Tag Archives: POEMS

All that glitters might be gold

Sometime back on the 4th October, I went to a seminar conducted by POEMS on ETFs and gold. Back then, it was chaos in the financial markets. Lehman Brothers just filed for bankruptcy protection, Merrill Lynch jus sold herself to BOA for 50billion, AIG managed to stay afloat with a 85billion dollars lifeline from the Feds and there was trouble trying to pass the 700billion bailout plan.

 

During the seminar, there were doubts about the 700billion bailout plan.

Will it be too late?

How will the 700billion dollars of taxpayers’ money be used?

Will it be sufficient to even buy up the toxic debts from the banks’ balance sheet?

Even so, what will be the consequences of the 700billion dollars on the world’s biggest economy?

Further inflation?

 

Given all these uncertainty and volatility in the financial markets, equities were not as attractive as before. That brought us to the topic of the seminar, the investment case for gold as a financial asset. The speaker for the seminar was Albert Cheng from World Gold Council, his explanation on gold was succinct and informative, and I learnt more about gold than I ever did for the last 22 years of my life.

 

Basically, gold can be used as insurance in your portfolio due to its minimal correlation will the volatility in the financial markets and inflationary pressures. The next function of gold is liquid asset in your portfolio, when times are bad and equities have taken a beating, gold would probably increase in value and can be liquidated for cash when you are hard-pressed for cash.

 

As gold price is also affected by the underlying supply and demand, the rising of the emerging economies and the significance of gold in their culture will invariably increase the world’s demand of gold. At this point, Albert flashed a few slides which showed the breakdown of gold supply and demand; a striking point to note was that a huge percentage of gold supply came from new gold which is decreasing. The reason being high exploration and production costs and that even capital exploitation will take 6-7 years. Albert went on to explain the technicalities and difficulties of the process.

 

 Lastly, Alfred explained how gold was available for investment via ETF in the secondary market, whereby 10 shares of gold EFT approximately 80USD will get you an equivalent of 1 ounce of allocated gold stored in London. That will save you the hassle as compared to buying jewelries which command the craftsman premium and GST, or buying the physical bar from bank which will incur delivery charges and GST.

 

On the whole, it is was a very informative seminar whereby we not only get to listen with the speakers but also interact with them; not to mention the scrumptious refreshment they provide. If POEM is going to conduct such interesting seminars during the subsequent Saturdays, I do not mind making this a permanent activity for my Saturdays.

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Another 1st: Annual Report & Dividends

The few interesting things that happened to me, between my 8th April post and last paper on 9th May.

Part 1: 11th April

Today, I found a pleasant surprise lying in my mailbox; it is the 2007 Annual Report for Banyan Tree Holdings. For the uninformed, I have bought Banyan Tree shares at a distressed price (and yes, I am a value investor), my current paper gain is in excess of 15%.

Banyan Tree has hotel and property operations, they also manage spa, gallery and designing operations. Their existing operations are mainly in Southeast Asia and Australia, with future developments in America, the Middle East and PRC.

I will be receiving my first dividends sometime in June; it is a small sum, further reduced by POEMS dividends charges (dammit!). Banyan tree has done a good job in maximizing shareholder value so far, pity that markets sentiments on rising oil prices has beaten down this counter.

What I thought was impressive was that they had a societal marketing concept, their 2 initiatives are the green imperative fund which provides financial support for environmental initiatives and environmental protection AND the natural resources conservation initiative with the aim of reducing water and electricity consumption by 10% for the next 3 years. They are also challenging themselves to plant 2000 new trees annually, drive greater awareness of climate changes and concurrently reducing their carbon emissions. I don’t know about you, but I would be a pretty satisfied customer if I am unwinding in a Banyan Tree or Angsana resort, knowing that a portion of the consumer dollars goes back into protecting the environment.

That reminds me of my plans to go turtle riding in RedangJ, I heard from many of my friends that excessive tourism is hurting the coral reefs there and nothing will be left in time to come.

You can click here for their corporate video, enjoy!

                                                              

                                                  nice company, i like em'