GOLDMONEY.COM
Figure 1: The homepage of GOLDMONEY.com
There are two basic kinds of money: commodity-backed money and faith-based
money. Commodity-backed currency can be exchanged on demand for the commodity
that backs it. That commodity might be gold or silver, or it could be something
of lesser, but commonly known, value, such as grain rye -- hence the "rye
marks" of Weimar Germany in 1923. In order to increase the amount of a
commodity-based currency, there must be an increase in that commodity.
More gold and/or silver must be mined or acquired by trade, or more rye
must be grown and stored, before the corresponding supply of money can
be increased.
On the other hand, faith-based money, more commonly referred to as fiat
money, is simply declared to be legal tender, usually by a government entity,
and it thereafter maintains its value based on the faith and credit of
the government that instituted it as currency. This is a quick and easy
way to create money. No commodity needs to be mined, grown, or stored.
The only requirement is continuing faith in the controlling government.
Such a system works very well, as long as the government keeps a tight
rein on the amount of the money in circulation.
Recently, many of the world's governments have increased their fiat
currency supplies in an attempt to avoid the natural contraction of their
economies following the worldwide stock market meltdown starting in the
spring of 2000. In other words, the governments are stretching the faith
of their citizens, some more than others. This is because there is nothing
behind the newly minted money except the ink and paper it takes to put
it into circulation. While all governments enjoyed the revenue windfall
of the stock-market feast, few are now willing to foot the bill.
Because of the problems that have befallen every single government in
the history of the world that employed this money expansion tactic, it
would appear that today, and in the foreseeable future, fiat currencies
are in for a somewhat volatile ride. The more pronounced the manipulation
-- the increase in the amount of money with no backing pumped into an otherwise
declining economy -- the larger the eventual devastation.
Even if the major economies of the world avoid the extreme currency
destruction suffered by Argentina, Germany, and Brazil, just to name a
few of the countries devastated by runaway inflation over the past 100
years, there can be no doubt that money issued by governments will fluctuate
considerably both in absolute value and in relation to each other. However,
there is a fairly easy way to avoid much of that wild ride, and possibly
even profit from it.
That easy way off of the wild ride is to get out of your fiat money
and get into a commodity-backed money. For the past two years, just such
a smooth transition has been possible. General access to a commodity-backed
currency system is now available, and one vehicle for the transition is
GoldMoney.com.
GoldMoney.com was launched in 2001. The founder, James Turk, has been
involved in international banking and precious metals since 1969. He received
US patents for creating a system and method that enables gold or other
commodities (tangible assets) to circulate through an electronic medium
as currency in a book entry accounting system; to circulate electronically
as digital cash, ensuring privacy and facilitating micro-payments; and
to circulate electronically as digital cash over wireless networks by means
of devices such as smart cards.
GoldMoney provides an easy and inexpensive way to buy and sell gold.
Not only that, the gold is safely stored for you in one of the world's
most secure vaults, and insured by Lloyds of London. Yet you still have
online access to your gold 24 hours a day, seven days a week, and you can
transfer it instantly to anyone with just the click of a mouse. Of course,
for that to happen, the person to whom it is being transferred also has
to have an account with GoldMoney.com, but signing up takes just minutes,
and it is free.
For those who are not smitten with the idea of owning gold, but recognize
that the value of the US dollar has dropped about 30% since early 2002
-- as compared to a basket of the world's other major currencies -- GoldMoney.com
can provide a quick escape from further dollar losses. It can be used as
a smooth transition into either the gold-backed money of the site, or into
one of three other, stronger currencies.
If you are, or are becoming, a gold bug, then opening a GoldMoney account
is an easy way to buy and sell, or simply own, physical gold. There is
no further need to shop for a convenient source of gold, nor is there the
expense and hassle of finding secure transportation and storage for the
precious metal. At GoldMoney.com you can buy gold with US or Canadian dollars,
euros, or British pounds at just a slight percentage over the spot price,
and you can sell it instantly, with zero commission, at the current spot
price for any of those currencies.
AH, THOSE GOLDEN GRAMS
The commodity currency available at GoldMoney.com is the goldgram (gg).
A goldgram is -- naturally -- equal in weight to one gram of gold, and it
is worth gold's rate of exchange in any of the four currencies at the time
of the transaction. When one ounce of gold was worth exactly $311.03 in
the US, then one goldgram was worth US$10. Breaking that down further,
1/1,000th of a goldgram, or one mil, as it is called at GoldMoney.com,
was then worth a penny. With the price currently over $400 per ounce, the
goldgram equivalents translate into amounts that are about 30% higher.
(Didn't I just mention that the dollar has dropped 30% in the last year
or so?)
Once you sign up with GoldMoney.com and either buy gold or transfer
your own gold to the account, it is then referred as your holding. You
can create a new holding by clicking the free signup button on the homepage.
Getting your fiat currency to GoldMoney.com for the purchase of your goldgrams
can be accomplished via bank wire, electronic check (US bank account only),
or by Chaps/Giro (UK bank account only). As soon as GoldMoney gets your
payment, you have goldgrams in your holding -- immediately.
Moving from gold to fiat is just as easy. Just get into your holding
and click on "sell." How much you want to sell, and in which of the four
fiat currencies you want the sale made, is up to you. The current spot
rate determines what will automatically be sent to your bank account. GoldMoney
can credit up to US$5,000 per day, at no cost to the user, via electronic
transfer (e-check). There is a bank wire charge if you wish to transfer
larger amounts.
IT'S NOT CALLED "GOLDMONEY" FOR NOTHING
Your holding is real money. You can pay other GoldMoney users with just
a click of your mouse. It's quick and easy for you, and there is no "The
check's in the mail" baloney. Once you click, the gold is in their holding.
GoldMoney.com seems to be a great site, but the developers are not altruistic.
They have to pay for the gold's storage, the insurance, the transfers,
and the website. All charges are in either mils or goldgrams, and deducted
from your account at the time of transaction. Each time you make a payment
from your holding into the holding of another user, a fee equal to 1% of
the payment amount is deducted from your account up to a maximum of 100
mils (0.1 of a gram, or about $1.35). There is a minimum transaction
fee of 10 mils, which is only about 13 cents (with gold just over $400
per ounce). Heck, there are banks that charge 20 cents for every check
you write. There is also an account fee of 100 mils per month, regardless
of the amount of goldgrams in your holding (unless you have none -- no goldgrams,
no charge).
For the majority of those who want to get into the ownership of gold,
buying goldgrams at GoldMoney.com appears to be a viable way to do so.
The user cost of goldgrams and ounces of gold is prominently displayed
on the homepage of the website, along with the current spot price of gold
in any of the four fiat currencies. Most of us will pay spot plus 2.99%
for our goldgrams, but if you are able to buy more than US$100,000 worth
at a time, then the surcharge drops to just 1.39% over spot.
Either way, compared to almost any other means of acquiring physical
gold and using it as a medium of exchange, GoldMoney.com looks like a hands-down
winner. There may be a downside to GoldMoney.com, but it is not obvious
to the eye of a novice gold ownerwannabe like me. So far, the only
trouble I've had is staying awake long enough to read the 11-page user
agreement.
It appears that James Turk saw a global need and put together a website
to fill that need in a first-class way. It also looks as if he has kept
the commissions and fees low enough that it will be a while before there
is much in the way of real competition. If you have ever had a desire to
own physical gold, or if your faith in the fiat system has ever wavered,
I would highly recommend you take a look at GoldMoney.com.
--Bruce R. Faber, Staff Writer
MRSWING.COM
Figure 1: The homepage of MrSwing.com
Do you swing? Whether you are a novice or a veteran trend trader who
has discovered that your need for immediate gratification (also known as
"ringing the register") is greater than your ability to withstand the inevitable
drawdowns and lower winning trade percentages involved in riding out long-term
market moves, then call me crazy, but swinging -- as in swing trading --
may be your thing.
What is swing trading? As Frederik Van Duuren, better known as "Larry
Swing," the creator of MrSwing.com, puts it in a section of his website
called "The Master Plan":
Why does swing trading work? Simply because fast moving stocks tend
to pause for a few days before they explode again. Just look at any candlestick
chart! Stocks keep on cycling every three, five, to seven days. In other
words, for every three-day gain there will probably be a down day. For
every five-day gain there may be three down days. A seven-day rally may
produce up to five down days. And the great thing about swingtrading [sic]
is that there is never a shortage of new opportunities. We just need to
wait patiently for the right stock to cycle ...
Swing trading has been around for as long as trading has been around.
In many ways, there are really only two different ways to trade: trends
or swings. Swings, which author Alexander Elder describes as "buying normalcy
and selling mania" (or, conversely, "shorting normalcy and covering depression")
are not just pullbacks in uptrends and bounces in downtrends. Swings in
fact can be used in trendless or meandering markets that ricochet back
and forth between support and resistance.
When trader and educator Oliver Velez of Pristine.com observed that
"amateurs buy new highs and pros sell them," he was talking less about
top-picking and more about the understanding most professionals have about
how markets swing. When radio commentator and former hedge fund manager
Jim Cramer insists that traders must learn to "sell when they can, not
when they have to," he is echoing a sentiment that underlies much of the
swing trading methodology.
Swing trading is attractive for a number of reasons. As Elder wrote,
there are more trade opportunities that provide more experience in a shorter
period of time than with trend trading. He adds that "the dollar risk is
lower thanks to closer stops, and quick rewards provide emotional satisfaction."
In fact, Elder goes so far as to suggest that "a beginning trader is better
off learning to catch swings ... early in your trading career, it is safer
to concentrate on swings." And of all the places on and off the Internet
for an aspiring swing trader to look for support, education, and encouragement,
a visit to MrSwing.com should perhaps be on that list.
THE SWING'S THE THING
What will a trader find surfing over to MrSwing.com? The website has
two main components. The first is an educational component that features
an introduction to swing trading as well as the "Master Plan." The "Master
Plan" goes into detail about how to find swing opportunities, entry strategies
for long and short-side swing trades, and various money management tips
and exit techniques that vary based on the specific condition of the market
(for example, whether a gap has occurred during or immediately before the
trade).
Not assuming that everyone who is interested in swing trading also has
a deep background in technical analysis, MrSwing.com also offers a few
pages collectively called "The Essentials of Technical Analysis." Here
is a discussion on the basic premise of technical analysis ("large professional
traders cannot help leaving behind considerable evidence regarding their
opinion on the direction of the market"), a brief explanation of Japanese
candlesticks, a discussion of both volume and Equivolume charting, moving
averages, the force index indicator, and directional movement index, as
well as a chart overlay developed specifically for MrSwing.com's software
product, SwingTracker (to be reviewed in full in a later issue) called
"up/down/in/out," which helps swing traders more rapidly spot buying and
selling opportunities.
The educational component of MrSwing.com also has a frequently asked
questions (Faq) section and links to some of his preferred resources on
and off the Internet on swing trading. In addition, there is a link to
what MrSwing.com refers to as "preferred brokers." The website also features
a sizable recommended reading list that includes a number of the more popular
technical analysis, trading, and swing trading titles by authors such as
Oliver Velez and Greg Capra, Alan Farley, Martin Pring, Alexander Elder,
as well as numerous others. If you do nothing else at MrSwing.com, then
check your reading list and bookshelf against his and see what you may
have been missing.
SWINGING WITH MR. SWING
The other major component of MrSwing.com is the products and services
available, including a number of free items, such as Mr. Swing's "Nuggets
of Wisdom," which consist of his "Option Swing of the Day"; a "Chart of
the Week"; and Mr. Swing's "Weekly Analysis" of the markets. These are
accessible to anyone who visits MrSwing.com, or they can be obtained by
subscribing to "MrSwing Lite," a free e-newsletter that will deliver Mr.
Swing's "Nuggets of Wisdom" on a weekly basis directly to your email inbox.
Also among the free products and services available at MrSwing.com is
the SwingLab, a part of the website where Mr. Swing shares some of the
stock scans he uses to spot potential swing trades. SwingLab is interactive
insofar that website visitors are encouraged to send in their own stock
scans that have helped them uncover solid swing trading opportunities.
An additional free item is the TrendMeter. The TrendMeter really is
the "storefront" for a number of paid services that Mr. Swing provides,
such as his "OEX Swings" advisory service. But the TrendMeter features
an index of the QQQ, OEX, DIA, and SMH that rates each market on a scale
from "very bullish" to "very bearish" (in-between ratings include "bullish,"
"overbought," "oversold," and "bearish").
The other products and services include the aforementioned "OEX Swings,"
as well as similar services that focus on specific markets and products
-- "Swing Trading the QQQ," "Swing Trading the DIA," "Swing Trading the
SOX," and so forth. There is an "OptionSwings" service, as well as a swing
trading system named after the companion website, SwingPlays.com, with
which the system is provided.
SwingPlays.com provides trading recommendations on stocks using a proprietary
system that is nevertheless based on the swing trading concepts articulated
by Mr. Swing. Interestingly, all of the recommendations that SwingPlays.com
provides are buy-side -- no shorts, and while some trades will last less
than a day, the "typical holding period" for SwingPlays.com recommendations
is closer to three to five days.
BRING ON THE SWING
Clearly, MrSwing.com's main purpose is not just to encourage traders
to try swing trading, but also to attract potential subscribers to any
of the numerous trade advisory services available through the website,
or any of the stock or options brokerages with which MrSwing.com is affiliated.
But that doesn't mean that those who are not interested in specific advice
won't find value in what Mr. Swing has to say about this method of trading.
As I have suggested about other websites I have reviewed, many have
a solid educational benefit -- whether because of an exceptional reading
list, an extensive discussion or explanation of the trading methodologies
used, or even as a sort of cheerleader for a particular way of trading
stocks, options, or futures that might be just what a trader down on his
or her fortunes needs to provide that pick-me-up shot in the arm.
If your swing trading has gone a little flat, or you're looking for
swing trading recommendations to compare to your own swing trades, then
consider surfing over to MrSwing.com. After all, any trader who uses the
tagline "Those who never control risk will never drink champagne" sounds
like a trader worth listening to.
-- David Penn, Technical Writer
Originally published in the March 2004 issue of Technical
Analysis of STOCKS & COMMODITIES magazine. All rights reserved. ©
Copyright 2004, Technical Analysis, Inc.
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