China To Purchase Half of IMF's Gold

By www.english.pravda.ru/

China has confirmed the intention to purchase 191.3 tons of gold from the International Monetary Fund at an open auction, Finmarket news agency said.

World central banks started to increase their gold reserves after prices on gold began to climb in 2001. The IMF sells gold within the scope of a program to diversify sources of income and achieve an increase in lending.

The IMF announced an intention to sell 403.3 tons of gold in accordance with the adequate decision made by the board of directors of the fund in September of 2009. India, Mauritius and Sri Lanka purchased about 212 tons of the amount at the end of 2009. India purchased most – 200 tons.

China’s interest in international trade is connected with the development of the nation’s economy, as well as with the growing consumer demand in the country.

“Chinese officials have confirmed previous announcements from IMF experts and said that the purchasing of 191 tons of gold would not exert negative influence on the world market. China is interested in the development of the domestic consumer market,” the agency reports.

Most of Chinese citizens believe that investing in gold jewelry is a good way to avoid inflation, Rough & Polished agency said.

The IMF has received the profit of $7.2 billion from gold sales. A part of the funds is to be used for crediting poor countries.

**If a huge country like China is slowly buying metals, shouldn't you be doing the same?

a Letter from an OFW friend

Recently, I received greetings from my inbox folder in Facebook from a friend working in Texas. Since we have not seen each other for a long time and that I knew that she was a victim of a very clever employer who made her travel long distances to see patients (she is a home health Occupational Therapist) and she filed suit to be able to get out of the contract.

Offering a little unsollicited advice, I inquired if she was aware of where the US economy is headed and followed to tell her that she should have a PLAN B AND PLAN C if things do not go well and Medicare will have to suffer a budget cut.

For most of you who do not know this, Pres. Obama is trying to reduce the budget for health care but is being met with widespread opposition. Others may have a tendency to be too optimistic about the US Economy, but I would not bet too much on this since their problems are just beginning. Their next problems will be meeting the retirement needs of SSS Pensioners who are 75 Million in population (Baby Boomers) who will be retiring in the next few years. Their programs are just too insolvent to survive, not to mention the cost of war in Iraq and the threats coming from Bin Laden on the Israeli issue.

It is a sorry audio flick to hear these things but this is reality and we need to prepare for these sort of occurrences. This affects us Filipinos since one way or another many of us have relatives, friends and family who have families in the US and who think that their fairy tale is still going to continue in the next decade.

My friend on the other hand, surprised me and told me she was studying the subject of investing in precious metals. Smart Kid! She told me she was studying many books including Mike Maloney's "Guide to Investing in Gold and Silver" and also a lot of Robert Kiyosaki's books and has been looking to buy actual metals to hedge for the future. Now that makes sense. Motivating her further more, I told her to stay away from ETFs and Metal Futures which are worthless papers.

If you are reading this and know OFWs that you care about, then you would be doing them a favor by helping them understand the dynamics of the economic powers.

Chinese sovereign wealth fund dumping dollars for strategic investments like gold

By: Lawrence Williams

LONDON -Several reports are coming out of China that there is pressure on state-controlled organisations - notably the country's main sovereign wealth fund, China Investment Corporation (CIC) to rapidly build investment in non-Chinese enterprises. While the CIC itself, with apparent access to some $300 billion in funds - and the possibility of more from the government - may be concentrating on hedge funds and other investment entities, there is another sector for Chinese state-owned companies looking at major investment in commodities. Indeed with the funds available as China seems to be dumping its US dollars in favour of more concrete assets, virtually no minerals sector is safe from Chinese participation.

While CIC was set up only two years ago, funded with $200 billion in initial capital, a report to the U.S. Congress noted that according to top Chinese officials, it was created to improve the rate of return on China's $1.5 trillion in foreign exchange reserves and to soak up some of the nation's excess financial liquidity. Depending on its performance with the initial allotment of $200 billion, the CIC might be allocated more of China's growing stock of foreign exchange reserves - and this has already proved to be the case.

Probably the most interesting of the recent reports of what is happening with Chinese sovereign wealth fund investment outside China has come from Paul Mylchreest's Thunder Road Report where an ex-U.S. intelligence service member is quoted. He reports that he has a friend who is in the Chinese Sovereign Wealth fund sector who says - hearsay I know and it wouldn't stand up in court - indicated that the wealth fund analysts were working all hours of the day and night trying to put investment deals together - particularly in the oil and precious metals sectors. The conclusion is that China recognises that the U.S. dollar is going to tank and it wants to convert as much of its trillions of dollars of holdings into strategic assets as possible before the collapse really takes hold.

The trouble is there is too much money available chasing too few assets - and too little time available - or such is the conclusion. As a result the Chinese government seems to be doing its utmost in trying to persuade the Chinese public to buy gold and silver by relaxing the restrictions - it's now easier to buy precious metals in China than in the U.S. - and by pushing gold and silver investment on state-owned television. If this continues the likelihood is that China will permanently overtake India as the world's biggest buyer of gold and silver, while the country's store of wealth will help shield it against further western economic collapse.

**How much of your portfolio is in precious metals? Now is a good time to buy and invest.

TRADING vs HOLDING for the long term

There are a lot of reasons why there is volatility in the price of gold and silver. Instead of being too technical about it, I simply try to find out the fundamentals of Supply and Demand and keep my metals for the long term.

Trading is an ART. One of my investor friends (David La Suer) an American who runs a successful US Investment company taught me this phrase "Nobody can time the market". If there are people who can, the chances of locating these people are slim and the fees associated with their advice would be staggering (talking about us being in the Philippine setting). Trading is not necessarily Investing, Trading is a procedure that takes a lot of time and experience.

Jim Rogers, the co-author of the Quantum fund with George Soros in his book "Hot Commodities" said that "Great Traders are Maestros of Timing". He admits that he is not a good trader and would suggest that a newbie person seeking to be in the commodities market just needs to figure out if the commodity is worth buying (if it is at it's lowest point or price) and then just rides out the seasons of busts and booms.

The fundamentals of the metals are very clear, I would like to share a few of them for you to be inspired to start your own portfolio:

1. The Gold and Silver ratio is still far per ounce- it will take the price of silver multiplied 70 times to get to the price of Gold. This is a fundamental since historically, gold and silver have a ratio of less than 50.

2. Silver is a metal that is industrially used and therefore will run out, just like Oil. Your laptop, your celfone, your nitty gritty gadgets are by chance, containing silver. It is a great electrical conductor. Silver is mined INCIDENTALLY, meaning it is not mined on it's own since it is a by-product of gold mines. I am more bullish on Silver rather than Gold.

3. The Mass Psyche is going to be awake. People in developed countries are still swayed by political moves and media blasts that the economics of the US and Europe will greatly improve. What they are feeling now is just a temporary relief brought about by the printing of too much Currency in the system. When the hyperinflation sets in after a big financial collapse, the metals will once again come in to save the day. And you know what happens when the masses see that gold and silver are exponentially growing in value.

The metals are still cheap and very affordable in terms of price. Do not be swayed by the volatility in the market, instead of parking your money in the bank where it is losing it's value faster due to inflation, go and get some metals for yourself.

Get smart, Philippines

John Mangun

Two Bible verses summarize my opinion of the current financial crisis:

The first describes the cause—Proverbs 16:18: “Pride goes before disaster, and a haughty spirit before a fall.” One who has a haughty spirit is scornfully arrogant. The second forecasts the future—Matthew 5:5: “Blessed are the meek, for they will inherit the land.” One who is meek displays patience and humility.

The United States had such pride in the economic system it created, borrowing money from foreigners to buy their foreign-made goods. The Americans arrogantly believed this credit cycle could continue forever. So arrogant were they that they then adopted this same system for their housing and banking industries. And now come the disaster and the fall.

Perhaps thinking about the idea that “it takes a thief to catch a thief,” the Americans just elected a group of economic fools to rescue them from problems created by other economic fools.

Ignore the US stock-market fall. It means little. The market dropped because wise money knows that the solution the US government is proposing for its banking system is, in effect, to nationalize and for the government to take over the banks, leaving public shareholders with nothing. On Tuesday, Dow Jones Index components Bank of America lost 19 percent, Citigroup dropped 15 percent, American Express fell 10 percent and JPMorgan Chase lost almost 10 percent. The “bank bailout” of Treasury Secretary Timothy Geithner will not bail anything out. It will only transfer bad assets to the government and, therefore, the US taxpayer. And how the purpose of all this, to increase bank lending, will be achieved is a complete mystery.

The Obama economic-stimulus package will stimulate little except the special economic interests, and that will have little positive impact on the economy. The Obama administration will spend the equivalent of a minimum of $5,000 for every man, woman and child in the United States. But instead of giving it directly to the people the money is supposed to help, the government will spend it. And we all know how well every government spends taxpayer money.

That is about the proud and haughty. What about the meek?

It was rightly predicted that a large portion of the world’s economic power would go from the West to the East. Unfortunately, the “East” meant countries like Japan, South Korea, Taiwan and China that took that power in the same way a flea sucks from the flesh of a dog. Instead of using a decade or two of prosperity to build their domestic economies to achieve self-sufficiency, they only learned to become larger and stronger economic parasites, living off the debt-rich blood of the West.

Taiwan’s exports declined 44 percent in December. Exports are 231 percent of total GDP in Singapore, in recession with 2009 economic estimates at minus 5 percent. Korea’s economy contracted by 22 percent in the last quarter of 2008.

After the shift to the “East,” futurists also postulated that power would shift to the “South,” where we find the meekest of the meek. Think Brazil, Argentina, Chile, the Philippines, India and South Africa, for example. These countries have struggled through the manipulation of gold and currency prices, restrictive trade policies when “globalization” favored only the economic parasites the West needed, and other neocolonial First-World policies.

The Philippines has become so brainwashed by the West and its local mouthpieces that we cannot see our strengths. Again, exports mean little to the Philippine economy, as I pointed out through the work of common-sense economist (perhaps the only one) Dr. Cielito Habito. We are reading of some 500,000 job losses in the United States last month, yet, where are the airplanes filled with returning overseas Filipino workers the “experts” keep warning about? They need Filipinos! Microsoft just fired 5,000 employees. Yet, they are lobbying the US Congress for more, not less, immigrant working visas. And Obama’s new Commerce Secretary Judd Gregg is a very strong supporter, described as “unabashedly endorsing an expansion of H1-B workers for the technology industry.” Speaking of overseas Filipinos, an incredible Philippine strength is the hundreds of thousands of soon-retiring Filipinos particularly in the United States. All those Filipino migrants during the 1970s and 1980s are reaching their “golden years” and are discovering that the “land of milk and honey” just isn’t. The general manager of the Philippine Retirement Authority should be given a Cabinet-level ranking and position. And a separate and heavily funded department should be established therein just to encourage Filipino retirees to return to the land of their birth.

Did you know that foreign direct investment to the Philippines surged by 68 percent in November? Why? Mining. Gold prices will move far above $1,000 per ounce in 2009. The Philippines has the third-largest gold reserves in the world. Help the government encourage, not discourage, this wealth builder while maintaining responsible mining practices. Build your personal wealth by owning shares of local mining companies on the stock exchange.

To those who continue to whine and blame economic woes on Philippine politics, remember this: Economic wealth creates political stability and a better political system, not the other way around. China under Mao Zedong was an economic disaster, and the politics no better. Dogs fight over empty bones, not over plentiful cuts of meat.

Get smart, Philippines. Almost everything needed for renewed economic prosperity is right here. And what the Philippines can use from the West will return to them something they desperately need: a profitable investment.

*This is a very strongly written and logical write-up from a column in Business mirror, the economic sense is just staring you at the face and we still whine about everything when we are actually sitting on gold. Although i get to disagree with author that one should own mining stocks per se, I still believe that you need to be educated about picking the right mining stocks for yourself and know what you are doing since this is not 'dart-board' science. Know how to see the trends first and pick a good stock broker.