Archives for June 2011

June 2011 - Page 4 of 9 - Money Morning - Only the News You Can Profit From

Gold Prices Crash Report: How To Profit As The Golden Bubble Bursts

All eyes are on gold. Investment demand is soaring as individuals catch gold fever. Governments are stockpiling record amounts of the shiny metal. Mints are pumping out new coins as fast as they can. Even hedge funds are piling on, buying up tons of bullion and futures contracts. No wonder the price of gold hit […]

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The Biggest Heist in History: U.S. Taxpayers Could Be On the Hook for Iraq's Missing Billions

For nearly a decade, U.S. military operations in the Middle East – Iraq in particular – have been criticized as a cumbersome and costly burden on the American taxpayer.

That accusation gained new credence this week when the Pentagon finally acknowledged that nearly $7 billion of Iraqi oil money might have been stolen.

And what's worse is that the U.S. taxpayer could end up paying for the mistake.

Following the March 2003 invasion of Iraq, the United States liberated, or seized, billions of dollars of assets from that country. But since Iraq had no banking system, the money – much of which came from Iraqi oil sales – was placed in an account at the Federal Reserve Bank of New York.

From there, large pallets of shrink-wrapped cash were periodically loaded into tractor-trailer trucks, driven to Andrews Air Force Base in Maryland, and airlifted to Baghdad. Some $12 billion of cash was flown to Iraq in the months following the overthrow of Saddam Hussein.

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'Facebook Rule' Would Delay IPOs, Open Door to Secondary Market Excesses

You may not yet have heard of the "Facebook Rule," but it's cause for concern.

Its formal name is the Private Company Flexibility and Growth Act (HR 2167), and it was introduced to the House of Representatives on Tuesday by Rep. David Schweikert, R-AZ.

Officially, the bill aims to increase from 500 to 1,000 the number of investors a company can have before it is required to publish its financial information. But in reality, it would simply delay companies from going public – thereby encouraging trading in secondary markets that are rife with questionable practices and shutting out the average investor.

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The Next Global Credit Crisis: Why U.S. Banks and Greek Debt Will be the Toxic Trigger

Will a hidden link between the Greek debt situation and the U.S. banking system ignite the next global credit crisis?

The odds of the "next" global credit crisis are increasing with each new day, and with each new revelation. And escalating fears are hitting worldwide stock markets hard.

Just yesterday (Thursday), Greece's leaders revealed that the country's socialist government is on the brink of collapse. Greek protesters – angered by brutal austerity measures that will almost certainly heighten the country's record 16.2% unemployment rate – are rioting in the streets of Athens.

On Wednesday, Moody's Investors Service (NYSE: MCO) warned France's three largest banks that their exposure to Greek debt could lead to credit-rating downgrades. There are even concerns that the European Central Bank (ECB) may be technically insolvent – meaning it wouldn't survive a global financial meltdown.

Investors are right to be worried.

But with the European banking system's financial woes currently dominating the headlines, those investors might be very surprised to discover that it's actually the U.S. financial system that may end up as the real weak link in the event of a Greek debt default.

And investors don't even know this link exists.

The Scary Facts About Greece's Finances

Since last May, when the International Monetary Fund (IMF) and Eurozone members ponied up $159 billion (110 billion euros) for a Greek bailout, Greece has had to implement radical austerity measures. Terms of the bailout forced Greece to boost taxes and slash government spending. There was a public outcry, but the country's citizenry largely went along; it had no choice.

One in three Greek workers is employed by the government. As austerity-mandated layoffs have progressed, Greece's unemployment rate has zoomed from 11.7% in the first quarter of last year to the record 16.2% rate recently reported.

And given that government spending is still at 46.8% of gross domestic product (GDP), additional budget cuts will be coming – meaning Greece's national jobless rate is certain to increase.

So is the national anger level.


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Bitcoins: An Online Currency You Can Trade Like a Stock

Chances are, you've never before heard of Bitcoins.

So here's a quick primer: Imagine a type of money that you can't put in your pocket, that you can trade like a stock, that you can earn with your computer, that enables anonymous transactions, and most importantly, has skyrocketed in value 399,900% in the past year.

That's precisely what we're talking about with Bitcoins.

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Tech-Hungry Investors Take the Bait With Overvalued Pandora IPO

Internet radio company Pandora Media Inc. (NYSE: P) raised $234.9 million in its initial public offering (IPO) Tuesday, luring investors who were looking to get in on this year's batch of Internet stocks.

The Oakland, CA-based company sold 14.7 million shares at $16 each, up from $9 when the company first announced its IPO. Pandora shares jumped more than 40% as trading started yesterday (Wednesday), but closed only 8.9% higher at $17.42.

While many analysts like Pandora's long-term outlook, they say the company's financials don't explain its $2.6 billion valuation.

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Retail Sales No Reason for Market Party

Today's retail sales report was far from a reason for the market to party. The media are reporting that on a seasonally adjusted basis, nominal retail sales fell less than expected. An analysis of real retail sales suggests that the underlying trend is weakening, and that contrary to the market's reaction today, the outlook may be less than rosy for stocks.

In order to filter out the effect of sharply higher gas prices and their impact on sales, I looked at the data on a historical basis ex gas prices. According to a breakdown of the retail sales data provided by the Census Bureau, actual, not seasonally manipulated data for nominal retail sales ex gasoline rose by 6.2% on an annual basis. That sounds great, aided no doubt by the weak dollar drawing shoppers to the US from the rest of the world.

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What You Need to Know Before Buying Gold Coins

If you believe those late-night infomercials, radio-talk-show hosts or even those stunning sales figures for Gold Eagles, buying gold coins is a slam-dunk strategy for lasting wealth.

Just last month, for instance, U.S. Mint buyers ordered 107,000 ounces of bullion Gold Eagles – the third-best May in the series' 25-year history.

And this soaring interest in yellow-metal coinage isn't limited to the U.S. market. Take India, where the State Bank of Travancore announced in late April that a program to sell gold coins through five of its branches would be expanded to 60 branches in a single months' time. In fact, as one bullion-dealer executive said in reference to India's fifth-largest city: "In Chennai, even the poor buy [some] gold."

So does this mean you should run out and stock up on gold coins?

Not necessarily.

In fact, I'm going to let you in on a secret: If you're looking at gold coins as a true "investment," there's only one kind to consider.

The rest are a waste of your time.

The Only Gold Coins Investors Should Buy

With gold having doubled in price over the last four years – not to mention a U.S. dollar that continues to weaken – it's no surprise at all that the world coin markets are attracting buyers like moths to a flame. First timers often arrive and are confused by all that's available – including rare and antique coins, and a numbing array of "collector" and "commemorative" coins.

But here's a rule of thumb that will make things simple: If you're an investor looking to bolster your portfolio with a modest helping of "hard assets," there's really only one category of gold coins to consider.

I'm talking about bullion-based gold coins.

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