Asset-Trends (Identifying the Next Big Thing)

Today although gold is still an underperforming asset, more and more people are consuming the yellow lustrous metal like never before. It is still not greatly shown in the media, but prices are gradually climbing. You can call the climb of gold taking 3 steps forward and 2 steps back.

I believe Gold is in the Mid-phase 2 of an investment boom. There is still ample time to invest into this metal. However what is the next investment opportunity? What is the current asset class that is still in phase 1. What is under everyone's radar?







Lets recollect: Phases of an investment boom

Phase 1: Stealth phase; only those with time, analytical skills and great knowledge can identify it.

Phase 2: More identifiable, but only those with foresight and emotional stability will enter it.

Phase 3: The whole world knows; this phase is motivated by greed and those entering here thinks they know everything.



I seek to find what it is.


p/s: To those who have not participated in riding the gold wave, please do yourself a favor and start now. It will not last forever, the wave will build up higher and higher and participating in a wrong time (phase 3) is not only dangerous but it might even be disastrous. Do not chase yesterday's news.

ssshhh gold is past 1410 USD/oz :)

Dictators & Bank Runs

The economy is strongly tied to the fate of the geopolitical world. Its an understatement to say when there is a crisis in any significant part of the world, the economy suffers.

Turmoil has hit the Middle-East, perhaps the beginning of something more. As the dust of the Egypt protests and violence begins to settle, an even more violent uprising and protest in Libya has begun.

Introducing Muammar al-Gaddafi

Ex-Colonel, now the leader of Libya from a successful coup. He faces a bloody open revolt by his people for ignoring the basics of public care, unemployment and the traditional reason of corruption. More or less, Libya is in a state of civil war with the opposition unwilling to back down and Gaddafi issuing a statement of ' fighting to the bitter end'.

'Gaddafi has vowed to "fight to the death" in defense of his leadership of the country, and has responded to the unrest with large scale and extremely violent military and police crackdowns in the cities of Benghazi and Tripoli, which include the use of artillery and airplanes against protesters. As of late February, the country appeared to be rapidly descending into chaos as hundreds of people were reported to have died in the violence, Gaddafi is reported to have imported foreign mercenaries to defend his regime, and large swaths of the country, particularly in Eastern Libya, are reported to have fallen into the hands of anti-Gaddafi elements'

-Wall Street Journal / AP

Bank Run in Korea

Did you know there was a bank run in Korea? Most probably you didn't. This incident is kept extremely quiet by the major presses and hardly even heard around the circles of even business.
South Korean banks now suffering from the classic bank run.

Bank Run: Its when depositors lose confidence in either paper currency of the banks credibility to assure their deposits and hence literally run to the bank to withdraw every dollar they have.

Isn't Asian economies suppose to be safe and immune from the Western problems? Not really, remember we are all interconnected and from the looks of this, time to be cautious of even the local banks. Check this out:

'More than a thousand customers lined up in front of the Busan II Savings Bank located in Busan yesterday as soon as the nation’s financial regulator announced a six-month business suspension of Busan Savings Bank and its affiliate Daejeon Mutual Savings Bank.'

The government is doing its best to calm people, but it's not working:

“I’ve saved 40 million won ($35,810) over my whole life. That money was going to be used for my grandson’s marriage but I cannot trust these people [bank employees] saying that I am guaranteed to get my money back,” said Cho So-young, 79.

Is it any wonder now gold has creeped back up the USD 1400/oz mark and silver has reached a 30 yr high? I think not.

http://www.businessinsider.com/there-are-fears-of-a-massive-run-on-the-banks-in-a-country-youd-never-suspect-2011-2?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+clusterstock+(ClusterStock)

The Strength of the Sing Dollar & The Blame Game

Its great to be in Singapore (for-now)!! =D

With the US dollar literally dying, the wealth of the Asian Economies will be affected but will ultimately thrive.

Come, let me explain why the Sing Dollar is Strong, Why the US dollar is weak & Why buying gold (or any commodity actually) using Asian Currencies is much better then the US dollar.

Here is an old pic of mine after my travels to New York. In Early 2007, the price of gold in US dollars is: 600 USD per oz. Exchange rate to Singapore then was probably around 1.42 or so. (Meaning 1 US dollar can buy 1.42 Sing Dollars). Meaning in 2007, you need 850 dollars to buy an oz of gold.

Today the price of gold is around 1370 USD an oz. However the exchange rate is now only 1.28, meaning you only need 1750 Sing Dollars to buy an oz of gold.

To conclude with the US dollar falling, get out of the dollars and get back into Asian currencies such as the Sing Dollar and the Yuan. Even if gold rises, you will be paying (in a way) lesser for gold using the Sing Dollar then if you held on to the greenback!

The Blame Game!!

How do most locals in Singapore think about inflation? There you have it. Most realise something is wrong but are waiting for either handouts or solutions from the government. They blame the whole world except themselves. Remember people, when something goes wrong, more often then not to find the culprit, one has but to look into the mirror.

Its quite obvious which post is mine down below. But omg, i received 2 dislikes within 10 minutes while Mr Whiner garnered 3 likes for complaining. Amazing. Disgraceful.

The 3 things that Erode your Wealth

The 3 Things that Erode your Wealth

Ok this time the post is not about gold/silver. But some basic financial education that shockingly, the majority of people have no idea. Once you view this you will be convinced the surest way to poverty is to just work a 9-5 job and save your money.

Sounds counter-intuitive right? Sounds like i'm crazy? Why this is dude criticizing the structure of society that 70%-90% of people are following.

I present you with the 3 Things that Erode your wealth

1. Tax

Since the ancient times of Kings, taxes were imposed on the common-folk to pay for the wars, lifestyles and plans of those in authority. Of course, taxes are also needed to pay for some public amenities and civil servants.

In Singapore the tax rate for individuals range from 3.5% to 20%.

http://www.iras.gov.sg/Tax%20Calculators/IIT/IIT.html

Simply meaning If you rely 100% on your income for your survival, payments and to sustain your lifestyle, the vampire called TAX will suck up to 20% from you.

Lets say you earn $4000 a month, a maximum of 800 dollars is lost to taxes and that does not include the CPF money taken from you. Take home pay will probably be less then $3000.

Things the Government CAN and WILL touch (as of 2011): Dividends, interests, Property Rent, gains of profits from an income, royalties and estate income.

Remedy: Do you know that capital gains are not taxable. Such as stock investments and commodities investments. An example is Gold, although physical gold is 7% GST taxable, if gold rises in value, the government doesn't tax you on that (for now)

Play it right: Do not rely 100% on your taxable income, do have some other forms of investments, property, precious metals and stocks.

2. Debts

Yes, i understand it is impossible to eliminate needing debts. You do need debt to survive, your first house, your university study loan. However the moment you take a bad debt without thinking, you have signed a form to financial suicide.

Lets say you buy a $1,000,000 dollar home, making a downpayment of $200,000 and you take a loan of $800,000 @ 8% interest for a 30 year term. Guess what, in 5 years, you would have paid $352,200 to the bank ($312,760 for interest and only $39,440 for debt reduction)

And that is assuming you can earn $70,000 a year (that excludes food, clothes, car payments and entertainment). If you can't pay on time, the interest will either pile up or you lose your house.

Play it right: If your going to take on debt, make sure you get paid for it, an easy example is rent out the million dollar house, let say it fetches at 6000 dollars a month, your mortgage is fully paid for and in essence, your getting a house for 'free'.

3. Inflation

Why saving all your dollars in a bank is pure ludicrous is simple. The interest rates you get is seriously near zero, even those that aren't, requires fixed deposits (your money is frozen for a time period if you want the interest).

We all can feel inflation, can your pay rise at least 5% a year to scale with inflation? Even if it can, it means your just surviving, your not getting richer. Your fighting over a money supply that is being printed for free.

Save your money, yea its a good idea, your 20 dollars today that can eat a nice meal in a middle-tier restaurant won't even buy you a mac donalds meal 3-5 years down the road.

Play it right: Invest at least 25% of your portfolio into stuff that will either appreciate or retain their value over time. An example of an item that has held its value for 3000+ years is Gold. An item that can appreciate is Silver, sugar, wheat, oil and other commodities.

Gold: The Art of When to Sell

Gold is an investment, there is a time to buy, there is a time to hold, and yes there is a time to Sell. There is a time to sell!



Gold/silver is not a marriage contract that states for better or for worse, sickness or in health. When the time comes, you need to sell it off to realise your profits.

Before i start talking about the signs of when to sell, lets discuss a bit about asset classes, and how they follow each other. In history, these signs have always played out, some more significantly then others. Others are directly track each other, some have lag times.

My Theory of Asset Class Movement



Ok granted, it may not be lines that have sharp turns, but perhaps gradual curves, but the general direction i believe should be highly correct.

Understand this concept Wealth Cycles. The economies of the world plays out in this fashion for thousands of years, one asset class will become overvalued and eventually fall, while another asset class from being undervalued rises. The old overvalued asset then become undervalued. Vice-versa.

The Art of Selling Gold/Silver is to correctly predict where roughly the peak of its wealth-cycle will be, sell everything and pump it into an asset that is undervalued.

Remember the stockmarket and dot.com boom, where everyone left their day jobs. Stocks was at an all time high, commodities was very low in price, gold was less then 200 dollars an ounce. (Today it is around 1370 US dollars an ounce).

We used to see the first graph applies to the direct relation between stocks and commodities, when stocks began declining, gold went directly up. However not today. With the manipulation of money (printing, silver/gold shorting, rumor & fear mongering and quiet acquisitions), the pattern of gold and stocks/bonds now follow closely the pattern of how commodities relate to property prices.

Happy Identifying the next undervalued asset class! You must know what to put your money in once gold/silver becomes overvalued. (But i believe, we are far from that day, still relatively far)


Factors that Signal the Time to Sell gold

Watch the Dow-Jones Index:
Historically in times of crisis, the price of gold rose and the dow jones fell to 1:2 and even 1:1 ratio. Meaning eg. Dow Jones fell to 8000 points, gold rose to 8000 dollars/ounce. Meaning you can buy a share of the Dow Jones with just an ounce of gold.

Currently: Gold: 1370/oz, Dow Jones: 12,092/share (we are still far off, relax)

Watch the Consumper price Index & Food prices:
This is simple, when the CPI jumps in double digits and above 20%, we are getting near an exponential increase in gold's price. When your plate of rice or noodles start costing 10 dollars for a simple meal, the end is near. You can feel it, your wallet will be screaming.

Watch your News papers, including business times:
The media especially in Singapore is slow to catch on, they are part of the herd, when gold rises and inflation hit the streets, people will all be thinking gold is the best investment and dump all their money in it. This will make the price of gold skyrocket, but incidentally, this is the time when you want to hold the trigger button that connects to the word 'Sell!' and squeeze it at a moments notice.

There are many more indicators, but these 3 points should be enough for you guys to keep in mind without forgetting.



So what are you doing with your money? :)