What is Money???

This is a Guest Post from my Canadian buddy Joe who is seriously clued up on trading in metals, specializing in silver trading. We met in Australia and his knowledge of this industry astounded me.

So what is money?

Gold is flying from west to east as we speak.  Over 50% of the world’s currency is in US dollars and they are involved in over 60% of world’s trades to settle differences; the petro dollar being the main one.  This is why all commodities are price in dollars.   Much of the world has slowly been moving away from US dollars.  Countries have been signing deals with china to trade currency for currency (for example in 2011, China and Japan signed a deal where they settle trades (Yen and Yuan) with one another, bypassing the US dollar).  This is huge because China and Japan are the world’s second and third biggest economies via GDP.  Even England recently signed a deal with China and brought over approx. 30 billion pounds worth of Yuan to settle trade differences with the Chinese.

Another major development recently is China has just surpassed the US for biggest importer of Saudi oil.  China also has a major deal with Russia, that Russia supplies much of Chinas oil needs.  China has slowly been pushing for a new world reserve currency.  They want to “de-Americanize” the world.  But China is also playing with fire as it is the biggest holder of US debt outside of the Federal Reserve.   The Chinese have been trying to spend the dollar without causing a panic.  If there is a panic on the US dollar and everyone tries to sell them at once, then the dollar would be worthless.

The US still has a while as the reserve currency as there is no other currency that can take its place at the moment.  The Chinese would love to but they don’t have a bond purchasing systems that can rival the American one.  There is not enough Yuan to do this.

Gold has been the most stabalist currency since money use 5000 years ago.  It would only make sense that the world realizes this and comes back to it.  The current system has only been around for about 40 years and has been in trouble since the get go.  No one ever really trusted it if you look at charts of gold going back.
I think we’ve seen the first leg of the gold bull market from 02 to 11.  We are now in a consolidation phase.  Gold may yet go down from here a little more.  I would be surprised to see it go down to absolute worst case scenario $1000 (I give it like a 2% chance).  But inventories at the COMEX are low as china and other Asian countries buy up everything they can.  I’ve even come across that JP Morgan bank is starting to collect gold.  If that’s true we’ve probably seen the bottom of the market.

If we add up all the debt in US dollars and what the US has in gold reserves, to pay it off gold would need to go up to 50-60k an ounce.  I think if there is a parabolic move like this in the price that simply no one will accept dollars for gold.  A country that is willing to step forward and say there currency is backed by gold or some other commodity like oil will come out on top but they will probably face the wrath of the American military.

Getting divorced? Beware the financial implications for retirement.

Beware the financial implications for retirement if you’re getting divorced

I have never been married and therefore have never been through a divorce. I know friends who have though, and I know what an emotionally draining and painful experience it can be. Unfortunately, it’s also financially draining – but did you know the financial effects can linger into retirement?

Sharing assets after the breakdown of arrange is a complicated process. Agreeing ‘who gets what’ and assessing monetary value of possessions is a difficult task at the best of times. But how do you decide what happens to the pension fund?

According to Prudential, divorce reduces the average expected retirement income by around £2,600 a year. Why?

Firstly, there are financial implications of dealing with pension savings. The pension fund is often the biggest asset a couple have, and in a divorce pensions cane dealt with in 3 ways;

Pension sharing provides a clean break as the ex-spouses pension fund is separated from the members fund.

Attachment orders – where the ex-spouse is entitled to part of a members pension fund, but the ex spouse doesn’t have a fund of their own

Offsetting- this is where the value of the pension is offset against other assets. For example, one party gets the pension fund and the other gets the house.

It’s understandable to me that a pension fund might not be the first consideration when getting a divorce. The emotional strain, possible custody battles and legal fees take precedence and pension funds can seem a long way down the line. Don’t forget them though – they can be one of the most valuable things you never knew you owned.

What’s that? I’ve used 3 million kilowatt hours?

3 million kilowatt hours? You’re Joking!

Finally, the first step to energy market reforms has begun. Ofgem, the energy regulator, has come up with new ways to make the world of energy ‘simpler, cleaner and fairer’ for the likes of you and I.

To me, it seems a pretty poor state of affairs when energy companies need to be told how to run their businesses. However, I’ve been on the receiving end of enough jargon filled bills to welcome the change.

Under the new regulations, energy companies must ensure that they compete all operations in a ‘fair, honest and transparent manner’ at all times. They must also provide clear and concise information to customers, using jargon free language which is easy to understand. Finally, energy companies must make it easy for customers to contact them in the event of a complaint or problem.

If energy companies fail to adhere to the new rules, Ofgem has the power to levy a fine of up to 10% of a supplier’s annual turnover.

Ofgems’ plans will take a while to implement due to the complex changes with energy suppliers licenses, but the full process should reach completion by the end of June 2014.

While I certainly welcome this change, it’s not going to bring the cost of my energy down – prices have risen by 30% in the last three years. So it looks like I’ll still be cold this winter – but at least I will have a bill I can understand.

The Advantages of ECN in FOREX Trading

 The world of Foreign Exchange Trading (FOREX) is complex enough, but the introduction of Electronic Communications Networks (ECN) has added another tier to the world of currency dealing.


 ECN trading has been around since 1999, though in those days it was called Currenex. One of the main advantages of an ECN Forex broker is that the trader has direct access to banks and hedgefunds and any other Forex players. This means that the broker earns money through commissions and the success of its traders. A brokerage house that doesn’t use an ECN platform can sometimes be seen to be actually gambling against its traders.

The ECN system is transparent and it is allows deal to be placed on single click execution. This type of trading is best suited to experienced traders. Quite simply, ECN takes out the middleman and allows traders to deal directly with the major market players.

 ECN advantages

 Experienced traders who have access to ECN brokers claim that you can get better bid/ask offers as you will have access to a diverse number of sources. The fact that your broker will pass on your order directly to a bank or other traders will work to your advantage.

On the downside, some of these trading platforms are difficult to use if you’re inexperienced, they are not always user friendly. They can prove to be expensive, as you will have to pay a commission on every transaction. You will, though, have access to additional liquidity as you’ll be able to raise liquidity directly with some of the major banking houses, including Goldman Sachs, RBS and all the other famous tier 1 institutions.

Another major ECN advantage is that the trader can have greater access to credit options, if needed.

 Market makers

 The market maker quite literally makes the market, they will set the bid/ask price and they will buy and sell to traders and from traders.   One of the main disadvantages of using market makers over an ECN system is that the market maker will always set currency exchange rates to their own advantage. Market makers generate the difference between the bid and the asking price, the spread, and this is why some of these brokers will be seen to delay an order or even gamble against a trader.

An ECN platform allows a trader to assess the best prices from other market makers and then trade accordingly in their own best interests. There are certain benefits for a trader to use a market maker, however, there is less price volatility than those experienced on ECN platforms and their software platforms can be easier to use. It’s harder to use  ‘scalping’ as a practice if you use a market maker. Scalping can be compared to the activities of ticket touts who corner the market in a certain product, and then resell the tickets to an investor at a far higher price as a result of their activities. Scalping is perfectly legal and allows traders to make small gains on a series of very fast trades but the speed of these transactions is more favourable for those who use an ECN platform.

6 signs your debt is out of control

Warning! 6 signs your debt is out of control

We’ve all been in debt, and most of us still are. The difference is whether our debt is controlled, or whether the bailiffs are knocking at the door demanding their money back.

Speaking to friends who have been in debt, I’ve put together 6 signs that you’re struggling;

1. You’re always in your overdraft. Ok so I have an overdraft and I don’t really consider it a debt. It’s just tiding me over for the month until the next pay check. But if you’re finding you’re always at your overdraft limit, read the warning signs. Not only are you spending money which isn’t technically yours, but your bank has the ability to take away overdraft facilities if they think you’re in trouble.

2. You always use your credit card. If you’re using your credit card for more than just the big purchases and emergencies – for the weekly shopping for example – take note.

3. You hate the postman. If your post drops through the door and you immediately file it into the bin, it’s a sign that you don’t want to read anything telling you you owe money.

4. You’re behind on the big things. Rent and council tax are priority expenses. If you’re behind with either of these – you’re in trouble.

5. You take credit to pay credit. Paying off one credit card with another is a flag for your financial health.

6. You’re considering a payday loan. If you’re considering a payday loan but you’re not completely sure you can pay it back, you’re in trouble.

If any of these points apply to you, be careful. Have a look at your spending and make sure you draw up a budget and stick to it. Cut up your credit cards and try to cut back on living expenses. We all know it’s not easy, but you’ll thank me in the long run.

Holiday homes – not as fun as they appear

Holiday homes – not as fun as they appear

Right now, 5.4 million of us are considering buying abroad. Spain and the Balearics islands are the top dream destination, followed by France, Italy, Portugal, Greece, Cyprus, the Caribbean, Florida and turkey. Personally, I fancy a little pied-a-terre in Portugal.

Sounds lovely doesn’t it? A place to escape to. But be warned. Holiday homes are the biggest waste of money ever.

Did you know that the average holiday home owner visits their holiday home just twice a year? 2/3 of holiday home buyers expected to visit their dream second home far more when they purchased – but between family commitments, lack of cash and work schedules those homes in the sun stay forlorn and forgotten.

So even though I probably wouldn’t be going to my imaginary house of fun in Portugal that often, I’d still be paying for it. Aside from the purchase price, which at the moment wouldn’t be a great buy as the pound is down 20% against the euro; there are local property taxes, legal fees and mortgage admin charges.

After these hefty initial fees, factor in furnishings, maintenance, repairs, insurance, utility bills, taxes and possibly a cleaner or monthly service charge.

Despite all of this, I still dream of my place the sun. I just need to answer these questions for myself;

Do I really want to go to the same place on holiday, year in, year out? Will I have the time?
Can I afford all the costs mentioned above?
Have I visited enough to know the location of the property – how far is it to the nearest town?
Do I know a decent lawyer to handle the transaction?

Of course, if you plan to retire and spend 6 months of the year at your holiday home it makes more sense. Otherwise, think twice. The reality of a second sun drenched home may not be as beautiful as it appears.

Buying shares? Read this to find out which are gaining from the weak pound…

Buying shares? Read this to find out which are gaining from the weak pound…

I’m thinking of investing in shares this year even though I have never done so before. The pounds fall against the dollar has left companies reaping rewards and there could be further profits as the trend continues.

Investors are benefitting from a number of ways since sterling lost 7pc against the dollar in January. Of all dividends paid to FTSE companies, 42pc are paid in dollars. This means an income boost for British blue chips and a benefit for UK equity income funds.

I expect the pound to be under pressure for some time as the bank of England continues to try to stimulate recovery through low rates and ‘money printing’ quantitative easing. This in effect weakens the demand for the currency which then falls in value.

My advice is to invest in established, shareholder focused, dividend paying companies. Royal Dutch Shell and GlaxoSmithKline are two to consider.

Also in my favourites list are BP and British American Tobacco. Both are global firms where the dividend is paid in dollars.

If you want to invest in a less common name, try Spirax-Sarco engineering, Spectris and Halma – all members of the FTSE 250.

Now’s the time to buy shares – and I’m jumping in with both feet.

Redundancy: a guide to debt and overdraft

Redundancy: a guide to debt and overdraft

Since the financial crisis, getting made redundant has become all too common an event. Unemployment has been falling somewhat recently, but thousands of people are faced with the problem of meeting mortgage payments and servicing other debts after losing their job.

While you may have every intention of returning to work as soon as possible, it’s amazing how quickly your finances can spiral out of control without any money coming in each month. From missed bill payments to interest charges on credit cards, getting out of debt can be extremely tough.

The trick is not to panic and just keep trying to land a new job. In the meantime, here’s a look at a few options if you are made redundant.

Prioritise outgoings

For most people being made redundant should mean a reduced income rather than none at all. With what money you do have coming in it’s vital to prioritise the most essential payments – mortgage, utility bills etc. If you have car finance, you’ll probably need to keep paying this as you’ll rely on your car for getting to interviews and for doing a new job.

Benefit entitlement

As soon as you’re made redundant, in addition to searching for a new job, you should find out what benefits you are entitled to. You might be surprised by how much you can receive, which could go a long way to alleviating money worries while on the job hunt.

Mortgage help

If you own your own home you may be entitled to mortgage support. For example Support for Mortgage Interest (SMI) Payments is a scheme that helps you keep paying the lender. You may be entitled to this if you are claiming one of the following benefits: income support, income based job seekers allowance or income related employment and support allowance. Payments will start 13 weeks after you claim benefit and are usually made direct to the lender.

Consolidate debts

While earning, it’s easy to chalk up debts on overdrafts and credit cards and be able to keep servicing them. But once you’ve been made redundant it becomes a little trickier. If you think you will not be able to meet repayments, you may wish to consider debt consolidation. This allows you to pay off your existing unsecured debts and reduce payments into one affordable monthly outgoing. As long as you haven’t missed any of the payments your credit rating should not be affected.

Debt management

If you have outstanding credit card debts and overdrafts that need servicing while you look for work, a debt management plan can help. It is an informal arrangement between you and your creditors with the aim of reducing the level of debt and monthly repayments without the need for further credit. It’s very widely used and allows people to only repay what they can afford each month. As soon as you’re back in work you can up your repayments and clear the debts.

Cutting the Cost of Air Travel

Cutting the Cost of Air Travel

Budgeting for a holiday can be tricky. Unless you opt for an all-inclusive break the aspects such as accommodation, transport and dining can add up to unexpected costs and leave you feeling anything but relaxed. Air travel is one of the biggest holiday expenses but there are several ways to save money when it comes to organizing your flight.

Booking a Flight

Low cost airlines are giving consumers more and more options these days. If you’re flying short-haul within Europe, be sure to compare popular destinations like Barcelona with more unusual Eastern capitals such as Tallinn in Estonia. If you’re set on one particular location, price comparison sites can be a good way of finding out which airlines have the best deals to your chosen destination.

The good news is that many locations around the world can now be reached for impressively low prices. Popular destinations in Asia are becoming more accessible, with cheap flights to India in 2013 in abundance and airlines going to places like Sri Lanka opening up new direct flights from London only this year.

Getting to the Airport

Taking a taxi to the airport is tempting, especially if you’ve got an early start, but by planning ahead you could take advantage of a cheaper transport option. Some low cost airlines provide their own minibuses from coach and rail stations, which typically cost very little. Alternatively, try national coach services which operate round the clock to various UK airports, avoiding the need to stay in airport hotels.

On the Plane

Shopping online and choosing ‘no-frills’ airlines should save you a significant amount of money. Bear in mind, though, that many of these airlines cut costs by limiting baggage allowances and online refreshments. To avoid being caught out at the check-in desk find out about the baggage allowance for each person beforehand and ensure that you have stuck to it. Weight and size guidelines should be published on the airline’s websites or in your booking literature.

To avoid spending money on expensive in-flight snacks take a sufficient amount of food onto the plane with you including treats for kids so that they won’t be tempted by the goodies in the in-flight catalogue.

The best way to get the deals when arranging a flight is to be flexible. Although this is not always possible, booking your tickets midweek or even flying on a Tuesday or Wednesday can get you significant savings if you can manage it. Book your connection such as bus and train travel at least three weeks ahead where possible and try to arrange any car rentals before you arrive as well, to take advantage of online discounts.


Qatar Airways flying high thanks to millions of Facebook fans

Qatar, expat hotspot and entrepreneurial magnet with billions of dollars up for grabs thanks to massive infrastructure spending on the FIFA 2022 World Cup competition. And the banks, modern and forward-looking. Competitive, too. If you’re looking for a competitive business credit card in Qatar then you’ll easily find one given the current spending frenzy.

Fan of Qatar Airways, the state-owned flag carrier? Millions of Facebook users certainly are. In fact the airline has now exceeded the 2 million mark in terms of Facebook “likes”. This makes Qatar Airways the fourth most popular airline across the industry.

Remarkably, the airline only launched on the social media site in April 2011. And much of its incredible fan growth has happened in the past year, due to a wide variety of promotions including fan engagement, exclusive airfares, and the airline’s sponsorship of the world’s most popular football club, FC Barcelona.

According to the airline, growth on Facebook has been a bi-product of its broad content initiatives, where its aim has been to bring unique glimpses into the airline’s expansion, operations, sponsorships, employees and culture. Additionally, the airline has launched exclusive Facebook Fan Fares, enabling its fans to avail discounts on air travel.

Contests have also played a significant role in building the airline’s popularity on the social web. During the year, the airline has launched popular promotions such as: “To Maldives, With Love,” “Be a VIP at the FC Barcelona Asia Tour,” and most recently “Where’s the Panda?”

The airline has cemented its strong social media presence across the social media landscape using not only Facebook, but other major sites, too, such as Twitter, YouTube, Instagram, Flickr, Pinterest and others. Using all of these has allowed the airline to build relationships with its expanding customer base. As a result, it has gained tremendous insights into the attitudes and opinions of its customers toward the Qatar Airways brand and received many great stories and product suggestions from its large fan base.

But if Qatar Airways is flying high, the same can’t be said about the country’s political clout across the Middle East which, according to some commentators at least, appears to be on the slide. Certainly, Qatar has been instrumental in providing backing to strife-torn Egypt, for example, lending strong financial support to the regime of the now deposed  Mohamed Morsi, the first democratically elected president who was removed from power by the army after mass protests.

Now relations between the two countries appear to have drifted yet further amid ramped-up tensions after the return by Egypt of $2 billion deposited by Qatar in its central bank following the failure of negotiations to convert the money into a three-year bond.

The Financial Times says the decision to return the funds at a time when Cairo is relying on support from Gulf states to shore up its foreign currency reserves is another sign of worsening relations between the two countries.

According to the Financial Times article, Cairo felt able to dispense with the Qatari cash because it has received $12 billion in support from Saudi Arabia, the United Arab Emirates and Kuwait – all of which were uneasy about the accession to power of the Muslim Brotherhood and which immediately welcomed the ousting of Mr Morsi.

Qatar, a staunch ally of the Islamists, emerged as the largest aid donor to Egypt after the 2011 revolt that toppled Hosni Mubarak as president, giving Cairo $7.5 billion in loans and grants during the year Mr Morsi was in power.

Read the full Financial Times article here (registration may be required).

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