serious

But that’s just over the short run. The long run is much more serious, because the next chapter of the Greater Depression has every chance of radically, and at least semi-permanently, overturning the basic character of American life. Ice turned to water – suddenly and unexpectedly – in Russia in 1918, Germany in 1933, China in 1949, Vietnam in 1954, Cambodia in 1975, and Rwanda in 1995. Those are just the first examples that come to mind. There are scores more.

The economic events I’ve outlined are going to mean serious hardship and unpleasantness for many people. But that doesn't concern me nearly as much as the social and political reaction.

Everybody gets hurt in a serious depression, but if you understand what’s going on and prepare for it, you can do well enough. Of course, political and social change always follow economic and financial upheaval, but I think it’s going to be much more drastic this time, because the U.S. has been on the road to becoming a police state for quite a while. The trend was supercharged by the so-called War on Terror, starting in 2001. And it’s likely to go into hyper-drive in the months to come as the economy emerges from the eye of the storm. I know it seems asynchronous to think of a police state in a suburban country dotted with shopping malls. But not really.
Think in terms of science fiction, a genre that has far more predictive value than the work of any futurist or think tank.

Reality is mimicking art. In 1932, Aldous Huxley described a highly controlled utopia in Brave New World, where drugs made everybody think (actually feel, because thinking could only make you unhappy) that they were happy. The U.S. has pretty much done that drill, consuming massive quantities of everything on credit, watching American Idol and its clones in every spare moment, and using plenty of Ritalin and Prozac along the way.

Sixteen years later, George Orwell described an even more tightly controlled dystopia in 1984. Everybody knows that story, even if they haven’t read the book.
Interestingly, like good sci-fi writers, both authors were just a generation or so ahead of events. What we’re likely to see in the next few years is elements of both their worlds.

Actually, we’re seeing it right now, or at least a preview. Whenever I return to the U.S., dealing with Immigration and Customs makes my skin crawl. And they’re no longer just at airports and the border; they now range many miles inland and make random stops to see if your papers are in order.

They’re almost as objectionable as the TSA, which has developed a highly dangerous corporate culture, even as it’s grown in numbers and power, now reaching into busses, trains, and soon the highways. The FBI, the CIA, the DEA, the ATF, the Secret Service, the Federal Marshals, FEMA, and literally scores of other national law enforcement agencies are all expanding rapidly.

They’ve long constituted a veritable Praetorian Guard but now truly have lives of their own. Homeland Security is completing its new 400-acre campus in Washington, DC. Police forces all over the country are increasingly militarized in both equipment and attitude. And the military itself, bloated on a budget of hundreds of billions a year, has come a long way from the slapstick world of Beetle Bailey, full of steroid-pumped Black Ops wannabes who’ve picked up plenty of bad habits in the government's numerous undeclared wars. All these types endorse the dozens of “fusion centers” that have been created across the U.S. to collect and correlate information from every source imaginable, for some purpose.

All these organizations are bureaucracies. They serve themselves first. Their prime impulse is to grow and increase their budgets. They tend to attract the wrong kind of person and drive out people of good will. And it’s reached a stage where even if John Galt were elected president, he’d find them not just impossible to uproot but dangerous to confront.

So here’s another prediction. Riding the economic and social disorder, these new Praetorians, oriented as they are toward professional paranoia and the “national security” state, are going to become truly virulent. They’re going to use the continuing economic crisis to increase their power, like it or not. The American people will demand it, since they are so degraded that they really do prefer the appearance of security to the prospect of having to take personal responsibility.

If I’m right (and I feel as sure about this as I ever have about anything), then it’s not going to go well for libertarians, classical liberals, old-line conservatives, individualists, free-thinkers, non-conformists, people who subscribe to letters like this or who cruise suspicious websites, or gamma-rats generally. It was a dangerous environment for these types (not to mention those of Japanese or German descent and members of various religious groups) during America’s past crises. When the chimpanzees are hooting and panting, you’d better join them, or they’ll start wondering why not.

I expect what we’re looking at is going to be much more serious than any past crisis, partly because America has already evaporated, like the morning haze on a hot summer's day. You're not in Kansas anymore. Kansas isn't in Kansas anymore.

Practical Objections

All very well, you may say. But there are practical issues, you also say. A person can’t just pick up and leave and go where he wants and do what he wants… can he? Get real, Casey. There are reasons a person has to stay where he is, aren’t there?

Let’s look at some of those reasons.

“America is the best country in the world. I’d be a fool to leave.” That was absolutely true, not so very long ago. America certainly was the best – and it was unique. But it no longer exists, except as an ideal. The geography it occupied has been co-opted by the United States, which today is just another nation-state. And, most unfortunately, one that’s become especially predatory toward its citizens.

“My parents and grandparents were born here; I have roots in this country.” An understandable emotion; everyone has an atavistic affinity for his place of birth, including your most distant relatives born long, long ago, and far, far away. I suppose if Lucy, apparently the first more-or-less human we know of, had been able to speak, she might have pled roots if you’d asked her to leave her valley in East Africa. If you buy this argument, then it’s clear your forefathers, who came from Europe, Asia, or Africa, were made of sterner stuff than you are.

“I’m not going to be unpatriotic.” Patriotism is one of those things very few even question and even fewer examine closely. I’m a patriot, you’re a nationalist, he’s a jingoist. But let’s put such a tendentious and emotion-laden subject aside. Today a true patriot – an effective patriot – would be accumulating capital elsewhere, to have assets he can repatriate and use for rebuilding when the time is right. And a real patriot understands that America is not a place; it’s an idea. It deserves to be spread.

“I can't leave my aging mother behind.” Not to sound callous, but your aging parent will soon leave you behind. Why not offer her the chance to come along, though? She might enjoy a good live-in maid in your own house (which I challenge you to get in the U.S.) more than a sterile, dismal and overpriced old people’s home, where she’s likely to wind up.

“I might not be able to earn a living.” Spoken like a person with little imagination and even less self-confidence. And likely little experience or knowledge of economics. Everyone, everywhere, has to produce at least as much as he consumes – that won’t change whether you stay in your living room or go to Timbuktu. In point of fact, though, it tends to be easier to earn big money in a foreign country, because you will have knowledge, experience, skills, and connections the locals don't. 

“I don’t have enough capital to make a move.” Well, that was one thing that kept serfs down on the farm. Capital gives you freedom. On the other hand, a certain amount of poverty can underwrite your freedom, since possessions act as chains for many.

“I'm afraid I won't fit in.” As I explained a little earlier, the real danger that's headed your way is not fitting in at home. This objection is often proffered by people who’ve never traveled abroad. Here’s a suggestion. If you don’t have a valid passport, apply for one tomorrow morning. Then, at the next opportunity, book a trip to somewhere that seems interesting. Make an effort to meet people. Find out if you’re really as abject a wallflower as you fear.

“I don’t speak the language.” It’s said that Sir Richard Burton, the 19th-century explorer, spoke 10 languages fluently and 15 more “reasonably well.” I’ve always liked that distinction although, personally, I’m not a good linguist. And it gets harder to learn a language as you get older – although it’s also true that learning a new language actually keeps your brain limber. In point of fact, though, English is the world’s language. Almost anyone who is anyone, and the typical school kid, has some grasp of it.

“I'm too old to make such a big change.” Yes, I guess it makes more sense to just take a seat and await the arrival of the Grim Reaper. Or, perhaps, is your life already so exciting and wonderful that you can't handle a little change? Better, I think, that you might adopt the attitude of the 85-year-old woman who has just transplanted herself to Argentina from the frozen north. Even after many years of adventure, she simply feels ready for a change and was getting tired of the same old people with the same old stories and habits.

“I’ve got to wait until the kids are out of school. It would disrupt their lives.” This is actually one of the lamest excuses in the book. I’m sympathetic to the view that kids ought to live with wolves for a couple of years to get a proper grounding in life – although I’m not advocating anything that radical. It’s one of the greatest gifts you can give your kids: to live in another culture, learn a new language, and associate with a better class of people (as an expat, you’ll almost automatically move to the upper rungs – arguably a big plus). After a little whining, the kids will love it. When they’re grown, if they discover you passed up the opportunity, they won’t forgive you.

“I don’t want to give up my U.S. citizenship.” There’s no need to. Anyway, if you have a lot of deferred income and untaxed gains, it can be punitive to do so; the U.S. government wants to keep you as a milk cow. But then, you may cotton to the idea of living free of any taxing government, while having the travel documents offered by several. And you may want to save your children from becoming cannon fodder or indentured servants, should the U.S. reinstitute the draft or start a program of “national service” – which is not unlikely.

But these arguments are unimportant. The real problem is one of psychology. In that regard, I like to point to my old friend Paul Terhorst, who 30 years ago was the youngest partner at a national accounting firm. He and his wife, Vicki, decided that “keeping up with the Joneses” for the rest of their lives just wasn’t for them. They sold everything – cars, house, clothes, artwork, the works – and decided to live around the world. Paul then had the time to read books, play chess, and generally enjoy himself. He wrote about it in Cashing In on the American Dream: How to Retire at 35. As a bonus, the advantages of not being a tax resident anywhere and having time to scope out proper investments has put Paul way ahead in the money game. He typically spends about half his year in Argentina; we usually have lunch every week when in residence.

I could go on. But perhaps it’s pointless to offer rational counters to irrational fears and preconceptions. As Gibbon noted with his signature brand of irony, “The power of instruction is seldom of much efficacy, except in those happy dispositions where it is almost superfluous.”

Let me say again, time is getting short. And the reasons for looking abroad are changing.

In the past, the best argument for expatriation was an automatic increase in one's standard of living. In the ‘50s and ‘60s, a book calledEurope on $5 a Day accurately reflected all-in costs for a tourist. In those days a middle-class American could live like a king in Europe; but those days are long gone. Now it’s the rare American who can afford to visit Europe except on a cheesy package tour. That situation may actually improve soon, if only because the standard of living in Europe is likely to fall even faster than in the U.S. But the improvement will be temporary. One thing you can plan your life around is that, for the average American, foreign travel is going to become much more expensive in the next few years as the dollar loses value at an accelerating rate.

Affordability is going to be a real problem for Americans, who’ve long been used to being the world's “rich guys.” But an even bigger problem will be presented by foreign exchange controls of some nature, which the government will impose in its efforts to “do something.” FX controls – perhaps in the form of taxes on money that goes abroad, perhaps restrictions on amounts and reasons, perhaps the requirement of official approval, perhaps all of these things – are a natural progression during the next stage of the crisis. After all, only rich people can afford to send money abroad, and only the unpatriotic would think of doing so.

How and Where

I would like to reemphasize that it’s pure foolishness to have your loyalties dictated by the lines on a map or the dictates of some ruler. The nation-state itself is on its way out. The world will increasingly be aligned with what we call phyles, groups of people who consider themselves countrymen based on their interests and values, not on which government's ID they share. I believe the sooner you start thinking that way, the freer, the richer, and the more secure you will become.

The most important first step is to get out of the danger zone. Let’s list the steps, in order of importance.
 
1. Establish a financial account in a second country and transfer assets to it, immediately.
2. Purchase a crib in a suitable third country, somewhere you might enjoy whether in good times or bad.
3. Get moving toward an alternative citizenship in a fourth country; you don’t want to be stuck geographically, and you don’t want to live like a refugee.
4. Keep your eyes open for business and investment opportunities in those four countries, plus the other 225; you’ll greatly increase your perspective and your chances of success.

Where to go? The personal conclusion I came to was Argentina (followed by Uruguay), where I spend a good part of my year, and even more when my house at La Estancia de Cafayate is completed.

In general, I would suggest you look most seriously at countries whose governments aren’t overly cozy with the U.S. and whose people maintain an inbred suspicion of the police, the military, and the fiscal authorities. These criteria tilt the scales against past favorites like Australia, New Zealand, Canada, and the UK.

And one more piece of sage advice: stop thinking like your neighbors, which is to say stop thinking and acting like a serf. Most people – although they can be perfectly affable and even seem sensible – have the attitudes of medieval peasants that objected to going further than a day’s round-trip from their hut, for fear the stories of dragons that live over the hill might be true. We covered the modern versions of that objection a bit earlier.

I’m not saying that you’ll make your fortune and find happiness by venturing out. But you’ll greatly increase your odds of doing so, greatly increase your security, and, I suspect, have a much more interesting time.

Let me end by reminding you what Rick Blaine, Bogart’s character in Casablanca, had to say in only a slightly different context. Appropriately, Rick was an early but also an archetypical international man. Let’s just imagine he’s talking about what will happen if you don’t effectively internationalize yourself, now. He said: “You may not regret it now, but you’ll regret it soon. And for the rest of your life.” 

[You may well regret it for the rest of your life if you don’t take appropriate steps now to internationalize and thus protect your wealth. To find out how to do it, what to watch out for, and which perfectly legal tactics to employ, read our free report “Does Your Bank Account Speak Spanish?”]

......................................................................................

PS: Just in case you missed it we have just closed an option play on www.silver-prices.net with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.

Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


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Wednesday
Mar022011

How Safe Is Your Physical Gold?

Pirate gold.JPG

By Jeff Clark, BIG GOLD

One of my best friends recently discovered, to his shock and dismay, that five one-ounce gold coins had been stolen from his home. I feel especially bad because I had encouraged him to buy some physical metal, giving him some tips and pointing him to the better dealers.

What’s especially disconcerting about the theft is that my friend had the coins stored in a safe, hidden from view, securely locked, with the key hidden. He thought his gold was safe, a reasonable assumption given the precautions he’d taken.

But all those measures weren’t enough. Based on what he knows, he strongly suspects it was a relative, partly because of this person’s background and partly because they were one of few familiar enough with the house to know where the key might be. The police unfortunately don’t have enough evidence to make an arrest – fingerprints, for one, couldn’t be successfully lifted from the safe.

My friend was in shock for several days. While it didn’t represent all the gold he owned, it’s not insignificant; with gold at $1,400/ounce, that’s seven grand the thief made off with. He’s further consternated by how it went down; the robber only took part of his stash, evidently to make it look like his gold hadn’t been disturbed. The key had also been put back in its place, and for this reason he can’t pinpoint a specific time period the coins were stolen.

The cost to him has been more than monetary; he loved his bullion coins and had collected at least one from almost every country that produces them. He told me he occasionally took them out of the safe because they were, in his words, “beautiful… and I just loved the weight of them in my hand.” His stash was starting to build up to a point where he had enough “savings” for almost any emergency. The pain deepened further when he learned that thanks to current IRS rules, he can’t even write off the loss. (He’s forgoing a homeowner’s claim, given the industry’s reputation for dropping customers for making “small” claims.)

Needless to say, my friend is no longer storing his gold (and silver) in that safe. He’s the kind that would normally shy away from using a bank safe deposit box, but not anymore. Even with that, though, he knew this method wasn’t perfect and so explored all his options. He’s decided to follow the suggestion I outline at the end.

After the dust settled, he told me that yes, he felt violated; yes, he’s still angry; and yes, it’s made him suspicious of others around him, a feeling he hates. “But what I suddenly realized,” he said, “was how valuable gold is becoming again. It’s not a ‘barbarous relic’ anymore… it’s not a pretty coin or a hunk of metal or a commodity or even an investment. It really is money, and it’s scary to think how dicey things might get when everyone sees gold as money again.”

My friend is not poor; there were other valuables the thief could’ve snatched. He took the gold.

So what about you? How safe is your safe? Are your clever hiding spots clever enough?

Here’s a quick checklist of the three most common places to store your gold. My friend overlooked one of the basic rules of home storage, so I hope you’ll review where and how you store your precious metals so that you can avoid the same pain and loss he experienced…

Safe deposit box

The easiest and simplest way to store gold is in a safe deposit box at your local bank. If you go this route, use a local bank. You want to be able to get to your gold in an emergency, which is one of the reasons you own it in the first place. So don’t keep it in a different state or a distant city. Keep it close.

However, as my friend acknowledges, a safe deposit box isn’t perfect. First, your access is restricted; you can only get to the gold during regular banking hours. Second, safe deposit boxes are not insured against robbery. And last, a bank box compromises your privacy. It provides a generous clue for the government, in case it ever decides to repeat FDR’s 1933 confiscation of gold.

A related option would be to use a depository or private vault. They’re outside of the financial system, though they tend to be on the expensive side. And they’re not plentiful, so you may not live near one.

Bury it

This is where the term “midnight gardening” comes from; people bury their gold at night so others won’t notice the digging. The alternative is to find a separate reason for the excavation, such as fixing a pipe or removing a stump, and work in the daylight.

Either way, before those of you who are used to clean fingernails pass on this method, consider its advantages: it won’t be damaged in a fire, and a burglar would need to know where to dig. A lot can happen in the world that won’t disturb buried gold.

A few practicalities, if you decide to go the shovel route. First, use the right container, something airtight and waterproof. This is especially important if you are storing numismatics or are burying silver in any form. We’ve been told those water bottles that hikers use work pretty well, but choose one heavy enough to stand up to years of erosion and persistent insects. Another choice is a small section of PVC pipe from your local hardware store; cap the ends and then bury it in a shallow puddle of cement.

Don’t use a coffee can, since the color on the metal can bleed. To protect from scratching, put each coin in a plastic baggie or something similar.

Where do you bury it? Your location should be neither too easy nor too difficult to find. Not too easy, so that the gold won’t be found by a thief. But not so difficult that years later, you or your heirs have trouble locating it. Complicated instructions (including treasure maps) can get muddled with time and create the risk your gold will never be dug up.

Find a place, on property you own, that you’ll always remember but that isn’t obvious if someone learns you’ve buried something valuable.

Keep in mind that most modern metal detectors can operate to a depth of about 4 feet for objects as large as a stash of coins or bars. There’s also ground-penetrating radar, used primarily by forensic investigators, that can detect where digging has occurred, as well as satellites that can pinpoint where ground has been disturbed.

Hide it in your house and/or use a home safe

Indoor storage is practical for smaller quantities. You can probably think of dozens of places in your home where no one would think to look. Avoid any place obvious, such as a jewelry box or cookie jar. The disadvantage of this method is exposure to, as my friend can tell you, theft, along with fire, flood, and other natural disasters.

Consider using a safe, ideally one secured to the floor. As one dealer said, “A safe can be brought in on a two-wheeler and taken out on a two-wheeler, if it hasn’t been attached to a building or at least hidden.” I’ve heard good things about Liberty safes, and they have a replacement guarantee. For obvious reasons, my friend is now gun-shy about using a safe with a key lock.

If you use a floor safe, locations for it include the garage, under a refrigerator, or anywhere you can place something over it. Another option might be under the floor of a storage or garden shed; you can both install and access it without being seen, day or night. We recommend installing it yourself, and some of the kits make it easier than you it might expect. We wouldn’t hire a contractor.

Before you buy a safe, however, I recommend reading this article from a veteran bullion collector: How Safe Are Safes? (If you can’t log in because you’re not a BIG GOLD subscriber, why not try it today risk-free for only $79 per year? Details here.)

Leave the right trail

However you store your gold, let exactly one person know the details. It needs to be someone in whose honesty and discretion you have complete confidence. It will be that person’s job to access the gold if you are incapacitated or die. If you are using a safe deposit box, his or her name should be included in the box registration, and they should know where to go to get the key.

Tell one person, but only one. No one else should know. This is especially important if you’re using home storage. You don’t want to come home someday to find your house turned upside down because someone heard you’re living in a treasure chest. Even worse would be to come home and find a looter waiting to have a chat with you. My friend kept quiet about his gold, but admitted some family knew about it. That’s all it took.

There’s just no other way to say it: Keep quiet about your gold.

Unless you’ve reached a point in life where you are depending on your children for help with your affairs, a child is not a good choice as your gold storage confidant. Kids talk, and you don’t know whom they might tell or how far the story might travel.

But you do need to tell someone, regardless of your storage method. I heard of an old miner who – no kidding – left a treasure map for his kids, to help them figure out where he’d hidden his gold. But someone else found the map – and his kids never got their inheritance. And what if the kids had received the map but weren’t very good treasure hunters? I’ve read similar stories about descendants who knew that gold had been left for them but had no idea where it was.

What if more than one person already knows you have gold? Review your home storage methods to be absolutely sure they are adequate, or use one of the other methods.  

So what’s the best place to store your physical gold? Well, your choices boil down to three: store your gold in a safe deposit box, bury it, or hide it indoors. Each method has pluses and minuses, but probably the best method is a combination of them all. In other words, diversify your storage locations. My friend could’ve been wiped out if the robber hadn’t been trying to be sneaky.

Last, don’t let this scare you off from buying bullion. It’s still the asset that offers the best monetary protection for the foreseeable future. Not owning it may leave you feeling robbed when you go to use your paper dollars and find they won’t buy you as much as you thought. That’s not a theft you can prevent – unless you own gold.

[Today it is more important than ever to allocate some of your portfolio to gold and silver. Right now China, Russia and other countries are plotting to dump the U.S. dollar – and they have started to hoard gold in never-before-seen amounts. Don’t wait until it’s too late to jump on the runaway gold train… watch this free video for more information.]






PS: Just in case you missed it we have just closed an option play on www.silver-prices.net with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.

Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Wednesday
Mar022011

Gold prices at new all time high

Gold chart 02 March 2011.JPG


Finally, a new all time high for gold prices. Gold prices are being well supported by both its 50dma and its 200dma as the chart above shows. The RSI is now over the '70' level, sitting at 72.33 suggesting that it is overbought, but don't count on it, the world is a very volatile place at the moment.

Unrest across throughout the Middle East has spread to North Africa, with the leaders of Tunisia and Egypt having to step down. The social problems have been highlighted by higher commodity prices leading to higher food prices in areas where the people just cannot afford them. Bahrain, Libya, Yemen and Iran are quickly realizing just how their people feel and it isn't good. Throw in Brent crude which is commanding $116.03 today and inflation looks set to soar.

On June 19th, 2006 we posted an article entitled; Reasons to invest in gold, one of the reasons that we saw as very important was the Internet and we wrote:

· Internet: information travels around the world in a nano-second, reactions to news, true or false, will add to the volatility of the gold price.

The internet and the advent of social networking via twitter, YouTube, face book, email have all come together to provide a truly worldwide method of communication. The ability to organize the masses has never been so readily available. Individual governments have tried to shut down the web in order to prevent various groups communicating and thus limit their effectiveness. It raises the question of just how long will it be before our own governments consider such options should unruliness breakout in the western world.

Another point that we listed in the same article was web based trading when we wrote:

· Web trading: increasing everyday, resulting in the trends being more exaggerated than ever before.

There are now so many investors using web based trading platforms that an uncorroborated rumor can go viral causing a deluge of orders to flood the market creating wild swings in either direction. You can be sure that this wont abate any time soon, so prepare yourself for volatile to be the old order of the day and violent to be the new order when it comes to price swings. This is not 1980 when a confirmation of an order to your trusty stockbroker took three days, this really is the new millennium with orders being placed at the 'tap' of a key.

USD chart 02 March 2011.JPG

The USD once again is struggling to find friends as it tries to hold the '77' level as we can see on the chart above. With gold and silver in a rampant mood we suspect more and more investors will divest themselves from the USD adding to the downward pressure on its true worth.

The technical indicators are in the oversold zone so we may see some sideways movement in the short term, however, we find it difficult to come up with a good reason to hold dollars at the moment. Also note that both the 50dma and the 200dma have turned negative and are heading south which is not a good sign.

silver chart 02 march 2011.JPG

Silver prices are absolutely sparkling just now and are leading the charge upwards having almost doubled in six months and made a multi-decade high. Note the gap between silver prices and the 200mda which suggests that silver is getting a tad ahead of itself. The technical indicators are on the ceiling, however, supply is very tight and backwardation appears to be getting worse.

In conclusion we believe that another major up leg is upon us, so, as per our usual mantra do not part with your physical metal or your core holdings of associated producers, you might just be offering someone a real bargain – me!


PS: Just in case you missed it we have just closed an option play on www.silver-prices.net with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.

Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Monday
Feb282011

Gold Trading Vehicles: SK Options Outperform

Gold Trading Vehicles: SK Options Outperform


We are often asked why we choose to trade options rather than the underlying asset. The most important reason is that options are far more versatile than simply trading gold or gold ETFs/ETNs. Using options we can increase our leverage if we wish to be particularly aggressive, whilst still limiting our risk.

When trading options one is not confined to simply be long or short, one can create positions that speculate on gold remaining in a certain range or above/below a certain level.

This versatility leads to great opportunities to not only profit but more importantly improve the risk/reward dynamics of each trade.




However to demonstrate this performance and illustrate why we trade options, we back tested all of the past gold trades recommended by our premium options trading service SK OptionTrader. SK OptionTrader recommends a capital allocation with each trade and runs a model portfolio as a template for subscribers to consider. So we simulated how our portfolio would have performed if instead of using options we had instead simply risked our capital in GLD for each gold trade. We also compared it to DGP, a double leveraged gold ETN, to add some balance since our options trades are often much more leveraged than the GLD stock.

As the graph above shows, using GLD has our trading vehicle our portfolio would have been up just over 20%, using DGP the portfolio would be up just over 40%, whereas using SK OptionTrader’s gold based trades the portfolio is up around 115%. (Note: This only includes the performance of gold related trades, not any other trades such as silver, oil, equities etc)

So our options recommendations have outperformed gold nearly six times over, and even outperformed DGP almost three times over.

We are not doing this to show our trading ability, merely the superior performance of options. Regardless of whether you think our views on market direction is correct, it is hard to deny that options have been the most effective instrument to trade gold, certainly for us.

Even if you are not a trader and are in favour of simply buying and holding, options could still have something to offer your investment portfolio. Since SK OptionTrader began offering trading recommendations to subscribers, gold is up around 45%, with the HUI index up around 50% and DGP up about 95%. So one would have needed to risk one’s entire portfolio in DGP to even come close to the performance of our gold options trading, and even then the performance is not beaten.

Keep in mind that we are not risking all our capital in each trade, rarely risking more than 5% of our capital, and at the most we may risk 10% of our portfolio in one trade. Quite often half our portfolio may be in cash, so this performance is not simply due to us taking on massive leverage; it is down to the fact that options are such versatile instruments and we have been using them effectively to trade based on our opinion on where the market is headed.


Feel free to check out our full trading record where we are averaging a return of 41.27% per trade including losses and contact us if you have any questions.

Alternatively you can subscribe below, for just $199 per 6 months or $349 for a year.

Subscribe for 6 months - $499

 

Subscribe for 12 months - $799

 

Sunday
Feb272011

All time highs in India

Gold in India.JPG


Both gold and silver prices are reported to be at all time highs in India according to an article by DEBIPRASAD NAYAK and carried in the Wall Street Journal recently.


MUMBAI – Gold and silver spot prices in Mumbai, India's largest bullion market, rose to all-time highs Thursday, as investment demand remained firm and turmoil in the Middle East continued.

Pure spot gold hit an all-time high of 21,065 rupees ($467) per 10 grams, while silver hit a new high of 50,515 rupees a kilogram, the Bombay Bullion Association said.

Spot gold hit an earlier high of 20,975 rupees per 10 grams in early December, while silver breached its previous record of 49,955 rupees per kilogram hit Monday.

Demand for gold is likely to remain firm in India in the coming days as rural consumers will have more disposable income due to winter-sown crop harvesting in March, said Angel Commodities in a note.

India's food grain production is expected to rise 7.2% to 234 million metric tons this crop year through June due to higher planting.

In India, the world's largest bullion consumer and importer, most of the farmers aren't exposed to other forms of asset classes and investment in gold is the only option available to them, Angel Commodities said.

The current wedding season in India is also bullish for the yellow metal, the brokerage added.

As we see it, it all bodes well for the continuation of demand out of India and pressure on gold and silver prices over the short term.



PS: Just in case you missed it we have just closed an option play on www.silver-prices.net with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.


Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Saturday
Feb262011

Germany: On Your Deutsche Marks!

Germany.JPG




The recent defeat of Angela Merkel's Christian Democratic Union in the Hamburg regional elections could spell the beginning of the end for the Germany's participation in the Euro currency. Angela Merkel's popularity has been on the wane for some time now so this result could be yet another nail in her political coffin. The broader 'handout' mentality of the European Union does not sit well in the psyche of the industrious Germans who are increasingly questioning the wisdom of such actions and making their feelings felt at the ballot box. If this deterioration of support for the government is not arrested then a change of leadership is not inconceivable. The newly formed government may take Germany back to its once very popular Deutsche Mark.

The Economist summed up the situation very well indeed with this piece carried on the 24th February 2011.



IN an election on February 20th the citizens of Hamburg, a port city with the status of a state, inflicted an historic drubbing on the Christian Democratic Union (CDU), the party of Germany’s chancellor, Angela Merkel. Its share of the vote tumbled by nearly half, to 22%. The mayor, Christoph Ahlhaus, was turfed out after just six months in office. The Social Democratic Party (SPD) stunned even itself by winning nearly half the votes and a majority of the seats in the city’s legislature, the Bürgerschaft. Olaf Scholz, the incoming mayor, will govern without a coalition partner.

This was the first of seven state elections in 2011 that will test both the resilience of Mrs Merkel’s coalition with the Free Democratic Party (FDP) and the prospects of the main opposition parties: the SPD, the Greens and the ex-communist Left Party. Happily for Mrs Merkel, the Hamburg vote was a verdict on Mr Ahlhaus’s government rather than hers. The CDU-Green coalition, the first of its kind at state level, fell apart soon after the popular mayor, Ole von Beust, retired prematurely in August. Mr Ahlhaus, a conservative Heidelberger, never appealed to the liberal Hamburgers.

The results mean more for the SPD, which hopes to break through the 30% ceiling in national polls. Mr Scholz wooed Hamburg’s middle class and its entrepreneurs, naming an ex-head of the chamber of commerce as his shadow economy minister. The lesson, said Sigmar Gabriel, the SPD’s chairman, is that economic issues matter as much as social justice, the party’s usual emphasis.

Almost as happy was Guido Westerwelle, the beleaguered chairman of the FDP and Germany’s foreign minister. He and his party were so unpopular that he looked in danger of losing at least one of his jobs. Helped by a telegenic candidate, Katja Suding, and its opposition to an unpopular school reform, the FDP re-entered the Bürgerschaft after a seven-year absence. If this recovery is sustained in the next few elections, Mr Westerwelle will be out of danger.

Mrs Merkel cannot be indifferent to the Hamburg defeat. Last year her government lost its majority in the Bundesrat, the upper house of parliament, which represents the states. After Hamburg her influence will wane further. The government got a taste of what that means this week when it was forced into an expensive compromise with opposition parties on welfare, which will entail higher benefits and a minimum wage for several types of worker. The three elections in March—in Saxony-Anhalt, Rhineland-Palatinate and Baden-Württemberg—should turn out better for the CDU than Hamburg did. But the stakes, especially in Baden-Württemberg, which the CDU has run since 1953, are higher.

As we see it the results of such a move would weaken the Euro and even spell the end of it completely with considerable turmoil in the financial markets putting more upward pressure on silver and gold prices.

PS: Just in case you missed it we have just closed an option play on www.silver-prices.net with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.



Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Thursday
Feb242011

Newmont Mining Corporation hits the skids

NEM Chart 24 Feb 2011.JPG


Newmont Mining Corporation (NEM) have released an update including a dividend payment which was not well received by the investment community as the stock price fell 7.36% on massive turnover of 19.1 million shares, which is twice the daily volume.

We'll start with the chart where we can see the golden crossover of the 50dama crossing over the 200dma in a downward direction, this is usually a rather negative sign for stocks. The technical indicators have also turned negative and are heading south.

The latest news release from Newmont hit the shares like a lead balloon. Gold prices also took a bit of a pounding after hours which didnt help the situation, however, this doesn't look good.


Newmont Mining Corporation (NYSE: NEM) today announced that net income increased 76% to $2.3 billion ($4.63 per share) in 2010, compared to $1.3 billion ($2.66 per share) in the prior year. Operating cash flow was a record $3.2 billion for 2010, compared to $2.9 billion in 2009. Adjusted net income(1) rose 39% to a record $1.9 billion ($3.85 per share) from $1.4 billion($2.79 per share) in 2009, while the Company's gold operating margin(2) increased by 30% to $737 per ounce in 2010, from $566 per ounce in 2009.

2010 Highlights:

Attributable gold and copper production of 5.4 million ounces and 327 million pounds, respectively, with gold production slightly higher and copper production approximately 44% higher than in 2009;

Record revenue of $9.5 billion, an increase of 24% from 2009;

Average realized gold and copper price of $1,222 per ounce and $3.43 per pound, respectively;
Gold operating margin increase(3) of 30%, compared with an average realized gold price increase of 25%;

Consolidated costs applicable to sales for gold and copper of $485 per ounce and $0.80 per pound, respectively; and Cash and cash equivalents of more than $4 billion on December 31, 2010.

Q4 2010 Highlights:

Attributable gold and copper production of 1.4 million ounces and 74 million pounds, respectively;
Average realized gold and copper price of $1,366 per ounce and $4.52 per pound, respectively; and Costs applicable to sales for gold and copper of $512 per ounce and $0.95 per pound, respectively.

"I am pleased to report that we generated record operating cash flow for the second year in a row, with our gold operating margin growing by 30% to $737 per ounce on an average realized gold price of$1,222 in 2010," stated Richard O'Brien, President and CEO.

"As a whole, our operations performed according to our plans, producing 5.4 million attributable ounces of gold in 2010. We continue to advance our Conga Project in Peru, which contains over 6 million attributable ounces of gold and 1.6 billion attributable pounds of copper reserves. Similarly, we continued to advance with our Akyem Project inGhana, which contains over 7 million attributable ounces of gold reserves. Advancing these two world-class mining projects, as well as continuing our drilling programs at Hope Bay in Canada, remain some of our top priorities in 2011."


NEM 5 Year table 24 Feb 2011.JPG

We can only conclude that after five years of rising gold prices this stock has gone nowhere and is still sub $60.00. The management need to explain such a poor performance along with the tiny dividend, which at $0.60 per year is a return of 1% and no growth in the price of the stock.

This one is not for us.

PS: Just in case you missed it we have just closed an option play on www.silver-prices.net with an average profit of 96.5% on Silver Wheaton Call Options. Click here to read more.


Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 25 Feb 2011.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.

Thursday
Feb242011

Yamana Gold Incorporated: Underwhelming

AUY Chart 24 Feb 2011.JPG

Try as we may we just cannot get excited about Yamana Gold Incorporated (AUY) it is range trading at a time when gold prices are close to hitting new highs. This stock touched $14.00 in November 2009 and here we are today closing at $12.44. Still, today Yamana Gold published its figures regarding its mineral reserves so we will take a quick look at the highlights.


Yamana's mineral reserves and mineral resources for the year ended December 31, 2010. The Company's total proven and probable mineral gold reserves increased by 4.5 million ounces to 22.1 million ounces, which represents a 26% increase over the previous year. Measured and indicated gold resources increased by 12% from 2009 to 14.5 million ounces. Silver and copper proven and probable mineral reserves increased by 3% and 9%, respectively.

HIGHLIGHTS:

- Total proven and probable gold equivalent(1) mineral reserves
increased to 25.1 million ounces, a 23% increase from 2009 and
includes:
- Total gold mineral reserves of 22.1 million ounces, an increase
of 26%
- Total silver mineral reserves of 167.3 million ounces, an increase
of 3%

- Total measured and indicated gold equivalent mineral resources
increased to 15.3 million ounces, an increase of 9% over 2009 and
includes:
- Total gold mineral resources of 14.5 million ounces, an increase
of 12%
- Total silver mineral resources of 46.0 million ounces, a decrease
of 23%

- Initial reserve estimate was declared at Jeronimo of over
1.6 million ounces (on a 100% ownership basis). A pre-feasibility
has recently been completed on Jeronimo with a feasibility expected
at the end of 2011

- Initial reserve estimate was declared at the Suruca gold area of
Chapada, which was previously announced, a feasibility study expected
by year end

- Jacobina's total mineral resources and grade increased significantly.
The Company will continue evaluating options to increase production.

- Pilar's mineral reserves to 1.4 million gold ounces, supporting
the Company's earlier decision to develop the project
with a 30% throughput increase for higher production levels

Chairman and Chief Executive Officer, Peter Marrone. Commented as follows:

"We have clearly demonstrated our ability to grow resources through the increases in the past and the significant increases this year. Our exploration budget for 2011 of $85 million is similar to last year's budget. Part of the focus of this year's program is to continue to show substantial growth in resources. We expect to deliver on our track record of doing so and of building sustainable and predictable production and growth by continuing our aggressive exploration program throughout 2011."

August 12th, 2010 we wrote the following about our stock holding in Yamana: We sold 80% of our stake in Yamana Gold Incorporated (AUY) for an average price of $9.53 and moved the proceeds onto the sidelines for redeployment at a later date.

Some of the cash went into Silver Wheaton which has doubled since then and some went into options trades as recommended by www.skoptionstrading.com.

So as the lady once sang; Non, je ne regrette rien

Yamana Gold Incorporated trades in Toronto, TSX: YRI and in New York, NYSE: AUY and in London LSE: YAU as one would expect from such a large company.

Yamana Gold Incorporated has a market capitalization of $9.22 billion, a very reasonable P/E ratio of 27.61, a 52 week price range of $9.16 - $13.13, with shares outstanding of 741.10 million

Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.


Wednesday
Feb232011

Robotics, Part 1 – Where Are We Today?

Robot Leonardo 24 Feb 2011.JPG



By Doug Hornig, Editor, Casey’s Extraordinary Technology

In the field of robotics, we have no Newton. No one who, assisted by a falling fruit, cried out, “Eureka, I have it, and it is called a… I know… a robot.”


No, the concept of a robot first occurred to some unknown person in some far distant time, as he or she, engaged in a grinding, repetitive task, dreamed of a mechanical contrivance that could do some of the dirty work. We know that moment was more than five hundred years ago, because we have sketchbooks from the incomparable Leonardo da Vinci, dated 1495, that contain detailed plans for one.

There is no hard evidence that Leonardo actually went on to build his robot. But such was his genius that, five centuries later, engineer Mark Rosheim was able to create a fully functional version faithful to the technology of the time. It works.

Leonardo believed that the human body is basically machine-like in structure, and that he could duplicate its intricate movements through the use of levers and pulleys. A rather simplistic view, of course. Nevertheless, da Vinci was able to use his remarkable knowledge of anatomy and kinetics to design a robot with the capability to walk, stand, and sit, raise its arms, move its head from side to side, and open and close its jaw.

While Leonardo’s creation is often considered the initial introduction of a robot in human form, many believe the honor should go instead to Al-Jazari, the engineering genius of the Islamic world during the Middle Ages. The Kurdish Al-Jazari designed, and apparently built in 1206, a boat that floated on a lake to entertain guests at royal drinking parties. Within the boat were four musical automata – two drummers, a harpist, and a flutist. They appear to have been somewhat programmable, although they lacked the sophisticated articulations of da Vinci’s design.

And some researchers want to push the invention of robots even further back into antiquity. But whatever the robot’s provenance turns out to be, we can date the appearance of the world's first modern humanoid robot, to 1939. Elektro, built by Westinghouse, was placed on exhibit at the 1939 World’s Fair in New York. The robot, standing a robust 6’ 9” tall, could smoke, blow up balloons, and speak more than 700 words. Elektro was still around in 1960, when it landed the role of Thinko in the movie Sex Kittens Go to College. As if that weren’t humiliating enough, it was then decapitated, with its head given to a retiring Westinghouse employee and its body sold for scrap.

Since Elektro, well, electrified audiences at the World’s Fair, the robot has entrenched itself in the popular psyche. It’s been a real love/hate relationship, too. When they’re not depicted as the kindly, human-friendly machines typified by C3PO and R2D2 in Star Wars, they tend to be cast as pure evil, like the malevolent metallic monster lurking beneath the artificial skin of the Terminator.

But so much for fiction. Even as the robot was conjuring up all sorts of creatures in movie screenwriters’ minds, the science of robotics has been progressing out in the real world. So where are we today? Short of the Terminator, but well along in other ways. Let’s have a look.

First, however, we must ask, just what is a robot, anyway? Unfortunately, there’s no consensus answer, although we generally tend to think of clanking metal things constructed more or less along the lines of a human. And most people would probably say they know one when they see one.

The primary definition, according to Webster’s Collegiate Dictionary is “a machine that looks like a human being and performs various complex acts (as walking or talking) of a human being.” Many would expand that to include any machine that does one or more of the following: move around, operate a mechanical limb, sense and manipulate its environment, and exhibit intelligent behavior – especially behavior that mimics humans or other animals. And it’s probably useful to add that a robot can be either physically or mentally anthropomorphic, if not both.

Designing a robot is a matter of thinking from brain to bones, so to speak. We’ve gotten very good at the brain part. Given the giant leaps forward in computer software development, we can write programs to do pretty much anything we want. If we have a device that can execute the instructions.

That’s where the external hardware comes in, and it is a different story. Spectacular CGI effects have become so commonplace in movies, we might be led to think that engineers are constructing the creatures from Avatar in their Bay Area laboratories. They aren’t. Physical robotics hasn’t remotely kept up with advances in CGI. We are, however, slowly closing the gap.

Let’s start with brain. Legendary computer scientist Alan Turing once proposed, in his 1950 paper Computing Machinery and Intelligence, a simple test to determine if a computer had achieved true artificial intelligence. Let any person have a conversation with both a machine and another human, both trying to act human, and see if the person can tell which respondent is the machine, if either. In order to ensure the test wasn’t hampered by the limitations of technologies at the time, he proposed both conversations happen not in person, and not via telephone with synthesized computer voice, but by a simple text chat.

As anyone who’s attempted to use one of those interactive voice telephone agents now popular with banks, airlines, and other soul-draining mega-agencies can attest to, we are far, far away from any system passing “The Turing Test.”

Researchers around the world are hard at work on trying to solve the AI problem, with mixed success. But in the meantime a whole other band of engineers are instead working on creating robots that tackle the challenge Turing chose to conveniently ignore: Can we make a machine that not just communicates via text, but that appears to act and think like a human, with all the nuance of non-verbal communication, the subtlety of speech, and the myriad other factors that (for now) separate us from the machines?

And they are making some impressive, albeit still elementary, progress. Take the Einstein robot, for instance. 

This fairly realistic representation of Einstein’s late-life head was built by Hanson Robotics in Texas and programmed by scientists at the University of California, San Diego.

That they were able to get it (him?) to move and exhibit recognizable human facial expressions is remarkable enough. But the head also contains a camera, linked to software that can interpret what it sees. Thus Einstein can learn who you are, including guessing your age and gender, respond to your audio cues, and mimic your own expressions and simple gestures in a sort of faux-empathy. Give him a wireless connection to a decent computer and he could probably beat any of us at chess, not unlike his real-life inspiration. (Well, not quite yet, but he may be getting there.)

For another look down “Creepy Lane,” here’s a full-size, modestly interactive Japanese robot from the 2009 Robotec Expo in Brazil.

As well as demonstrating our present capabilities, these machines also dramatically illustrate our limitations. Giving a robot a brain – the “intelligence” to move, speak, do some rudimentary learning, play chess – is the easy part.

Faithfully recreating even a small part of the human body, that’s tough. Our structure does not readily lend itself to simulation. Muscles, bones, joints, tendons, ligaments are not a series of servos and actuators, but a collection of tens of trillions of individual biological machines all connected in highly intricate ways that allow us to laugh and cry, wrestle with our children, kick a soccer ball, and assume the lotus position. Just imagine how much is involved in the elementary act of stair climbing, as Asimo the robot discovered to his chagrin (if “he” could feel embarrassment).

Speaking of soccer, getting robots to act cooperatively, in addition to kicking a ball, might seem like an insurmountable problem given the state of robotics today. But researchers are working on it. Each year, there is a RoboCup soccer match, and each year the participants get better. The goal (so to speak) is to field a robotic team by 2050 that can defeat the human World Cup champions. For a glimpse of where we stand with that, check out some of the “action” from the 2010 RoboCup.


Neither Einstein’s head, nor the Japanese spokesrobot, nor Asimo, nor our mechanical soccer stars are likely to be confused with real life.

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Many thanks to those of you who have recently signed up for options trading service, its very much appreciated. Please be patient as we have a number of new trades on the drawing board and as you are aware the timing of them is critical to their success.

We now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


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Tuesday
Feb222011

A few newsy snippets from China, America and Africa

China Inflation 23 Feb 2011.JPG



First stop is China where we have this snippet about inflation and gold in china.

Although it's rarely mentioned in the Western media, the Chinese government is encouraging their citizens to buy physical gold bullion as part of an effort to cool further investment in the red-hot real estate and housing sectors.

"Unlike the property market, investment in the gold sector is something the government is encouraging," ICBC's Zhou told Reuters.

China actually banned its citizens from owning gold from 1950-2003.

ICBC, the world's largest bank by market value, sold about seven tons of physical gold in January this year, nearly half the 15 tons of bullion sold in all of 2010, Zhou said.

ICBC is also coming up with other creative ways for Chinese citizens to invest in the shiny metal.

In an initiative with the WGC, ICBC started offering physical-gold linked savings accounts in December. Over one million such accounts have already been opened, and the bank is now storing over 12 tons of gold on behalf of investors. 

"There is frantic demand for non-physical gold investments. We issued 1 billion yuan ($151 million) worth of gold-price-linked term deposits in 2010, but we managed to sell the same amount over just a few days in January this year," Zhou said, adding that investors will deposit more than 5 billion yuan ($759 million) in gold-linked accounts this year.

Last week, the bank launched its second physical gold investment product, which sells gold bars to investors. They can then be resold for cash through ICBC based on real-time gold prices.

Zhou said that the huge increase in Chinese demand would continue in 2011 due to a "choppy stock market" and concerns about how rising interest rates will affect property markets. 

Fitz-Gerald says insatiable Chinese demand can do nothing but continue to drive gold prices higher. 

"For global gold buyers [this will have] a huge impact because Chinese buying programs are going to drive prices a lot higher before this is done...especially if the dollar gets worse," he said.

Fitz-Gerald believes gold prices will hit $2,500 in the near future.



Now for a quick 'take' from the United States on inflation and gold prices:

The stakes have seldom been higher.  With the unemployment rate still above 9%, and federal debt at record levels, this latest error by the monetary authorities is likely to be the most costly since the Great Inflation of the 1970s.  Monetary instability will slow employment growth and further erode confidence in government at the same time that higher interest rates will add billions of dollars to the interest cost on the national debt.  Yet, failure to act in a timely basis will lead to an even greater crisis.

When it arrives, the Federal Reserve and its defenders will call it “cost-push” inflation and blame it on economic growth, the weather, Arab sheiks, China, and perhaps greedy companies and labor unions.

The actual cause of the looming crisis is the same as the cause of the Great Inflation of the 1970’s:  a too easy monetary policy that has devalued the dollar by 40% against gold during the past two years.

I choose gold as the reference point for the dollar’s value because it has the remarkable characteristic of maintaining its buying power in terms of other goods and services over long periods of time.  As a consequence, the dollar price of gold is the best, though imprecise, real-time measure of the price level.  Other, more traditional measures, such as the consumer price index (CPI) are merely lagging indicators of inflation or deflation that has occurred already.
I also choose gold because I remember what happened after President Richard Nixon in August 1971 severed the link between the dollar and gold.   At the time, those who warned that the rising price of gold was signaling higher inflation ahead were widely dismissed as “gold bugs.” The conventional wisdom then, as now, is that economic slack would protect the U.S. economy from inflation regardless of what happened to the value of the dollar in terms of gold.
But it didn’t work out that way.


Out of Africa we have this snippet:

The JSE shaved off in excess of 360 points at its close on Tuesday amid profit taking, while political unrest in north Africa continues to plague the oil price.
In Asia, markets also suffered sharp losses, hurt by a major earthquake in New Zealand and a move by Moody's Investor Service to cut the outlook on Japan's Aa2 rating to negative from stable.

On the JSE, Anglo American (AGL) gave up 2.55 rand to 371 rand, and BHP Billiton (BIL) lost 60 cents to 278.60 rand. Sasol (SOL) declined 2.33 rand to 372.50 rand. 

Among gold miners, Anglogold Ashanti (ANG) lost 5.19 rand or 1.48 percent to 346.55 rand, Gold Fields (GFI) was down 2.40 rand or 1.87 percent at 126 rand and Harmony (HAR) shipped 1.50 rand or 1.78 percent to 82.99 rand. Junior gold miner Simmers & Jack Mines (SIM) on Tuesday reported a 34 percent rise in gold production from its Tau Lekoa and Buffelsfontein Gold Mine to 49,170 ounces for the quarter ended December 2010 from 36,608oz in the September quarter. 

Gold revenue increased from 327 million rand for the quarter ended September 2010 to 463 million rand, with nearly half of the increase due to increased volumes, while 17.9 million rand was due to a 5 percent increase in the rand gold price per kilogram. Simmers moved up a cent at 93 cents.


Hang on its going to be white knuckle bumpy ride from here on in. Hold onto to your core position unless you are a terrific market timer and increase your physical holdings as and when you can.


Over in the options pit another profitable trade was closed on Friday so we now have 65 winners out of 67 options trades, or a 97.00% success rate If you have any questions regarding these trades please address them through their site where they will be handled quickly and I hope efficiently.

sk chart 19 Feb 2011.JPG



The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

So, the question is: Are you going to make the decision to join us today, before we decide to cap membership.

Stay on your toes and have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.


To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.