Can you explain what is HYIP ? HYIP is an abbreviation of High Yield Income Program. What it means is that investing in a HYIP will bring great returns on your investment.Most of these investments focus primarily on FOREX markets. These types of investments yield much higher returns on your money than the standard investment (such as mutual fund, savings account, stocks and bonds, ect.) but also come with a much higher risk of losing your money. HYIP's have been around for decades but up until recently, were only available to the ultra rich, mainly because of the high minimums required to invest.(Most starting at 2 mil.) There are a few pooled funds that are legitimate opportunities for the average investor. However, be aware that most High yield investments are ponzis and scams.
Are HYIP's scams? Yes and no. There are HYIP's that are legitimate but over 99% of the HYIP's you will encounter online will be out and out scams. However, even with the scam sites, there is a potential to earn although this should be considered a game rather than investment. The key is learning how to work it and to not let your greed become a decisive factor in your decisions.
How Do I Know They Are Not Scams? Simple and straight answer: You don't. You can take advice from people in the industry, read forum posts. The decision to join should be entirely your own, and you should understand the risks involv
Are HYIP Legal? The real HYIP's are legal, they are a form of investing, but they are only legal if you declare your earnings from them on your tax form (similarly, you can put your losses on them aswell). However, Ponzi's are not legal, anywhere or in any country under any circumstances. It's your choice alone to invest in them and take the risks.
What should I look for to determine whether an HYIP is real or fake? Due Diligence is a word you will become very familiar with when you become involved with "fringe" investments. This is simply the process of determining whether the website is actually trading or doing what it claims to do. There are many steps to this and most of the time, you will not get all the information to be assured that the prospective investment is, in fact, real. However, this process will allow you to judge exactly how much you should trust them and how much risk there will be when you are investing. Most HYIP's are largely unregulated by government entitlies making DueDiligence even harder. To see what you should look for in a real HYIP
Can I earn a living by investing in HYIP's? Again, yes and no. The biggest problem with investing with HYIP's is understanding the level of risk. While in most traditional investments, you will likely earn up to 15%/year max, with HYIP's the earning potential can easily double this in a year and in some, even pay back 200%+/year. These numbers are for the legitimate HYIP's. In the "scams", the earning potential is much higher, some as much as 200% in a month but the volatility is too great to invest a large sum of money.
How Much Can I Make? It depends entirely on how much you invest (obviously the more you invest, the more you make), and the daily percentage of the program (higher daily percentage = more money daily).
How Much Can I Lose? Again, you can lose as much as you invest. Therefore remember the golden rule of HYIP: ONLY INVEST WHAT YOU CAN AFFORD TO LOSE.
If 99% of HYIP's online are scams, why should I even bother to invest? While it is true that 99%of HYIP's are scams, a frugal person can make money, even with HYIP scams. Some HYIP sites will last 3-10 months even when they are paying 2-3% daily. If you were to invest $100 into one of these sites, you would have the potential to earn 272% to 440% even after you have pulled your original investment out. However, this is a gamble, very much like going to the casino. You can never be sure exactly when an HYIP scam site will decide to pull the plug and disappear with your money. The legitimate HYIP's are another story altogether. The only way that you can lose with the legitimate HYIP's is if they do poorly on their trades.
How Much Can I Invest? Depends on the company. Some companies allow you to invest from $1, and most have no upper limit. Check the specific company for more details.
How Do I Invest? You invest your e-Gold into the companies. Actually making the transaction is simple, enter the amount you wish to invest, and away you go.
I have heard that you can make money by playing the scams. Is this true? Yes, it is true. You can make money but consider this to be a form of gambling and understand that you will lose at times and win at times. There are many who play the ponzis exclusively, focusing on the short term high percentage sites. They do this by recognizing these types of HYIP's early on and use a "get in get out" strategy. This comes with an ultra high risk as many of these types of HYIP's never pay out in the first place. Personally, I stay away from this type of gamble most of the time.
What is a Ponzi? When someone says that an HYIP is a ponzi, they are basically saying that the HYIP is paying older investors with newly invested money. A ponzi can sustain only as long as the "new" money coming in is more than the "old" money going out
Open Position Any deal which has not been settled by physical payment or reversed by an equal and opposite deal for the same value date. It can be termed as a high risk, high return proposition.
Option A contract conferring the right but not the obligation to buy (call) or to sell (put) a specified amount of an instrument at a specified price within a predetermined time period.
Over The Counter (OTC) A market conducted directly between dealers and principals via a telephone and computer network rather than a regulated exchange trading floor. These markets have not been very popular because of the risks both the parties face in case the other party fails to honor the contract. They were never part of the Stock Exchange since they were seen as "unofficial".
Par (1) The nominal value of a security or instrument. (2) The official value of a currency.
Parity (1) Foreign exchange dealer's slang for your price is the correct market price. (2) Official rates in terms of SDR or other pegging currency.
Point (1) 100th part of a per cent, normally 10,000 of any spot rate. Movement of exchange rates are usually in terms of points. (2) One percent on an interest rate, e.g. from 8-9%. (3) Minimum fluctuation or smallest increment of price movement.
Premium (1) The amount by which a forward rate exceeds a spot rate. (2) The amount by which the market price of a bond exceeds its par value. (3) Options, the price a put or call buyer must pay to a put or call seller for an option contract. (4) The margin paid above the normal price level.
Principal A dealer who buys or sells stock for his/her own account.
Profit Taking The unwinding of a position to realize profits.
Put Option A put option confers the right but not the obligation to sell currencies, instruments or futures at the option exercise price within a predetermined time period.
Quote An indicative price. The price quoted for information purposes but not to deal.
Rally A recovery in price after a period of decline. *
Range The difference between the highest and lowest price of a future recorded during a given trading session.
Rate The price of one currency in terms of another. It has the same meaning as the term parities.
Reserves Funds held against future contingencies, normally a combination of convertible foreign currency, gold, and SDRs. Official reserves are to ensure that a government can meet near term obligations. They are an asset in the balance of payments.
Risk management The identification and acceptance or offsetting of the risks threatening the profitability or existence of an organization. With respect to foreign exchange involves among others consideration of market, sovereign, country, transfer, delivery, credit, and counterparty risk.
Rollover An overnight swap, specifically the next business day against the following business day (also called Tomorrow Next, abbreviated to Tom-Next). *
Short A market position where the client has sold a currency he does not already own. Usually expressed in base currency terms.
Spot (1) The most common foreign exchange transaction. (2) Spot refers to the buying and selling of the currency where the settlement date is two business days forward.
Square Purchase and sales are in balance and thus the dealer has no open position.
Stagflation Recession or low growth (stagnation) in conjunction with high inflation rates.
Standard and Poor’s (S&P) A US firm engaged in assessing the financial health of borrowers. The firm also has generated certain stock indices i.e. S&P 500.
Stop Loss Order Order given to ensure that, should a currency weaken by a certain percentage, a short position will be covered even though this involves taking a loss. Realize profit orders are less common.
Support Levels A price level at which the buying is expected to take place. When an exchange rate depreciates or appreciates to a level where (1) Technical analysis techniques suggest that the currency will rebound, or not go below; (2) The monetary authorities intervene to stop any further downward movement. See Resistance Point.
Swap The simultaneous purchase and sale of the same amount of a given currency for two different dates, against the sale and purchase of another. A swap can be a swap against a forward. In essence, swapping is somewhat similar to borrowing one currency and lending another for the same period. However, any rate of return or cost of funds is expressed in the price differential between the two sides of the transaction.
Technical Analysis The study of the price that reflects the supply and demand factors of a currency. Common methods are flags, trend-lines spikes, bottoms, tops, pennants, patterns and gaps
Tomorrow Next (Tom next) Simultaneous buying and selling of a currency for delivery the following day and selling for the next day or vice versa.
Volatility A measure of the amount by which an asset price is expected to fluctuate over a given period. Normally measured by the annual standard deviation of daily price changes (historic). Can be implied from futures pricing, implied volatility.
Yard Slang for milliard, one thousand million (1 European milliard = 1 US billion = 1,000 million).
Fed The United States Federal Reserve. Federal Deposit Insurance Corporation Membership is compulsory for Federal Reserve members. The corporation had deep involvement in the Savings and Loans crisis of the late 80s.
Fixed Exchange Rate Official rate set by monetary authorities for one or more currencies. In practice, even fixed exchange rates are allowed to fluctuate between definite upper and lower bands, leading to intervention by the central bank.
Flat/Square Where a client has not traded in that currency or where an earlier deal is reversed thereby creating a neutral (flat) position. example: you bought $500,000 then sold $500,000 = FLAT
Floating Exchange Rate When the value of a currency is decided by the market forces dictating the demand and supply of that particular currency. FOMC Federal Open Market Committee, the committee that sets money supply targets in the US which tend to be implemented through Fed Fund interest rates etc.
Foreign Exchange The purchase or sale of a currency against sale or purchase of another. Forex An abbreviation of foreign exchange. Forward Contract Sometimes used as synonym for "forward deal" or "future". More specifically for arrangements with the same effect as a forward deal between a bank and a customer. Forward Deal A deal with a value date greater than the spot value date. Forward Points The interest rate differential between two currencies expressed in exchange rate points. The forward points are added to or subtracted from the spot rate to give the forward or outright rate depending on whether the currency is at a forward premium or discount. Forward Rate The rate at which a foreign exchange contract is struck today for settlement at a specified future date which is decided at the time of entering into the contract. The decision to subtract or add points is determined by the differential between the deposit rates for both currencies concerned in the transaction. The base currency with the higher interest rate is said to be at a discount to the lower interest rate quoted currency in the forward market. Therefore the forward points are subtracted from the spot rate. Similarly, the lower interest rate base currency is said to be at a premium, and the forward points are added to the spot rate to obtain the forward rate. Fundamental Analysis Analysis based on economic and political factors. FX Foreign Exchange. G5, G7, G10 [G5] The Group of Five. The five leading industrial countries, being US, Germany, Japan, France, UK; [G7] The seven leading industrial countries, being US , Germany, Japan, France, UK, Canada, Italy;[G10] G7 plus Belgium, Netherlands and Sweden, a group associated with IMF discussions. Switzerland is sometimes peripherally involved.
Good Until Canceled (GTC) An instruction to a broker that unlike normal practice the order does not expire at the end of the trading day, although normally terminates at the end of the trading month. * Head and Shoulders A pattern in price trends which chartist consider indicates a price trend reversal. The price has risen for some time, at the peak of the left shoulder, profit taking has caused the price to drop or level. The price then rises steeply again to the head before more profit taking causes the price to drop to around the same level as the shoulder. A further modest rise or level will indicate that a further major fall is imminent. The breach of the neckline is the indication to sell.
Hedging A hedging transaction is one whose main aim is to protect an asset or liability against a fluctuation in the foreign exchange rate rather than profit from the exchange rate fluctuations. Initial Margin The deposit required by the Broker before a client can trade/transact a deal to have some cushion in the event of default by the party. Interbank Rates The Forex rates large international banks quote to other large international banks. Normally the public and other businesses do not have access to these rates. Intrinsic Value The amount by which an option is In-the-money. The intrinsic value is the difference between the exercise/strike price and the price of the underlying security. Kiwi Slang for the New Zealand dollar. Leading Indicators Statistic that are considered to precede changes in economic growth rates and total business activity, e.g. factory orders. Leverage In options terminology, this expresses the disproportionately large change in the premium in terms of the relative price movement of the underlying instrument. *
LIBOR (London Inter Bank Offer Rate) British Bankers' Association average of interbank offered rates for dollar deposits in the London market based on quotations at 16 major banks. Effective rate for contracts entered into two days from date appearing. Limit Order – Reserved Day Trading Deal An order to perform a Day-Trading deal at a rate pre-defined by the customer, when and if such rate comes up in real market time. The Limit rate is superior to the existing rate at the time of reservation. The reservation order lasts for a period defined by the customer, and is associated by the necessary collaterals to facilitate the potential Day*Trading deal, when and if activated, under the pre-defined terms. Liquidity The ability of a market to accept large transactions without having any major impact on the interest rates. Long A market position where the Client has bought a currency he previously did not own. For example: long Dollars. M0; M1; M2; M3; M4 [M0} Cash in circulation . Only used by the UK; [M1] Cash in circulation plus demand deposits at commercial banks. There are variations between the precise definitions used by national financial authorities; [M2] Includes demand deposits time deposits and money market mutual funds excluding large CDs; [M3] In the UK it is M1 plus public and private sector time deposits and sight deposits held by the public sector.; [M4] In the US it is M2 plus negotiable CDs. Maintenance Margin The minimum margin which an investor must keep on deposit in a margin account at all times in respect of each open contract. * Margin (1) Difference between the buying and selling rates, also used to indicate the discount or premium between spot or forward. (2) For options the sum required as collateral from the writer of an option. (3) For futures a deposit made to the clearing house on establishing a futures position account. (4) The percentage reserve required by the US Federal Reserve to make an initial credit transaction. Margin Call A demand for additional funds to cover positions. A demand for additional funds to be deposited in a margin account to meet margin requirements because of adverse future price movements. * Market Maker A market maker is a person or firm authorized to create and maintain a market in an instrument. * Market Value Market value of a Forex position at any time is the amount of the domestic currency that could be purchased at the then market rate in exchange for the amount of foreign currency to be delivered under the Forex Contract. Mid-Price or Middle Rate The price half-way between the two prices, or the average of both buying and selling prices offered by the market makers. Mio Million.
Moving Average A way of smoothing a set of data, widely used in price time series. Nickel US term for five basis points. Old Lady Old lady of Threadneedle Street, a term for the Bank of England. One Cancels Other Order Where the execution of one order automatically cancels a previous order also referred to as OCO or 'One cancels the other'.
Ask Price The price at which the currency or instrument is offered. *Ask is the lowest price acceptable to the buyer.
American Option An option which may be exercised at any valid business date throughout the life of the option. Compared with a European option that can only be exercised on a specific date.
Arbitrage A risk-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets.
Around Used in quoting forward "premium / discount". At Best An instruction given to a dealer to buy or sell at the best rate that is currently available in the market.
At or Better An order to deal at a specific rate or better.
At the Price Stop-Loss Order A stop-loss order that must be executed at the requested level regardless of market conditions.
Average Rate Option A contract where the exercise price is based on the difference between the strike price and the average spot rate over the contract period. Sometimes called an "Asian option".
Back to Back (1) Transaction where all the obligations and liabilities in one transaction are mirrored in a second transaction. (2) Transaction where a loan is made in one currency in one country against a loan in another country in another currency. Base Currency The currency in which the operating results of the bank or institution are reported. Base Rate A term used in the UK for the rate used by banks to calculate the interest rate to borrowers. Top quality borrowers will pay a small amount over base. Basis The difference between the cash price and futures price. Basis Point One per cent of one per cent. Bear An investor who believes that prices are going to fall. * Bear Market A market in which prices decline sharply against a background of widespread pessimism (opposite of Bull Market). Bid Price The price at which a buyer has offered to purchase the currency or instrument. Bid is the highest price that the seller is offering for the particular currency at the moment; the difference between the ask and the bid price is the spread. Together, the two prices constitute a quotation; the difference between the two is the spread. The bid-ask spread is stated as a percentage cost of transacting in the foreign. Binary Options A binary "call" (or "step up") is like a standard European call option except that the pay off at expiry is fixed at one unit of the counter currency, if the call expires in the money. Black-Scholes Model An option pricing formula initially derived by Fisher Black and Myron Scholes for securities options and later refined by Black for options on futures. It is widely used in the currency markets.
Bretton-Woods The site of the conference which in 1944 led to the establishment of the post war foreign exchange system that remained intact until the early 1970s. The conference resulted in the formation of the IMF. The system fixed currencies in a fixed exchange rate system with 1% fluctuations of the currency to gold or the dollar. Broker An agent, who executes orders to buy and sell currencies and related instruments either for a commission or on a spread. Brokers are agents working on commission and not principals or agents acting on their own account. In the foreign exchange market brokers tend to act as intermediaries between banks bringing buyers and sellers together for a commission paid by the initiator or by both parties. There are four or five major global brokers operating through subsidiaries affiliates and partners in many countries. Bull A person who believes that prices will rise. Bull Market A market characterized by rising prices. Buyer/Taker The purchaser of an option, whether a call or put option. The buyer may also be referred to as the option holder. Option buyers receive the right, but not the obligation, to enter a futures/securities market position. * Cable A term used in the foreign exchange market for the US Dollar/British Pound rate. Call An option that gives the holder the right to buy the underlying instrument at a specified price during a fixed period. Call Option A call option confers the right but not the obligation to buy stock, shares or futures at a specified price. CBOE Chicago Board Options Exchange. Central Bank A central bank provides financial and banking services for a country's government and commercial banks. It implements the government's monetary policy, as well, by changing interest rates. It is normally the issuing bank and controls bank licensing, and any foreign exchange control regime. CFTC The Commodity Futures Trading Commission, the US Federal regulatory agency for futures traded on commodity markets, including financial futures. Closed Position A transaction which leaves the trade with a zero net commitment to the market with respect to a particular currency. Commission The fee that a broker may charge clients for dealing on their behalf. Contract An agreement to buy or sell a specified amount of a particular currency or option for a specified month in the future (See Futures contract). Cross Rate An exchange rate between two currencies, usually constructed from the individual exchange rates of the two currencies, as most currencies are quoted against the dollar. Currency The type of money that a country uses. It can be traded for other currencies on the foreign exchange market, so each currency has a value relative to another. Day Trading A Day-Trading deal is a currency exchange deal which renew automatically every night at 22:00 (GMT time) starting the day the deal was made and until it ends. The deal ends in one of the following events: 1. Termination initiated by you. 2. The day trading rate has reached the Stop-Loss rate (or Take-Profit rate) you predefined. 3. The deal end date. As long as the deal is open, it is charged a renewal fee every night at 22:00 (GMT time). Deal Date The date on which a transaction is agreed upon. Dealer An individual or firm acting as a principal, rather than as an agent, in the purchase and/or sale of securities. Dealers trade for their own account and risk in contrast to the brokers who do trade only on behalf of their clients. European Option An option that can be exercised only on its expiration date rather than before that date. * Exotic A less broadly traded currency.
The dollar slipped against the euro on Thursday after a report showed April capital flows into the United States, which dropped sharply, were not enough to cover the trade deficit.
A mixed bag of U.S. economic data left traders with no clear direction and most said orders to buy dollars were being met with just as many to sell. However, against a basket of major currencies, the dollar remained within striking distance of seven-week highs reached on Tuesday.
Foreign investment in U.S. assets in April, particularly from private investors, was the lowest in more than a year and unable to offset that month's trade deficit for the first time since December 2005.
"To the extent the private sector suddenly decided they didn't want U.S. securities that meant there were more dollars available on the foreign exchange market and that meant downward pressure on the dollar," Chris Probyn, chief economist with State Street Global Advisors in Boston, said.
By 1:00 p.m. (1700 GMT), the euro was at $1.2615, up 0.1 percent from Wednesday but off session highs of $1.2658 . On Tuesday the euro hit a 1-1/2 month low of $1.2528.
The dollar held steady at 115.06 yen , within sight of seven-week highs of 115.44 yen touched on Tuesday.
Weakness in the dollar for the second consecutive session was striking especially since the futures market reflected increased chances of two more rate hikes by the Federal Reserve later this month and in August.
Euro The euro depreciated vis-à-vis the U.S. dollar last week as the single currency tested bids around the $1.2595 level and was capped around the$1.2980 level. The pair lost about 285 pips last week. Fed officials continued to manage inflation expectations with more hawkish talk. Atlanta Fed's Guynn noted the Fed would 'not let its guard down;" St. Louis's Poole said the current economic slowdown may not stymie inflation; Kohn testified that inflation is elevated; Bies said the Fed can't say it's done hiking; and Bernanke reiterated the Fed needs to remain "vigilant." Traders bought dollars on the premise the FOMC will move again by +25bps at the end of June. Data saw the May services ISM fall to 60.1 from 63.0 while weekly initial jobless claims pulled back to 302,000. The April trade deficit narrowed slightly and the May import price index came in a hotter-than-expected +1.6%.
In eurozone news, the ECB lifted its headline rate by a modest +25bps to 2.75% with Trichet not overly hawkish in his remarks. Many traders expected a +50bps move. EMU-12 April retail sales were up 1.4% m/m and 2.8% y/y and the EMU-12 May services PMI up at 58.7. Ecofin ministers tried to talk the euro down with Austria's Grasser, Luxembourg's Juncker, and France's Breton noting $1.30 is at the high end of the its comfort zone. G8 officials meeting in St. Petersburg could shake things up in the FX world, especially if they again talk about normalization of Asian exchange rates. Papademos, Tumpell-Gugerell, and Gonzalez-Paramo talked up the EMU-12 economy and downplayed the euro's role in policymaking. The ECB kept its 2006 GDP growth forecast intact at +2.1%.
Yen/ CNY
The yen weakened vis-à-vis the U.S. dollar last week as the greenback tested offers around the 114.30 level and was supported around the 111.40 level. The pair gained about 230 pips last week. The Nikkei 225 stock index closed the week at14,750.84. BoJ's Iwata echoed Fukui's recent comments, saying policymakers have no idea when interest rates will be lifted from near zero per cent. May bank lending was up 1.2% y/y, the fastest climb in more than ten years and speculation mounted the government may lift its January - March GDP estimate. The Nikkei reported the government will emphasize deflation is receding in its June monthly report. April machinery orders rose 10.8% m/m.
The Chinese yuan rallied vis-à-vis the U.S. dollar last week as the greenback closed at CNY 8.0112 in the over-the-counter market and at CNY 8.0115 in the exchange-traded market. A Chinese government research body called on the government to widen the yuan's trading band and PBOC's Zhou indicated the central bank has no plans to tighten policy further at this time. May PPI was up 19.5% y/y.
GBP The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.8365 level and was capped around the $1.8880 level. The pair lost about 375 pips last week. BoE's MPC kept rates unchanged at 4.50% for the tenth consecutive month. Data was on the soft side with April manufacturing output off 0.2% m/m, May BRC retail sales off, and the May services PMI survey off at 59.2. Halifax and CML reported continued strength in house prices and May Nationwide May consumer confidence improved. The April trade in goods deficit printed at -GBP5.8 billion while NIESR sees U.K. GDP at 0.6% in the three months to May.
CHF
The Swiss franc depreicated vis-à-vis the U.S. dollar last week as the greenback tested offers around the CHF 1.2365 figure and was supported around the CHF 1.2015 level. The pair gained about 250 pips last week. Data released in Switzerland saw the May unemployment rate recede to 3.3% from 3.5% in April.
CAD
The Canadian dollar depreciated vis-à-vis the U.S. dollar last week as the greenback tested offers around the US$ 1.1230 level and was supported around the US$ 1.0975 level. The pair gained about 60 pips last week. The May unemployment rare fell 0.3% to 6.1%, its lowest level since December 1974.
AUD
The Australian dollar came off vis-à-vis the U.S. dollar last week as the Aussie tested bids around the US$ 0.7390 level and was capped around the US$ 0.7545 level. The pair lost about 25 pips last week. RBA kept its official cash rate unchanged at 5.75% and the May unemployment rate printed at 4.9%, down from 5.1%. Q1 GDP was up 0.9% q/q and 3.1% y/y and the May services PMI fell to 49.3. Also, the Q1 current account deficit printed at - A$ 13.999 billion, down from - A$ 14.330 billion in Q4, and Westpac industrial activity index receded to 48.4 in June from 51.1 in March, its lowest level since June 2001.
SCHEDULE
Sunday, 11 June 2006
all times GMT
(last release in parentheses)
1700 US European Central Bank member Constancio speaks
1845 NZ Q1 import prices (0.6%)
1845 NZ Q1 export prices (-1.8%)
2245 NZ Q1 terms of trade index (-2.3% q/q)
2350 Japan Q1 GDP (0.5% q/q)
2350 Japan Q1 GDP, annualized (1.9%)
2350 Japan Q1 GDP deflator (-1.3% y/y)
2350 Japan May domestic corporate goods price index (0.5% m/m)
2350 Japan May domestic corporate goods price index (2.5% y/y)
2350 Japan May export price index (0.7% m/m)
2350 Japan May export price index (4.0% y/y)
2350 Japan May import price index (0.8% m/m)
2350 Japan May import price index (14.9% y/y)
2350 Japan April current account (¥2.395 trillion)
2350 Japan April trade balance (¥1.108 trillion)
Monday, 12 June 2006
all times GMT
(last release in parentheses)
N/A Australia Financial markets closed
0500 Japan May consumer confidence (50.2)
0600 Germany May wholesale price index (1.0% m/m)
0600 Germany May wholesale price index (3.2% y/y)
0800 Italy April industrial production (-0.1% m/m)
0800 Italy April industrial production (4.2% y/y)
0830 Eurozone European Central Bank member Quaden speaks
0830 UK May producer price index, input (2.5% m/m)
0830 UK May producer price index, input (15.7% y/y)
0830 UK May producer price index, output (0.4% m/m)
0830 UK May core producer price index, output (0.4% m/m)
0830 UK May producer price index, output (2.4% y/y)
0830 UK May core producer price index, output (2.3% y/y)
0830 UK April ODPM house prices (3.3% y/y)
0830 UK May FT house prices (3.3% y/y)
1200 NZ Q3 employment outlook
1230 Canada Q1 capacity utilization ratio (86.3%)
1315 US Cleveland Fed President Pianalto speaks
1345 Slovenia European Central Bank member Bini-Smaghi speaks
1430 US Dallas Fed President Fisher speaks
1615 US Fed Governor Olson speaks
2000 US Fed Governor Bies speaks
2245 NZ April retail sales (-1.0% m/m)
2330 US Fed Chairman Bernanke speaks
Tuesday, 13 June 2006
all times GMT
(last release in parentheses)
N/A Japan June monthly economic report
0130 Australia May National Australia business survey
0430 Japan April industrial production (1.5% m/m)
0430 Japan April industrial production (3.8% y/y)
0430 Japan April capacity utilization (104.1)
0430 Japan May machine tool orders (14.8% y/y)
0600 Germany May consumer price index (0.2% m/m)
0600 Germany May consumer price index (1.9% y/y)
0600 Germany May harmonized consumer price index (2.1% m/m)
0600 Germany May harmonized consumer price index (0.2% y/y)
0800 Italy Q1 labour cost in industry and services
0830 UK May consumer price inflation (0.6% m/m)
0830 UK May consumer price inflation (2.0% y/y)
0830 UK May core consumer price inflation (1.3% y/y)
0830 UK May retail price index (0.8% m/m)
0830 UK May retail price index (2.6% y/y)
0830 UK May RPIX (2.4% y/y)
0900 Germany June ZEW survey of economic sentiment (50.0)
0900 Germany June ZEW survey of current situation (8.7)
0900 Eurozone June ZEW survey of economic sentiment (47.7)
0900 Eurozone Q1 current account (-€15.1 billion)
1230 US May producer price index (0.9% m/m)
1230 US May producer price index, ex-food and energy (0.1% m/m)
1230 US May producer price index (4.0% y/y)
1230 US May producer price index, ex-food and energy (1.5% y/y)
1230 US May advance retail sales (0.5%)
1230 US April business inventories (0.7%)
1230 US Fed Chairman Bernanke speaks
1600 Eurozone European Central Bank member Mersch speaks
2245 NZ May food prices (-0.8% m/m)
Wednesday, 14 June 2006
all times GMT
(last release in parentheses)
N/A Japan Bank of Japan Policy Board meeting
0030 Australia June Westpac consumer confidence
0400 Japan May bankruptcies (14.9% y/y)
0400 Japan May Tokyo condominium sales (-2.5% y/y)
0600 Germany May wholesale price index (1.0% m/m)
0600 Germany May wholesale price index (3.2% y/y)
0800 Italy May consumer prices (0.3% m/m)
0800 Italy May consumer prices (2.2% y/y)
0800 France May consumer price index (0.4% m/m)
0800 France May consumer price index (2.0% y/y)
0800 France May harmonized consumer price index (0.3% m/m)
0800 France May harmonized consumer price index (2.3% y/y)
0830 UK May claimant count rate (3.0%)
0830 UK May jobless claims change (7,700)
0830 UK April average earnings (4.2%)
0830 UK April ILO unemployment rate (5.2%)
0830 UK April manufacturing unit wage cost (1.9%)
1230 US May consumer price index (0.6% m/m)
1230 US May consumer price index, ex-food and energy (0.3% m/m)
1230 US May consumer price index (3.5% y/y)
1230 US May consumer price index, ex-food and energy (2.3% y/y)
1230 Canada April manufacturing shipments (1.6% m/m)
1300 France European Central Bank President Trichet speaks
1530 US Fed Governor Bies speaks
1700 US Dallas Fed President Fisher speaks
1800 US Fed Beige Book
2300 US Boston Fed President Minehan speaks
2330 UK May RICS house price balance (15.0%)
2350 Japan April tertiary industry index (-0.6% m/m)
Thursday, 15 June 2006
all times GMT
(last release in parentheses)
N/A Japan Bank of Japan Policy Board monetary policy announcement
N/A CH Swiss National Bank interest rate announcement
N/A CH Swiss National Bank mid-year monetary policy assessment
0100 Australia June consumer inflation expectations
0130 Australia May Reserve Bank of Australia bulletin
0300 NZ May non-resident bond holdings
0500 Japan April leading economic index (50%)
0500 Japan April coincident index (77.8%)
0600 Japan Bank of Japan monthly report
0645 France Q1 non-farm payrolls (0.2% q/q)
0730 Italy European Central Bank member Tumpell-Gugerell speaks
0800 Eurozone June European Central Bank monthly report
0800 Eurozone European Central Bank member Liikanen speaks
0830 UK May retail sales (0.6% m/m)
0830 UK May retail sales (3.0% y/y)
0900 Eurozone May consumer price inflation (0.7% m/m)
0900 Eurozone May consumer price inflation (2.4% y/y)
0900 Eurozone May consumer price inflation, core (1.5% y/y)
1201 NZ May ANZ PMI (53.1)
1215 US Boston Fed President Minehan speaks
1230 US Weekly initial jobless claims (302,000)
1230 US Weekly continuing jobless claims (2.145 million)
1230 US June Empire Fed manufacturing index (12.4)
1300 US April net foreign security purchases (US$ 69.8 billion)
1315 US May industrial production (0.8%)
1315 US May capacity utilization (81.9%)
1430 UK April leading indicator index (0.6% m/m)
1430 UK April coincident index (0.2%)
1600 US June Philadelphia Fed index (14.4)
1700 US Fed Governor Kroszner speaks
1800 Us Fed Chairman Bernanke speaks
2245 NZ Q1 manufacturing activity (0.3%)
Friday, 16 June 2006
all times GMT
(last release in parentheses)
N/A CH Swiss National Bank President Roth speaks
0645 France April current account (-€1.793 billion)
0730 Korea St. Louis Fed President Poole speaks
0900 Eurozone Q1 labour costs (2.4% y/y)
0900 Eurozone April industrial production (0.4% m/m)
0900 Eurozone April industrial production (3.8% y/y)
1230 US Q1 current account balance (-US$ 224.9 billion)
1315 Italy April current account (-€1.991 billion)
1345 US June University of Michigan consumer sentiment (79.1)
1500 US Fed Governor Kohn speaks
1500 US Fed Governor Kroszner speaks
DISCLAIMER: GCI's Weekly Market Recap and Week Ahead is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information
HYIP, which stands for High Yield Investment Program is just what it sounds like, a program offering a high yield investment. HYIP's are offering probably the most profitable investments available today. Interest rates of up to 100% a monthis not uncommon. In general the interest rates are ranging anywhere between 5 - 250% a month.
HYIP's are using different investment strategies. Some invest in stocks, others in property. There are even HYIPs investing in other HYIPs. Probably there are also programs that are not investing at all. These belong to the scammers. You'll read more about unserious HYIPs further down this text.
Most HYIP's use different e-currencies as their way of accepting funds from members. E-gold is undoubtedly the most commonly used one hence the many program names containing 'Gold' or "E-gold". E-currencies makes instant and secure money transfers possible online and have very much paved the way for HYIP's.
The phenomenon of Hyips is growing bigger and bigger on the internet today. Every day new programs are being launched. Lots of people are earning fortunes investing in these programs.
Sounds too good to be true?
Well, while the statements above are not lies, they don't give you the whole picture. Many program owners are scammers. Their only will is to run with your money. There are more scams out there than serious long term programs.Over the years large amounts of people have lost their money as a result of being involved in High Yield Investment Programs.
Given the fact that the HYIP industry is a very risky one, most people are very hesitant when it comes to investing in HYIP's - which is legitimate. However, not being aware of the risks is the main reason why people are losing their money. There is a great number of cases where people have thought they've found an incredible opportunity and gladly invested their entire fortune. When the programs later went out of business, the consequences have been devastating.
Although there are unserious players in all markets, the HYIP arena seem to have more of them than many other industries. The reason for this is the big amounts of money involved and the fact that it’s pretty easy to steal money on the net.
Taking both the negative and positive aspects of High Yield Investments into consideration, the conclusion is; If done right, High Yield Investments can be extremely lucrative.
This is where we come into play. We are constantly studying and researching the market. We are also investing in a number of HYIP's to be able to analyze them and keep track of their payments.
Technical analysis (or chartism) is the use of numerical series generated by market activity, such as price and volume, to predict future price trends. The techniques can be applied to any market with a comprehensive price history.
Primarily, but not exclusively, technical analysis is conducted by studying charts of past price movement. Many different methods and tools are used in technical analysis, but they all rely on the assumption that price patterns and trends exist in markets, and that they can be identified and exploited.
Technical analysis does not try to analyze the financial data of a company such as cashflow, dividends and projection of future dividends. That type of analysis is called fundamental analysis. Nor does it claim to be 100% accurate. It attempts to give the "most likely" outcome.
Some speculators combine elements from both technical and fundamental analysis. (A budding field known as fusion analysis explicitly advocates the combined use of fundamental and technical analysis.) Technical analysis is viewed by many of its practitioners as more art than science. Many academic studies conclude that technical analysis has little, if any, predictive power. However, the practice has a dedicated following especially among active traders and does have support among the academic community.
As an example of the debate regarding the efficacy of technical analysis, Peter Lynch, a very well-known and successful fundamental analyst, once commented, "Charts are great for predicting the past." On the other hand, the U.S. Federal Reserve once published a study saying that certain elements of technical analysis were effective in price forecasting in the intraday foreign exchange market.
History The premises of technical analysis were derived from empirical observations of financial markets over hundreds of years. Perhaps the oldest branch of technical analysis is the use of candlestick techniques by Japanese traders at least as early as the 18th century, and still very popular today.
Dow Theory, a theory based on the collected writings of Dow Jones co-founder and editor Charles Dow, inspired the increasingly widespread use and development of technical analysis from the end of the 19th century. Modern technical analysis considers Dow Theory its cornerstone.
New tools and theories have been produced and existing tools have been enhanced at a rapid rate in recent decades, with an increasing emphasis on computer-assisted techniques.
Theory Technical analysis is not concerned with why a price is moving (e.g. poor earnings, difficult business environment, poor management, or other fundamentals) but rather whether it is moving in a particular direction or in a particular chart pattern. Technical analysts believe that profits can be made by "trend following." In other words if a particular stock price is steadily rising (trending upward) then a technical analyst will look for opportunities to buy this stock. Until the technical analyst is convinced this uptrend has reversed or ended, all else equal, he will continue to own this security. Additionally, technical analysts look for various price patterns to form on a price chart and will take positions in anticipation of the expected move following that pattern. The various tools of technical analysis assist the technician in determining when trends have formed, ended, etc. and when particular patterns are unfolding.
Technical analysis may be at odds with fundamental analysis. Fundamental analysis maintains that markets may misprice a security and, through various methods of fundamental analysis, the "correct" price can be calculated. Profits can be made by trading the mispriced security and then waiting for the market to recognize its "mistake" and reprice the security. In contrast, a technical analyst is not interested in a security's "correct" price, only in price movement.
Two well known sayings among technical analysts are, "The trend is your friend," and "Forget the fundamentals and follow the money." An example of the different views of technical and fundamental analysis follows. Suppose a stock was trading at 124.25 pence, and that the consensus fundamental analysis view of the stock was that it was worth 120.00 pence. If the share price rose to 125.00 pence, then to 126.00 pence, and then to 127.00 pence, a technical analyst would likely be a buyer of this stock in order to profit from the perceived trend. In contrast, a fundamental analyst would possibly look to sell the stock as it is moving away from what the fundamental analyst believes is the "correct" price.
Three Beliefs of Technical Analysis
Price action in the market discounts everything Technical analysis holds that because every possible bit of information is immediately included in the price of a security, it is not necessary to explicitly analyze the fundamental, economic, political, etc. factors that might influence that price. Because all possible information is reflected in the price, only a study of the price movement is required. Murphy. Technical Analysis of the Financial Markets, 24 - 31.
Prices move in trends While it cannot be shown that prices must trend, technical analysis relies on empirical evidence and common sense to assert that prices do trend. To a technician, markets are trending up, trending down, or trending sideways (flat). This definition of a price trend is essentially the one put forward by Dow Theory. Murphy. Technical Analysis of the Financial Markets, 24 - 31.
A person who does not believe that prices move in trends will find little use for technical analysis. The assumption that prices must trend is probably the most important concept in technical analysis.
History tends to repeat itself Technical analysts believe that investors en masse repeat the behavior of the investors that preceded them. "Everyone wants in on the next Microsoft," "If this stock ever gets to $50 again, I will buy it," "This company's technology will revolutionize its industry, therefore this stock will skyrocket,"-- these are all examples of investors' attitudes repeating. To a technical analyst, the human characteristics of the market might be irrational, but they exist. Because investors' attitudes often repeat, investors' actions in the marketplace often repeat as well. I.e., patterns of price movement will develop on a chart that a technical analyst believes have predictive qualities.
Technical analysis is not limited to charting. Technical analysis is always primarily concerned with price trends. Anything that can influence the price trend is of interest to a technical analyst. As an example, many technical analysts monitor surveys of investor enthusiasm. These surveys attempt to gauge the general attitude of the investment community to determine whether investors are bearish or bullish. Technical analysts use these surveys to help determine whether a trend will reverse or whether a new trend will develop. A technical analyst would be alerted that a trend might change when these surveys report extreme investor reactions. When surveys are overly bullish, for example, a technical analyst will look for evidence that an uptrend will reverse. The logic being that if most investors are bullish, then they would have already bought the market (anticipating that the market will move higher). But because most investors are bulllish and have invested, it is safe to assume that there are few buyers remaining in the market. With most investors long, there are more potential sellers in the market than buyers despite the fact that the overall attitude of investors is bullish. This implies that the market is set to trend down and is an example of a technical analysis concept called contrarian trading.
Criticism of Technical Analysis Lack of evidence Although chartists assert that their techniques provide excess returns over time, this assertion is controversial. Many academics believe that technical analysis has no predictive power. Burton Malkiel in his book "A Random Walk Down Wall Street" (8th edition, 2003) and Eugene Fama in "Efficient Capital Markets: A Review of Theory and Empirical Work," May 1970 Journal of Financesummarize many early studies, conducted from the 1950s-70s, that show that after trading costs are considered, the returns generated by many technical strategies underperform a simple buy and hold strategy.
Cheol-Ho Park and Scott H. Irwin [1] reviewed 93 modern studies on the profitability of technical analysis and considered 59 of them to indicate positive results, and 24 negative results. "Despite the positive evidence ... it appears that most empirical studies are subject to various problems in their testing procedures, e.g., data snooping, ex post selection of trading rules or search technologies, and difficulties in estimation of risk and transaction costs." See also [2].
Critics of technical analysis include well known fundamental analysts. Warren Buffett has exclaimed, "I realized technical analysis didn't work when I turned the charts upside down and didn't get a different answer" and "If past history was all there was to the game, the richest people would be librarians." Still, even an investor like Buffett occasionally recognizes technical analysis. In a recent conference on investing in mining companies, Buffett commented, "In metals and oils, there's been a terrific [price] move. It's like most trends: at the beginning, it's driven by fundamentals, then speculation takes over...then the speculation becomes dominant." To a technician, Buffett basically paraphrased Dow Theory.
Inconsistencies with Other Market Hypotheses
The Efficient Market Hypothesis The efficient market hypothesis (EMH) concludes that technical analysis cannot be effective. According to this hypothesis, all relevant information is quickly reflected in a security's price through the actions of traders who have that information. Thus, it is impossible to "beat the market," and technical analysis cannot work. News events and new fundamental developments which influence prices occur randomly and are unknowable in advance. Advocates of EMH have produced many studies that reject the efficacy of technical analysis.
Proponents of technical analysis counter that technical analysis does not completely contradict the efficient market hypothesis. Technicians agree with EMH in that they believe that all available information is reflected within a security's price; that is why technicians say a study of the price movement is necessary. Technicians argue that EMH ignores the realities of the market place, namely that many investors base their future expectations on past earnings, track records, etc. Because future stock prices can be strongly influenced by investor expectations, technicians claim it only follows that past prices can influence future prices.
Technicians point to the new field of behavioral finance. Behavioral finance essentially says that people are not the rational participants EMH makes them out to be. Market participants can and do act irrationally. Technicians have long held that irrational human behavior influences stock prices and claim to have ways of predicting probable outcomes based on this behavior.
The Random Walk Hypothesis The random walk hypothesis is also at odds with technical analysis and charting. Essentially, the hypothesis claims that stock price moments are a Brownian Motion with either independent or uncorrelated increments. In this model, movements in stock prices are not dependent on past stock prices, so trends cannot exist and technical analysis has no basis. Again, proponents of this theory have generated substantial research in support of the hypothesis.
The random walk hypothesis may be derived from the weak-form efficient markets hypothesis, which is based on the assumption that market participants take full account of any information contained in past price movements (but not necessarily other public information).
Technical analysts maintain that trends are identifiable in the market and that it is impractical to believe that market prices move in a random fashion. To a technician, over time prices will trend in a direction until supply equals demand. Therefore, there cannot be any pure random price movement. As stated earlier, one of the cornerstones of technical analysis is that prices trend. If one does not believe this concept, one will not agree with technical analysis.
Also, with regards to EMH and Random Walk Theory, technicians claim that both theories ignore the realities of the marketplace. To a technician, the market is neither composed of completely rational participants as EMH assumes (participants can be greedy, overly risky, etc. at any given time) nor is its stock price movement completely independent of its prior movement (technicians will point at charts like AOL above). Technicians maintain that both theories would also invalidate numerous other trading strategies such as index arbitrage, statistical arbitrage and many other trading systems.
Proponents of Technical Analysis To many traders, trading in the direction of the trend is the most effective means to be profitable in financial or commodities markets. John Henry, Larry Hite, Ed Seykota, Richard Dennis, Bruce Kovner, and Michael Marcus (some of the so-called Market Wizards in the popular book of the same name by Jack D. Schwager) have each amassed massive fortunes through the use of technical analysis and its concepts. George Lane, a technical analyst, coined one of the most popular phrases on Wall Street, "The trend is your friend!"
Many non-arbitrage algorithmic trading systems rely on the idea of trend-following, as do many hedge funds. A relatively recent trend, both in research and industrial practice, has been the development of increasingly sophisticated automated trading strategies. These often rely on underlying technical analysis principles (see algorithmic trading article for an overview).
Charting terms and indicators Many different techniques and indicators can be used to follow and predict trends in markets, and usually at least a few at a time are considered when making an investment decision. Some of the most widely known include:
Accumulation/distribution index - based on the close within the day's range Average true range - averaged daily trading range Bollinger bands - a range of price volatility Breakout - when a price passes through and stays above an area of support or resistance Commodity Channel Index - identifies cyclical trends Hikkake Pattern - pattern for identifying reversals and continuations MACD - moving average convergence/divergence Momentum - the rate of price change Money Flow - the amount of stock traded on days the price went up Moving average - lags behind the price action, On balance volume - the momentum of buying and selling stocks PAC charts - two-dimensional method for charting volume by price level Parabolic SAR - Wilder's trailing stop based on prices tending to stay within a parabolic curve during a strong trend Pivot point - derived by calculating the numerical average of a particular currency's or stock's high, low and closing prices. Point and figure charts - charts based on price without time Relative Strength Index - oscillator showing price strength. Resistance - an area that brings on increased selling Stochastic oscillator, close position within recent trading range Stop loss - controls drawdown Support - an area that brings on increased buying Trend line - a sloping line of support or resistance
Initial margin requirement - The minimum Margin Balance necessary to establish a NEW Open Position. Trading System reserves the right to change the Initial Margin requirement at it’s sole discretion. The Initial Margin requirement can be expressed as a percentage (i.e., 2% of US dollar position amount) or can be calculated by the Leverage Ratio. For example, a $100,000 position in USD/JPY would require $2,000 of margin given a 2% Margin Requirement. Expressed as a leverage ratio, if 50:1 leverage ratio is used a $100,000 position would require the same Initial Margin ($100,000 / 50 = $2,000).
Stop loss order - A specific order entered by the client to close out a position if the price moves in the opposite direction of the position by a certain amount of pips. In most cases Stop Orders are executed as soon as the market reaches or goes through the Customer set Stop Price level. Once issued, the stop order will be held pending until the stop price is reached. Stop orders may be used to close out a position (Stop Loss), to reverse a position, or open a new position. The most common use is to protect an existing position (by limiting losses or protecting unrealized gains). Once the market hits or goes through the stop price, the order is activated (triggered) and Trading System will execute the order at the next available price. Unlike a Limit Order, a Stop Order does not guarantee execution at the stop price. Market conditions including volatility and lack of volume may cause a Stop order to be executed at a price different than the order.
Before you click through to the e-gold site, here is a quick summary of e-gold. When you get there you will be able explore the site and verify the information for yourself. The Gold community centers around the use of GOLD (AUG) as a worldwide digital currency. The focal point of this community is presently e-Gold Limited which is the primary issuer of digital currency, although new competitors in the field such as GoldMoney.com and E-bullion.com are now offering gold digital currencies as well. The foundational currencies to the Gold Economy are 100% backed by gold bars held in secure vaults in locations around the world, such as London, Zurich, and Dubai. Should any holder of a gold digital currency require their equivalent value of gold holdings, they are redeemable in actual gold bars or can be converted to national currencies by exchange agents. E-gold is second only to PayPal in popularity. They've actually been around longer than PayPal (they're the original online money transfer service). The biggest selling point of eGold is that all online currency is backed 100% by real world gold. In fact, members can even cash in their eGold for real gold. Carrying it around might be a little difficult but gold is nice because of it's immunity to inflation. Also, we realize a lot of people have sexual confusion related to bullion, making e-gold the perfect choice. Egold is a payment service similar to PayPal but with a few significant differences: It is based on gold. When you open an egold account, you are actually buying a quantity of gold. If the price changes, the value in your account changes. The price you pay depends upon the quantity purchased. The more you buy, the better price you get. There is a minimum amount which must be purchased. Payments are made to account numbers. You don't see the name of the recipient. Payments are non-refundable. If you pay the wrong account by accident, it's too bad. It's easy to see why gold was humanity's currency of choice for all those centuries. It doesn't tarnish or rust. It exists in limited quantity, making it hard for governments to manipulate. And it looks and feels comforting, a kind of metallic analogue of ice cream and chocolate. Converted into bits in this way, gold once again becomes a viable -- some would say vastly superior -- kind of money. Conceptually, it works like this: You transfer some dollars or euros or whatever to a firm that buys gold for you and deposits it in a super-safe vault. You then make payments from this account via credit card or PC, and the gold -- without ever leaving the vault -- is credited to the recipient's account. Because of these factors, it is common for people to open egold accounts with large purchases and then sell them in smaller blocks to investors who can't come up with the minimum purchase. There are also sellers who accept egold for their auctions. If you win one of their auctions and don't want to open an egold account, you might pay an existing account holder who accepts paypal to act as a middleman and ask him to then pay your seller. e-gold is accounted by weight of metal, not US$ or any other national currency unit. Weight units have a precise, invariable, internationally recognized definition. Additionally, precious metals, gold in particular, enjoy a long history of monetary use around the world. Thus, e-gold is ideally suited for international transactions. Although e-gold is accounted by weight, the e-gold payment system allows Spends to be expressed in terms of a number of major national currencies.For example, it's possible to: Spend 10 troy oz worth of e-gold. Spend 5.3 grams worth of e-gold. Spend US $100.00 worth of e-gold. Spend CHF 685.88 worth of e-gold. This means (for example) that a Canadian can pay a German or a Japanese can pay an Australian the correct weight of gold (e-gold) for a good or service as easily as if the price had been quoted in his own national currency. All financial value will migrate to cyberspace over the next few years. e-gold is ready so that you can be too. e-gold is borderless - e-gold may be Spent to any other e-gold account anywhere in the world via the e-gold shopping cart interface (SCI), the e-gold Account Manager, or web enabled mobile phone. e-gold is quick -e-gold payments clear instantaneously (with no chargeback risk), no matter how large the payment, no matter how far apart the Spender and Recipient. e-gold is cost effective -Spending e-gold is free, even if your recipient is on the other side of the world. Recipient pays only 1% of the transaction amount for Spends less than or equal to US $50 worth of e-gold. e-gold is well suited (and e-silver is ideal) for micropayments. Recipient pays a flat USD 50 cents worth of e-gold for Spends greater than US $50 worth of e-gold, no matter how large the payment. The e-gold Agio fee, based on average daily balance, is only 1% per annum. What are E-Currencies? The simplest way to look at the E-Currency systems is not as a real 'currency' such as the U.S. dollar, Euro, or the Yen, since those are actual currencies created and backed by their respective governments. You can't exactly go to a currency conversion booth in France and ask to exchange your Euros for E-Gold (one of the E-Currency systems). Rather, E-Currencies are "stored value units", in a sense, they are digital widgets! You buy some digital widgets from a particular E-Currency System and use them in whatever manner you wish. Your concern would be that whatever particular use you had in mind - such as sending the widgets to a friend in Iceland, for example – that the person on the other end will accept your widgets for their stored value. Should people or governments be concerned about what you do with your "digital widgets"? Even if these E-Currency systems were actual currencies, what would be the concern as to how you use or convert them? If you were an American on vacation and flew to France and went to a currency conversion booth and changed $1,000 U.S. into the Euro equivalent, what concern is it of either the American or French governments? As mentioned, E-Currencies are not actual government backed currencies and therefore are not related to any particular government currency, per se. History - the 'why' of E-Currencies The E-Currency industry came about in an effort, I believe, to circumvent the restrictions of using hard currencies in dealing with international business. Additionally, the aspect of transaction privacy seems to be of import to those using E-Currencies also. By transferring funds to your E-Currency account, you can then easily transfer them to someone else's account with the expectation of having very good privacy and anonymity, depending on the E-Currency used. Finally, the speed of transfer is quite fast with E-Currencies, from one account to another. So if you were in the U.S. and wanted to purchase something from someone in Italy and an E-Currency that you use was an option, you would probably choose that payment transfer method rather than a bank wire. It would seem that these three factors, (1) the need for a common currency rather than dealing with conversion issues between various hard currencies; (2) privacy of transaction and (3) speed of transaction, are the main reasons for the existence of the E-Currency industry. Which of those 3 factors is most important depends on the individual using the E-Currency systems.
Are E-Currencies legal? E-Gold (www.e-gold.com) is currently the largest E-Currency provider, with over 500,000 customers worldwide. They have been in operation since July, 1996. At no time, I am aware of, has any government of any country accused an E-Currency of doing anything illegal by that country's laws and statutes. At no time has any International body, such as the United Nations, the World Trade Organization, or Interpol accused any E-Currency of violating any International laws.
Top reasons to prefer E-gold Low Cost - Creating an e-gold account costs nothing. Clicking a payment costs nothing. The maximum fee for receiving any e-gold payment is 0.05 grams, about fifty cents (in 2002 US dollars or about 70 cents in 2004) worth of e-metal®. Safe :e-gold is 100% backed by physical gold. Secure : No one can draw upon another person's account. With e-gold when you get paid, you stay paid. If you keep your passphrase secure, then your e-metal is secure. Fast :An e-gold payment settles in seconds. You have spendable money right away. Flexible :Your e-gold account is instantly accessible anywhere you can reach the Internet. Convenient - can remit the proceeds of an OutExchange™ by check (cheque) or wire to anyone you choose, in a variety of national currencies. (USD, JPY, GBP, FFR, EUR, DEM, CHF, CAD, AUD...etc) You can review detailed transaction records securely. Transparent - You can audit total physical metal reserves in real time with Examiner™, an automated report that displays live data from the e-gold system. Portable :A transfer of physical gold is risky, expensive, and slow. With an e-gold transaction your metal stays safe ... only its ownership changes. Automated Conversion :You can specify e-gold payments using familiar national currency units or by weight. Micropayments :e-gold is highly divisible, enabling very small payments if desired. Advantages of E-gold Low transaction fees : The maximum payment processing fee is 0.05 grams. For a $1000 value payment, this is less than one twentieth as much as credit cards. Immediate settlement :e-gold payments clear instantaneously, no matter how large or small the payment, no matter how far apart the spender and recipient. Non-repudiation : No chargebacks. Get paid, stay paid. Direct access with bi-directionality : Anyone can pay or be paid. Automation support :The e-gold Shopping Cart Interface is easily implemented and provides immediate authenticated notification of completed payment. Zero financial risk :e-gold is the world's first remote payment system backed 100% by physical gold in allocated storage.
E-gold Fees On January 1st 2004 E-gold changed their fees (or more precisely increased them) - check here for details: http://www.e-gold.com/unsecure/fees.htm. There is no change in that only the receiver is charged fees. Secondly, it makes sense that the new e-gold fees are not defined in terms of USD, where as previously the maximum fee was 50 cents. The new maximum spend fee is 0.05 Grams of Gold (AUG), which is equal to $0.65 at today's exchange rate. Thirdly, they have introduced minimum spend amount of 0.0004 Grams of Gold (AUG), equal to about half a cent ($0.0053) at today's exchange rate. For spends over 1 Gram of Gold (AUG) equivalent to about $13.07 at today's exchange rate, the rate is 1% or less, equal to the maximum rate of $0.66 at today's exchange rate. Advantages: The e-gold payment system should become more responsive as users will be reluctant to pay charges of up to 55% on spends worth less than a dollar. Disadvantages: E-gold becomes a more costly medium to use. E-bullion becomes a more cost effective alternative for transfers over $25. Examples of Typical PT Digital Gold Users Danny Makes a Small Anonymous Payment It's often easier to illustrate using examples, so we will start with Danny. Danny is in Phoenix, Arizona - just testing the water, having never used digital gold. He is aware that the encrypted email provider Hushmail accepts e-gold, and he wants to use this payment method to pay them $100 for services, rather than having a link to Hushmail on his credit card statement. First he will need a throw-away email account, or at least one not directly related to him. With this, he will sign up for an e-gold account, which will be opened online in seconds. Then he locates the website of a suitable exchanger. In this case, let's assume he selects an exchanger based in Florida, and their fee for this transaction is 4%. He buys a money order for cash in Phoenix for $104, mails it to the exchanger, and within a few days they have received it and transferred $100 to his e-gold account. Then all he has to do is log in to his email account, transfer the money to Hushmail's e-gold account, and voila! Transaction completed. If Danny is really security conscious he can now ditch the e-gold account and use a new one for the next transaction, but that's probably unnecessary. He can keep the same account for the coming months and maybe use it to receive some money anonymously for little trades he fulfills on Ebay. Rory Wants to Move Money Offshore Rory from Dublin, Ireland already has an e-gold account and wants to use it to transfer funds to his secret account in Latvia. Obviously if he wires the funds directly from Ireland, that would not look good. Instead, he visits the websites of some exchange businesses and locates several which he thinks would be suitable: in the UK, the USA and Australia. Wires to these countries, he figures, will not attract attention because they fit into the normal pattern of his business, and are not headed for known offshore locations. Over the course of some months, he randomly sends wires and bank drafts of between $3,000 and $7,000 from his business accounts at several different Irish banks, to each of these three exchangers. On receipt of the money, they credit his e-gold account as instructed. All in all, he wires out maybe $100,000. At the same time, he has located another couple of reputable exchangers located in Estonia and Finland to complete the other end of the transaction. Periodically, Rory logs in to his e-gold account and makes a transfer to the accounts of these exchangers, then he fires off an encrypted email to them giving his Latvian bank details. The exchangers send Euros to Rory's Latvian bank account. Of course, if the Irish tax authorities were really desperate to unravel this set of transactions they could. But it would require court orders in the UK, USA, Australia, Estonia and Finland, and it is very unlikely they would bother. For extra security, Rory could pay a nominal fee (perhaps 1%) to a straw man who would claim ownership of the e-gold account if required, and he would have a contract with Rory for consultancy services, programming work, website design or something similarly intangible. How much does this cost Rory? Buying and selling of e-gold depends on market conditions, but a fair estimate suggests that he could get quite a decent rate by emailing the exchangers in advance and explaining that he needs to make regular transactions. In this case he might be able to pay 2% in and 1% out. That's a total of 3% (ignoring any movements in the gold price) which we think is a very reasonable price to pay for the privacy afforded. Note that in the above case, if Rory is simply transferring his own, tax-paid savings, then he is doing absolutely nothing illegal. Like most civilized countries, Ireland has no restrictions on what you can and can't do with money you have legitimately earned. But if he is involved in making false tax declarations or trying to avoid court orders, the above process could quickly be construed as money laundering. Needless to say, we strongly recommend against that. If you do everything in good time when you have no tax emergencies or claims pending, then you can do everything by the book and totally legally. Much better. Giles Wants a Golden Offshore Nest Egg Giles is seriously, independently wealthy. His family founded one of London's landmark department stores and made their fortune before selling out to an international chain. Giles is British but now lives in Monaco. Giles would like to keep some assets in gold, as part of a diversified portfolio. But he's what his friends call a privacy freak so he wants to avoid buying it through the more conventional channels. Because what he wants is a long-term holding, he decides to go for GoldMoney rather than e-gold because of their better corporate governance. He opens an account with them, named G-WIDGET ACCOUNT, and provides them, unbeknown to her, with a copy of the passport of his Filipina maid. He locates an exchanger in nearby France and calls him on the phone. Although the exchanger doesn't normally take cash, he's a small businessman out to make a buck and sees now harm in doing so, given the profit potential of the situation Giles offers him. Giles therefore loads up 100,000 euros in his car, drives to meet the exchanger, and the transaction is carried out then and there. Giles watches as the exchanger transfers the GoldMoney to G-WIDGET, and then he logs in from his laptop as a double check. The transaction goes well and Giles makes a mental note to repeat this transaction soon and increase his holding in GoldMoney. Dealing with E-Currency Exchange Providers exchaning E-gold, GoldMoney..etc There are quite a number of exchangers which make it their business to get your money into and out of the digital gold systems. Most are small businesses and are not related to the companies managing the actual systems. Some of these outfits are better than others. If in doubt, check this list http://www.golddirectory.com/e-gold.htm – I can vouch for http://www.icegold.com/ and http://www.goldage.net/ since I use them regularly. The other issue to consider is that exchange providers are subject to different regulations in different countries. For example, those in the USA are treated as money transfer businesses and are required to obtain ID on clients for most transactions. Nonetheless, you might still want to use a US exchanger, though, if you are doing business in the US - obviously getting money to and from them in such a case would be quicker, cheaper, and more private than using a foreign exchanger. PTs know how to be creative and solve the ID problem. Some of the exchangers in other countries are prepared to conduct business anonymously but they will need to be reassured that you are not just another internet fraudster or hacker trying to launder your ill-gotten gains. We suggest you email several and only deal with those you seem comfortable with, who are on your wavelength. E-gold has spent nothing on advertising, but its account base is already larger than some Internet-only banks that lay out millions of dollars on marketing. e-gold is succeeding where other electronic payment initiatives are failing because it is designed specifically for worldwide eCommerce. All others merely add additional layers of liability to legacy systems. The promise of the Internet - elimination of barriers to the free and instant flow of information and value - is being fulfilled. Does the Gold Really Exist? This is an obvious question to which any prudent user requires an answer. Since you cannot physically see or touch the gold, how can you be sure it really exists? How can you be sure you are not just placing blind faith on someone's word? (as is the case for example when you pass US dollars around). But there is no general answer to this question digital gold as a whole. There are a number of competing digital gold systems and some are more secure than others. Before using them, it is important to carry out due diligence and satisfy yourself as to the authenticity of claims. Clearly the amount of time and effort you put into this will vary depending on whether you are depositing $100 or $1 million. What we really like to see is an independent, regularly updated third party audit by a trusted name such as a major accounting firm. At the moment, there is only one digital gold system which offers this: GoldMoney, which is audited by Deloitte and Touche. Additionally their gold is stored in the UK by a third party of international repute - the secure storage company ViaMat - who are able to confirm this. Therefore, we consider GoldMoney to be the best for long-term storage of value if that is your objective. E-Gold has published audits in the past but they are now out-of-date. Nonetheless, e-gold is a well-established system that our associates have been using for several years without any problem. On the internet reputation is everything because bad news travels very fast - and e-gold has developed an excellent reputation. Therefore we can cautiously but responsibly recommend it. Surveillance of Digital Gold Transactions At present Digital Gold is a relatively free economy, small enough to be unregulated. Because it is so international in scope, it would be very hard for any government to regulate. Most governments have no idea it even exists. There is no known reporting of transactions within Digital Gold systems. However at the time you are cashing in or out, your transactions do have to go through the regular banking system of some country or another, and there of course they could be monitored. We imagine that all systems will keep permanent records of the IP address (that of your internet provider) so anyone with access to those records will be able to ascertain exactly where the transaction was made from. We can also assume that they monitor the part of the world you are in. For example, if you have an address in the USA on file but the account is accessed from the Ukraine, that could be cause for further investigation. The other issue you need to be aware of is security. If a hacker or Big Brother has installed a malicious program such as a keyboard logger on your system, it would be possible for them to steal your passwords. But of course this risk applies to all forms of internet banking, not just to Digital Gold. It is therefore very important for users to maintain good levels of computer security (see the separate chapter on computer security). Blending In What is a typical transaction size? Most digital gold transactions will be relatively small, but low five figure dollar amounts are not unusual and should pass below the radar. Six or seven figure transactions (over $100,000) certainly happen quite often too, but they are probably big enough to stand out and maybe receive some extra attention. If you were seeking privacy, you would not want that unless you had a well-established account with a history of larger transactions.
