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Issue 27


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Issue 27 of Ross Naylor's Ezine - Thoughts on Exchange Traded Funds, investing gold and federal reserve notes.

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Issue 27

  1. 1. Ross Naylor +48 (22) 389 65 70 (w) +48 512 275 706 (m) ul. Królewska 27 lok 411 Warszawa 00-060 PolandThe Importance of Knowing Food forWhy Thought When investing in In the original Federal gold, it is important Reserve Act, there is a to know why you passage which reads as are doing so. follows: There are 2 Federal reserve notes, to be fundamental issued at the discretion of the reasons why you Federal Reserve Board for would buy gold. It is the purpose of maki ngeither as an investment or an insurance policy. An advances to Federal reserveinsurance policy in case Messrs Bernanke and co. have banks are freely things spectacularly wrong. The said notes shall be obligations of the UnitedIf it is the former, then buying gold as an investment at States, and shall bethe current price, around USD1,500 an ounce, may not recoverable by all nationalseem so attractive. You could be better served by buying and member bank s andshares in gold mining companies instead. Federal reserve banks and for all taxes, customs, and otherIf it is the latter and it turns out that Bernanke and co. public dues. They shall be behave got things spectacularly wrong, then the current redeemed in gold on demandprice will seem like a bargain. at the Treasury Department of the United States, or in gold
  2. 2. or lawful money at anyHot Topic Federal reserve bank.There has been So, if a Federal reserve noteconsiderable (dollar bill) is not lawfulamount of money, what exactly is it?speculationregardingExchange TradedFunds (ETFs) in thepast couple ofweeks.Generally this speculation has suggested that they maybe the end to life as we know it.In particular, the reports highlight a potential risk of thestructure of ETFs, the fact that some of them do not holdreal assets but instead hold derivatives that replicate the Did You Know?performance of the desired asset. Chinas GDP per capita is the 91st-lowest in the world, belowThe point, that this is risky as you stand to l ose money if Bosnia & Herzegovina.the provider of the derivative contract goes bust, is valid.However, I looked into this in detail recently and themajority of these funds actually hold real assets. As aresult some of the headl ines appear to be overcooked.As always, common sense should apply. If it is an etftracking something plain vanilla like the FTSE100, thenthere is a fair chance that the assets will be real. Ifhowever it is something like an etf that is triple short theprice of oil (i.e. if oil falls 5% then the fund rises by 15%)then for sure the assets will be synthetic. Sign UpFurther Reading If you have been forwardedThese are some of the articles/interviews that I have this ezine by someone elsefound interesting in the past couple of weeks. I hope you and wish to sign up to receivelike them too. future issues automati cally, just enter your e-mail addressJim Rogers, opinionated as ever, talks on China. here.Opportunities in Iraq.
  3. 3. Super interview with top fund manager David Herro. DisclaimerAn article discussing the risks of etfs. It does a good jobof explaining the benefits of etfs as well as the risks The views expressed here areinvolved. Shame the headline is a bit over the top. my own. They are not necessarily shared by AES International. They are subject to change at any time based on market and other conditions.And finally... This is not an offer or solicitation for the purchase or sale of anyThank you for reading. Your time is greatly appreciated. security and should not be construed as such. References toIf you have any comments or feedback on any of the specific securities are forarticles or the ezine in general, feel free to drop me a illustrative or informationalline. purposes only and are not intended to be, and should not beIn the mean time, I wish you a happy hump day and a interpreted as, recommendationsgreat end to the week. to purchase or sell such securities.Ross. My day job is as a qualified financial planner. This entails me giving my clients advice on maximizing the returns on their investments within their specified risk parameters. This may or may not involve me recommending some of the securities listed above. Call me: +48 (22) 389 65 70 (w) +48 512 275 706 (m) Click here to no longer receive email from this person with this service.