Depending on where your investments lie, you may or may not be upset by the news: although gold futures have dropped 2 percent today, lower-than-expected job losses have propelled the dollar upwards. Traditionally, the value of gold increases whenever the dollar loses value as investors look for a safer place to invest their money, but this development shows that the opposite holds true as well.

Image: Flickr

According to a recent report by the Labor Department, applications for unemployment insurance have finally begun to slow down, showing their first decline in numbers in a long while. Analysts seem to agree that employers are cutting jobs much faster than what the economy needs to recover, but an increase in the value of the dollar should stimulate hiring.

This news, along with other recent developments, seem to show that the economy may be turning around. Still, the unemployment rate remains at staggeringly high levels, signaling that we are far from back to normal.

In the light of recent developments in the digital gold market, with companies like e gold being indicted and the  US government taking a hardline against some of them because of moneylaundering and unregulated illegal practices going unchecked, what do you think the future of these alternative currencies or digital currencies are ?

Can the US govt and others force them out of business as some believe?

We value your opinion here on www.digitalmoneyworld.com and both Mark and Benson have written here on digital gold extensively in the past.

DGC Magazine Blog

http://www.dgcmagazine.com/blog/index.php

• 
• Author: Mark Herpel
• Listed in: Finance Innovation
• Tags: gold e-gold e-bullion pecunix e-currency digital gold currency

So what do you think about this issue? Please let us know.

Comment below

Moneypenny

Recently we’ve been talking about investing in digital gold or digital shares here on www.digitalmoneyworld.com I also asked what you would do with a windfall of 1000 dollars in this post

http://www.bizzia.com/fridays-fun-question/ What is clear, whatever you want to invest in, is this:Those who successfully invest year after year, follow one golden rule although their risk aversion may be high or low.

The golden rule is invest for the long term, that means five years or more.

That doesn’t mean you can’t take chances and make money on the short term on higher risk investments which can give higher returns. It just means this must be the exception not the rule.

Buying when no one else is, this is a trademark of the most successful it takes guts though, to hold on when others bail or sell out, and a singuar purpose.

Those with money to spare are buying into property now with low values. Why? Because it will turn, and when it does they ride the wave up to a good profit and double their money. While the sheep among us want to wait till the market is “safe” and everyone else is getting in, that’s the wrong time to turn a profit.

Of course you should never gamble money you need to live on, as you may have to hold on to get your return. Here those with spare cash have a great advantage.

Warren Buffet built his empire on these principles.

Warren Buffett is the world’s third richest man with an estimated fortune of over $52bn.

But unlike the other billionaires that feature in Forbes’ list of the 10 richest people in the world, Buffett doesn’t have a retail empire, an oil well or a brain for computing to show for it – simply a lot of share certificates.

The 76-year-old made his money through identifying companies that he believed were worth more than their market value, investing in them and holding that investment for the long-term. And it’s certainly paid off.

Class A shares in his company Berkshire Hathaway were $15 when he first took over in 1965 – today they are valued atover $1oo,ooo per share.

It sounds remarkably simple, but given the ups and downs of the stock market, it takes a high level of discipline, nerve and conviction in your decisions. Although Buffett has never written a book detailing his investment style, much can be gleaned from the annual letter he sends to Berkshire shareholders.

He doesn’t view the purchase of shares in a company as buying a stake in that business, but believes that the investor should feel that they are actually buying that business outright. Because of that he looks for quality management, a durable competitive edge and low capital expenditure.

Companies tend to have a strong brand name – Coca Cola, McDonalds and Gillette feature in his holdings – and a good history of solid earnings growth. We run through how Buffett invests his money.

‘Rule No.1: Never lose money. Rule No.2: Never forget rule No.1.’

Value investing

‘It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’

The basic premise of Buffett’s investing style is buying something for less than it’s actually worth. This sounds simple enough, but unearthing these stocks and prove difficult and it’s easy to mistake a company that is unloved by the market because nobody has spotted its opportunity with one that is simply a dog. For that reason, Buffett applies some of the measures that are listed below.

Strong profitability

‘If a business does well, the stock eventually follows.’

Buffett prefers to invest in companies with a proven level of strong profitability, giving more credence to this than what analysts predict will happen in the future. He looks at a number of measures to assess a business’s profitability, including return on equity (ROE), return on invested capital (ROIC) and a company’s profit margin.

ROE is a measure of the rate at which shareholders are earning income on their shares and Buffett uses this measure to see how well a company is performing compared to other businesses operating in the same sector. You can calculate the ROE by dividing the company’s net income by the shareholder’s equity. It is believed that Buffett prefers a company that has an ROE in excess of 15%. He also looks for companies with above average profit margins, which can be calculated by dividing net income by net sales. The higher the ratio, the more profitable the company based on its level of sales.

Not too much in debt

‘Should you find yourself in a chronically leaking boat, energy devoted to changing vessels is likely to be more productive than energy devoted to patching leaks.’

However, a company with a high ROE could be being fuelled by substantial levels of debt, which Buffett is keen to avoid. For this reason he also takes into accounted the ROIC. This helps take debt out of the equation by adding it back to the shareholder equity before doing the calculation. This can be calculated by dividing a company’s total liabilities by its shareholder equity – the higher the ratio, the higher the level of debt the company is using to fuel its growth.

He doesn’t like over-indebted companies, as he says each year in his Berkshire Hathaway letters, because they could become vulnerable in a credit squeeze or when interest rates are rising, as they have been doing recently.

Understanding the business

‘Risk comes from not knowing what you’re doing.’

Buffett will only invest in businesses he can understand and analyse, rejecting those that operate in complicated markets or where he is unsure of their operating model. He describes this as his ‘circle of competence’. He has largely ignored the technology sector because he claims not to fully understand their business, but prefers retailing, food and insurance stocks.

Strong management

‘It’s better to hang out with people better than you, … Pick out associates whose behaviour is better than yours and you’ll drift in that direction.’

Buffett places great emphasis on the quality of a company’s management. According to Robert Hagstrom, author of ‘The Warren Buffett Way’, he asks three questions of a company’s management team – are they rational, do they admit to mistakes and do they resist the institutional imperative? He takes a dim view of management teams that simply follow the crowd, copying the lead of competitors. He also likes companies to have been floated for a 10-year period before investing, but says he never interferes with the running of a company.

The ‘Moat’

‘Your premium brand had better be delivering something special, or it’s not going to get the business.’

Buffett coined the phrase ‘moat’ to refer to the competitive advantage or unique proposition that gives a business protection against their competitors. He says those businesses that have a wider moat will offer more protection to the main core business, which he refers to as the castle. This could be geographical, entry costs, a strong brand name or owning a particular patent. Buffett tends to pick companies that offer strong brand names, even though there is a lot of competition in their particular markets. Examples include MacDonalds, Coca-Cola and Gillette.

Moats are important to investors because if a business develops a successful product it is likely to be aped by competitors. How effecitively it can survive is largely determined by how its product differs from the others in the market and why consumers will keep coming back.

Long-term hold

‘Our favourite holding period is forever.’

When Buffett buys a stock he buys it with the view of holding it for life. He holds a number of permanent stocks in his portfolio, including Coca-Cola, GEICO and Washington Post, which he claims he’ll not sell even if they appear to be significantly overpriced. This approach has led to accusations that his portfolio has a number of ‘tired’ stocks in it, but Buffett thinks investors are too quick to buy and sell.

Don’t rush

‘You do things when the opportunities come along. I’ve had periods in my life when I’ve had a bundle of ideas come along, and I’ve had long dry spells. If I get an idea next week, I’ll do something. If not, I won’t do a damn thing.’

Boredom can cause rash buying decisions, forcing the investor to buy stock at the wrong time. Buffett has proved to be a master at the waiting game, preferring to sit on his cash rather than buy into a company just for the sake of it. He understands markets rise and fall and would prefer to wait until he feels a stock is cheap enough to buy. Buffett says investors would be better off if they could only invest a limited number of times, so they would make sure they were making the right investment.

Happy 4th of July

Yours in money,

Moneypenny

I blogged yesterday about the those that have written into me about a fake moneybookers scam.

http://www.bizzia.com/adding-value/

Adding value read this and comment on it if you have suggestions.

These people were scammed because they received an email identical to the moneybookers one and took it as the original, it was actually a faked page which looked identical.

Today I want to talk about online security with moneybookers, pay pal and others.

What should you expect to receive from them?

Rule number one

Any mail you get, first check the address it came from, that’s the first clue. Mark spam as spam and delete it out of your spam folder daily.

Rule number 2

Never click on a link, but rather type the address www.paypal.com or moneybookers.com straight into your browser window. Then you can’t be misdirected. Check the page you are logging into it should look right, dont rush. Never update your details on a form you’re not certain about. These scams continue because people fail to to do this, they know they will catch someone.

Rule number 3

If you don’t have a bank account with that bank or payment company, don’t open the mail. You don’t get an account by accident.

Follow these simple rules everytime and scams will suffer, not you.

Care to comment? share this with everyone you know.

Be safe online, Moneypenny

This is a kind of unofficial poll to find out which online payment company is rated best.

These are the criteria:

1. ease of use, functionality and options.

2. service level, charges/cost and market share.

3. security, support and reliability.

4. ethical, regulated and financially sound company.

So which online payment company does these best for you.

Leave a comment and tell us your experience for the benefit of our readers.

Moneypenny

I remember as an investment broker not so long ago, my clients and peers talking about ethical investments. Exercising your ethical choice in investments was becoming mainstream and even clients were talking about it.

Contrast this with the Elliot Spitzer case recently. He didn’t seem to care that prostitution and the crimes always linked with it, where being funded by him. He possibly said - I’m O.k. I’m not hurting anyone.

The IRS’s Criminal Investigation Division then started a probe, initially fearing that Spitzer was the victim of either extortion or identity theft.

Screenshot of the website of Emperors Club VIP showing list of prices for escort services

Image from wiki

North Fork’s report in July 2007 went largely unnoticed until HSBC in the fall filed a report that the transactions were going to QAT International and QAT Consulting Group, which were offshore shell companies operating as a front for the Emperors Club.

Later the IRS contacted the FBI to investigate possible political corruption. The investigation led Federal authorities to link the money transfers to the Emperors Club.

On November 19, 2007, Republican operative Roger Stone sent a letter to the FBI saying that Spitzer “used the service of high-priced call girls” while in Florida.

Spitzer announced on March 12 that he would resign his post as Governor effective March 17, amid threats of his impeachment by state lawmakers.

So what’s happened to the ethics questions we used to ask, like: Was the company involved in mining practices that affected the environment? Did that company operate sweatshops in cheap-labour countries. Was the company involved in money laundering, pornography, tobacco, alcohol etc?

Whilst some of this talk and campaigning has been replaced by the fair trade movement, which when it works, I do applaud, what has happened to our own ethics?

Do we care how that money we got out of an investment was made?

Did it involve a pyramid scheme or scams where someone was robbed of their hard earned money, or was the money got from trading in guns, drugs or people trafficking? These are the questions banks have to ask in the bigger picture, and perhaps we should be asking them too in the smaller picture of our choices.

What do you think? Who does your research about where to put your money or what to invest in?

Does it matter to you what the e company/gold company/ web money/ company you use invests in or derives its profits from? Give us your view under comments

Moneypenny

Should we be worried about the financial markets? Well I think so. When companies like Lehman Bros lose 50% of their share value for the first time in their very long history, and then start scrabling around trying to raise money on the stock exchange. When major banks are being bailed out by reserve banks. When many shares are in freefall due to the jittery markets, and when the price of oil is just on a drunken rampage full of its own importance and value. When world powers can’t find a workable alternative solution to the oil producing states having their foot on our necks. Yes I think it’s worrying.

This may be why some prefer holding gold, commodities and digital currencies hoping to hedge against the falling dollar value.

June 9, 2008

 Much has been written on www.digitalmoneyworld.com about e gold and the fallout of the investment. HYIPs are still big business on the net and people fall into them because they are lured by the returns. Which are astronomical! Indeed those who have invested, will tell you that they lure people in by giving them these returns in the first few weeks and  by giving them bonuses for referring others. The problem like so many of these schemes, comes when the investor wants to cash out. Although this professes to not be spam or a scam, in my book it is. Firstly someone referred me, although I have never been and will never be a customer.

 Secondly offering a 10% bonus is likely to attract the very people who try a higher gamble to make up their ever increasing losses. Calling this one of the most reliable investment programes is a stretch, if not an outright lie.

Income X Brokers - Celebrating 1-year - special offer. Join us this week and receive 10% additional bonus upon signup* ! # 1 day profit 123% # 3 days profit 130% (daily). http://www.income-x.com With near $100k invested and more than a year on the market we are one of most reliable investment programs. Serving more than 1000 investors around the world. Refer to our site for further information. Deposits are accepted thru E-Gold only. Note : You have received this message because one of our investors placed you on his refferal list. If you believie this is a spam message please contact us immediately. Thank you. So buyer beware.!!! Don’t risk your funds that you can’t afford to loose. Anyone care to tell us your experience with these products? Leave a comment and You could win the “smart alec” of the month award. Moneypenny

Here’s one for  all you gold people.  Just another of the many messages to arrive in my mailbox on a daily basis,

which  make little or no sense.

So the first person who can write in and tell me what this scheme is about or not, will win an all-expenses-paid trip to the moon in 2020. The winner will also be crowned the “smart alec” of the month.

Answers on a postcard.. no rather send me a comment here, as quick as a flash.

Moneypenny

ALLUVAIL GOLD for sale.
To:	jessicabeloved00@yahoo.com

Dear sir

Its with pleasure that I write to inform you of the availability of ALLUVAIL GOLD for sale.

Below are the classification of the goods :

PRODUCT : ALLUVIAL GOLD.

QUANTITY :500 KGS.

QUALITY : +22 KARATS.

PURITY : 92+

PRICE : 30percent below the standard price

TERM OF PAYMENT : NEGOTIABLE.

we do not accept advance payment, the transaction will be done according to the seller and buyers agreement and we expect you to come with your Inspector machines and after checking, the payment will be on bank to bank bases.

If you are interested in the above product please get in touch with me and we will make arrangement on the mode of delivery.

I await to hear from you very soon.

Regards.

Mrs Jessica.

A warm wish to all those on b5media, and of course our readers, remembering the fallen on this Memorial Day 2008. May all those who served and are serving, be remembered. Here’s the link to participate http://www.nationalmemorialdayparade.com   Last week I wrote on web money http://www.bizzia.com/webmoney-online-payments/  and  it seems that every month, there’s a new way to pay on-line. Are these virtual companies using our money held-on-line to trade with? Are they using customers online funds to raise capital to trade with. Ask some finance wizzes or a group of investment bankers, and they will tell you that for the small benefit of giving customers an alternative to using credit cards on line, these payments companies get to hold real money on behalf of the customer, and trade with it? The gold-related payment setups must be doing this. The sites tell you that the gold value is not linked to the current price of gold, but you can bet your bottom dollar, that they care about the fluctuations in the price of the commodity.  A clever scheme, e bullion, and others, convince the public you can create a monetary system outside of the mainstream, and apart from the normal US dollar currency, and they will come. Those who  use them swear by the safety, legality. etc. But the facts behind the incorporation, the location in Delaware, the gold vault stores, all open up many a can of worms. What’s the point of basing the investment on gold, if the investment its not linked to the commodities value? These are the questions I, and others very trained in financial instruments, are asking? Maybe we can because we are not invested and can still see the woods for the trees, or maybe we have just missed something. But I smell a rat, a big rat. Mark Herpel wrote on these gold payment companies like e bullion, a lot, and now writes DGC mag http://www.dgcmagazine.com  So perhaps he would agree to answer some pertinent questions. Are you up for the challenge Mark? Moneypenny