Business Trends

Archive for May, 2009|Monthly archive page

Gold Rush

In Uncategorized on May 20, 2009 at 4:44 pm

 

 

 

 

Demand for physical gold as a hedge against losses in paper assets, such as stocks and the US dollar, is breaking records.

 

 

Record-Breaking Bank Failures Driving More Investors to Gold

Seven more U.S. banks were seized by regulators on July 2, 2009, pushing this year’s total bank failures to 52 as a result of rising losses on home mortgages, commercial real estate loans, and defaults on consumer credit cards. Even more startling is that bank closures barely make the news these days.

Serious investors, however, are keeping a close watch on the instability of the banking system, according to Capital Gold Group, Inc., a premier provider of precious metals assets in the U.S.

Capital Gold Group reports that investors holding cash in low-yielding bank accounts are turning to the safety and protection of physical gold that they can hold in their own hands and which they control, rather than allowing their money to sit in a bank earning next to nothing or rolling over a low-yielding CD for an additional term.

Gold has traditionally been a safe store of wealth for anyone looking to preserve and protect their long-term savings and retirement, and today more than ever, commercial banks dislike gold because it represents competition for investment dollars and savings, and because they can’t make money without your money on deposit.

Most recently seized were Founders Bank of Worth, IL; Millennium State Bank of Texas, Dallas, TX; First National Bank of Danville, Danville, IL; Elizabeth State Bank, Elizabeth, IL; Rock River Bank, Oregon, IL; First State Bank of Winchester, Winchester, IL; and John Warner Bank, Clinton, IL.

The Federal Deposit Insurance Corp. said its roster of problem financial institutions grew to include 305 banks and thrifts in the first three months of this year. On March 4 of this year, Federal Deposit Insurance Corp. Chairman Sheila Bair said the fund it uses to protect customer deposits at U.S. banks could dry up amid a surge in bank failures. “A large number” of bank failures may occur through 2010 because of “rapidly deteriorating economic conditions,” Bair said.

As of June 30, regulators had seized the most U.S. banks this year since 1933, a total of 45, with six months left to go.

“Banks are making good efforts to deal with the challenges they’re facing, but today’s report says that we’re not out of the woods yet,” FDIC Chairwoman Sheila Bair said in a statement. “As I see it, we’re now in the cleanup phase for the banking industry.”

“Troubled loans continue to accumulate, and the costs associated with impaired assets are weighing heavily on the industry’s performance,” Bair said in a statement.

The names of banks on the watch list are kept secret to prevent runs that could destabilize them further. But at the pace at which failures are happening, it won’t be long before we learn the names of those financial institutions in trouble.

In the meantime, record numbers of investors aren’t waiting around. They are moving their retirement assets out of the banks, the stock market and money markets and into physical gold IRAs, a traditional hedge against volatile markets and returns that can’t keep up with inflation.

Consumers Going For Gold

Total demand for all types of gold – bullion, proof, and numismatic – have doubled year over year and continues to escalate as people realize the full impact of our economic condition. Gold is being viewed as a store of wealth, an essential part of every investment portfolio, and vital for the preservation and protection of one’s assets in very uncertain economic times.

People are reporting huge losses in the market, in their IRAs and 401ks, and are unhappy with low-yielding bank accounts. They realize these types of accounts will never reach their intended goal.

People are also catching on that shares in gold mining companies, gold ETFs, and shares of a gold mutual fund don’t provide the safety and security of the tangible asset because they’re still investing in paper gold. They never actually get to take physical possession of the metal. The safety and security of gold is in taking possession of it. You keep it in your hands, you put it somewhere safe, and you allow it protect the buying power of your money for the long-term.

As for those concerned about whether it is too late to enter the market: Buy gold now, then wait.  

Considering gold’s inverse relationship with the dollar, a shrinking US dollar bodes well for gold. The US Dollar Index has lost over 30% since 2001, and continues to decline, while gold has risen over 300%.

Investors have a much better chance of recovering losses in the market by holding gold instead of stocks.

Louise Yamada, one of the top technical analysts in the business, stated in a recent CNBC interview (March 2, 2009) that the destruction of wealth relative to the crash of 1929, when the market declined 49%, was really in the 3-4 years following 1930, after a secondary rally in the market, which she related to the rally of 2007 within an ongoing bear market.

“In 1930, when the crash support level of 1929 gave way, that was the decline was wiped out the wealth, and that’s what we’re worried about today,” she said.

With the recent rush to buy gold, as well as cash-strapped consumers selling their gold to pay for everyday necessities, complaints against gold dealers have risen. Buyer beware! The biggest offenders, according to a recent tally on the Better Business Bureau’s website, are companies advertising heavily to buy unwanted gold jewelry on cable television channels. One company had 314 complaints in the previous 36 months. Another had 97. The complaints range from pricing discrepancies and misleading advertising to customer service issues and claims for lost shipments.

“Not every internet gold buyer is dishonest,” says Michael Gusky, whose company, GoldFellow.com has no complaints against it. The company was created to provide consumers a safe, competitive and easy method to sell unwanted gold, sterling silver and platinum.
“The owners of GoldFellow are the most honest and ethical dealers I have had the pleasure to do business with,” says Carla Stern who first tried to sell her unwanted jewelry to two other internet gold buyers. “GoldFellow paid me $1800 for the same package I had sent to a highly advertised on TV and Internet dealer, who tried to pay me only $310,” explains Stern.

Gusky strongly recommends reading a company’s Website and comparing policies and pricing before choosing a gold buyer. “Ask how much you will be paid for one pennyweight of 14 karat gold jewelry and compare prices. Ask if you will be notified of your value before you’re paid,” he suggests. “And for goodness sake, never agree to drop your valuables in a regular mailbox. There’s no record or proof that it has been mailed – and it’s not insured although many of our competitors would like you to believe otherwise.”

As for the production side of things, market research firm IBISWorld states that  global mine production of gold decreased by 3.3% to 2,400 tons in 2008. Higher production in China was more than offset by declines in other major producing countries, especially Indonesia.

“China extended its lead as the largest producer over the year, accounting for 12.7% of world production”, said IBISWorld analyst Toon van Beeck. Other major producers of gold include South Africa (10.7%), the US (9.9%), Australia (9.7), Peru (7.5%), and Russia (7.1%). Countries outside of the top eight producers account for 34.2% of production.

In rare public announcement not too long ago, China revealed its gold holdings, which are 1,054 tons — up from 600 tons in 2002. Signs that China is losing confidence in the US dollar as a reserve currency further attest that gold is becoming the world’s de facto currency.

Advertisements

Virgin America first airline to offer internet service

In Uncategorized on May 20, 2009 at 4:36 pm

Virgin America, the California-based carrier, announced that as of today it is the first and only airline to offer Gogo(R) In-flight Internet service on every flight. As of today, guests on any of Virgin America’s 100 daily flights have the option to surf the Web, check e-mail, or log on to their corporate VPN – all from the comfort of their seats at 37,000 feet. 

“As a new airline, Virgin America is reinventing the typical domestic air travel experience with award-winning service and brand new, beautifully designed planes equipped with the latest technology and entertainment. With power outlets at every Virgin America seat, Gogo(R) has now turned our planes into WiFi hotspots and home offices in the air,” said Porter Gale, Vice President of Marketing for Virgin America. “Hosting a chat from a plane at 37,000 feet to Oprah Winfrey in her studio is a fun example of how Virgin America is embracing technology and meeting the needs of consumers who want to stay connected.”

Although Virgin America does not typically allow Voice-Over-IP (VoIP) products like Skype video call in-flight due to concerns about maintaining a quiet, restful cabin environment, guests can currently use Gogo(R) to Skype via the instant message feature, in addition to e-mailing, tweeting, updating their Facebook pages and any of the myriad other ways the web is keeping people connected. The early roll out of the Gogo(R) service across the airline’s network makes Virgin America the first and only airline to offer consumers in-flight WiFi on every flight – regardless of route, aircraft type, or flight time.

 

The Gogo(R) service is available for $12.95 for daytime flights of over three hours, $9.95 for daytime flights of less than three hours, $5.95 on red-eye flights and $7.95 for handheld devices. In November 2008, Virgin America launched Gogo(R) In-flight Internet on its first flight with a first ever “air-to-ground” video stream to YouTube Live – YouTube’s first official real-world user event. In February 2009, the airline became the first to host a live national television broadcast via WiFi stream while in-flight over the coast of Massachusetts with CBS News’ THE EARLY SHOW

 

Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C., Seattle, Las Vegas, San Diego, Boston and Orange County. The airline is one of the fastest growing of all time, with an all-new Airbus A320-family fleet and daily flights from: SFO to LAX, SFO to JFK, SFO to SAN, SFO to IAD, SFO to LAS, LAX to JFK, LAX to IAD, SFO to SEA, SEA to LAX, JFK to LAS, BOS to LAX, BOS to SFO and SFO to SNA.

EDITORS NOTE: Virgin America is a U.S. controlled and operated airline and an entirely separate company from Virgin Atlantic. Sir Richard Branson’s Virgin Group is a minority share investor in Virgin America.


Bad economy causing thirty-five percent of workers to dismiss vacation plans

In Uncategorized on May 18, 2009 at 5:12 pm

With only a few days until the official start of vacation season, money, anxiety and guilt are causing some workers to scrap their vacation plans. Consumers have become increasingly concerned for their jobs, and more than a third (35 percent) of workers say they haven’t gone on or aren’t planning to take a vacation in 2009; 71 percent of those indicate it is because they just can’t afford it, according CareerBuilder’s annual vacation survey. The survey was conducted from February 20 through March 11, 2009 among more than 4,400 workers. Additionally, close to one-in-five workers indicate that they are either afraid of losing their jobs if they go on vacation or feel guilty being away from the office.

Taking a vacation doesn’t necessarily mean a clean break from the office. Half (50 percent) of employers say they expect employees to check in with the office while they are away, with 40 percent indicating it’ll be necessary only if they are working on a big project or there is a major issue going on with the company. Close to three-in-ten (28 percent) workers say they plan to contact the office at least once, regardless of what they are working on, while they are on vacation.

“While the current economy may be causing workers anxiety about taking a vacation this year, a break from work is essential for maintaining healthy productivity levels in the office,” said Rosemary Haefner, vice president of human resources at CareerBuilder. “Workers should plan ahead and make it a goal to use their vacation benefits; 15 percent reported that they didn’t use all of their allotted time last year. Utilizing your time off is even more important now due to the added responsibilities and pressure that some workers may be faced with due to the current economic situation.”

Just when will things start turning around? According to Richard Buczynski, chief economist at IBISWorld, the US economy will continue to decline by 3% in 2009, and will not return to its normal course until 2011. The full report, entitled ‘Economic Crisis: When will it end?’ is now available at the firm’s website. To view it, click here.

Many Organic Soy Food Brands Importing Beans From China

In Importing from China, Uncategorized on May 18, 2009 at 4:26 pm

Tremendous growth in organic soy foods has occurred over the last two decades as consumers seek healthy dietary protein sources. Many companies touting “natural” or “organic” soy brands have found favor in the supermarket. A new report, from The Cornucopia Institute, lifts the veil on some of these companies, exposing widespread importation of soybeans from China and the use of toxic chemicals to process soy foods labeled as “natural.”

The report, Beyond the Bean: The Heroes and Charlatans of the Natural and Organic Soy Foods Industry, and an accompanying scorecard rating organic brands, separates industry heroes — who have gone out of their way to connect with domestic farmers — from agribusinesses exploiting consumer trust.

“Importing Chinese soybeans or contributing to the loss of rain forests by shipping in commodities from Brazil just flat-out contradicts the working definition of organic agriculture,” said Mark Kastel, Senior Farm Policy Analyst at The Cornucopia Institute.

Through a nationwide survey of the industry, onsite farm, and processor visits, plus reviews of import data, Cornucopia assembled a soybean foods rating system respecting the fundamental tenets of organics.

“The report’s good news is that consumers can easily find, normally without paying any premium, organic soy foods that truly meet their expectations,” said Charlotte Vallaeys, a Cornucopia researcher and primary author of the report.

One company that had an excellent opportunity to meet consumer expectations by supporting the growth of organic acreage in North America was Dean Foods, makers of the industry’s leading soymilk, Silk. Instead, after buying the Silk brand, Dean Foods quit purchasing most of their soybeans from American family farmers and switched its primary sourcing to China.

“White Wave (Dean’s marketing division for Silk and Horizon organic milk) had the opportunity to push organic and sustainable agriculture to incredible heights of production by working with North American farmers and traders to get more land in organic production, but what they did was pit cheap foreign soybeans against the U.S. organic farmer, taking away any attraction for conventional farmers to make the move into sustainable agriculture,” said Merle Kramer, a marketer for the Midwestern Organic Farmers Cooperative.

Dean has now quietly abandoned organic soybeans in most of the Silk product line, switching to even cheaper conventional soybeans without lowering consumer pricing.

Meanwhile, highly committed companies like Eden Foods, Small Planet Tofu, and Vermont Soy work directly with North American organic farmers.

“We hope consumers will use Cornucopia’s soy scorecard to reward in the marketplace the top-rated companies that nurture relationships with American organic farmers,” noted Kastel.

Behind the Bean also exposes the natural soy industry’s “dirty little secret”: its widespread use of the toxic solvent hexane. Conventional soybeans are bathed in hexane by food processors seeking to separate soy oil from the protein and fiber of the beans. It is banned in organics. Hexane, a neurotoxic chemical, poses serious occupational hazards to workers, is an environmental air pollutant, and can contaminate food.

Oil a hot commodity with investors

In business opportunity on May 13, 2009 at 4:40 pm

Prospects for the oil market are looking good, according to industry analysts. Although high prices have caused consumers to use less fuel, the market is continuing to rise thanks to the growing demand from emerging markets like China, the world’s second-largest consumer of energy. Oil prices have gained more than 30 percent this year, breaking $60 a barrel during trading last Tuesday in New York. According to an Energy Department report issued May 6th, US crude supplies rose 605, 000 barrels to $375.3 million, the highest it’s been since 1990.

The oil market is certainly ahead of itself, despite a continual decline in total fuel-demand. Meanwhile, major independent oil companies have halted exploration budgets and cut back on planned capital expenditures, waiting for a rebound. The latest U.S. employment data is suggesting the economic slump is bottoming out, all of which means that if and when demand for oil rebounds, a surge in supply will ensue.

The growing consensus among industry analysts is that we can anticipate seeing stocks propel even higher. But, “The question is not if, but how fast? How much?” says Oppenheimer analyst Fadel Gheit. Given the current economic conditions, it may seem counterintuitive to go bullish on oil prices. But investors are betting that as the economy gets better, the commodity market for oil is a lucrative place to be.

Mina Kimes, of Fortune magazine, gives her two cents on which companies to bet on:

One tried-and-true approach to betting on oil is to buy the biggest, most stable company in the sector. That, of course, is Exxon Mobil (XOM, Fortune 500), which, with $477 billion in revenues, is by far the largest of the supermajors and has the best return on equity. But many oil investors aren’t wild about the stock at its current price. While Exxon is the largest holding in T. Rowe Price’s $2.9 billion commodity-focused New Era Fund, manager Charles Ober says the stock, though ultrasafe, isn’t worth its premium over its peers. Exxon has a P/E ratio of 8, the highest of the majors. Plus, Exxon’s very size and stability mean that it probably won’t rise as much as its smaller rivals if there’s a strong move up in crude. “Right now, I’d rather have something that’s more levered to the price of oil,” says Ober.

Where should you look beyond Exxon? With future capacity in short supply, the best way to pick winners, analysts say, is to focus on the few companies that are positioned to sharply increase production. And among the oil giants, the company with the brightest outlook is Chevron (CVX, Fortune 500). Barclays estimates that Chevron will increase production by 2.7% annually through 2012, the best rate among the super majors. “Right now, Chevron has more resource opportunity than they’ve had in a long time,” says J.P. Morgan analyst Michael LaMotte, who expects the company to work deals to get access to new reserves in countries like Iraq and Brazil. With a P/E of 6, Chevron is also cheaper than Exxon, and its dividend yield of 3.8% is nearly twice that of its bigger rival.

A pair of mid-majors also offer robust growth prospects. According to Barclays, Hess (HES, Fortune 500) will increase its production capacity by an average of 2.4% a year through 2012. But J.P. Morgan’s LaMotte believes the company’s holdings in Brazil and West Africa give it the potential to far surpass that estimate. “When you look at exploration upside, Hess has considerably more than any other company,” he says. Marathon Oil (MRO, Fortune 500), which Barclays expects to boost production by a robust 4.3% this year, is a particular favorite of Ed Maran, the manager of the $2.1 billion Thornburg Value Fund. “It’s trading far too cheap relative to the value of its assets,” says Maran.

But perhaps the most impressive growth story in the oil world belongs to Petróleo Brasileiro (PBR), or Petrobras, the giant Brazilian oil company based in Rio de Janeiro. Over the past two years the company has announced three deepwater discoveries that are potential mega-fields. While they’ll take years to develop, they have vast potential. “If you look across all the companies you can buy as an oil investor, there’s only a handful of companies that can grow organically, and we like Petrobras the most,” says Cheng of Barclays. He also points out that while new investors have flocked to the company’s common stock, they have largely ignored its preferred shares, which currently trade at a significant discount. If you’re going to play the oil rebound, you might as well start from the lowest point possible.

The Added Bump in the Economy for Pregnant Women

In business opportunity on May 11, 2009 at 5:50 pm

As times are quickly changing, and the economy evolving, women may need to re-think the way they dress for work when they are pregnant. That is the advice of image consultant Maureen Costello, principal of Image Launch in Chicago. She assists clients with their professional image in a variety of business situations, and coaches them on dining and business etiquette. Ms. Costello advises employees of some of the nation’s largest companies through her seminars.

When dressing for the office, Ms. Costello recommends staying away from form fitting maternity clothes that have been the trend in recent years. The introduction of lycra-based fabrics, coupled with a general increase of body exposure in the office, have changed the way pregnant women dress for work. Many of the maternity clothes of late display the woman’s growing belly, growing chest and the all-defining umblicous as it pops out.

Ms. Costello’s advice in this period of business history is to downplay the pregnancy. This is the time to dress in maternity clothes that do not scream “I am pregnant!” to her co-workers and clients. “Things that were perceived to be okay in business one month ago, may not be in alignment today. For example, a client function held in a warm weather resort location is less apt to get approval now. At bonus time, a boss who pulls up in a new corvette can expect a different reaction from co-workers than he might have just a few months ago.” Dressing for work is no different. “Employers are looking to trim staff and increase efficiencies, and these decisions are made behind closed doors.” In these times, the less you make of your pregnancy the better.

Frances Keating worked as a Learning and Development Manager for a large bank during most of her pregnancy. Ms. Keating says, “I agree that a woman who is pregnant in the workplace should down play their pregnancy. I was not a fan of having people notice my growing belly. Actually, I rather enjoyed the comments from individuals that stated, ‘I can not even tell that you are pregnant.’ It wasn’t until I was pushing six months that people began to notice the pouch. I preferred to wear clothes that hid my pregnancy simply because I did not want people in the workplace to focus on my stomach, but to focus on what I was saying, especially when I spoke in front of a large group. No one ever conveyed any particular expectation of my maternity wardrobe and I made sure to continue to look as professional as possible.”

Ms. Costello also advises pregnant women to be aware of other subtleties. If a woman typically wears dark suits to work everyday, but now only wears floral; her employers may take notice of the behavior change. Conversely a woman who took great pride in her appearance, but is now “muddling through” may also be sending out the wrong message.

Adrienne Stachura, who is seven months pregnant, and works as a Consignment Coordinator for a large electronic interconnect supplier company says, “I believe it is even more important now- a- days to look pulled together and business appropriate while pregnant at the work place. The last thing I want to convey to my employer during this economy is that my pregnancy will hinder my image at work. We as women must prove we can balance family, careers, and still look polished while pregnant.”

According to Ms. Costello, a frequent problem for pregnant women has often been finding a website or store to find professional maternity clothing. While there are many large retail stores and small boutiques that sell maternity clothes, Matriarch Maternity is one of the few stores to primarily focus on the professional mother- to- be. Seeking alternative clothing sources to build your comfort and confidence will be worth the effort during this transition phase.

While “looking the part” may seem like one more thing to add to a woman’s list who is working through her pregnancy, the long term impact on your career is worth the extra effort. Maintaining consistency with your over-all image should be your guide as you navigate your pregnancy in the office. The idea of transparency with discretion will go a long way with the added bump in your immediate future.