Notes on Gold’s Commitment of Traders Report

traderdannorcini.blogspot.com / By Dan Norcini / 

A brief summary – All classes of speculators, hedge funds, other large reportables, and the general public, were net sellers of gold this past reporting period.
The other side of the equation, the buying, was done by the commercial category (bullion banks, etc,) and the swap dealers. The swap dealers, in particular, are a very good group of traders since they trade not only for clients and for the purpose of hedging, but can also speculate for their own interests.
I should note here that both of the latter categories, remain net short overall but continue to consistently reduce that position as they cover existing shorts and institute fresh long positions.
The small specs, the general public, are now showing the smallest net long position on record from this report which dates back to the beginning of 2006. In going back even further to 1999, they still have the smallest net long position that they have held in over a decade. That is quite remarkable!
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Bonds 101: Yields, Prices, And Inflation

We recently showed 220 years of US Treasury bond yield history but all too often, the average investor is unfortunately unaware of the relationship between bond yields (interesting on a relative-value perspective) and bond prices (the thing that matters for your portfolio’s returns). The two measures are inextricably linked obviously (a higher yield implies a lower price and vice versa) but the relationship is not a straight line – it has ‘convexity’. The following charts may help understand the upside-downside changes from ‘yield’ movements, what the Fed is doing to the relationship, and how inflation expectations impact these changes.
Via Goldman Sachs:
Bonds are loans that investors make to governments, municipalities or companies, which typically pay the investors a fixed rate of interest until the bonds mature and the loans are repaid.
The most well-known US government bond is the 10-year US Treasury bond, which matures ten years from the issue date. Right now, investors can purchase a bond for $100 with a yield of about 1.7%, or about $1.70 per year – almost nothing! But there is a bond market that moves daily, so the price of bonds will move depending on interest rates and the economy.

Although investors can simply hold the bond they purchased until maturity and be paid back what they spent in full (plus the interest they’ve received), they can also sell the bond before maturity. What they get back, however, will depend on interest rates at the time that they sell. If interest rates have risen, then it will be harder to sell their lower-yielding bond, and they will have to sell it for less than they paid for it. If interest rates have declined, then other investors will want to own the bond, and the seller can charge more than they paid for it. So bond holders don’t fare well when interest rates rise.  (more)

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How to Set Up a Trust Fund for Your Child

Establishing a trust fund is one way to transfer assets between generations. With the right type of trust, you can distribute assets to your child both before and after you die, without subjecting your child to the expenses and delays of the probate process. Depending on how you set it up, you may also enjoy significant tax benefits.

Parties

The creation of a trust requires at least three parties -- the grantor, the trustee and the beneficiary. If you own trust assets jointly with your spouse, you should name both yourself and your spouse as grantors -- the property owners who are transferring assets to the beneficiary, your child. The trustee is the person who manages the property for the beneficiary. If you prefer, you can name yourself as trustee. If you name yourself as trustee and you want the trust to continue after you die, however, you need to name a successor trustee. Alternatively, you can name another individual or even a trust company as your trustee. If you plan to distribute assets to your child before he reaches the age of majority, you might appoint someone to manage his distributions from the trust until he becomes an adult.

Documentation

A living trust is established by creating a declaration of trust, a document that takes trust assets out of the jurisdiction of the probate court. The declaration of trust should name all parties to the trust as well as any successors. Most importantly, it should set out specific instructions that tell that trustee what to do with trust assets. Trusts are quite flexible instruments -- you might have your trustee distribute assets all at once, distribute them gradually both before and after you die, or even invest trust assets and distribute only investment profits to your child. You should also state whether the trust is revocable or irrevocable during your lifetime.

Assets

Transfer the titles to titled trust assets such as real estate, automobiles and bank accounts into the name of the trustee in a form such as "John Doe, Trustee of the Smith Family Living Trust." This format makes it clear that the trustee is holding trust assets for the beneficiary rather than for himself. You might also make a list of untitled trust assets, such as household furnishings, to attach to the declaration of trust as an appendix.

The Testamentary Trust

A testamentary trust differs from a living trust in two ways -- it doesn't take effect until you die, and it is created by the terms of your will. Testamentary trusts contain the same terms as living trusts, but can be quite complex in some cases. The probate court will have jurisdiction over your trustee until the trust terminates. Because the trust doesn't take effect until you die, it is necessarily irrevocable. In many cases, the grantor will provide that the remaining assets of a testamentary trust are to be distributed to the beneficiary as soon as he reaches the age of majority.

Getting Help

Creating a trust can be tricky. For this reason, you might hire a local lawyer to set up a trust for you if you will contribute substantial assets to it. Alternatively, you might take advantage of online resources (please see Resources section) that offer templates, or software that allows you to create a declaration of trust. Since every trust is different, be sure to individualize your declaration of trust to fit your needs and your state's laws.

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Central Banks Buying Shares & Selling Gold?

What is interesting is that those who manage the more than $11 trillion in reserves for central banks know more than what they are revealing. Previously, on April 4th we reported that China’s debt holding in Euros fell to BELOW 7%.
http://armstrongeconomics.com/2013/04/04/chinas-external-debt-in-euros-drops-to-below-7/
We have been collecting the raw data on the reserve holdings and will report shortly on that breakdown. However, what has been going on is nothing but shocking. While the gold promoters are touting hyperinflation, the central bank reserves have been diversifying and moving into TOP BLUE CHIP STOCK!!!!!!! Yes – you read correctly.

Even when the Federal Reserve was originally formed in 1913, to “stimulate” the economy it once upon a time bought corporate paper. When World War I came, the politicians told the Fed it had to buy only US government paper – not corporate. During World War II, the Fed was ordered to support US government bonds at PAR until 1950.They thereafter began a crash and burn nosedive for 31 years into 1981.
Some central banks appear poised to sell gold to raise money given they have no intent to return to a gold standard. This is the shadow behind the advice to Cyprus to dump gold. Meanwhile, Switzerland had recalled its gold because the US was going after them for helping Americans avoid taxes. The Swiss hold 70% of their gold reserves at home, 20% is held by the Bank of England, and 10% by Canada. They removed all gold from the USA. Thus, those who said Germany would find the US vaults empty, have been proven wrong by the Swiss who preceded the Germans on that score.
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The Last Time Gold Dropped This Much

goldsilver.com / April 26, 2013
As recently as April 15th of this year, gold plunged $144 an ounce in Its “biggest two-day decline since 1983,” totaling a 14.9% drop in price. However, the speed of gold’s most recent price drop is not rare. As Dr. Ron Paul explained on Bloomberg, “in the 1970′s… it went from $35 to $200 rather rapidly, and then it lost 50%. Then it went up to $800.” Paul continued:
“To compare a couple of months or a couple of weeks and forget about a bull market in gold price in relationship to the dollar for 12 years. I would say the comparison is not an authentic comparison. What you have to look at is the inflation. Inflation is an increased supply of money [currency].”
The last time gold dropped this much, Seeing “disorderly, hurried selling in the past five years,” it was July 2008. Gold quickly dropped 21%, and the Price collapse “sent a ripple of alarm through the investment world.”
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Commodities Could Turn Lower

CRX is at support and Gold looks like it’s at resistance nearing the 20 ema. If this is a major long term bottom I think we need a retest to make it complete. Look for a pullback to the $1375 and if that holds then it may be safe to buy gold. Right now I think we’re at some strong resistance.

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Investment Education 101: Compound Interest

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Wealth From a Prepper’s Perspective

by DocLiberty, Survival Blog:
Many (if not most) people seek wealth, yet few can define it. There are many practical definitions. One author defines wealth as having sufficient assets to provide the cash flow necessary to meet your monthly living expenses. That’s a great definition for normal times, but having a bunch of rental houses when the dollar is worthless and the hungering hoards are loose upon society won’t do you much good.
If you are at all familiar with the concepts promoted in this blog you know what you need to have for basic survival. I will not spend space and electrons reviewing what we already know. But what do you do after you have the basics? Do you continue to accumulate more of the basics until you need a multilevel secret subterranean warehouse to house your supplies?
Read More @ SurvivalBlog.com

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