Gold will hit $2,000 an ounce within decade, says Jim Rogers

NEW YORK (MarketWatch) -- Gold prices, which just reached a new record high above $1,060 an ounce Thursday, will top $2,000 in a decade, according to Jim Rogers, a famed investor known for his bullish calls on commodities.

Rogers, speaking Thursday at the sidelines in a conference held by ETF Securities in New York, said gold prices will keep rising as a protection against a weaker U.S. dollar.

The dollar "is a terribly flawed" currency, he said. "Foreign debts are increasing rapidly every year, and I don't think Washington seems to care."

Rogers, chairman of Rogers Holdings, said prices of other commodities, such as oil, copper, and sugar, will continue to rise in the long term as the world will face more demand but shrinking supplies.

"There was very, very few new production capacity brought on line in the past 30 years for commodities," he said. "We have shortages developing throughout the world."

Demand, meanwhile, is on the rise, especially from Asia, he said.

"Thirty years ago, the last time we had a bull market in commodities, Asia was not in the game," said Rogers, who moved from New York to Singapore in late 2007. "And now they are all trying to live like we do."

"If you are going to diversify [your portfolio,] it's got to be commodities, because they will go in a different direction from your other assets," he said.

Rogers's remarks came as commodities prices, after suffering a big slump in the second half of last year and early this year, have mostly rebounded.

Oil prices, which tumbled below $35 a barrel in February, recently rose to as high as $75 a barrel. Crude futures ended Thursday's trading up 3% at $71.69 on the New York Mercantile Exchange. See Futures Movers.

Gold futures, meanwhile, made a fresh record high Thursday for the third session in a row. SPDR Gold Trust /quotes/comstock/13*!gld/quotes/nls/gld (GLD 102.96, -0.68, -0.66%) , the biggest gold exchange-traded fund, ended at $103.64. See Metals Stocks.

Rogers, who also wrote several books including "Hot Commodities" and "A Bull in China," said he owned gold futures, ETFs, and physical gold.

"I like gold," he said in the interview, pulling a Chinese Panda gold coin from his pocket.

While bullish on gold, Rogers said silver and palladium will perform even better.

"There are better opportunities in silver and palladium," he said. "Silver is still 70% below its all-time high," while palladium, standing at around $310 an ounce, is also much lower than its high above $1,000 an ounce hit in early 2001.

Rogers said he owns all four major precious metals: gold, silver, platinum, and palladium. He also owns currencies such as the Japanese yen and the Singapore dollar and agriculture commodities such as sugar.

A native of Demopolis, Ala., Rogers co-founded the Quantum Fund in the early 1970s with George Soros.

He retired in the 1980s at age 37. While continuing to manage his own portfolio, he embarked on two round-the-world voyages, concluding the most recent in 2001.

In 1998 he founded the Rogers International Commodity Index, which consists of 36 commodities, including some not traded on U.S. exchanges such as azuki beans, silk, rubber, and wool. The index has risen 13% this year.

Moming Zhou is a MarketWatch reporter based in New

How to choose the Best Stock to Buy in Malaysian Stock Market!

Honestly speaking, it is difficult to stock pick the best share to buy in thebull market as most good counters/ stocks have raisen a great deal.While in the bear market nobody can guarantee that the current lowstock price has reached its bottom already.For the typical investor, says Mr. Joe Average, he who regularly chooses the best stocks based on hearsay, analysts%u2019 stock reports or economic forecast.He watches local & international business channels or listen towell-dressed people talking on TV who thinks they are veryknowledgeable. And finally, he believes them - else they would not beon TV, right???The average investors/traders pick a stock no one has really heard aboutand hope it would make them really, really rich! However the chosenstock could go in any direction. This is highly risky not knowingwhether the company can produce future earnings and profits. How tochoose the best stocks usually involves blue chips stock that arehousehold name companies or fairly well known companies in Malaysia orglobally. You can choose the best stock over the markets or the bestsector they are in.Subscriber can email me for stock-pick-the-best list.
For most average investors/traders I have interviewed, learning to stockpick the best share to buy or sell can be difficult because they eitherhave little or no plan at all as to why they are buying at the firstplace. The first question we need to ask ourselves is %u201Cwhy are webuying or do we have investing stock goals or trading strategies%u201D butunfortunately many traders and investors cannot even provide an answer.If you are a long term investor (I do not support buy, hold &pray), you would have a very different buying system criteria to ashort term trader who buy and sell within very short period of time. Soit is very important that you need to be very clear of your investinggoals and trading objectives. Make sure you can differentiate betweenyour long term investment goals and short term trading strategies. From my own experience having been in this online stock trading business foryears that the simpler the system for stocks picking the better, andthe good news is you do not need to rely on stock market experts orstock market gurus to tell you what to buy or sell. All you need issome effort, hard work and lots of practice with a few tools availablefor a very low cost. The process I use to pick the best stock to buy islargely a technical analysis which includes many elements offundamental analysis at the macro-economic level. The process is fullyexplained in my investing & trading course, but the principles are as follows.
We start to look at the Bursa Malaysia Saham stock market companies as apool. We begin to make selection on the individual stocks or the bestsector and at this stage the very simple and common indicators areused. Using a technical analysis tool, I would identify some possibleprospects for the best stock to buy and are placed on a watch list andmonitored daily. How long they remain in the watchlist folder depend onthe daily stock price chart.We wait for clues in changes in the technical analysis landscape totrigger our buy signal and buy order. After placing the buy order wealways put a stop loss in case the price trend reverses suddenly. Thestock market is so uncertain that we have to protect our capital.The only technical analysis tool that I use for the above analysis is asimple end of day charting package called MetaStock software which Ihave written technical codes (filtering the required best sector or byprice movements) to do just the stock picking.In short, the process to choose the best stocks to buy starts with themacro level and moves down to combination of using both technical andfundamental data. Although it sound very complicated, it is very easyto use as many of our course graduates have used them for years withgreat success. For new traders and investors, it is better to start offpaper-trading to allow you to overcome the steep learning curve e.g.various trading strategies, unpredictable stock market behaviour andcomfortable with placing order online for online trading.
To be successful, you have to model after successful investors and traderswho been through the blood and sweat who know how to pick the beststock to buy. Success lies on yourself and the effort you put in at thestart you. I hope the above article would help to put you into the rightpath.
-Martin Wong

Dollar tumbles on report of its demise

The price of gold is surging on world markets amid fears that the old economic order based on the supremacy of the US dollar could be breaking down.

A new spike has sent the cost of the precious metal to a level not seen before. The dollar slid sharply after yesterday's report in The Independent that Gulf Arab states are secretly planning to stop trading oil in dollars, and a senior UN official said that the US should be stripped of its position as the main source of currency reserves for other countries.

The developments come on top of speculation that the Obama administration is operating a policy of benign neglect of the dollar, engineering a devaluation that could help repair some of the economic damage caused by the recession.

Not since the collapse of the Bretton Woods system in 1971 has gold been treated as the equivalent of a world currency, but The Independent reported that it could form part of a basket of currencies that would be used for oil trading by the end of the next decade.

Aram Shishmanian, the chief executive of World Gold Council, said: "The financial and economic instability of the past 18 months has brought gold's historical role into sharp focus and has continued to increase its prominence among policy advisers, central banks, and investors around the world.

Across the world, investors have been reaching for gold as an alternative to the dollar and to other US assets, fearing that the American currency is headed inexorably lower.

The dollar index – which measures the greenback against other currencies – fell 0.7 per cent yesterday and the dollar was lower against all major currencies except the British pound.

The US government's debt – which stands at $11.86 trillion (£7.45trn) after tax revenues collapsed with the recession and the Treasury spent billions on propping up the banking system – would be easier to repay if the value of the dollar was lower. Economists noted that the US resisted pressure to include a promise to protect the stability of world currencies in last weekend's communiqué from the International Monetary Fund (IMF), sparking growing concern that the Obama administration could be content to see the currency fall. That would make US exports more competitive and could spark a manufacturing jobs revival.

Overseas governments are in a bind because they hold trillions of dollars as reserves to protect them against a financial crisis. They are seeing the value of those reserves decline, but starting to swap them for gold or other currencies could deluge world markets with unwanted dollars and send the value of the greenback even lower. The situation is particularly sensitive for oil-producing nations, who are paid in dollars for their exports and therefore hold high dollar reserves.

Gulf Arabs have begun planning – with China, Russia, Japan and France – to move from dollar dealings for oil to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean oil will no longer be priced in dollars. The revelation was met with public denials yesterday. The Saudi central bank governor, Muhammad al-Jasser, said: "The future is in God's hands. Today, the conditions are good for the arrangement we have." The Japanese Finance Minister, Hirohisa Fujii, said he "doesn't know anything about it".

Dennis Gartman, the US investment guru who writes the daily Gartman Letter, said that no one should be surprised to hear denials. "We are certain that spokespeople for every single nation will be brought to the fore to deny that any such meetings have occurred, that no such decisions have been made, that it is not in anyone's interest to have held such meetings or made such decisions," he told clients as The Independent story broke. "The market will care not a whit."

Simon Johnson, the IMF's former chief economist, said the countries involved would calculate that it was not in their interests to drive the dollar down by eroding its position as the currency of international commodities trading and central bank reserves.

"It would only be great news for the US. The US would love a little bit of devaluation, even though they can't say it," he said. "They have to pay lip service to the strong dollar policy, but if someone else were to engineer a devaluation, that would be lucky break for the US."

Warren Buffett: Economy is Flat

OMAHA, Nebraska: Billionaire Warren Buffett said Wednesday the economy has not yet had any bounce and will take some time to recover, but he complimented the government’s efforts over the past year to solve the problems.

Berkshire Hathaway’s chairman and chief executive conducted a couple of live television interviews in New York.

The interviews came before his lunch with a Chinese investment manager who bid $2.1 million in a charity auction to dine with the Oracle of Omaha.

Buffett said during an interview on CNBC that all the reports he sees from Berkshire’s retail, manufacturing and utility businesses show the economy has remained fairly flat.


Buffett joked that he had hoped the cataract surgery he had a couple weeks ago would help him see the “green shoots” of recovery others have talked about, but he still hasn’t.

“There were a lot of excesses to be wrung out, and that process is still under way,” Buffett said.

“And it looks to me like that process will be under way for quite a while.”

Buffett said the United States has a good team leading the Treasury Department and Federal Reserve as it fights what he’s called an economic war.

Buffett complimented Federal Reserve Chairman Ben Bernanke, Treasury Secretary Timothy Geithner and the president’s economic adviser, Larry Summers, and he said Bernanke has played a key role.

Bernanke’s term ends Jan. 30, and there is speculation that Obama may appoint someone else, possibly Summers, to lead the Fed.

“I don’t see how you can do better” than Bernanke at the Fed, Buffett said.

Bernanke took decisive action at a time when the nation’s economy needed that. Buffett didn’t weigh in on the wisdom of the new financial regulations proposed by President Barack Obama.

Buffett said he first needs to see the details of what’s included in the plan.

But Buffett said the government needs to do something to make sure the economy doesn’t wind up in a situation similar to last September, when the level of borrowing threatened to cripple the economy.

But that will be hard to do, Buffett said, because it’s hard to write rules to prevent excesses.

“It’s in human nature to go to excess,” Buffett said.

Buffett said he’s sure the actions the government has taken in the past year to help the economy will result in high inflation down the road.

But he said the actions were appropriate.

Buffett addressed several other topics in the interviews besides the health of the economy:

_ Apple should have disclosed Steve Jobs’ liver transplant because it’s relevant to investors, and they’re likely to find out anyway.

“Certainly, Steve Jobs is important to Apple. It’s a material fact,” he said on CNBC.

Buffett said he would disclose any serious health issues to Berkshire shareholders.

_ He has no plans before they mature to sell the $5 billion in preferred shares of Goldman Sachs Group Inc. that Berkshire acquired last September.

They pay a 10 percent dividend, and Buffett said, “I think we’ll make a lot of money out of those.”

_ He doesn’t think the United States will lose its AAA credit rating anytime in the next generation. “As long as you’re issuing money and you’re issuing debt in your own currency, you can print money,” Buffett said to the Fox Business Network.

Berkshire Hathaway Inc. owns more than 60 subsidiaries including insurance, clothing, furniture, jewelry and candy companies, restaurants, natural gas and corporate jet firms and has major investments in such companies as Coca-Cola Co. and Wells Fargo & Co. – AP

The End For US Dollar?

TOKYO (MarketWatch) -- Growing speculation over the potential end to dollar-based trading in the oil market may be part of the reason gold prices have rallied beyond $1,020 an ounce to stand near their highest level in 18 months.

And the strength was kept even as several top officials, including Saudi central bank chief Muhammad al-Jasser, denied the report.

Gulf Arab states, along with China, Russia, Japan and France, are planning to put an end to dollar-based trading in the oil market, according to an exclusive report published Tuesday in the U.K. by The Independent.

"News on gold's expected future role in oil transactions between these trading partners has sent the price past $1,020," said Peter Spina, chief investment analyst at GoldSeek.com.

The report is "absolutely bullish," for gold, said Peter Grandich, a metals writer at Agoracom. "I've not see gold's fundamentals this bullish in years."

The December contract for gold, the most-active on the Comex division of the New York Mercantile Exchange, closed Monday with a gain of $13.50, or 1.3%, at $1,017.80 an ounce. By the morning in London, December gold was up $2.80 to $1,020.70.

In mid-September, futures prices had climbed past $1,025 to hit a fresh 18-month high. The record intraday price for a front-month gold contract is $1,033.90, set on March 17, 2008.

Many analysts had attributed the gains Monday to higher demand in the face of more weakness in the U.S. dollar. See Metals Stocks.

But, as Spina pointed out, trading gold and other currencies in exchange for oil would "establish gold as a recognized medium of exchange, returning it a step closer to its role as money on a world trade system."

So the price of gold "should continue to find upward price pressures on this news," he said.

At the same time, "the domination of the U.S. dollar is further removed and really, it has been the pricing of oil in dollars for trade that has given it a huge boost in its demand globally," said Spina.

If the dollar is presently being used to transact oil between these nations, then they must use many billions of dollars to do so, he explained.

"If they will switch away from the U.S. buck, then all that demand disappears, the need for the U.S. dollar diminishes, and its value should reflect this," he said.

At last check, one U.S. dollar bought 88.97 Japanese yen, down from 89.49 yen in late New York Trading Monday. One euro bought $1.4726, up from $1.466.

"Transacting in gold will boost demand [for gold] as the U.S. dollar's role diminishes," said Spina.

All in all, "this news is certainly bullish for gold's prospects for further use in international trade going forward," he said.



'News on gold's expected future role in oil transactions between these trading partners has sent the price past $1,020.'

In place of the greenback, the nations plan to use a basket of currencies, including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar, the report said.

The Independent said the plans were confirmed by both Gulf Arab and Chinese banking sources in Hong Kong.

Several top Gulf central bankers immediately dismissed the talk, and the vice chairman of China's central bank made no mention of such a move in a speech.

10 Major Economic Reports & Indicators

There is a lot of economic data released each week but there are some reports that hold special significance – these are reports that traders really get up for. The data released in these reports often shapes the entire trading session.

The state of the current economic cycle also has an impact on how anticipated each of these reports are. For example, during boom times, most eyes will be on inflation and the consumer price index as people watch for signs that the economy is overheating and during tough times, the employment numbers (i.e. non-farm payrolls) are center stage as economists look for a rebound in job losses.

Either way, if you follow the markets passively or actively, make sure these blockbuster economic reports are always on your radar lest you run the risk of getting blindsided by market sentiment.

Jobless claims
The number of people who file for unemployment benefits in a given week. This data is collected by the Department of Labor, and published as a weekly report. The number of jobless claims is used as a measure of the health of the job market, as a series of increases indicates that there are fewer people being hired.

Consumer Price Index
CPI. An inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly. Also called cost-of-living index.

Non-farm payroll
A statistic gathered by the U.S. Bureau of Labor Statistics, which represents the payroll data for the majority of the United States with the exception of a few categories of employees. The employees that are not included in this calculation include government employees, nonprofit employees, individuals who work within a private household, and farm employees. Once these categories are removed, the data represents about 80% of United States employees, and provides monthly information about salary which is used as an indicator of the health of the economy.

Producer Price Index
PPI. An inflationary indicator published by the U.S. Bureau of Labor Statistics to evaluate wholesale price levels in the economy. Previously called Wholesale Price Index.

Beige Book
Report on current economic conditions, published by the Federal Reserve Board eight times each year. The Beige Book is part of the Federal Open Market Committee's preparations for its meetings. The report is released two Wednesdays before each FOMC meeting at 2:15 pm EST. The book is a summary of economic conditions in each of the Fed's regions. The report is primarily seen as an indicator of how the Fed might act at its upcoming meeting.

Consumer Confidence Index
A measure of consumer optimism toward current economic conditions. The consumer confidence index was arbitrarily set at 100 in 1985 and is adjusted monthly on the basis of a survey of about 5,000 households. The index considers consumer opinion on both current conditions (40% of the index) and future expectations (the other 60%). The Consumer Confidence Index is closely watched because many economists consider consumer optimism an important indicator of the future health of the economy.

Durable goods orders
A government report which measures consumer spending on long-term purchases, products that are expected to last more than three years. It is intended to offer a gauge of the future of the manufacturing industry. The report is made at 8:30 am EST around the 26th of each month and is thought to provide insight into the future for the manufacturing industry. The reports are broken down by industry, which helps to eliminate the effects of single volatile industries like defense spending.

Gross Domestic Product
GDP. The total market value of all final goods and services produced in a country in a given year, equal to total consumer, investment and government spending, plus the value of exports, minus the value of imports. The GDP report is released at 8:30 am EST on the last day of each quarter and reflects the previous quarter. Growth in GDP is what matters, and the U.S. GDP growth has historically averaged about 2.5-3% per year but with substantial deviations. Each initial GDP report will be revised twice before the final figure is settled upon: the "advance" report is followed by the "preliminary" report about a month later and a final report a month after that. Significant revisions to the advance number can cause additional ripples through the markets. The GDP numbers are reported in two forms: current dollar and constant dollar. Current dollar GDP is calculated using today's dollars and makes comparisons between time periods difficult because of the effects of inflation. Constant dollar GDP solves this problem by converting the current information into some standard era dollar, such as 1997 dollars. This process factors out the effects of inflation and allows easy comparisons between periods. It is important to differentiate Gross Domestic Product from Gross National Product (GNP). GDP includes only goods and services produced within the geographic boundaries of the U.S., regardless of the producer's nationality. GNP doesn't include goods and services produced by foreign producers, but does include goods and services produced by U.S. firms operating in foreign countries.

Retail sales index
A monthly measurement of all goods sold by retailers based on a sampling of retail stores of different types and sizes. The retail sales index is often taken as an indicator of consumer confidence. Released at 8:30 am EST around the 12th of each month, the report reflects data from the previous month. This report is the "advance" report, which can be revised fairly significantly after the final numbers are calculated. Many analysts choose to look at the figures "ex-auto", which means excluding the volatile car sales figure. It is thought that this number is a better measure of across-the-board purchasing trends. The report does not include money spent on services, so it represents less than half of total consumption during the month. However, even with these limitations, the figures are closely watched as an indicator of the health of the economy.

What is Options?

You may have heard of options and seen that you can trade them in your online account, but what is a stock option and why would you even care if one exists?

Let's start first with a very basic question: What is a stock option?

A stock option is not a physical thing like holding shares in a company. Instead it is a contract between two parties.

When you own stock (or shares) you actually own part of a physical entity--a piece of a company. An option is an agreement, or contract, where one party agrees to deliver something to another party within a specific time period and for a specific price.

This distinction is important because with options you are not borrowing anything. For example, in the case of stock, you must first borrow the stock to short it--but with options there is nothing to borrow so you can short options without the worry of borrowing first.

Options are popular because they can help you get more bang for your buck. Instead of buying a stock outright, you can enter into an options contract which can be much cheaper but have the same--or even better--results.

Options can also be less risky than holding stocks, but that is not always the case. If you plan on trading options at some point make sure you understand fully the risk and downside of each trade. Also, options take more attention and can amplify the movement of a stock in your favor or out of your favor very quickly. So options trading is not for everyone, especially if you are not comfortable taking on risk or managing positions.

Learning about options isn't difficult anymore. There are a few web sites that have popped up recently to help you keep track of options news. And there have been plenty of books written recently that can really help individual investors understand how using options can be a worthwhile endeavor, depending on your financial needs.

Many of the various options exchanges have web sites geared towards individual investors looking for information on options.

Probably the best prepared to reach investors is the Chicago Board Options Exchange, which has a terrific web site set up to educate you. Visit its education page. The CBOE also holds seminars and sells books about options and how to trade them.

Your broker also can give you much guidance if you are prepared to trade options online or through a proprietary service.

Bull strategies

If you are trying to make money on a stock that you think will go up, you may adopt a bull spread strategy (hence the name).

This trading strategy can be accomplished with either puts or calls.

Remember a call is the right (not obligation) to purchase a security (stock, index, or bond) at a specific price on or by a specific date. A put is the right (not obligation) to sell a security (stock, index, or bond) at a specific price on or by a specific date. See Options terms.

NAKED LONG CALL

The simplest bullish strategy is the naked long call (see chart below). This is simply buying the call without any type of hedge and the strategy is used when you think that a security is going to make a large move upward.

Let us assume that a stock is trading $50. You may purchase a call with a strike price of 50 and about 30 days until that option expires. This call may costs $4, for example.

If the stock closes $50 or less on expiration then the call will expire worthless. This represents your maximum risk. There is no way to lose more than you paid for the call. If the stock closes at some price higher you will begin to recoup some of your investment and possibly make money.

If the stock closes at $54 on expiration, you will exercise your right to purchase the stock at $50 and immediately turn around and sell the stock for $54 yielding $4. Since this profit covers your initial investment, however, the outcome is a net wash.

This point is important since it is your breakeven point. It is always important to know your breakeven point PRIOR to making any options trade. By knowing this point you also know where you are loosing money but more importantly where you are making money.

Now comes the good part. If the stock closes above $54 you will be making a net profit. Let us say the stock closes $60 on expiration. There are two ways to take profits: The first is to exercise the right to purchase the stock at $50 and then turn around and sell it for $60 yielding a $6 profit. But you have to have enough money in your account to take delivery of the stock.

Another way to take a profit, and the better way of doing it, is to sell the option the Friday of expiration for $10. This $10 is referred to as the par value of the option. Math is: $10 minus the $4 you paid for it yields $6 in profit. (Note that you may actually be able to sell it for 10 1/8 or have to sell it for 9 7/8 depending on how volatile the stock is, or how liquid those particular options are that day.)