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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER
Your Link to Freedom, Privacy & Prosperity in the Offshore World
Monday, September 27, 2004 - Vol. 6 No. 184
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In This Issue:
* COMMENT: Gold! Has it Regained its Glitter?
* OFFSHORE: Corporate Tax Issue. Gibraltar Talks. Jersey Banks Help. Swiss Politics Gets Rough. Russian Dictator Putin's Sweet Words.
* WEALTH: FATF Costs Millions. Bahamas Laws. Hedge Fund Blues.
* PRIVACY & RIGHTS: EU Split. U.K. Extraditions, U.K. Tax Laws.
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Today's comment is by Mark Nestmann, editor of The Sovereign Society members' monthly newsletter, The Sovereign Individual.
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COMMENT: Gold! Has it Regained its Glitter?
Dear A-Letter Reader:
Since the first of September, gold prices have increased about US$10 an ounce. That's not a huge move, but it's enough to drive up sharply the price of gold shares and especially call options on gold.
Gold is, of course, the world's oldest currency and the only financial asset not backed up by someone else's liability. It's that character- istic of gold that has led us to recommend Sovereign Society members accumulate physical gold on a long-term basis. And that recommendation has paid off; since we first recommended gold bullion in November 1999, prices have climbed nearly 40% in U.S. dollar terms. Gold shares have done even better; the widely followed 'Gold Bugs Index' is up 183% in the same period.
However, gold price movements are notoriously choppy. Just in the last year, gold prices have ranged from US$372 to US$430 per ounce. While this choppiness has given our members the opportunity to add to their permanent gold holdings at lower prices, it's also given traders opportunity to make even larger profits, and in short periods of time.
To learn more about how this is done, I turned to Scott Barrie, co- editor of a new weekly investment service called the 'Money Trader.' Scott, a former trader at the Chicago Board of Trade, is also president of Commodity Futures and Equity Analytics, author of trading 'Almanacs' used by professional traders, and a consultant to institutions investing in bonds and commodities markets.
Three weeks ago, Scott recommended to Money Trader readers that they buy gold calls; options that are a bet that gold prices will increase. Since then the value of these options has soared including 59% in the first week after his recommendation.
Why did Scott recommend gold options in September? Here's his answer: * First, the weakening dollar makes gold a more attractive investment for foreign purchasers, because gold is priced in terms of dollars on the global market, therefore if the dollar declines, the price these foreign purchasers pay declines, helping to boost demand.
* Secondly, if Fed Chairman Greenspan's comments earlier this month are taken to heart, the US economy is regaining traction and the threat of inflation is real -- despite the fact that it can't be seen yet in the official statistics. Though many people 'hoard' gold as an investment, gold is also an industrial metal. A stronger economy should see an increase in the demand for gold, as gold is used in a variety of industrial purposes including electronics, chemical processes, as well as jewelry. The 'hoarding' or investment demand for gold may also get a boost from Chairman Greenspan's comments as well.
* Finally, gold tends to rally during September. Jewelry fabrication is the crucial cornerstone of demand for the yellow metal. Most jewelry stores report their largest sales of jewelry during the Christmas season. Anticipating orders from retail jewelers, jewelry fabricators begin buying bullion in September, to prepare for the holiday. This surge in demand has supported prices in the past. In 14 of the last 15 years, December gold futures have rallied from the 5th trading day of September through to the last trading day of September.
For those investors who already purchased the gold calls he recommended a few weeks ago, Scott's now suggesting a transaction in Money Trader that recoups all but US$100 of their cost. He's projecting this trade could result in a US$1400 profit for each US$100 risked by December.
Options aren't for everyone. And they shouldn't take the place of a long term gold accumulation plan. But in the hands of a master like Scott, they can provide a valuable boost to the performance of your portfolio.
Mark Nestmann
Vienna, Austria
E-mail: assetpro@nestmann.com
Web site: http://www.nestmann.com/
PS: Find out more about Scott's analysis and trading strategies,
click here. LINK: http://www.agora-inc.com/reports/MTR/WMTRE900/
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COMMENT LINKS:
* Gold Bug Index. LINK: http://finance.yahoo.com/q?s=^HUI.
* Mary Anne & Pamela Aden forecast gold rise.
LINK: http://www.howestreet.com/story.php?ArticleId=668
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* OFFSHORE *
OFFSHORE CORPORATE TAX HAVENS AT ISSUE
US tax reform must address laws that drive business offshore. LINK:
http://www.sptimes.com/2004/09/25/Columns/For_next_president__t.shtml
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GIBRALTAR CONSTITUTIONAL TALKS
Future of The Rock is at issue in London talks.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17389
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JERSEY HELPS HARD HIT CAYMANS
ST PETER PORT: Hurricane hit banks aided by local colleagues. LINK:
http://www.thisisguernsey.com/code/shownewsarticle.pl?ArticleID=011954
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SWISS 'CONSENSUS POLITICS' BADLY BRUISED
ZURICH: Other parties attack conservative Swiss Peoples Party. LINK:
http://www.swissinfo.org/sen/swissinfo.html?siteSect=111&sid=5236047
* Swiss vote Sunday on citizenship rules. LINK:
http://www.usatoday.com/news/world/2004-09-25-swiss-votes_x.htm
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AFTER HIS PROPOSED TAKE OVER, PUTIN'S SWEET WORDS
MOSCOW: Putin vows to maintain democracy. Oh yeah?
LINK: http://news.bbc.co.uk/2/hi/europe/3686176.stm
* Putin's disturbing revival of historic Russian autocratic rule.
LINK: http://www.cato.org/dailys/09-24-04.html
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* WEALTH *
F.A.T.F. RULES COST MILLIONS
Fighting Money laundering becomes billion dollar game. LINK:
http://www.washingtontimes.com/commentary/20040922-091143-1836r.htm
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BAHAMAS PLANS MORE FINANCIAL LAW REVISIONS
NASSAU: Six new laws in place, more planned. LINK:
http://www.thenassauguardian.com/business/283462933843947.php
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HEDGE FUNDS SEEK NEW MONEY
LONDON: Falling profits, fewer opportunities. LINKS:
http://www.boston.com/business/articles/2004/09/25/hedge_funds_ponder_new_ways_to_make_money/
* Best days may be over for hedge funds.
http://www.money.telegraph.co.uk/money/main.jhtml?xml=/money/2004/09/25/cmhedge25.xml
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* PRIVACY & RIGHTS *
EU COULD 'SPLIT' OVER CONSTITUTION
A divided 'union' may disintegrate. LINK:
http://www.economist.com/world/europe/displayStory.cfm?story_id=3194381
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U.S. SEEKS EXTRADITION OF U.K. BANKERS
LONDON: Enron's Cayman Island partnerships at issue.
LINK: http://news.bbc.co.uk/2/hi/business/3658664.stm
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BRITISH LAWYERS IGNORE NEW TAX RULES
LONDON: Contend new tax rules violate client confidentiality.
LINK: http://www.tax-news.com/asp/story/story.asp?storyname=17391
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THE SOVEREIGN SOCIETY OFFSHORE A-LETTER.
* Bob Bauman, Editor * Daniel Aponte, Jr. Editorial Asst.
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