Cash For Gold – Gold Prices Advice

Oil, gold and Co. are less crisis-proof than I thought. Are once again blame the speculators.

The old American exchange professional Jim Rogers is also responsible for career guidance. “I advise young people to become farmers,” recommends that the carrier flies over regularly to lecture tours. Rogers, the hedge funds with his former partner George Soros at the beginning of the 70s made a fortune, is one of the most prominent representative of the commodity story, which reads: corn, wheat, oil or gold – all these are real values, which is a long-term investment suitable.

Now, the money in the stock market generally is difficult. Therefore, it is unlikely that the Council simply “buy raw materials” of long-term success could be. The matter is complicated, as well as the financial crisis showed.

Unlike many experts expected, in addition to the equity markets and the commodities markets caved. Actually, were gold, oil and Co. as a crisis-proof investment, but far from the truth. The world has experienced an unexpected harmony of the prices of all asset classes. Blame the speculators. “As soon as financial investors in commodity markets are involved, it is to spread the risk to happen,” says Ulf Becker, a partner of the independent Lupus Alpha Asset Management. “Also commodity prices then in crisis situations, little protection.”

In recent years, financial investors, the commodity markets provides. They buy to speculate. Quite different from the commercial players think: They buy commodity futures in the futures markets, for example, to hedge their crop yields. Futures are contracts in which two parties agree on a certain date a particular commodity at a predetermined price to act.

Commodities are physical goods that are consumed and consumed, they have therefore, in contrast to stocks of commercial value in itself. Unlike securities, they raise no interest nor dividends from. Raw materials are commonly referred to as the ideal protection against inflation, but to look at the price of the CRB commodity index shows: “In retrospect, provide raw materials since 1970, neither inflation nor a value to shares”, says Becker.

Big Picture
Commodities promise when compared to equities a bad return. Corn cuts in long-term comparison particularly poorly.
The close but not enough that individual commodities, this could make. “Crude oil is about the best inflation hedge,” said Becker, referring to his latest data, for example, while the price of corn, the devaluation of the past have not been compensated. To sell metals like: gold is generally considered the best protection against inflation. However, it depends on the time period that is considered. You can enter phases in which the gold price, despite the general fall in prices. Moreover, the price of gold depends also on the value of the dollar.

A rather technical problem for commodity investors, it is clear from the futures markets themselves, as the name suggests, there are futures on commodities, usually in monthly intervals, traded.

A barrel of oil, investors can, for example, for delivery in July, August or September to buy. Most private savers, on rising oil prices are betting to the oil but not delivered – where should they store it? – They want to invest long term stay. It succeeds with certificates.

These bearer bonds to buy crude oil in the form of futures. These futures expire but someday and become due. Therefore, the futures contracts maturing in the certificate to regularly rolled, so a different month to be distributed.

This can have ugly consequences: if the date of the current oil price is lower than the quoted futures price in the future, some three months later, then the roller is automatically a loss for investors (technical term: contango price curve). Many experts therefore recommend: Oil inwestments worthwhile only when the forward prices are lower than current spot prices (technical term: backwardation price curve).

Major banks in the U.S. and Europe make profits again. Is the crisis has passed around? Banking experts know at least three reasons for not doing so.

Wall Street is good things. After two years of severe storms in the financial system and hundreds of billions of dollars depreciation report the major American and European banks returned to profitability. The share of the money houses shoot up in the air force. Several U.S. financial institutions to the unpopular government assistance to pay back as quickly as possible. Already the first financial cheer Magazine: “The banking crisis could soon be history.” Is it really so far? Bank analysts and economists doubt it.

The sigh of relief on the stock market started in early April, when some U.S. homes surprisingly good results for the first quarter presented. Goldman Sachs, JP Morgan, and other German banks posted strong gains after many losing months. The investment banks profited from the Kapitalnot of states and companies, with the help of the banks increased yield securities on the market threw.

Good climate for U.S. banks
Who in this business is weak – such as Commerzbank and Postbank – had not much to laugh. Because the traditional retail banking and lending business is very badly, because their property insecure savers in the park or deposit account to buy gold – that earned the bank is not much.

Among the exceptional results of the banks did not help as the billions of Governments and the zero to low interest rate policy of central banks at the top of government bonds and even distressed securities to buy.

“Clearly, that U.S. banks in such a climate to make good money,” writes Niels Jensen, a partner of the London investment company, Absolute Return, in a newsletter to his clients – and draws comparisons to the auto industry. It was as if the Government of the production costs for cars sink to zero and then, with the money of the taxpayers, millions of cars to buy. “Even Detroit to such conditions would make money,” Jensen beggars.

Anger over concealment tactics
In addition, new accounting rules for banks, allowing the balance sheets quite legally be beautiful. Europe’s biggest bank, HSBC for example, has in the first months of the year, well deserved – but only thanks to a revaluation of their debt. Excluding 6.6 billion U.S. dollars book profits would be the result of decreased.

Or the German bank: it has, particularly in the second half of 2008 and to a lesser extent in the first quarter positions in the amount of 38.1 billion euros of investment in the credit book shifted. There must be no longer at their fair value, but are at book value in the balance sheet. To avoid the bank in the first quarter writedowns of 1.4 billion euros. Instead, the German bank was formed only 200 million euro loan losses – and achieved a billion profit.

“Such examples can be durchexerzieren for each bank,” said Konrad Becker, analyst at Merck Finck & Co., professional investors are angry about the concealment tactics. “The good results from the first quarter are not sustainable,” said Cologne’s asset manager Bert Floss Bach. “Quality problems in the banking book can not be permanent open spaces in accounting solve.”

To ensure the quality of many securities, it is still poor. “The banks still have significant potential loss, because many papers on fairytale prices in the balance sheets, which are not realized,” says Hans-Peter Castle, a professor of banking at the University of Hohenheim.

“It takes more than 18 months”
Globally, institutions have been plants with a value of 1500 billion U.S. dollars depreciated. This, as fears of the International Monetary Fund (IMF), but was only the beginning: More to be 1500 billion U.S. dollars in this and the coming year are written off. So far, the gloomy forecasts of the IMF on financial crisis not only met – it was always worse.

The total assets of the banks will continue to shrink. “The problems are not solved,” says Jensen, also. “It takes more than 18 months to the excesses of 25 years relies.” The debt of the U.S. financial sector is still estimated to be 117 percent of U.S. gross domestic product, in 1982, as the recent large upswing in the stock markets started, there were only 22 percent. “The lending business has been hugely inflated,” said Mark Beck, analyst of Landesbank Baden-Wuerttemberg. Now shrink the institutes healthy balance sheets and reduce their loans forgiven less. The adjustment process is likely take many years. ”

The next wave rolls already lost out. The recession in America and Europe is forcing more and more companies into bankruptcy and millions of people lose their jobs. That makes even more necessary depreciation. According to the subprime mortgages that are increasingly also ordinary loans, financing of commercial real estate, business and consumer loans in the lurch. They make a much larger portion of the loan book of banks than the subprime securities.

A vicious circle
And the failure rates have only just begun to rise, but steep. “The brutal decline of the credit book has yet to come,” says fund manager Floss Bach. And Becker warns: “The loans will increase. Therefore, during heavy loads on the banks, there will be no relaxation.”

At the same time, the rating agencies for their credit scores, many companies significantly worse. For the banks, thereby increasing the capital requirements exponentially, because with bad papers must be hedged equity more than good – a vicious circle.

The old problems with the toxic securities so the banks remain preserved, at least until there is a Bad Bank, which they deposited. Adds new difficulties by the economic downturn, corporate and consumer loans at risk. The next wave hits, but on extremely weak institutions, the past two years, suffering from the financial crisis.

“The banking crisis is not over yet,” believes, therefore, Professor courtyard. “However, we have the systemic risks largely under control – albeit at the expense of state budgets and taxpayers.” Investors, however, the Bank shares today to bet probably need huge reserves of optimism, they want their good mood is not lost.