China Buying Gold ...

Well, it is not China alone:

China Gold Buying 35 Times that of US

When I see the graph, I would trust economic policy the more the further left (only on the chart!) the country ranks.

When you read on, it looks like the Chinese policy seems valid and gives good advice to its people. Alternatively, you can also google: china gold attack usd
What you get is the same facts: China buys gold. Just with a different spin. Evil communist China attempts to devalue the US-Dollar by bying gold (instead of US-T-Bills).

Well, maybe China is dumping US-D. Can you blame them?
Seems like the US-treasury does not any more!

But where did we start? Ah, I forgot: China is buying Gold ... massively!

Side Efects of Taxageddon

Back in May of this year, I wrote about Taxageddon or what is now in the headlines every day: the financial cliff. With the suggestions of the Democratic Party and President Obama, its more a tax cliff by now, as the left wing has almost no spending cuts in its program, but a lot of higher taxes. But I want to focus on just two side effects of the ongoing discussion about reversing tax cuts: Why it might come to a year-end sell-off and what currently happens to dividend policies of US companies.

Without an agreement in the next weeks - I would say latest by 24th of December - capital gains tax will raise. At the moment you pay 0 to 15 % capital gains tax. This will go up to a minimum rate of 10 % and as high as 20 %. While this is still comfortably low compared to most European countries, it will certainly make a lot of folks think about their year-end-action. Imagine you bought your stocks back in 2009, after the financial crises and they are up now by 100 %. It will certainly make a difference for you whether you have to give away 15 or 20 % of those gains. Just by selling now, and buying back later next week, you can cut the tax burden on this sale by 25 %. And if you worry about the market conditions at them moment, you should for sure sell now and not on January the 3rd.

To me, it remains unclear whether or not we already see some of those sales. You could interpret the sell-off after the announcement of Obama's victory as induced just by this fact. But it is mere speculation. You could also argue, that the outperformance of the European, especially the German market has something to do with this taxation issue.

Second tax cliff issue, that already led to tax evasive measurements announced publicly is the dividends tax. Taxation on dividends will move from 15 % to personal income tax rate - so to a maximum just short of 40 % federal tax (+ state tax). Companies noticed, that they and especially their large share holders will be worse of receiving dividends next year. Some of them took evasive action - and this is especially if you have huge shareholders (like a family, or part of the management. (Also do not forget, the dividends paid out are from the profits of the companies - they have already been taxed by roughly 30 % before they get paid to their owners!)

COSTCO will pay a special dividend of 7 USD/share while the normal payment rate is 0.275 USD per share per quarter. To do so, COSTCO raise 3.5 USD bn of additional debt. Share price did rise over 100 USD after the announcement. 

And COSTCO is not alone. On 27th of November, Financial Times counted 37 companies that had announced special dividends from October to early November and 66 that did so since the US election. The whole dividend issue might have pushed the indices up, as such announcements would put upward pressure on stock prices immediately (see the price hike in COSTCO).

Adding up the capital gains issue and dividend issue, the 'tax optimized investor' would have:

- sold all his non-dividend paying stocks with gains since he bought them by now

- bought shares of stocks who would announce a special dividend prior to such announcement (the hardest part - without insider knowledge you could have speculated during the last weeks who would do so, though)

- and will again sell all his dividend paying shares once he qualified for the dividend by mid December

- and then he will buy them back later in December or early next year for a discount.

Taking the discussion a step further, the ones expecting such behaviour would be short by now ... which leads us to the interesting question: is short interest in general higher at them moment than normally? A field for your input and my research ....

Trustable Gold?

Today I found an interesting web-page - Trustable Gold.

After the Munich International Precious Metals & Commodities Show I tried to collect more information regarding investment (and storage) in precious and strategic metals. 

Two evening invitations turned out not really convincing.

Schweizerische Metallhandels AG made a nice presentation in a convincing surrounding. Only trouble here is you invest in metals not traded on an open market. And as there is no market price you have no idea wether you are treated fair. But even done so: the margins are quite high. Still it looks like an option. I just do not feel really good about it so far.

Mida Trading AG was even less convincing. Their presentation was crowded, taking place in the rooms of a Volkshochschule. Who ever want to attract people investing money should find better places. The speaker was quite amusing, but the company was not really in the focus of the whole speech. This was more about investing, inflation, Gold, ... in general. 

Quite clear was, how seriously this company keeps track of who brought contacts and visitors. From my point of view, the percentages to be gained by selling are very much of importance here. Plus: the offer is for sure not cheap, even with the special discounts they offer you after 5 minutes of discussion.

All that brought me to a little more research on the Internet - and two companies I know since a long time popped up: GoldMoney and proaurum. Both offer storage options, but with very different concepts. I will not go into details here for the time being.

What TrustableGold offers is just an evaluation of the offerings of different companies who allow you to store  Gold. GoldMoney and proaurum are rated. It was really nice to see, that GoldMoney got a top rating; proaurum did not.  

Still, I guess I will try to get more information on both concepts (and share them with you).

Und wenn Du glaubst es geht nicht mehr ...

.... kommt von irgendwo ein Lichtlein her!

Or so goes a German saying. Gosh.
Not sure what happened today ... markets looked awful - and just from nowhere all markets are in GREEN mode. I know, I know - lame duck president avoids fiscal cliff over the weekend - blah, blah, blah ... but hey - that is the news event driving the market?

Guess in the next days we will learn where that bucks (and EUROs) did come from.

Post-Election Action

While the USA might not be the strongest country any more, might not have the best infra-structure, or producing economy --- it for sure is still the epicenter of the financial markets.

With the elections behind us and some uncertainty lifted, what are the take-aways?

1) 16 of the DOW30 stocks trade below 200-day-moving-average; 15 of them look like a sell  following my chart patterns. The markets dropped significantly with the DOW30 below 13.000, the S&P below 1.400 and the NASDAQ below 2.650.

My read: After the decisive outcome of the election we saw a short rally as this was better than a stalemate with weeks of discussion. But it seems, the market expected a Republican win and now hads lower. Also the focus has shifted from the elections to he fiscal cliff approaching in seven-league boots.

2)  German market also look unhealthy, but at least still holds the 7.000 level. The MDAX is still within its upwards trend, but on the lower end. Germany clearly looks stonger than its European fellows - FTSE, CAC showing signs of late weakness. Only the ATX and SMI look as stable as Germany for the moment: same language, same thinking, same stock trend.

3) The EUR gained strength compared to the USD - or the USD lost ground ... My read is that here we see the same shift in focus than with regard to US stocks. Fiscal Cliff and discussion about the debt/deficit limits in the US are on the horizon. Last time Democrats and Republicans could kick the can down the road at the last moment - and it hurt the USD very much. 

4) Gold/Silver was hammered last week - and I tried to get some but placed my limit a few bucks to low. With Obama in office, its back well above 1.700 USD - same chart for silver despite worries of a weakening economy. Gold in EUR is close to its all-time-high and approaching 1.400-levels now. Here I guess the market was anticipating a (chance of) more prudent fiscal and monetary policy from Romney/Rian. With that out of discussion - and Bernanke likely to stay - an upward trend from gold seems to develop.

5) Obamas victory speech  was a first step towards the Republicans. I guess 50 % of his speech Romney could also have made ...

'... you hear the deep patriotism in the voice of the military spouses, working their phones late at night, to make sure that no one who fights for this country ever has to fight for a job or a roof over his head when they come home ...' 

Obama or Romney?

So what are the takeaways:

- I expect US stocks and the USD to be somewhat depressed for the next weeks, unless Obama can put on a deal on fiscal cliff issues fast

- focus of US markets will be the US - so Europe is ganted some more time to move ahead

- whilst the elections might have had an impact on short term outlook of Gold, mid and long-term the USA, Europa and Japan can only try to inflate away their debt; the opportunity to buy precious metals lower is gone with Obama still in place

- Bernanke will not run for a 2nd term; I guess the rumors about him not doing so have been linked with the fear that a Republican president might not see him as first choice

- I would say there is a 75 % chance, that the fiscal cliff will be a fiscal hill - it would be unwise from both parties to stand by their left- or right-wing extremists and let the US run into very hard times. Instead they will fight for a compromise, kick the can down the road, both presenting themselves as victorious. They will strike a deal, where maybe taxes on the rich go up, but not the tax rates (by reducing exemptions). Where spending will be cut - but with room to point on the cuts the other side hurts more.

- Once the cliff is behind us and we cruise down the hill, big money will have accomplished something else: invested heavily in bonds they already have a guarantee to make an exit here with central banks buying up those papers (see QE3, Draghi comments in Europe, BoJ policy). Guaranteed sell at all-time-high prices. Instead of shifting to stocks now, those guys just have to wait for lower prices on stocks; so several weeks of discussions on the US debt, the fiscal policy - all with southwards impact on the equity-markets - will only second their goal.

Those are not markets any more. Maybe we should be worried about real output, production volumes, spending and saving - if we would have a market society any longer. Instead we have to analyze what fits into the strategy of the big players. What do European, Chinese and finally US politicians want to achieve? What game are the central banks playing? What is big money doing? You really think all the Wall Street guys out there do not know that bonds have never in history - never in history - been as much over-valued as they are today?

My tactical plan for the next weeks til year-end:

- lighten up on stocks when individual charts start to look ugly - rather not invest into new ideas until the fiscal cliff is hopefully eroded to a fiscal hill

- shift 30 % of my monthly equity-funds-purchasing programm into an alternative where I buy gold or silver

- play the USD/EUR FX rate

Have a good night and stay flexible!

IPM&CS Munich - Part V - The Speeches

Int. Precious Metals & Commodities Show Munich  -  PART V
Int. Edelmetall- & Rohstoffmesse München  - Teil 5

 Here comes the fifth and final part of my report from the Munich Edelmetall- & Rohstoffmesse. I will have at least one follow-up, as I visited a speech of Schweizerische Metallhandelsgesellschaft yesterday.

The speeches came in two kinds. Type I was 20 minutes speeches from companies, mostly miners and explorers. This had little value to me, as I was quite unprepared and I am not the kind of technical guy, who can make an evaluation on drill hole results and the kind. Still I watched several of those, as otherwise it would have been impossible to get a seating on the Type II speeches.

One that made some impression was BacTech Einvironmental Corp. The company is using the tailings of mines and uses bacteria to recover metals left behind.

 

Type II speeches were more of general, macro type.  I will give you several links here of the guys I watched and will address the major points they made.

Major points:

- there was no 'deflationist' - not a single one I listened to. Everyone was quite sure, that inflation will happen (or: not happen, but be the choice politicians will make). Well, you could argue, that is no surprise given the surrounding of the Precious Metals & Commodities Show. But Gold was always marketed as an asset, you could - also - invest in during deflation. So seeing no deflationist was a surprise to me.

- people are really willing to listen to a very theoretical presentation about Mises, Hayek, and the Theory of Money today. Well, not the average teenager on the street, but at least 300 to 400 folks. I really like to see, that Austrian economists are on vogue again.

 -  I did see the worst presentation I ever - ever - saw. And this one was paid for! It was the presentation of Prof. Dr. Han-Jürgen Bocker. The worst slides I have ever seen! Jokes that are politically non-correct - very much so. Really disgusting trash-talk, treating woman as inferior objects. And the guy was even proud of being able to go on with this s..t for hours. But: the room was full, the listeners yelled, even the quite educated visitors of the show did fall for him.
He was spitting out everything he knoww, all at once. Not that the facts would be false. But dropping them on your listeners all at once, with no structure, no idea how to make it a logical story, not picking them up where they stand and leading them some steps upwards ... you just drown folks, overlaod them with facts, overnews them.

 - Uwe Bergold - one of the speakers sponsored by proaurum.de was one of the long-term orientated speakers. He pretty much demonstrated to me, how hard it is for me to trust somebody talking with a local slang (Bavarian in this case). But it was a nice presentation, with good facts. Not really new to me, citing sources like Shadowstats.com I follow since years.
Very important statement he made: Every market booms and busts. So you have to think about your exit strategy in advance. The gains of years and decades can vanish in a few months when a market crashes. So make sure, you are in a position to exit when it is time to do so.
But for the moment, Bergold still is bearish on paper money ... and therefore suggest to buy precious metals.

- Best presentation I ever saw life was Gerald Celente. His name was not totally new to me, as Jim Puplava interview him several times at FinancialSense. But what he delivered - in a huge room totally overcrowded - did surprise me. I was expecting a speaker with hundreds of presentations behind him --- but he looked to me as pushing for impact very much. Someone very dedicated to make an impact, to change the picture, to influence the developmet.

The presentation was so much different to Bocker. Hardly any text. Almost no charts. A Picture presentation.

 

A clear structure. A red line you  could follow - had to follow - while the speech was given. An Italian SIGNORE making jokes on the Italian way of living.

And somebody ending with a mixed picture ... Celente thinks its likely we will end up in a very nasty century with lots of wars, big wars, close to world wars. On the other hand-side he motivates to become better, to excel and reach out for the best you can reach. An those raise the bar for our so-called leaders. 

 

Very motivating speaker at the end of the show: Mister Dax Dirk Müller.

Four points to take-away from his speech:

- the US and China does not like to see a strong Europe. Europe does not have to fail. We can make a difference - USofA is just afraid of an western power as strong or even stronger then them. We can overcome the European troubles. Do not let US-bankers tell us we cannot.

- bond holders - the huge ones with political influence - made sure they can dump the bonds they hold on central banks. Central banks will buy at the absolute high ... and GS, Pimco and similar guys will sell at the peak. So far, that is just a fact. Interesting question to ask yourself: will current bond holders have enough influence to force stock marekts to break down ... so that they cannot only exit at the peak, but also enter at the (stock market) bottom?

-  any credit is a debit. Nice thing is: you pay interest on you own debt (for sure. Be it consumer debt or debt on your mortgage ... that's the way it should be). But then you pay interest on state debt ... as the government will just raise taxes high enough to pay the interest on 'its' debt. And then you pay interest on the debt of all the companies out there. And you do so by paying the price of the goods you need - and this price is full production cost + cost of capital including interest on debt + a margin for the company.

The whole system is stable, as long as debts do not exceed a certain level. Once they do, the 'average guy' (the one with a job, good paying, not in debt, not living on social benefits) will just collapse ... he cannot bear it any longer.
So the share you pay for interest in the system will grow - until you cannot longer stand it. And once you cannot stand it any more, wealth has to be redistributed from the ones 'having' to the ones 'producing'

- and this redistribution can be done two ways: quick or ... slowly / dirty .. .whatever you want to call it. Quick is: Default - Taking wealth from the 'rich' (= middle class) and give it to the others - Expropriation. Slow and dirty is: Inflation.

And we should all hope for the slow and dirty way, as this is the way you (being a guy with wealth, net worth, some assets) can take actions and outsmart the others, protecting at least some of the stuff you did earn and safe, put aside. 

Immediate actions of theft you can hardly avoid. 

So lets be a (THE) friend of inflation!!!
Let us elect socialist governments!!!
Hail to Obaman!!!

(Sorry - getting sarcastic here.)

Prof. Dr. Max Otte

Thorsten Polleit 

 Prof. Dr. Hans J. Bocker

Uwe Bergold 

Gerald Celente   

Dirk Mueller

IPM&CS Munich - Part IV - Explorers and Miners

Int. Precious Metals & Commodities Show Munich  -  PART IV
Int. Edelmetall- & Rohstoffmesse München  - Teil 4

 

There must have been close to 100 of those companies - which was quite a surprise to me. None of the real big guys (like Barrick, GoldCorp, ...) - guess the most known one is First Majestic Silver. And then down to real small companies with a market cap of 15 - 20 EUR mn. 

 

Apart from gold and silver we had uranium, potash, palladium, platinum, tantal, rare earth, graphite, copper. Projects from all regions of the world - the Amicas, Serbia, China, India, Africa. Companies have been in all stages: exploration, starting to build the mine, months away from producing, full producer. Some of them with done financing, some with positive cash streams to further grow, some with dividend pay-out - and others where further stock dilution is to be expected.

Finding such a portfolio of companies at the show did surprise me. Think about on of those small, more-or-less unknown explorers. What can they expect at a Munich show? 100s of private / retail clients buying shares for 5.000 EUR each? Analysts showing up at the booth and asking questions, starting coverage suddenly? Institutional investors being convinced to put money into those companies?

Surprisingly, many of the small companies told me that Germany is important for them, as a big part of their shares is held by Germans (No. 2 or 3 in ranking). And this is really with retail customers, German institutional holders are hardly present. Some companies have a second listing in Germany.

What you get here is direct access to CEOs, COOs, presidents and vice presidents. I was not really preparing for the show, so I was not able digging deep with questions. To really get more out of it, you would have to do your homework ... guess most of the material presented here you can really get from the internet pages of the companies. What they are dropping here and there is a hint on news to come ... like Q3 results, new updates on drilling, ... Well, that's of course also a marketing gimmick.

 

Any highlights? Well, I am not really sure. At least interesting stuff:

BACTECH: biotechnological extraction of recourses from tailings (mine dumps)

URANERZ ENERGY CORP: in-situ recovery of uranium

 

 As a conclusion: the concept (direct company access at the show) is for sure interesting, but without more preparation on the side of the visitor, this will not really give you an edge. A nice waste-of-time; to get more out of it you have to focus and specialize on some of those companies (read: work to do!)

 

... more to come ...  

IPM&CS Munich - Part III - The Storage Problem

Int. Precious Metals & Commodities Show Munich  -  PART III
Int. Edelmetall- & Rohstoffmesse München  - Teil3

 

 I did write a few lines on the traders in my last post. After you selected one of those traders and started to buy some precious metals, new questions arise:  how and where to store it?

 

Just think about yourself. Lets assume, you put 10 % of the assets you own into gold or silver. For the sake of the argument, lets say that is 20.000 EUR. All in Gold, that would be ~15 oz of gold. And in silver: 31 USD / oz at 1.29 EUR/USD >> so somewhat less then 850 oz  or below 30 kg.

 

You really want to store that in you flat / house? Well, I guess, this is doable. Its only 10 % of your worth - so if you loose it (to your maid, burglars, party guests stumbling over it) you still stay alive. May be you even want to have that amount at immediate access - just in case.

 

When the numbers rise, sooner or later you do not want to store that at home. So what next? You took physical delivery in first place, because you did not want any risk from counter-parties. So no ETF, funds, etc ... rather physical delivery.

 

Not wanting to store under your pillow, the bank vault is the next step. Its quite anonymous; you don't have to tell the bank what you store ... just make sure you do not store more than the insurance covers.
But what happens in worst case: will the vault be accessible in case of bank holidays? Just imagine: nobody can take money from his accounts. People line up. Now you step in. Maybe you get your coins and bars ... and then you want to exit and move through the angry crowd?
Or maybe you do not get your precious metals! As banks have been told to make the bank holiday a holiday for everybody! So all vaults may be frozen ....

What (mostly) Swiss companies offer here: Store in the Swiss mountains (some of them offer that literally).

Approach I: non-allocated storage in a customs-free zone (in Switzerland).
What you can do here is buy gold or silver in a lump-sum or over time. You will get some discount here, as the provider buys huge lots and not a coin here and there. And being in a customs-free zone, there is no VAT (on silver; gold is tax free anyways). 

On the upside: safe storage, not linked to a bank, out of the European Community, guaranteed take-back of you metalls.
One of the sales guys started to speak about a traceless transfer (no emails, no paper sent to your address) without me asking. Guess that is a standard question they get.

The cost: you pay an agio (0 to 5 %), storage fees per anno (1 - 2 %), and sell fees (1 - 2 %). 

 

Approach II: allocated storage at such companies.
I asked about that, and it looked like they are not really prepared for it. You can do it, fees will rise. But the minimum amount is rather high (1 CHF mn) - and the main problem they mention is the seperate storage rooms needed. 

 

Apporach III: vault from private companies.
Here you get storage in a vault - its no longer in a customs-free zone. But you can access it just as a vault at your local bank. So whatever you put in or out - it is your business. Still they offer you to buy and sell metals, as they have a link to a retailer. So you can call them or buy online, drive their, take the stuff from them and place it immediately into your vault. (You get 2 keys, can leave on with them or take both with you - and you will need both to open the vault.) 

And (mentioned without asking): after 3 years they accept paying for the vault in cash. Price: ~750 CHF per anno, but depending on the size. You can go up to storage places for 1 ton. 

All the concepts have so far been alien and new to me. To really get a picture, I guess it will be necessary to do some more research. One of the companies - Mida - will be presenting in the next weeks here near Munich. Guess I will take a look on how much attention they will get at that event.

 

... more to follow ...

IPM&CS Munich - Part II - The (Coin) Traders

Int. Precious Metals & Commodities Show Munich  -  PART II
Int. Edelmetall- & Rohstoffmesse München  - Teil 2

I got notice of the PM&CSM via    pro aurum    and, being a customer, they also sent me 2 free tickets for Friday.

Guess we had a pretty nice line-up of such companies: the magazine of the show lists  15+ precious-metal and coin traders, most of them German, some Swiss and Austrian. Maybe I did know 3 or 4 of those names so far and even some of the bigger booths were unknown to me. Sure those traders always make up for a nice show: shiny coins and bars behind glass, security here and there, sales guys and gals ...

I really did not notice the amount of trading going on on Friday. But obviously EUR where changed to 'real money', gold and silver, coins and bars, left and right. Did see a lot more of that on Saturday.  It is kind of strange, when you see a guy in T-shirts and washed-out jeans handing over a 500-EUR-note in  an overcrowded environment and receiving a stack of silver coins for it. And you can just take you camera out and film the whole transaction ... 
People coming to the booth and discussing the delivery of 10 coins, only 1 piece from each country ... this one they got. that one is sold-out ... all the discussions and hand-overs taking place in a semi-private environment.

Guess 95 % of the folks visiting the show are 'retail customers' - so the guy like you and me, private investors, putting some k EUR here and there.  I can really see, why it makes sense for the coin/retail traders to be on the show. They make some business there, but mainly they make their name known. Next time I want to buy some physical coins, I will check on alternatives to my broker. I am quite sure, it will not be worth-while to change, but at least I will check. 
And for the total new-comer to the world of buying gold and silver - guess these traders can attract some business.

So: who did well in presenting himself? (this is a very subjective view and me walking on thin ice)
Degussa - huge booth, shiny, guess 90 % of all visitors used a free bag from them to collect show papers and hand-outs
pro aurum - nice booth, but nothing compared to Degussa, on the plus side some key note speakers mentioning their support
And the rest of the field - with Münze Österreich (just put 10 girls into these stylish Maria-Theresia-costumes on the next show instead of one and you really make an impact), and ReiseBank (booth placed on a strategic location just exiting one of the presentation rooms and big enough to get attention, never heard of them before) leading.

... more to follow ...
 

IPM&CS Munich - Part I

Int. Precious Metals & Commodities Show Munich  -  PART I
Int. Edelmetall- & Rohstoffmesse München  - Teil 1

 

The IPM&CS Munich took place on 2nd and 3rd of November at the Event Arena in Munich, loacted at the fields of the Olympia Park. The place was used for in-door bicycle-races - it is now a 2-story oval building, giving space for 3.000+ visitors. If I got it right, the show was conducted the 8th time in Munich, but - shame on me - I visited it the first time.

We had 2 days of nice weather in Munich. I was early on both days, interested in how many and what kind of people would show up. On Friday - just between the weekend and a public holiday in Bavaria - people lined up to get in. Well - this is common for Munich at almost any place; you better get reservation here on whatever you plan. Opening up some 20 minutes after the indicated time, who wonders we had people lining up to get in. (Kind of guerrilla marketing: provide only 20 pairs of the newest running shows, and who would not expect them to be sold out after 30 min?) Well, at the end: It sure provided for some nice pictures and nobody will know how you 'created' the line-up.

On Saturday, waiting in perfect morning sun light sipping a cup of free coffee,  the crowd was a little bit smaller (Surprise - everybody had a day off ... why smaller - well doors opened in time now).

Not really sure how that compared to previous years, the top presentations for sure were overcrowded, not having enough seating available. Guess, that's the same picture on most shows - organizing one of them, I would make sure there is not enough seating.

Speaking about presentations: we had 2 days of them in 3 halls/rooms ranging from 20 min (mostly company presentations) to  50 min (with some very prominent key note speakers).

On the show, we had several banks / banking institutions, precious metal / coin traders, coin and bar producers, intelligence/report providers, institutions selling PM funds, uncommon stuff (like silver art), and a whole lot of expoloration/mining corporations (gold, silver, but also other stuff like platinum, uranium, and so on). 

I did not really prepare for the show --- just went there, breathing the atmosphere, listening to presentations, watching who attends the show. Took it as 2 holidays with alternative brain feed. Giving my background, given all the information I soaked up in recent years, some of the stuff, some of the companies looked really familiar. Guess I had no big 'WHOOW' event here on my side - no new data, no new concept --- but still a whole lot of impressions, side aspects, vivid pictures behind the guys whose articles I read.

I will try to categorize the impressions and data in my next postings. Writing will help me to think about it, categorize impressions and information, think about the input, process it, get a picture. and eventually share it with you.

VAT on Silver Coins

German state is looking for new ways to tax its people all the time. Surprisingly the Wirtschaftswoche reports in its latest issue, that plans for a hike on VAT on silver coins from 7 to 19 percent have been postponed.

Plans? Ever heard about that? Red in the papers? Seen on television? Not me ...

Silver bars are already taxed with 19 % VAT today. So if you use them as an 'investment vehicle' (read: a store of value not to be inflated away by politicians printing more and more fiat mney), you have to bet on a 20 % increase over time. Silver coins have been comparable cheap - 7 % VAT so far.
For both products you do not owe capital gains tax, if you sell them after holding a year or more.

Gold - up to now - has been treated similar to paper money and there is no VAT nor a capital gains tax on it.

How quickly things may change is demonstrated in Austria: holding real estate for more than 10 years and gains would have been exempted from capital gains tax (like in Germany). Not any more - since April 2012 there is only an exemption if you currently live or have lived in the estate for several years.

What steps come next? VAT raise on silver coins? VAT on gold? Hah - i have got the idea: VAT on paper money! Single problem: we most give it a different name, as we cannot expect paper money to 'add value'. How about a 19 % transfer tax on all the fiat money you get transferred - physically or electronically? This would give nations burdened by debt finally a break. At least for one or two years ...

Internationale Edelmetall- & Rohstoffmesse - International Precious Metal & Raw Material Fair

At November the 2nd & 3rd the Internationale Edelmetall- & Rohstoffmesse will take place in Munich, Germany.

The list of companies present at the fair is available now and there will be interesting presentations on both days. I will do my best to be present on both days.

Follow the link!

The Magnitude of the Mess We're In

I found a real top story in the opinions section of the Wall Street Journal: The Magnitude of the Mess We are in.

Unfortunately, this is not only affecting the USA.

GOLD at all-time-high

Just noticed, we are at all-time-high at 1.380 EUR / oz.

Another one to think about ...

- US will not tolerate Iran becoming a nuclear power (latest Obama speech)
- biggest naval exercises ever are conducted in the Streets of Hormus
- Israelian trash-talk on Iran was never worse
- tensions between China, Japan and Taiwan about some neglect-able islands rise

Oil prices are going to ????

And now for something completly different ...

These days i got a notification from comdirect on 'comdirect Wechselgeld sparen' ('comdirect save change').

The deal is:
- for every payment you do with your comdirect VISA card, they will round up the amount to a whole EUR (so if you fill up your tank for 70.01 EUR as you did not hit the 70.00 number, as you usually try, they will charge you 71 EUR)
- the excess amount will be transferred to your Tagesgeld-Konto (call money account), which has a yield of appr. 2 %
- so your Griokonto (checking account) will be charged somewhat higher, but the difference goes to your interest earning call money account
- for the first 3 months, they will double every EUR transferred to your call money account that way after 3 months (read: you get a 100 % bonus on such transfers from your left to your right pocket; and you will get it after 90 days after the transaction happened - or at the next accounting run after 90 days - have not seen the details on that one)
- afterward this 3 month they will add 10 % to every EUR transferred that way after 3 months (read: the bonus drops from 100 to 10 %)

To me, this sounds like a deal. Where can you get 100 % or 10 % interest nowadays? And: I can always transfer the money from my call money account back to my checking account. It is really just left pocket to right pocket. I have no transaction fees. No time delay ...
While I will not get rich on this or secure my old age pension - millions of transactions could impact the earnings of comdirect. So I doubt, they really have to pay for all this.

Question (and I am totally sure 100 % of readers can provide speculative answers on that one and I expect such multi-line comments on the blog by all of you!):
- why does comdirect offer this?
- is it just to boost turnover with their own VISA cards?
- or can they make up for the costs of doubling / adding 10 % to such transfers by earning interest, getting refunds from VISA, etc?
- just explain the (possible) business case behind that offer to me

Awaiting your postings !

PS: I will write comdirect Investor Relations a question regarding the thinking behind this offer. If they answer, we can compare your comments to their answer.

Morphosys

We did speak about 10-year-highs lately. With Morphosys, we have a stock that just made a +10 % jump to new all time highs on Friday.

Morphosys is one of the stocks I watch since years. Its business modell is split into 3 parts:

- (1) solid cash stream from the proprietary anti-body library
- (2) partnering with pharma companies all over the world using the human anti-bodies technology to develop new pharmaceuticals
- (3) developing own pharmaceuticals

While (1) provides solid cash flows, (2) can be very profitable. If companies like Novartis would develop a new blockbuster with the anti-body-technology, Morphosys would get a percentage of the turnover. And the definition of a pharmaceutical blockbuster is: 1 USD bn turnover a year or more.

Even if those pharmaceuticals would never hit the market, Morphosys is entitled to milestone-payments in the process of development.
Well, I gained a little knowledge on development of pharma products: this is a process, where only a very small number of possible candidates will finally become a product. And it has not only to do with the management quality of the company. Once you have developed the substance, you have to go through several test phases. Demonstrate that the product does no harm; that it has positive effects on the illness you want to treat. Increasing number of participants in the studies. Higher costs with each step. But also increasing likeliness for success. Phase 0, Phase 1 ...  and so on - each phase regulated by drug authorities.
And Morphosys would get payments for each development stage achieved by one of its partner companies.

The real leverage is (3), where Morphosys uses the cash from (1) and (2) to develop its own pharma product with its own technology. It will perhaps never be able to market it, like a Pfizer, a Glaxo or a Bayer. But having developed it, it could be sold for a huge number to big pharma.

Downside: as long as there is cash from (1) and (2), Morphosys can go on with R&D. And the cash stream from (1) and (2) is getting higher by the years, Morphosys having set aside USD 100 mn. This alone would be good enough for 5 to 8 years of proprietary development. So there is no downside, as long as they have ideas for further development.

Upside: they hit something big.

On Friday they announced Phase 1b/2a results of their MOR103 project. MOR103 was safe and had no harmfull side-effects. The project has the potential to become one of the first drugs against rheumatoid arthritis (RA), which is harming millions of people.
Stocks did rise by 15 % on Friday.

MOR103 has a higher chance to fail than to succeed. That's the way it is with drug development. Morphosys has not only one project, but several ... Still the stock is like a lottery ticket. Maybe they hit big - who knows.
Difference to so many BioTech start-ups is: they are funded and will stay funded. Their business model provides cash flow - and you are not getting harmed by stock dilution. So: little downside.

I got my lottery ticket. How about yours?

10-year Highs

Did you worry about 10-year highs latetly?

Given the circumstances, I guess you did not. We have a EURO-crisis just in front of us. EZB is throwing paper on us and calling it money. US is not growing fast enough, so the FED opted for QE3. Emerging countries growth rates disappointed lately. And in China 1/3 of the public listed companies reported negative cash results for Q2 2012.

Sounds like a vibrant economy.

So, how many of the DAX30 companies are close to 10 year-highs today?

How many of the DOW30?

How close are DAX30, DOW30 and S&P500 to 10 year-highs? 10 %? 25 %? 50 %?

Adidas - Basf - Bayer - FMC - FMCE - Henkel - Linde - SAP - VW ... why are they all close to 10 year highs?

Disney - Home Depot - Honeywell - IBM - Verizon - WalMart ... why are they all close to 10 year highs?

Reality Check!

It's more important to know where the market moves then why the market moves.

EZB decission destabilizes FX markets

ECB decided last week on buying 'unlimited' amounts of short-term bonds to address distortions and 'unfounded' fears of investors about the survival of the EURO. Only the German Bundesbank and his head Jens Weidmann objected to the plan. The operation will address the secondary market, not buying troubled / toxic bonds from the PIGS and other stressed countries directly. 

The announcement led to a spike in European stocks, with the DAX closing above 7.200 on Friday; the EuroStoxx50 above 2.500; the Swiss Market Index SMI above 6.500, and a rise of the FTSE from 5.650 to 5.800 at the end of the week. The DOW30 is clearly above 13.000 now and the S&P500 continues its way to 1.500 ...
This all, despite worsening economic outlook around the globe.

Gold jumped to 1.735 and is on the rise again. The consolidation form the last peak above 1.900 USD lasted above one year and the metal seems to gain momentum again. Silver also spiked to 33.6 USD - gaining 10 % in the last 10 days.

So far you can argue that the markets had not discounted all the additional liquidity from the ECB move and made up for it on Thursday and Friday. With a move that will clearly push inflation up, this seems logical - and you never know who did bet on Draghi's announcement before the fact and who jumped the train when he was leaving the station. 

It gets a little bit weird when you look at the USD/EUR ratio, which jumped to 1.2815. Comments here state an increased trust in the EURO  and weak US labor market data. Well, you can understand those arguments per se. But together with rising stock markets the make less sense.

Even more astonishing was the move of the Swiss Franc (CHF) to me. In recent month it was kept close to 1.20 CHF/EUR by massive intervention of the Swiss National Bank (SNB). Estimated EUR 50 to 100 bn where bought by the SNB each month in order to keep the 1.20 ratio established. This lead to a huge spike in foreign currency reserves of the SNB. Recently comments on how long this procedure can be kept up got more vivid.

It is unclear, what led to the CHF jump above 1.21 vs. the EUR at the end of the week. One reason could be that money left the CHF as trust in the stabilization of the EURO-zone did rise. Ohter reason would be, that the pressure on the SNB to buy EURO was lifted somewhat by the EZB comments and following expectations of the market.
In that case, it was maybe a wise move of the SNB not to start selling EURO immediately but let the CHF get awy from the 1.20 limit set. If the market could drive the ratio to lets say 1.25, the SNB could even take some profit from the intervention - starting to sell EURO at such a level.

One other think I am always a little bit worried about: When markets move fast, at a weekend - and with all the manipulation from governments we have to live with nowadays - can the regulators and bureaucrats act fast enough? We know that the EU summits are often on weekends, so  that markets are not directly influenced. Decisions have to be made, before Monday morning Asia starts to trade.  
But are there really SNB bankers with authority to change the trading strategy available Friday afternoon, when New York is still trading? Or can the market catch them off guard?

One step further down the road ...

Here we are ... one step further down the road.

This is a day to lean back, get a glass of heavy (Spain) wine, some (French) cheese, a little bit of fresh (German) air ... and regroup.
So we will have massive EZB bond buying without limits for any EURO-country seeking cover. We stand here at 1.700 USD Gold. Or 1.350 EUR Gold. Stock markets did rise 2 to 3 % today - ignoring all the bad data on  economic outlook.

I think we should not underestimate crowd intelligence here. Markets are on a rise for a reason.

Actually, I think we know what is happening here. WE WATCH MONEY DIE.

We do not want to believe it. We think that is such a silly approach, that it can not, should not and will not happen. It is against our gut feelings.

We fear it.

But it happens. Year after year - step after step.

Take action!

Buy hard assets.
Buy gold.
Buy silver.
Buy platinum.
Store in different countries, as it might get confiscated.
Buy stocks.
Get out of paper money.

Raise credit levels.
Do not pay back earlier than you need to.
Go into debt.

Listen what the market and the numbers are telling. And accept the truth.

Interesting Developments

Going through charts on stocks I am interested in, I noticed a few interesting ones I want to share with you:

Fuchs Petrolub: First of them is Fuchs Petrolub. It's one of the solid companies in the German MDAX and it just reached a new 10-years high. The chart also looks like a clear outbreak to the upside during the last weeks. Sure, you might argue: why should I buy now at new highs. Counterquestion: why should the stock / company stop to perform, just because you buy a neglect-able amount of their stock?

Next one looking very interesting is in the silver / gold field. With Jackson Hole speeches of B52-Bernanke and the expectation that the bazooka will be used by EZB bankers to safe the EUR, gold and silver picked up during the last fortnight. There are several very solid companies, that show interesting charts with this background keeping in mind:

Silver Wheaton: This is one I hold for long times. Its not a producer, but a financier of producers. In return, it gets a stream of silver ounces at a fixed price. So when silver if gold on steroids (because it moves same direction, but faster), then Silver Wheaton is silver on steroids (or gold on steroids²). To me, it is a very solid managed company paying some, but fast rising dividends. And its easy to understand for any guys used to crunching numbers.

Agnico-Eagle Mines: This one attacks the 50 USD range now fast. It dropped below that level, after it had a water entry into one of its mines and could not keep up production there. Its one of the best managed gold miners, dividend paying, with the downside priced in. If it could move up a little bit further, it could spike.

Both Silver Wheaton and AEM show little exposition to political risk, as they mainly operate (or finance) projects in political safe jurisdictions (North America, Europe).

Hope you consider investing in one of the three and even more so hope you make good profits.

--------------
This is no solicitation, offer or recommendation to buy or sell any of the stocks, securities or financial products mentioned. Not all possible risks of any investment in products mentioned above are covered here. Do your own financial due diligence. You invest on your own risk.

GOLD considered money again?

Today, two different news items about Gold got my attention:

- US Republicans consider to set up a commission to examine a return to a gold standard.

Republicans eye a return to gold standard

- Basel III will count Gold as a Tier 1 asset, meaning it as good as liquidity. Until now, it was treated as Tier III asset, meaning it would account only for 50 % of its market value when it comes to equity requirements.

What does Basel III do for Gold

Gold is at 1.664 USD/ounze today - which corresponds to 1.331 EUR/oz.

DAX 30 Outlook

On July 15th I posted on the DAX30 outlook. Finding some time today, I want to do an update on this. Fundamentally, I still think Europe is not out of the woods and you there are indications of a slowing economy towards the end of the year. For the last weeks, Europe got some relieve from political 'input' as most of these guys and gals took their 'deserved days off'. This may change coming September, but the focus will also be stronger on the US. Here we will see heating up of the presidential campaign and a hitting of the debt limit. So, maybe focus will not be on Europe so much.

From the 30 DAX stocks, I see 12 in an upward, positive chart picture as of today. Only one - MAN - looks really ugly and worth a short; the rest of the pack I would rate neutral. This is a far to positive outlook if you ask me about my gut feeling. Besides my bearish feeling about economy, the DAX not hodling the 7.000 level is a negative making me scratch the head. But: never fight the ticker.

For the next lines I will put my July 15th suggestions into brackets and follow with some comments on the outcome and my look on how to position as of today.

DAX 30 (6971) [6557; enter if 6.600 taken out upwards, use 6.000 or MVA200 as S/L]. The entry was okay, but the 6.600 S/L was too tight. You might have entered at 6.650 if you did check every day - with the tight stop you would have exited at 6.440 perhaps. With the long stop you would still be in at 6.970.

If still in I would raise the S/L to 6.800 now. If the index shows numbers above 7.000 at day end, I would enter; but not before. The last few days could be the start of a correction, though the underlying stocks do not suggest so.

Addidas (62.16) [57,9; suggested to stay neutral as long as in 56 to 60 trading range]. Here we had an upward outbreak and are trading now at 62. I think you can enter here with a stop at 60.

Allianz (87.36) [79,06; no strong but rather upward suggestion with tight S/L] Guess if you entered, you would have been stopped out rather shortly be 3 violent down days. Stock is now 10 % higher and it looks positive to me now. Like all the financial stocks in the index, recent performance is good. I think this is mainly based on the expectation that Draghi and the EZB will support the EUR strongly in the next weeks.

BASF (62.13) [55.96; Stay away until outbreak above 58] By now we did see this entry signal, I would stay long now on this quality paper with a S/L at 58.

Bayer (61,46) [58,3; long with several strategies and S/L, highest at 56] You should be in now with any of the S/L not taken out on day-end basis. That's a 10 % plus and I would move S/L up to 59,5 now, securing some profit. If you have a large enough position, maybe you can be even tighter on S/L of half of it.

BMW (60,05) [57.77; neutral] I would stay neutral here, though the stock did gain some ground. I got a long signal here, though I would not execute it until we end above MVA200 (61.83).

Beiersdorf (57.14) [53,48; you should be long following suggestions] After a nice move up stock is now trading in a narrow range between 56.2 and 57.3. This is a level above / around 10-year highs and I would stay long here. maybe raise the S/L to 53 (and even 55 for 50 % of position).

Commerzbank (1.271) [1,24; short suggestion that bottomed at 1.127] I would exit here for more or less a wash. With recent run-up of financial, stock did find a bottom.

Daimler (40.98) [36.4; neutral as BMW] Actually looks strong since end of July, but I am still not feeling good about auto stocks. Technically a long with S/L at 38

Deutsche Bank (27,255) [25,6; suggested short with S/L at 30] No change in my feelings about fundamentals; but some sort of QE could drive it up. MVA200 stabilizes around 30 now ... no change in strategy.

Deutsche Börse (41.38) [42,11; neutral] Still within 38/44 borders - no change.

Dt. Lufthansa (9,83) [9.745; S/L 1 EUR below entry] Stock changed to a sideways move. I have not found a good explanations why it was moving up nor why it stopped now. I would clearly raise the S/L now to MVA200 level of 9.60 if you are in. And I would not enter here unless we see a trend again.

Deutsche Post (15.325) [14.35]; neutral until 15 is taken out] Stock is above 15.00 now; leave S/L at 13.8

Deutsche Telekom (9.50) [9.18; suggested entry and S/L at 8.8] Entry worked and I would maybe raise the S/L to ensure the position will not get negative. This would be around 9.20 and giving not much room for movement. But that depends on you overall risk in all your positions, of course.

E.ON (18.05) [17.645; watch trading range of 16 to 18] During the last days, we had kind of an outbreak here. It is slow, not very convincing. MVAs I watch are around 17 now  So if you want to enter here, do so with S/L at 17.

FMC (56.66) [57.05; long with 55 as S/L level] It is of course more dangerous to trade a stock on charts when it is involved in merger discussions. (Same is true before major announcements, such as Q earnings or Capital Market Days.) Would not change trading ratio here.

Fresenius (84.4) [85.62] See above.

Heidelberger (40,475) [37,12; stay neutral] By now I would say this is trending up and you can enter with a S/L at 17.

Henkel (59,58) [55,12; long play with stop around 50] Moved up to 61 and is in new multi-year-highs range. This was a nice entry giving you 8 % heads-up now. Raise S/L to 56 or 58 by now.

Infineon (5,63) [5,23; short with S/L at 5.6] This short play turned around at 5.0 and should be stopped out by now. Stay neutral.

K+S (39.83) [37.95; long with tight stop or wait for 40 to be broken] Kali+Salz was above 40 until Friday. Following any of my recommendations, you should still be long. I would move the S/L to 38 now and either stay long or enter again it the 40 level can be defended for some days.

Linde (125.05) [117.5; stay neutral until 120 is broken] Well it was and looks like with more certainty on acquisition topics, we could move up again here. For me this is a long now with 120 being the S/L. MVA200 at 121.34 now.

MAN (74.65) [80.75; neutral, be careful, watch resistance at 78; no entry below 85] 78 level was taken out end of July and MAN is in a range between 74 and 77 now. Looks bearish now and I still would stay away because of the influence of VW on it.

Merck (90.39) [78.1; neutral - long way to recent highs at 86] Well, those highs have been taken out by now.  Price now at levels not seen since 2008. As always when you miss such fast moves you do not only feel bad, but you also have the problem of developing a new strategy. Chart looks like a pole showing north. Maybe wait for a set-back to 86?

Metro (23.825) [20.14; short with 2 S/L-suggestions] The narrower limit has been taken out; The wider one is at 27. If you are still short, I would stay with that S/L. Otherwise stay neutral.

Munich RE (116.85) [114.1; trading range 100 to 116] Made it out of the range to 120, following financials. This could be a rather low-risk entry positions to a dividend stock. If it falls back to 112, I would get out of the way.

RWE (32.8) [34.06; long with S/L at 30.8] Think the idea is still in place - stay in as long as it trades above MVA200.

SAP (51.69) [48.9; long with S/L at 44] Move up somewhat, but could not take out 2012 highs. Raise S/L to 47.6 (MVA200) and maybe take profits around 54 for part of the position.

Siemens (74.54) [68.03; neutral - stay away at least until 72] 72 was taken out and Siemens trades now below a resistance level at 76. I still do not like it, though it was down to 63 earlier this year.

ThyssenKrupp (16.21) [14.5; I rated neutral, but made aware of the play on a trend reversal, which seems to be in place now. Lows from June have not been hit again. Guess you can play the upward movement as long as 15 is in place.

VW (142.6) [137.1; long] We hit the next resistance level mentioned in my prior post. Guess I would stay long here, but raise the S/L to 140. 

So that was the look back. Clearly, you cannot leave your stocks alone for such a long time trading with close stops. I just did not find the time to post earlier. Putting both blogs together with you favorite charting software should give you an impression of the trading idea behind.

German Racing Bets and Lotteries Act (Rennwett- und Lotteriegesetz RennwLottG)

Guess I missed some points in my recent post on POKER. Bwin.com just informed me, that from 1st of July, 2012 onwards all sports bets in Germany are subject to a 5 % tax on the amount wagered. This is due to a recent change in the German Racing Bets and Lotteries Act (Rennwett- und Lotteriegesetz RennwLottG). There seems to be an obligation of any provider located wherever in the world to pay this tax on bets of German residents (do not ask me, how this can be executed ... I guess if I place bets with an US broker, I would not pay the tax).

This is another example of ever increasing tax burdens, especially during the last months and years. It hardly hit the news. Folks out there: any other increases in taxes and fees lately we should be aware of?

How low can you go ... reloaded!

With tears in my eyes and a smile on my face I did read the 'SPIEGEL', today.

Living in Germany, you have to be accustomed to certain absurd facts by now. For example, you should not be surprised to see some of the German states buying stolen goods. Data stolen from Swiss banks is bought on a regular basis by German tax authorities. Later on, this data is used to prosecute people cheating on German taxes by transferring their money to Switzerland.
Nevertheless, German authorities encourage employees of Swiss banks to steal data by demonstrating month over month that they are willing to pay millions of EUR for this data.
How about allowing 'people' to break into the apartments of tax payers to steal their personal documents showing tax fraud? How about paying them for such action?

Now it gets even better!

For years, German state argued that POKER is a game of chance. Therefore, you are allowed to play POKER for money (face to face, against computers, online) only in registered, licensed casinos. In Germany this means they are more or less state-run and the state takes all the profits. To play at Pokerstars.com for money is theoretically not allowed. And companies like bwin are prosecuted for not adhering to the rules. Internet knows no borders ... such rules get kind of absurd.

Good thing about German regulation: all your winnings in 'games of chance' are tax free in Germany. So all the state run games of chance lead to tax free winnings.

But now the tax authorities of Cologne changed their position: POKER is no game of chance. Therefore all the German winners at the World Series of Poker (WSOP), at PokerStars.com, and all the other events would be eligible for income tax.

(GULP)

So, when the state fears competition in 'games of chance', it declares POKER as game of chance. And therefore decides nobody but the state is allowed to run such games. And therefore bwin, PokerStars, PartyPoker .... they are considered like the Mafia as organized crime.

But when there are winnings to be taxed, POKER is no game of chance.  So winnings and results from the game depend on skills and experience. Like a sport ... And therefore everybody playing regularly does so for an intention to make profits. And therefore can be taxed.

Related atricle of 'Der Spiegel'


Hey, maybe we use this kind of 'rationality' for our own purpose.

Capital gains. You have to pay tax on them. It is kind of an income tax ... in some countries you pay your personal income tax rate on capital gains, in others somewhat less.

But, let us face the realities. Capital gains are a game of chance!

Is there any rationality behind the valuation of governments bonds? Which of them will default, which not? Or is this only determined by political decisions without rational backing?
How many professional fund managers can outperform the market? Only a few? Are the returns from funds distributed like a bell-shaped curve? Yes? So if the distribution is bell-shaped, shouldn't that indicate a 'game of chance'?
Can anybody do a forecast on the timing of the next quantitative easing of the major central banks? No? Will that impact equity prices? Yes? If you cannot forecast it - won't it hit you like a non-predictable event? An accident? A game of chance?
How about taxes, duties, anti-dumping fees? Can you really predict new legislation on such items?
And what about incentives? German renewable-energy refunds? Italian ones? Tax credits? Predictable? NO? The impact on single stocks - a game of chance!

There are a lot of arguments why investing money in the capital markets is not a profession, but a game of chance. The mediocre or even worse rates of return of the average, 'professional' (meaning: dedicating lots of time) investor being one of the strongest.

So why should a private person, having only limited time and money resources available, pay tax on capital gains? If even the most educated persons, dedicating all of their work time cannot achieve above-average results? Why should the private investor having less resources available, be able to achieve positive, year-in year-out results? And if that is not the case ... doesn't it sound like a 'ame of chance'?

Conclusio: Investment is a game of chance! It should not be taxed!

FTS - French FinanzTransaktionsSteuer --- how PSEUDO can you go?

This new tax at 0.2 per cent of the transaction volume has to be paid starting August the 1st. Finally a small success against big Wall Street and all the bad hedge funds and evil banks. Finally F. Hollande shows some balls. Finally a politician making head against the markets.

Today I got notification about the details on this tax from one of my brokers (shame on the others). The tax applies:

• on any buy of french stocks (not trading in Paris/France, but companies registered in France)
• only if market cap is above EUR 1 bn (but this limit could change - currently 109 companies qualify)
• only for a transaction vs. money (read: no execution of options, share exchange, etc.)

Then my broker listed some exceptions, like an IPO, market making, etc. ... but several lines down the hammer did fall!

I am not sure I can translate this perfectly, but it goes like this: The tax has to be paid on the net buying/selling amount of one day. 

The example following shows clearly: if you buy 1.000 shares in the morning and sell 500 in the afternoon, you pay FTS only on 500 shares.


...

Lean back.

...

Take breath.

...

Stay calm.

...

This crappy socialist politicians tell us something about hitting the 'evil markets'. About 'bad' banks and hedge funds. About computer trading - high speed execution ... and how 'evil' all that is.
And then they initiate a tax that will NOT hit computer traders. A tax that will not even hit day traders? Something that will only hit Mom and Dad investing for their retirement?

How PSEUDO can you be? How much of a LIAR?

And it gets better:
- whereas my Swiss broker (swissquote) makes sure that i pay minimum transaction tax by netting the deals of a day
- my German borker tells me that he is not obliged to do so and would tansfer the tax to the French government anyways ...

So it depends on how nice your borker is whether you pay or do not pay the tax.


I stand aside - shocked!

PS:

And one final question: will this ever hit the news?

A lot of ZigZag - nothing changed ... ? ... ! .... ??

What did we see in the last week? A lot of action.

•  DAX30 did break out upwards last week, just to fall back violently
• European PIGS countries bond rates climbed fast
• Core countries like Germany and Austria still with negative bond rates
• EUR recovered vs. the USD
• GOLD jumped over 1.600 USD
• DAX30 recovered strongly on Thursday and Friday

This is the 'perfect' environment to trade. Violent moves up or down. Technical levels taken out for 2 days. Fast reversals afterwards. I was shaken out on the upwards move (gave up my equity protection) and on the downward move (sold most of my European equity positions entered last week; sold 50 % of  Gold miners).
Trading was too fast for me to re-enter the market - so I missed the rally of the last 2 days.

Psychologically, what happened to me? I could clearly see the set-ups a week ago. DOW30 and DAX30 with many stocks breaking out upwards or hitting new highs. Hard to understand, as the economic outlook seems to be deteriorating everywhere. Still this was looking really strong, especially for US stocks with an EUR loosing more and more value. Why fight the market? So I entered a few positions and exited protection.

Once the European stocks and gold miners did break down, I was really fast in exiting positions. My overall sentiment is still bearish, so I pulled the trigger. Too fast - maybe. But the move seemed to make sense - the market finally getting the message. In addition, at this point, the support levels for GLD and SLV looked vulnerable. Exiting positions made sense to me, as a drop from support levels would be violent and deep.
Then came Draghi with his 'ready to do whatever it takes'. And the market jumped upwards and the EUR regained strength.GOLD jumped over 1.600 USD and DOW30, SPY500 and DAX30 are giving clear positive signals.

Lets lean back for a moment:

• economic outlook did not improve - latest data from the US confirms this
• solution to the EUR crisis is not any closer than it was a month before
• over the weekend, first voices remind the EZB it has no mandate to buy bonds of Spain or Italy 
• German politicians in second line voice warnings to the EZB
• GOLD looks more of a protections in this situation then ever
• top gold miners had weak Q2 performance (Barrick, Newmont, GoldCorp) doing further damage to gold stock

So, what to do? Guess I will lean back another 24 hours to evaluate the picture and do ... nothing!

Swiss National Bank monthly statistics

In my pursuit to understand a little bit more about the way the SNB (Swiss National Bank) succeeds in keeping the CHF at a rate of 1.2 vs. the EUR, I found lots of statistical data on their web-page. Look out for the Monthly Statistical Bulletin:

Balance Sheet - Active:
- foreign currency investments increased by CHF 50 bn in May 2012
- up 300 % since 2009

Balance Sheet - Passive: 
- sight deposits of domestic banks increased by CHF 35 bn in May 2012
- liabilities towards the Swiss Confederation are increasing

Banknotes and coins in circulation are stable (CHF 56 bn)

Reserve assets CHF 372 bn, thereof securities CHF 232 bn - deposits at other central banks CHF 75 bn - gold CHF 51 bn; more than 90 % in USD, EUR, GBP and JPY

Monetary base increased from a slightly increasing level or CHF 40 to 50 bn from 2003 to 2008 to CHF 80 bn in Q3'11 and further to CHF 275 (sic!) bn mid of 2012, with the latest jump from May to June 2012 from CHF 217 bn (sic! sic!).

M1 increases at a rate of >10 %, M2 at  ~10 %, M3 at ~8%

Detailed figures on transactions, transactions by size, number or credit cards, credit card transactions, ATM transactions ... interesting how much information is evaluated.

Interest rates, public finances on Confederation/Cantons/Municipality level, trade balance, construction activities (public, private), employees by economic activity, .... consumer prices, raw material prices, real estate prices ...

GDP is around CHF 150 bn a quarter ... look back up on the foreign currency investments compared to this number.

228 pages of statistical information ... two thoughts come up:
1) are all central banks providing such detailed data?
2) is somebody creating a library, so that he can place the 'forbidden' book somewhere it will not be easy to find?

Thought-Provoking Information Snippets from the Weekend

Well, while the weather was so frightening, we cancelled our weekend trip, I still could put in some hours on the bicycle. And with falling rain drops, I was able to catch up with some reading. I ended up with some note I wanted to share with you:

1. Gold is close to its high. Well, not in USD, but with the recent EUR weakness in the currency I pay my bills with. Its around 1.300 EUR now - very close to the peak.
2. EUR vs. USD looks really ugly from a technical / chart perspective. A little more downward movement of the EUR could trigger a stampede of chart traders to get out of it.
3. Remaining with FX topics, I did hear on a podcast, that the Swiss National Bank had to sell CHF close to 10 % of Swiss GDP in the last 2 months in order to keep the rate to the EUR at a level close to 1,20. As you will remember, the SNB announced it will tie the CHF to the EUR at this level - a move to avoid further currency appreciation as money was fleeing the the save haven of the Swiss Alps. Question that comes to mind: what are they buying with all that paper money? Guess I will try to investigate on this topic in the next days.
4. German Wirtschaftswoche did a list of stocks called: 'Five for Eternity'. BASF, China Mobile, Coca-Cola, Altria, Royal Dutch Shell. I own four of them!!
5. And a couple of pages further: 'Five in Megatrend Ag'. Potash, Syngenta, CF Industries, Bunge, KWS-Saat. I own none of them!?? 
6. Have you ever heard about Li Ning? Why not? And if so - tried to invest in it? Why do I still know so little about Chinese companies?
7. Outlook is muddy. Stocks performed quite well in the last week and especially blue-chips looked like they would break up. I liked US ones, as I would guess that the EUR remains week. Still, Friday news from Spain did put pressure on the indices and with Murcia following Valencia in demanding help from central government, I fear the next days will show some more downward pressure.
8. Several Californian cities declared bankruptcy in the last days: Stockton, San Bernardino, Mammoth Lakes.
9. EURIBOR dropped to 0.451 % now. Adding 0.7 %, our mortgage would be adjusted to 1.151 % at the end of the quarter - should the rate stay that low. Denmark 'pays' negative interest of -0.2 % now as target rate. Germany, Netherlands, Austria and some others are also at negative bond rates now. And Spain moved above 7 % and has close to EUR 80 bn to refinance this year.

Crazy stuff ...

DOW30 Outlook

You know the trick by now - same procedure as with DAX30. Just noticed, that the stocks I had noted as DOW30 in my charting tool, are not all really within the index any longer. Therefore this is more than 30 equities - you might want to disregard the () ones.

3M (87,59 USD): moving sideways - break-out above 90 would be a buy signal - stay neutral
Alcoa (8,42 USD): consolidating within a down trend. still would see it as neutral. 
(Altria (35,62): perfect up-trend; did run a little bit too far - overbought; still a long term buy as its a dividend play, too)
American Express (57,93): somewhat interesting; looks like 54 was a catalyst. buts its not trending up.
(AIG (31,44): no clear picture here - looks like a sideways trend. neutral)
AT&T (35,35): looks like consolidating in a trading range, but in an upwards trend;
BofA (7,82): neutral - did find kind of a support, but not trending
Boing (73,51): 76 USD is the interesting level here; trading between mva200 and the 76. this will count for another neutral one. 
Cat (82,07): clear downtrend despite the index doing good; short with S/L 87
Chevron (106,01): upper resistance at 110; wait for a break-out - moves side-ways since mid 2011; MVA200 approaching resistance
(Citi (26,65): kind of sideways after being week like bank stocks lately; hold support at 26 currently. neutral)
Cisco (16,31): wild fluctuation - huge gaps at Q-results? keep away from it
CocaCola (77,28): nice long-term upwards trend; could be fine down to S/L of 74. close to ten year high  
Disney (48,19): upward trend since Q3'11; could prepare for just the next spike up as it consolidated a little.
DuPont (47,63): trending down; just crossed the MVA200 downwards; short play til it comes back up at least.
Exxon (85,47): interesting plateau at 88 USD, which it is approaching again. until that - neutral.
GE (19,77): false break-out above 20,3; we should wait to see that level again
HP (18,98): long term down trend: little bit extended at the moment; still you could try to ride it. S/L at 22? 
Home Depot (52.09): upper resistance at 53 and change; mutli-year-high; if you enter, palce a S/L at 50; maybe wait for the break-out
(Honeywell (54,58): downtrending, maybe forming a bottom at 53; MVA200 almost flat at similar level - neutral)
Intel (25,25): moving downwards at the moment; look like the ASML announcement did not help the stock price; 25 USD is the important level to hold; looks like a neutral lookout so far
IBM (186,01): looks like the climb up has been stopped for now; feels rather bearish; but maybe nothing to short, as 180 seems to provide some support.  
J&J (68,61): i had clear trend channel (63 to 66); now it jumped above 2011 multi-year-high of 68 USD; enter with S/L at 66
JPM Chase (36,07): highly volatile going nowhere for 10 years; huge trading possibilities, but not from the chart-side; stay away  
McD (92,29): was at multi-year high at beginning of 2012; could be just at a trend reversal; 91 is important; 95 would be a clear break-out level; S/L at 86;
Merck (43,47): missed the break-out at 39 / 39,5; looks very overextended now. Hardly tradeable
Microsoft (29,39): neutral; peaked at 33 earlier the year; is supported by MVA200 now; but I would not touch it now
Pfizer (22,81): resistance at 23 USD; closing in on it; supported by up-moving MVA200
P&G (65,09): big mulit-year trading range (60 - 68); very volatile between that; neutral
United Tech (73,59): pretty neutral; nothing trade-able  
Verizon (45,21): strong upward move; apporaching 2007 high at 46; you need a wide S/L here though; not a perfect set up ...
Wal-Mart (73,18): looks like a pole heading north ... break out level was 65; never stopped on the way up - no S/L level; U could just use a money management stop