Investing in Gold

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Gold is like portfolio insurance

Investors who want to put their money into precious metals turn to cold more than any other metal. Gold is considered and excellent hedge against inflation and the vagaries of economic or political turmoil. Like other markets gold is subject to speculation, and it is common to purchase futures contracts and derivatives based on gold.

In September 2010 Joe Foster, a portfolio manager at the Van Eck International Gold Fund, explained why gold can be an excellent hedge against inflation:

“The currencies of all the major countries, including ours, are under severe pressure because of massive government deficits. The more money that is pumped into these economies – the printing of money basically – then the less valuable the currencies become.”

At a time when money made on bonds, equities and real estate does not properly compensate for risk and inflation, then investors turn to gold and other alternative types of investments in greater numbers. Some portfolio managers think of gold as a kind of “portfolio insurance.”

Experts Advise Caution as Housing Market Grows

With low mortgage rates and growing prices, the housing market is on the rise. Still, the U.S. economy has yet to truly stabilize, making it hard to guarantee the continuing growth of the real estate sector. Some experts are warning potential buyers to be aware of and prepare for potential shifts in the market.

Reuters discusses several key points made by Stan Humphries of Zillow.com:

 

New York’s New Medicaid Care System

New York is now working to alter the care system for nearly 1 million people on Medicaid through the federal health care reform called Health Homes.

According to the reform, patient care focuses on the case itself, and organized through a network which will include hospitals, mental health organizations, health plans, community-based institutions, addiction disorder providers and heatlh centers. A care manager will be elected to manage these numerous services.

According to Gov. Andrew Cuomo, it was no small feat for his staff to organize such a program in such little time. Agencies throughout the state have pooled resources to provide information and eduction to the public, as well as to health home applicants.

U.S. Economy on the Rise

Economists estimate that retail sales increased at a faster pace last month, while the U.S. housing market saw some improvement as the economy recovers.

According to the median forecast of economists surveyed by Bloomberg, purchases at retailers rose 0.8%, the highest in four months. May also saw a 0.6% climb. Household wealth and the labor market are both on the rise, leaving Americans less hesitant in their spending. Cars and trucks were purchased at the fastest rate since 2007.

Millan Mulraine of the U.S. rates research at TD Securities USA LLC explained: “The transition from a soft patch to a more sustained rebound is slowly beginning to take shape. The underlying tone of retail sales is encouraging. The positive momentum in housing will continue. Manufacturing has stabilized.”

Jenny Lin of Ford added, “Economic indicators continue to improve.” The “consumer spending growth pace is slowly picking up.”

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Experts Predict Increased Retail Sales in May

Economists believe that sales at U.S. retailers rose in May as the job market looks up and consumer confidence rises to boost automobile, home furnishing and clothing sales.

Experts predict a 0.4% rise, which would be the biggest in three months. April saw an increase of 0.1%, according to a forecast from a Bloomberg survey.

Gap Inc. and General Motors are two companies who have reported significant gains and hiring increases thanks to higher home and stock prices. Other brands who revealed May gains include L Brands Inc., Victoria’s Secret and Bath & Body Works.

Glenn Murphy, Gap chairman and CEO, said: “We are pleased with the positive customer response to summer product across our brands and the continued momentum in the business.”

Ted Wieseman, an economist at Morgan Stanley, explained: “Consumers are not feeling the need to pare back their spending to offset the impact of the tax increases, with confidence in the labor market rising and balance sheets improving.”

In April, payrolls rose by 149,000 workers, and last month saw another 175,000 enter the labor force.

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Asia’s Economic Growth: Spotlight on India

According to a recent poll from Reuters, it appears that economic growth in India has witnessed an escalation in the first quarter of 2013. This is particularly good news for the Asian region given that it has encountered quite a substantial low in the last quarter of 2012.  This report indicates that India could be on the upswing, moving away from its downward spiral.

However, there is still much work to be done vis-à-vis strengthening India’s economy.  Indeed, according to economist Kruti Shah, this recent statistic is “only a marginal improvement with much of the support from a slight recovery in the manufacturing sector and better trade data in this quarter compared to the previous quarter.”   However, given that there has been somewhat of a recovery in the country’s exports, factories and investments, this had a positive, noteworthy impact on the performance of the overall economy. There was a slight increase in capital goods output as well as exports which saw an escalation from levels during the same time period as 2012.

Economists and financial predictors must still be aware of India’s current account deficit that witnessed an all-time high in the last quarter of 2012 and still today remains under substantial pressure. But simultaneously, inflation dropped below 5 percent in April 2013, which puts it in the Central Bank’s comfort zone for the first time in over three years.

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DWP Employee Pay Rose 15% in Five Years

According to records released this week, average employee pay at the Los Angeles Department of Water and Power rose 15% over the past few years despite the national economic slump.

DWP workers generally receive more generous pay raises than other city workers. Household income for LA residents fell from $48,882 to $46,148 over a similar period. DWP pay rose from $88,299 to $101,237.

The LA Times explains that “DWP compensation has become a central issue in the May 21 mayoral election, in which there has been much debate over whether the city’s labor contracts are too costly given the fiscal problems that have resulted in major cuts in services.

“The union representing most of the DWP’s workers has become the single biggest source of campaign cash in the race, giving $1.45 million to an independent effort backing City Controller Wendy Greuel.

“The only pay growth comparable to the DWP came at the city Fire Department, where average total salary and other payments also rose 15% over the five years to $132,131. But officials note that about 300 positions were cut from the Fire Department in that period, which required increased overtime payments to fill positions.”

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Center for Discovery Annual Economic Impact Reaches $184M

A recent analysis reveals that the Center for Discovery is one of the biggest economic engines in the history of Sullivan County. Generating $134 million every year, the Center provides more than 1,400 employment opportunities in Sullivan County alone. In the state of New York, the Center’s total economic impact reaches $184 million annually.

Patrick Dollard, Center for Discovery President and CEO, said:

“The data confirms that The Center for Discovery is a major regional economic force, and while that is an important part of our story, it isn’t all of it. What is more telling is the work we do every day, and the role we have assumed as a national leader in developing innovative care for children and adults with severe disabilities and autism spectrum disorders. Our strong commitment to patient care, education and research makes us a model in our industry.”

The Center has proposed a new $20 million project to build a High-Risk Assessment Clinic in Harris. The clinic should add around 400 new jobs over the first few years.

Dr. Theresa Hamlin, Center Associate Executive Director, explained:

“The Assessment Clinic is the only project of its kind. We feel strongly that it will not only be a game-changer for New York but for the entire world.”

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What is a Hedge Fund?

Since many individuals new to the world of investing are confused about the various terms used in this industry, here as an article that broaches the question, what is a hedge fund? In layman’s terms, a hedge fund is an investment partnership established by a money manager.  A hedge fund can be a limited liability company or a limited partnership.  Thus if the company falls into bankruptcy the creditors are not able to ask the investors for more money than they have deposited into the hedge fund. In addition, hedge fund investments are illiquid as investors generally are forced to keep their funds in for at least a year, often more.

Hedge fund managers are paid a percentage of the profits they earn on the money the investor has deposited to his/her company. When hedge funds first started out, they were seeking to turn a profit irrespective of if the market went up or down since the managers were able to either buy stocks or short them (make money when a stock plummets).  Later on, “hedge fund” became a generic term.

Going a little deeper to answer the question, what is a hedge fund, one finds that it is a group of investments that is managed utilizing advanced investment strategies.  Such hedge fund strategies include: short, long and leveraged derivative positions in domestic and international markets in an attempt to get high returns.

Furthermore, the term “hedging” is used to describe what happens when hedge fund managers try to reduce risk. In general though, this is not a common hedge fund strategy since most managers are actually seeking to maximize return on the investment.

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