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FBI: Criminals Using Gold to Launder Money MoneyNews
(Headlines - scroll down for full stories)
The latest issue of BusinessWeek tackles the burgeoning issue of "digital currency." In a nutshell, the FBI is quite concerned with Internet opportunists who are using what is known as "e-gold" (otherwise referred to as digital currency) as a mechanism to create unlicensed money-transmittal operations. BusinessWeek focuses on a company called Gold & Silver Reserve, which operates under the moniker Omnipay. The U.S. government has targeted the firm over the legal use of e-gold on the Internet.
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According to the magazine, Omnipay operates "a bullion-backed 'digital currency' unit called e-gold that U.S. law enforcement officials say has become a popular payment system for online criminals." Last December, law enforcement officials from the FBI and the U.S. Secret Service raided Gold & Silver Reserve's offices in Melbourne, Florida, seizing what they believe to be incriminating documents and software files. In addition, the U.S. Justice Department wants the company to give back $800,000 that federal authorities believe was earned illegally. Officials seized the funds a day before raiding Gold & Silver's offices. "The government alleges in a lawsuit filed on Dec. 30 in federal court in Washington that Gold & Silver Reserve – using the name Omnipay to provide an exchange service that enables users to convert regular money into units of e-gold – has operated as 'an unlicensed money-transmitting business.' " BusinessWeek reports that Gold & Silver Reserve, Omnipay and e-gold itself were all created by a man named Douglas Jackson, who runs the operation. Jackson reportedly denies any involvement in illegal money laundering practices. He adds that agents exaggerated the extent to which criminals employ e-gold and is seeking to reclaim the disputed $800,000. "Law enforcement officials worry that digital currency is becoming the money-laundering machine of choice for cyber-criminals," says the mag. "At least a dozen such services allow users to deposit and transfer funds. Eight, including e-gold, claim to be backed by actual bullion." Editor's Note:
2. Rollover Trusts: Maximizing Your IRA Many wealthy Americans know all too well that when you name your children as beneficiaries of your IRA, you have no control over what happens to the money. "Viewing it as a windfall, rather than as financial security for the future, an adult child could withdraw the cash and fritter it away on a new car or vacation home within months," says Jay Herrlinger, a senior financial adviser at Pennsylvania's Univest Wealth Management & Trust. And that may be why retirement rollover trusts are increasingly popular. "They allow the IRA owner to control the speed with which those benefits are paid out, so the money continues to grow tax-free as long as possible," says Herrlinger. When you retire or leave your company, transferring your retirement assets into an IRA rollover trust can help you:
Herrlinger says that an IRA rollover trust allows you to receive the required minimum distributions over your lifetime. After your death, the balance can be paid out, or payments can be continued for one or more beneficiaries you designate. Sound good? Herllinger says it's best to talk with your benefit plan director at work and consult an attorney to identify the appropriate beneficiary designation for your retirement account. Editor's Note:
3. WSJ: Oil Refineries to Flourish in 2006 With oil once again inching toward $70, oil company profits are back in the media spotlight.
Monday's Wall Street Journal discusses the industry's record profits but asks: "How long will the gusher last?" First, it is improbable that this year will see a repeat of 2005's earnings growth. And there is an increased call for higher taxes after some in Congress complained of price gouging by oil firms. In addition, there are geopolitical security concerns in Iran and the continuing problem of finding new sources of oil to replenish spent supplies. Of course, as The Journal reports, everything is relative. "Other industries would love the oil patch's problems," says WSJ. "Last year, riding soaring oil and natural-gas prices, the Dow Jones Oil & Gas Index racked up a 32% return, more than seven times the return of the Dow Jones U.S. Total Market Index and more than double the return of any other industry-specific Dow Jones index." Certain sectors, such as dedicated refineries (which process crude oil into gasoline and home-heating oil), enjoyed double-digit stock gains in '05, thanks to low inventories and high demand after a nasty U.S. hurricane season flattened the Gulf Coast. According to the Energy Information Administration, consumer use remains high, although Americans cannot be happy about paying $2.75 for a gallon of gas. The picture will soon become clearer, although most Wall Street analysts say that oil companies will enjoy a banner fourth-quarter earnings season. ConocoPhillips announces its results on Wednesday, kicking off the oil sector's earning season. Fadel Gheit, an oil analyst at Oppenheimer & Co., predicts average fourth-quarter earnings gains of 25% for the major international oil companies and 86% for specialty oil companies that target exploration and production. "As for 2006, it is likely to be another good year for the energy industry, though probably not as good as 2005," says The Journal. "The administration predicts that the price of West Texas Intermediate crude oil this year will average $63.27 a barrel. That would mark a 12% rise from last year's average price. For natural gas, the EIA forecasts an average residential price this year of $14.57 per thousand cubic feet, up 14.5% from last year, a bit weaker than the 18.6% price jump in 2005 over 2004." Gheit says 2006 earnings for Big Oil firms should rise 7%, while specialty research and exploration oil companies should see their take rocket as much as 30%. Refineries should see about 10% in gains for the year. Refinery expectations are of particular interest to The Journal. "An industry sector worth watching will be refining. Analysts expect that refining profit margins generally declined in the fourth quarter from soaring third-quarter levels, but they also predict strong refining margins in the coming year, particularly as new federal regulations requiring cleaner fuel take effect." Editor's Note:
4. Mondays Murderous for World Markets You may have heard that Monday, Jan. 23 was the "worst day of the year," according to a British scientific research group. The day comes three weeks after Christmas merriment but eight weeks before spring rejuvenation arrives. On Jan. 23, people are facing exorbitant holiday bills, leaving them ill-humored to say the least. In many places (especially England), the day generally offers little or no sunlight after mid-afternoon, bringing only cold weather and rain – a combination that makes us even more miserable. So it should come as no surprise that the worst day of the year for stocks falls on a Monday as well. That's right. Just like humans, stock markets are susceptible to the Monday blues, according to research from the ADVFN Web site, which deals with stocks and investment.
Average weekday returns for America's biggest indices show that Monday is always the worst-performing day of the week. Over the last 35 years, the NASDAQ Composite Index has fallen by an average of -0.12% on the first day of the week. Similarly, over the last 35 years, the S&P 500 and the Dow Jones Industrial Average have shown returns of -0.03% and 0%, respectively. And some of the biggest losses in stock market history have taken place on a Monday. The greatest one-day percentage loss (-19.66%) on the Dow Jones Industrial Average occurred on Oct. 19, 1987 – a day referred to as "Black Monday." Before that, during the Wall Street crash of 1929, the Dow Jones Industrial Average fell by a record (at that time) 13% on Oct. 28 – another Monday. But it's not only the U.S. that has experienced the phenomenon of Monday market blues. In the UK, Mondays have brought the biggest loss of any day of the week on the FTSE 100 Index, averaging -0.27% since its inception in 1984. On a more positive note, the same data shows that Wednesday is always the best-performing day of the week in the U.S. The NASDAQ Composite Index shows gains of 0.12% midweek, while the S&P 500 increases by 0.08% and the Dow Jones Industrial Average rises by 0.06%. "Our research proves that, like many of us, the stock market really does not like Mondays," says ADVFN CEO Clem Chambers. "Many attribute this to the glut of 'bad' company news that is published over the weekend, while others believe that investors' malaise, particularly evident during the early hours of Monday trading, is the root cause.
"Whatever the cause, once more it's proven it pays to have data at your fingertips to be up-to-date with the latest trends."
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