Gold: Uses and Demand

From the Visual Capitalist.

Gold: Mining and Supply

From the Visual Capitalist.

Gold: The History of Gold Infographic

From the Visual Capitalist.

Lottery winner may not keep wealth

Mega Millions Lottery Could Make You More Likely To Go Bankrupt

(Link here)

Strange but true: an extra-big lottery prize means you've got an extra-big chance of going bankrupt.

That's the implication of a paper published in 2010 by researchers at Vanderbilt University, the University of Kentucky and the University of Pittsburgh. The authors looked at lottery winners as separated into two groups: those who won sizable cash prizes (between $50,000 and $150,000) and those who won more modest prizes of $10,000 or less. They found that five years after the fact, the big winners were the ones more likely to have filed for bankruptcy.

We're bringing this up today, of course, because America went crazy for lottery tickets this week, buying up so many entries in the Mega Millions drawing that the jackpot soared to a record-smashing $640 million. That number could get higher still: if a winner isn't picked Friday night, according to The Boston Globe, the pot will climb toan estimated $975 million.

It's tempting stuff -- especially at a moment when half of all Americans earn less than $27,000 a year, and more and more people can't afford the basics. But this paper -- plus a wealth of additional evidence, anecdotal and otherwise -- suggests that winning the lottery may not be the best thing that could happen to you.

The researchers, led by Mark Hoekstra of the University of Pittsburgh, found that five years down the line, there were almost no meaningful differences between the big lottery winners and the small. The two groups had comparable assets and debts. But there was one big distinction -- the big winners were more likely to have gone bankrupt, for the simple reason that, as the authors put it, they had "consumed their winnings."

The study notes that the researchers controlled for the financial health of the lottery winners -- meaning that before they actually won, the big winners were no more or less likely to file for bankruptcy than the small winners were. So the risk of bankruptcy seems to have been directly linked to the size of the prize.

Obviously, $150,000 is a sum on a totally different scale from $640 million -- or even$324 million, after taxes. So whoever takes home the Mega Millions cash may not have exactly the same experience as the people in the study.
Still, recent history is thick with examples of people who struck gold in the lottery and saw their lives take a sharp turn for the worse. Business Insider has a collection of numerous grim cases, including people who lost their money to gambling or drug addiction, and one Pennsylvania man whose brother tried to have him killed in the hopes of inheriting a share of the cash. And Jen Doll at the Atlantic Wire offers an even more comprehensive primer, including people whose lottery wins prefaced social ostracization, destitution, suicide and other tragic outcomes.

Lottery Wealth

Any amount below $5000, you can claim in cash at any Singapore Pools outlet.
Singapore pools will pay you in cheque for any winnings above $5000.

Singapore Pools: Claim Prizes - Claiming your Prize

When is the prize claim expiry date? All Lottery and Sports Bets winning tickets should be claimed within 180 days from the date of the draw or event closure (including weekends and public holidays). Click here for prize claim expiry dates for Toto, 4D and Singapore Sweep draws.

Where to claim your prize?

Prize Amount Where to Claim Up to $5,000 per winning ticket Cash payment at any Singapore Pools outlet during sales hours. Above $5,000 per winning ticket Cheque payment at Singapore Pools Main Branch located at 1 Selegie Road, #01-01 PoMo, Singapore 188306  Monday to Friday, 8.00am to 4.30pm (excluding Public Holidays). Please furnish a photo-identification document that is identical to your bank's record to facilitate the issuing of cheque.

All winnings are NOT taxable.

IRAS: Winnings (Toto, 4D...)

Winnings from betting such as 4D, toto, football, Singapore sweep, horse racing, fruit machine (jackpot) winnings and etc. in Singapore, are not taxable as they are windfalls and not of income nature.

How to report

You do not need to declare winnings since they are not taxable.

Gold & Silver as Haven

From Silver Coin Investor's article on how precious metals can be a safe haven....
Article below

How Gold and Silver Provide a Safe Haven in Today's Troubled World

The reasons for holding precious metals as a relatively safe haven for one’s personal wealth are numerous.

One common investing thesis for buying precious metals is that these intrinsically valuable commodities can hold their value in times of rising price levels. This characteristic can help American savers keep pace with credit expansion and paper currency debasement.

Diversify Out of the Dollar

For example, precious metals can provide a safe haven in terms of the diversification they offer relative to holding U.S. Dollars in cash or Dollar-denominated assets.

Physical gold and silver investments can take up a core position in an investment portfolio since they offer an easy way to have some wealth stashed out of Dollar-denominated assets. These hard assets also provide a viable alternative to holding foreign currencies or foreign equities.

Basically, precious metals allow investors to engage in a new way of thinking, where investment priorities are anchored to real value and permit advance planning for troubled times.

When the Dollar Bubble Bursts

In much the same way that market bubbles have been blown in various asset classes over the last 40 years, largely via Fed sanctioned interest rate manipulation, the overvalued U.S. Dollar seems like yet another bubble waiting to burst.

Basically, the value of silver has been artificially deflated in U.S. Dollar terms via price control implemented using contracts traded at global futures exchanges. The symbolic investigation of this so-called conspiracy by the CFTC just passed its fourth year.

Underpriced assets like silver will eventually lead the way back to what will very likely be the largest bubble the world has ever seen. The U.S. Dollar and the U.S. bond market appear destined for a long overdue crash.

Various factors point to this outcome. They include such things as: intrinsically worthless paper wealth, high frequency trading, a world where MF Globals can exist, the threat of taxation, and rampant money printing — otherwise known as Quantitative Easing.

Competing With the Banks for Credit

Major international banks have benefited disproportionately compared to the individual investor from credit expansion in recent years. Banks enjoy better profits from cheap money and can buy future cash flows very inexpensively.

Meanwhile, consumer credit has contracted leaving consumers holding the bag in many cases. People are also unable to consume as much because of a rise in general price levels and the failure of the troubled financial system to purge itself of bad debt.

If at any point the American consumer and banks are equalized with additional credit infusions, the tide will then begin to turn. Consumers can then free up more discretionary income as America goes back to work.

Nevertheless, until the two groups are made equal, credit will neither expand nor contract. Instead, credit supplies will stay constant, although prices will continue to rise relative to consumer incomes.

Precious metals provide a safe haven investment that can often help compensate an investor for such price rises. Furthermore, if at any point the system balances and allows for credit expansion to extend to Main Street, then precious metals investors will typically benefit.

Growing Gold

I found this interesting article recently.

One of the reason why Gold is valuable because it is rare.
If the production costs of producing gold element drops, there goes gold pricing.

Fortunately (or unfortunately) the costs of "growing" such gold is still..... too high.

___________________________________

Researchers at Michigan State University have discovered bacteria with the remarkable ability to turn toxic chemical compounds into 24-karat gold.

The breakthrough, detailed in a combination art and biotechnology exhibition called "The Great Work of the Metal Lover," is described by researcher Adam Brown as modern day "neo-alchemy."

Here's what you should know:

What is this bacteria, exactly?
The microbe, Cupriavidus metallidurans, possesses the unique ability to survive in extremely toxic environments. A few years ago, researchers discovered the bacteria growing on gold nuggets at two separate sites hundreds of miles apart in Australia. That got scientists thinking: Does this bacteria just happen to live in the vicinity of gold, or do they actually create gold?

Well... do these bacteria actually turn chemicals into gold?
Yes. Kazem Kashefi, assistant professor of microbiology and molecular genetics, and Adam Brown, associate professor of electronic art and intermedia, discovered that C. metallidurans could grow and prosper if placed on gold chloride, an otherwise worthless yet toxic chemical. Using a portable laboratory made out of the bacteria, a glass bioreactor, and 24-karate gold-plated hardware, the team continually fed the bacterium "unprecedented amounts of gold chloride," says R&D Mag. Not only were the bacteria extraordinarily resistant to gold chloride's toxicity, but in about a week, they converted the toxic chemical into 99.9 percent pure gold. The details are a bit complicated, says Jesus Diaz at Gizmodo, but basically, "Cupriavidus metallidurans can eat toxins and poop out gold nuggets."

What does this mean for gold production?
Although the Michigan State University experiment was successful, it could be "cost prohibitive to reproduce [this] experiment on a larger scale," says R&D Mag. So don't expect to grow your own gold at home anytime soon.

Read more: http://theweek.com/article/index/234341/the-bacteria-that-turns-toxic-chemicals-into-pure-gold#ixzz29iqJJz9m

Current FD deposits in Singapore

Some readers have email me (cedricsoh@gmail.com) on fixed deposits enquires.

I used to have fixed deposits in my youth as I simply do not know how to indulge in stock market trading. (Plus my capital was rather pitiful)

Nowadays I do not advocate fixed deposit due to the low interest rate climate. In fact, you are losing money with inflation rate higher than the current interest rate. Still it is good to keep a small sum of money in case of emergency.

Of course, for investors who are waiting for a good time to enter the property market / or stock market (ie, they are waiting for markets to crash), cash is still king.

Here are some of the latest Fixed Deposits offer in Singapore.
Usually Standard Chartered, Maybank and UOB fights pretty hard for FD savers.


Standard Chartered Bank's Step Up Time Deposits.
The longer you leave the money there, the higher the interests rate will.... Step Up.
Step Up offers are good as it offers you liquidity, you do not have to worry about losing interests forgone if you take out the cash for some investment buys at some unanticipated time later. You still get interest, though at a lower rate.
If you do not need the cash, it will just gather higher interest rate.

From ANZ, we have "Step-Up Time Deposit"
Interest rate is up to 1.6% pa if you deposit it for at least 10 months, making it an effective interest rate of 1.09% for SGD $150,000 and above.
Or an effective rate of 0.90% for below that amount.

UOB is offering 1% for a 7-months deposit, for October UOB promotion.

Maybank offering 0.9% pa for 6 month deposits for October promotion, it seems like a direct challenger to ANZ's Step up Time Deposit. Of course, if you can wait one more month for a 7mth deposit, I would say go for the UOB plans above.

A History of Exchange Rates Regime.

How did the Classic Gold Standard evolves to the current system.

Below is a large picture file with graphics and explanation of the history of the Exchange Rate regime.

A nice read on how we evolved from the classic gold standard to our current regime.

Yes, I've left the picture file in its orginal size, its pretty huge, but the size makes it easier to read.

Just right click to open in a new windows/tab if you are bothered by the alignment with the side column. =D

Honestly, I think economics and currencies is a very interesting study. With the large size of the global economy and the complexities of global trade, I doubt we would ever return to the gold standard, but I am keeping some investment-grade gold to counter inflation. (Thanks to QE3, Uncle Sam)

Investing in Gold / Precious metals - Paper gold

To own gold, silver, or other precious metals in Singapore as a form of savings or investment, one can either buy

1) certificates (or paper gold)
2) ETF or trading in companies that mine or deals with precious metals. (technically you do not own the gold or metal itself, but movement in the companies would be linked with spot prices)
3) Physical ownership of the precious metal

In this post, we will talk about ownership of paper certificates of precious metals.
This is actually the more common and usual way of owning precious metals.
For example, you buy a certificate from dealers that states that you have a specific amount of gold. The real physical gold is actually not delivered to you. It is a promise.

When the spot prices of gold rises and you sell the certificate to another dealer, you will get the value of the gold. It is "as good" as owning the physical gold itself.

However, the gold certificate is backed up only by the financial institutes that issues the certificate. In other words, it is as good as the "promise" of the bank.
After Lehman Brothers, your trust in the financial system is as good as mine.

In fact, here is a good link to understand paper gold vs physical gold.
If you are lazy to read, basically

It has been said that as much as 99x as much “paper” or digital gold is bought on commodities exchanges such as COMEX, as there is traded in actual delivery of physical gold.

There are 100 times trading in paper gold, than the amount of physical gold in existent. Personally, I have no problem with that, as this is how modern financial system works. A bank owning $1 in deposit can create $100 of loan amount.
However, there are many who are uneasy with the large ratio and prefer to own physical gold. A quick google check will turn up many sceptics of the trading system.


Do note that this is the easiest and quicker way to trade in precious gold, especially when you are dealing with large quantities. Imaging the security and risk of hauling a 10 kg gold bar back home and keeping it secured at home. =D
(though I would love the challenge)

In Singapore, the easiest way to buy these paper gold or silver is via opening an UOB Gold Saving Account and/or Silver Account.

In owning these gold/silver Saving Account, UOB does not back your saving accounts with real physical precious metals. They just back it up with a promise. It depends on the bank's financial strength and reputation.

This girl does not work at UOB Bank.

Courts Asia IPO

The Wealth Ninja advocates a healthy diverse mix of assets in your financial portfolio.

A good mix of real estate (unfortunately, a little distant for a single male in Singapore), stocks, bonds, hard and soft commodities ...

Shares are one of the good, and easy way to own productive assets, as lots of shares are not that expensive.

I am an extremely novice in shares, so I would not provide any insight.

I would only share my own experience in IPO.

IPO are usually exciting and there are large amount of information (or noise) in the mass media, so one can easily do piecemeal research. Also, IPO of a fixed price can be easily purchased by participarting banks' ATM network or internet banking which is easy and convenient.

The latest IPO that caught my attention is Courts Asia Limited, at $0.77 per share, deadline at 12noon on 11th October.

Basically in a nutshell... 

Shares at $0.77, the PER (Price Earning Ratio) is at 10.95, a reasonable average figure for retail, and a dividend is predicted to be around 2.x%.

Pro factors

1) Court has a good market dominance of 9.8% in Singapore and 7% share in Malaysia

2) Courts' sales has grown from $580m to $724m in 2012 with an improvement in net profit from $18m to $39m.

3) The CEO and CFO has collectively subscribed to about 14.285million shares, which is a big vote of confidence in their company. Also, the CEO, CFO and the COO are with Courts for the past 15 years, another thumbs-up to the management.

4) The cornerstone investors, JF Asset Management, New Silk Road Investment, Target Asset Management and Value Partners are reputable and widely regarded as long term investors.

5) Courts intend to use the proceeds to expand in Indonesia. Given the large expanding market in Indonesia, this offers a good long term growth plan.

Con factors

1) Courts' parents company, Singapore Retail Group (SRG) is using the IPO as an exit strategy to reduce its stake in Courts. This IPO is the 4th attempted by SRG, which seems to have little confidence in Courts' future growth.

SRG will gets $86.2m from the IPO while Courts Asia gets only $43.8m.

2) Courts previous attempts in Indonesia lost money. With this IPO, the intention of their first Indonesia store is only in 2014, a good 2 years away.

3) Market saturation in Singapore and Malaysia for furniture and electronic retailer.

Despite the big con (parents company exiting Courts), which is a negative vote in the future growth of 

Courts, I will apply for the IPO (only 5 lots) to start off my dividend portfolio. I do believe that the Indonesia growth can be a good strategy as Indonesia is a large market, and Courts' ability to provide in-house credit is a big advantage to its business strategy in wooing the lower income families.

I have done my simple homework, and hope this would be a good start.

Wealth Ninja's first Gold Bar.

In times of inflationary pressure, gold and other precious metals serve as a good hedge.

With the USA doing the third round of quanlitative easing, aka QE3, otherwise known as, print tons of money, our cash in hand tend to lose their purchasing value.

Your hot pipping cup of coffee that sells for $1 a year ago is now selling at $1.20.
Is your coffee harder to grow now?

It is actually not coffee beans becoming more valuable. It is that your cold-hard cash is becoming less valuable. That's inflation.


Gold, silver, and other precious metals may help in preserving your savings and assets.
Personally I do not recommend buying gold as it does not generate passive income, after all, gold on its own does is non-productive. Property provides rental income, stocks provide dividends.

However, I do realise that it can be a proper saving tool that beats inflation.
Plus there is a human tendency to admire shiny objects... =)

Hence I bought my first gold bar from a nice and helpful member, "chef" from GoldClubAsia, an online forum that shares tips on precious metals.

The Wealth Ninja's first gold bar in his wealth profile.

The choice of this PAMP gold bar is not just to satisfy the value of holding a BULLION bar, there is numismatic value in this design as well. Personally I like the lunar calendar collection and what better numismatic value than a mighty dragon holding on to a gold pillar? =D

Bullion and numismatic values are something new that I have learnt recently to buy precious metals. In the next few few days, I will write more on bullion and numismatic values and arguments FOR and AGAINST holding gold in your portfolio.

The Wealth Ninja Path

Building wealth should be like a Ninja.

Stealth. Efficient. Swift.

Well, "sexy" would be good too.


Building wealth is not a walk-in-the-park, but neither is it difficult.
It can be as easy as buying simple small gold / silver/ precious assets, or buying blue-chips stocks.
What the wealth ninja would do is to recommend small simple steps to slow build up wealth.

What I am against is many of the get-rich-schemes around. Those are schemes designed to make the founder rich... NOT you.
In Singapore, there are countless of schemes where many get burned by get-rich-quick schemes, from Profitable Plots land-banking scam, to the recent Genneve Gold scam, with a high chance that "The Gold Guarantee" and "Asia Pacifc Bullion" be the next few scams....

Let us be our own wealth ninjas. I will be starting my path soon, with a small sum of capital, and slowly building up a wealth.

I will share my steps, and I do hope all readers will participate and discuss and share with me much wealth and business ideas.

Sincerely
The Wealth Ninja.

well... not exactly the kind of ninja I was conjuring up...