Global Investing Editor

What Is Hurting Gold?

I think gold has a place in every portfolio as an inflation hedge. it is just that for the moment, worldwide, inflation is not a major threat. Long-term it may be an issue if the managers of our financial system screw up.

The governments are printing money which sounds like it would trigger price increases, wage increases, and inflation. But because of the amount of deflation going on, because of the savings boost, because of global slowdown, inflation is, for now, de-fanged.

For a forecast on the price of gold made months ago, you may want to buy my report at:
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Author Guide to the Latest Seeking Alpha Website Updates (Useful for Readers Too)

Congrats to Boaz on his new baby! all the best wishes to the new-born and the mother. Of course I am desperate to know if it a little boy or a little girl, but Boaz did not say.
Vivian Lewis

Coming Soon: Banking Crisis of Historic Proportions

given where I am coming from, as editor of global-investing.comI am astonished at comments about how the failure of U.S. banks is the fault of free trade. US banks got into trouble by making bad loans either directly to the eventual borrower, or more likely, by purchase of cruddy blocks of loans created by Wall St.

The import of foreign goods had nothing to do with this except indirectly by leading to there being too much money available to the banking sector until 2007. Bernanke's excess savings from China is what I mean. Also excess savings in other export areas like the Middle EAst.

The bailouts are federal not state, and the fact that Colonial was in so many places is one reason why. Alabama was not enough. The other is that the FDIC was created in the 1930s by the New Deal to prevent US retail depositors from being wiped out by the failure of the banks which held their money. I cannot imagine anyone so fiercely capitalistic as to want to punish depositors for the stupid loans banks made. Or who wants there to be no safety net for depositors, no FDIC, no Fed, no natioanl currency, no regulators, no government. But these websites seem to attract some weird folks.

What I was trying to say, and I admit it was on the fly, was that because failed banks are usually sold to other banks, the result is to create ever more banks too big to fail. Consolidation with Colonial and other failures has made BB&T a regional superbank. It has to be protected like Citigroup. As a shareholder of BBT I am glad it is protected; as a taxpayer I worry about the impact of further bank disasters.

Who pays for these bank collapses? ultimately everyone with a bank account, because the FDIC has to tax all savings accounts to build up its kitty. That is not a tax as such but indirectly it is one.

Back to Saigon: Vietnam ETF

From Cambridge MA fund flow trackers EPFR Global report: “China’s resilient growth has been a key driver of flows into emerging markets equity funds in recent months. During the third week of August, however, doubts about the quality of the loans doled out at breakneck speed by Chinese banks during 1H09 prompted investors to book profits and take some of their recent gains off the table. EPFR Global-tracked China Equity Funds had their worst week since early 1Q08 while outflows from Asia ex-Japan and Global Emerging Markets (GEM) Equity Funds hit 24 week and year-to-date highs respectively.”

While we have lightened up on China as its local markets fell 20%, as we reported yesterday, this is a buy opportunity. Shanghai is a very immature rumor-driven exchange and the pattern of panic selling followed by a new boost can be spotted again and again.


My Vietnam commentary (linked to the creation of an new U.S. ETF) has got a lot of play, so I follow up. Here are items about other ways to invest in Nam from readers in MD, NY and FL.

*"VCVOF, VinaCapital Opportunity Fund, seems to be a good Vietnam Fund. As you described, I bought my first shares far too high and got crunched last year. Fortunately, I doubled up not far from the bottom. They are managed out of London but also have managers in Viet Nam. As the above symbol indicates, I bought them instantly through Fidelity. They also have a Viet Nam Infrastructure Fund that interests me a lot because it sells below NAV. However Fido had to get that one for me in London."

*Cavico Corp., one of the largest infrastructure and natural resources companies in Vietnam announced a reverse stock split to position the company to apply for a listing on the Nasdaq exchange. Cavico could become the first Vietnam based company to be listed on a major U.S market. Timothy Pham, a Vice President and Director of Cavico (and an American) is boosting infrastructure development in Vietnam as the company will soon begin building a 30 megawatt (MW) wind power plant.

*Further material on offshore funds investing in Vietnam from Compagnie Financière Edmond de Rothschild is provided thanks to yet another reader, but if you cannot afford a subscription you should not be investing in 'Nam, and particularly not with a posh Rothschild bank, source of our oldest and most successful investment of all.

I have to apologize to the Closed-End Fund Association because their CEFA.COM website was down, but it is now back on line. I feared it had disappeared. There is therefore current information on closed-end funds (CEFs) from the U.S. and Canada showing pricesa nd net asset value of the funds. This is useful information for investing even if you do not delude yourself into thinking the discounts will disappear.

CEFs issue a fixed number of shares which are priced by the stock market depending on how attractive they seem to be. They therefore can (and often do) fall to discounts below the net asset value of the portfolios they own. This is a prime example of how prices on exchange do not reflect all known information, and it shows that markets are irrational.

What Is Hurting Gold?

Oy. what venom when you tell people that the price of gold is being held back by economic reality rather than a dark conspiracy by central banks and, for some reason, JP Morgan. (Isn't that supposed to be Goldman Sachs, the bank everyone loves to hate?)

I think I will not take on the Gold Bugs again. For the record, I am not a 6th grader. I am not a bimbo either. I am a grandmother 5 times over. My parents both died of old age in their 80s, 20 and 10 years ago.

Back to Saigon: Vietnam ETF

unlike the mad hedge fund guy, for a site where China offshores, I prefer Thailand to Vietnam, because (surprisingly) the stock market is well regulated. remember that our GIs also discovered the joys of Bangkok R&R during the Vietnam War.
moreover its political crisis is easier for me to understand. from an investing perspective both sides are okay, unlike VN where the other guys are reds.

Thai companies are well covered by Paul Renaud who writes for us. So I do not have to buy a mindless mechanical ETF and can buy real shares as my fancy falls.

if you want 'Nam you are better off with a closed-end fund because it will not be just tracking a pretty ephemeral index, esp. if you can get it at a discount from Net Asset Value. They are all offshore and wild.

as for the question about where the bargains are in Closed-end funds I am at a disadvantage right now, Joe, because I am in London on business and family business. Here I cannot buy Barron's. And the Closed-end Fund Assn. has ended provision of net asset values on its website (WHY?) as of July 31. so I cannot get current data on US and Canada CEFs until I am back Stateside.

while you should not buy closed-end funds because of the discount disappearing (it won't) it helps your money go further if you get a dollar's worth of assets for 85 or 90 cents. You get the return and the gains for the full buck. This is really insane. Markets price irrationally.

Coming Soon: Banking Crisis of Historic Proportions

As a shareholder in BB&T which picked up the pieces in Colonial Bank last Friday with the FDIC; but the State of Alabama was nowhere in the deal, despit what the writer wrote, I think we are in quandary between laudable goals: saving depositors' their deposits which is a national obligation; and saving banks which is not. BBT bought the Colonial accounts in a sharing deal with the FDIC which makes BBT too big to fail. We are creating more and more oligarchic banks which are too big to fail in order to save depositors. which will win? as a BBT shareholder natch I am glad it is now too big to fail. but as a taxpayer I am not so sure

Solar Eclipse

I said the same thing. but in myown words. vivian


On Jul 22 08:35 AM Henry Weingarten wrote:

> 1. TOTAL SOLAR ECLIPSE July 22, 2009
> Stocks rose around the world and bonds initially fueled by the fanciful
> speculation that the spectacular earnings from Goldman Sachs Group
> suggest that the worst of the financial crisis is over.
> Reality: The worst MAY be over for GS but not for Main Street!<br/>
>
> Coming up this week is the longest total solar eclipse of the 21st
> century. This corresponds with Ben Speaking and the dissolving of
> the Japanese lower house of parliament, both potentially market moving
> events. Astrological students will note the visual path of this eclipse
> runs over China and India. It is China that we believe will surprise
> on the downside those who believe China will lead the world out of
> recession. Not this time. Do not delay booking your profits here
> before it is too late!
>
> PS If your investing mandate actions require more justification than
> sound astrological advice, please read the following article from
> the current issue of Institutional Investor:
> China Recovery Doesn’t Add Up

Blogs, Profanity and Editorial Integrity

about profanity. IMO as an older female financial journalist and a grandmother of (at last count) 5 children under the age of 8, three of whom know how to read, bad words are useless and not persuasive. they do nothing to improve financial and stock analysis.

Irrelevent profanity is simply something you don't want your grandchildren to learn from you or from your fellow-contributors. Reading the Madoff piece which Mr. Weinstein left alone, I truly do not think it gained any impact or authority by the repeated and silly use of one piece of very bad language. The author had something to say and he or she should have been asked to clean the piece up for publication. That has little to do with free speech and plenty to do with publishing standards which should apply even on the Internet

Israel Chemicals: Dramatically Underpriced

that was a forward projection by citigroup, not a current yield figure. vivian

On Nov 26 10:35 AM hkrsk wrote:

> Reuters shows the Tel Aviv listed stock (ICL.TA) as paying a 3.82%
> yield, and I can't find verification of any yield at all on the PK
> shares. Where can I verify that the yield is 15.4-17.5%?

Top Global Dividend Stocks

the real danger with this kind of list is that it ignores the fact that in the present climate dividends are omitted or cut.