Mountain Vision
Feb 15, 2012
Mountain Vision
DON´T GET THROWN OFF BY G-FORCE VOLATILITY!

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense... that gold and economic freedom are inseparable.

~ Alan Greenspan

Dear Mountaineers,

Today I am filling in for Frank Suess who is in the mountains skiing with his family.

Lately, the volatility of financial markets has been mind boggling. Investor sentiment has been swinging from bullish to bearish and back within a matter of days. This is a very challenging time for investors, not to mention for their asset managers. We are living through a period of erratic and incalculable political interventions in financial markets.

This is also a time during which, as an investor, you must retain a good level of patience and hard grit tenacity. Investors in gold, for instance, are well advised to stay on board and not be shaken off by the gold price´s volatility. Look back over the development of gold prices over the past decade. It´s easy to see that those who had the courage and patience to sit through the manifold up´s and down´s are those who benefitted most from the gold bull market, which in my opinion is still very strong and fully intact.

Timing the gold market is difficult. Lately it has become almost impossible and, for most investors, should be considered treacherous. In this context, I am strongly reminded of a truly awesome and intense experience I recently had in St. Moritz, a beautiful and possibly the most famous ski and spa resort of Switzerland, nestled in the beautiful Engadine valley.

Physical Forces - and Gold...

Did you ever dream of flying a jet? Of experiencing hard-core physics first-hand? Have you ever craved incredible acceleration and speed, the feeling of g-forces, close to the limit? I guess many of us might share this dream, if not first in our teens then maybe even well into our ‘mid-life´.

I was fortunate enough to live the dream, or close enough to the dream, only last week. I was invited for a bobsled run in St. Moritz...yes, the bobsledding they do in the winter Olympics. When I got to the bobsledding area I felt as excited as a teenager. The ride was unbelievable. And, while I was shooting down that ‘tunnel of rage´, I couldn´t help but think of gold. I know, I am a bit of an investment and metals freak!

Anyway, the bobsled run in St. Moritz (the official name is Olympia Bobrun St. Moritz-Celerina) is not only the oldest bobsledding track in the world but also the only one that is naturally refrigerated. The track was built in 1903 after the St. Moritz Bobsleigh Club was created in 1897, mainly by winter guests from Great Britain who were looking for a place where they could practice their just-invented sport. The track doesn´t need to be refrigerated artificially because of the altitude at where it sits. All other bobsledding tracks in the world need technical assistance. Maybe in St. Moritz they should think about labeling it the only eco-friendly bobsledding run in the world.

The weather was perfect: it was a sunny, dry and very cold evening - minus 20 degrees Celsius. After a mere 15 second briefing on how to squeeze into the bobsled and a quick check if my helmet was tight, I entered the four-man bob as the second man. In front of me was a happy looking pilot, introduced as a ‘professional´, behind me was a friend of mine, and the group rounded out with the second professional at the very back, our brakeman.

Our brakeman started us off by pushing the sled downhill until he finally jumped in...it was the point of no return.

The next seventy seconds will go on record as being seventy seconds in my life I will never forget. Frankly, there were times when I hoped the length of the track as only 17.22 meters long instead of the actual 1,722 meters. At times, I wondered whether there might be a red ‘button´ to stop the bus.

The experience of acceleration (you get faster with each meter) and high speed (the top speed was 135 km/h) was incredible. But what was even more impressive was the look of these ultra tight turns, coming at me at this speed. The tightest curve, the horseshoe curve, honestly looked like a wall. I was certain that this was the end of us.

But, to my painful but happy surprise, I was met head-on by a g-force of 4 to 5, which means the physical force was even stronger than the maximum g-force in a Space Shuttle during launch and reentry. There were moments when I found my head pressured towards the bottom of the bobsled, when I had doubts about how long I and my body would be able to withstand the laws of physics. And, by the way, six hours after the ride I still felt soreness in my neck.

In hindsight, it was an unbelievably intense and fun experience. I really enjoyed the ride and overwhelming power of physics. But what struck me most remarkably is that, as mentioned earlier, I was thinking about gold during the bob run.

You may find yourself asking ‘what does a seventy second, life-changing experience have to do with gold?´ Let me tell you that, first, if you think that the volatility in the gold price is bad, you should think twice. It´s nothing compared to the "volatility" in that bobsleigh track. And, rest assured, just as I think it is treacherous for your financial health to get thrown off by volatility, it would have been deadly to step off of that bobsled while going down that hill. I was forced to sit tight, suck it up and move on. And, I made it to the end, happier and richer (experience-wise) than before.

Secondly, awhile after the run, I was told that my pilot was Reto Goetschi himself, former World Champion and gold medal winner in 1997, and winner of the silver medal at the 1994 in Lillehammer Olympics. The man is a winner. He was given gold and silver to show for his triumphs. Do you think he would have been half as happy had he received a piece of paper such as US dollars instead?

Winners go for the gold, you know!

Sincerely,

Dirk Steinhoff
Director Wealth Management, BFI Capital Group Inc.
NEWS BRIEFS

Rioters Set Fire to 45 Buildings in Athens Austerity Protest

The situation in Athens is dramatically accelerating. While the media is slowly moving from describing the events no longer merely as protest, but also as riots, one must ask himself, could this be the beginning of severe civil unrest?

According to Bloomberg: "Seventeen banks, four bookstores, five department stores, shopping malls and 70 clothing and footwear shops were among the businesses that suffered damage, the Athens-based association said."

"Several national heritage sites were burned including a neoclassical building from 1870-1881, designed by German architect Ernst Ziller, which was gutted by fire, according to an e-mailed statement from the Athens City Hall."
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Court Victory for Banking Secrecy in France

Currently the attention of the media and the public are focused on Switzerland and their banks UBS, Wegelin, and others, concerning the banking secrecy. However, a little known victory for banking secrecy has taken place in France, where: "France´s Supreme Court has ruled that information stolen from HSBC Private Bank´s Geneva branch cannot be used in the prosecution of alleged tax evaders."

Furthermore, the article of QWealth informs us that: "The facts of the matter are that in 2007 an HSBC employee, Herve Falciani, illicitly copied the details of thousands of client accounts and took the stolen data to France, where he tried unsuccessfully to sell it. The Swiss government issued a warrant for his arrest for theft of the data. In a convoluted action, the French authorities then used this warrant as an excuse to raid Falciani´s home and seize the data in question. Falciani is now hiding out under a witness protection program ... However, it now turns out that these searches were all illegal."
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US Looks for European Partners on FATCA

Many may have surely intuitively only had one thought in mind, after having read the aforementioned headline: "keep on looking..." It is an unspoken secret that the US has not made many friends during the recent years especially, when considering their hypocritical approach regarding regulations. Although now it seems that they have noticed that even their powers have a limitation...

As the article reveals: "The US Treasury has changed its approach to the Foreign Account Tax Compliance Act (FATCA), a regulation designed to fight offshore tax evasion by Americans."

"The US Treasury is proposing that France, Germany, Italy, Spain and the UK be allowed to collect information on financial accounts covered under FATCA and forward that information to the US. The new proposals, which are due to take effect next year, aim to lift the burden FATCA imposes on financial institutions by involving the governments of five European countries."
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Draghi $158Billion Free Lunch Boosts Bank Profits

The ECB has undertaken new measurements, a subsidy of 120 billion euros, described in various ways. Some say: "enough to pay every bonus at financial firms in London for the next 24 years at today´s levels" others "It is a massive money-making opportunity for those who don´t need it to play the yield curve" and some yet again "In many ways this has been a masterstroke."

This incidence leaves enough space for facts, speculations, emotions and several question marks in respect to what might happen. The Bloomberg article provides a variety of insights on the different aspects.
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Will the American People Vote on Substance, or on Personality? Much Speaks for the Latter...



© Copyright 2012, by BFI Capital Group AG, Bahnhofstrasse 29, 6300 Zug, Switzerland, website: www.bficapital.com. The MOUNTAIN VISION UPDATE is published by BFI Capital Group (‘BFI’). Quotation is allowed if credit is given. Although every care has been taken in the preparation of Mountain Vision, BFI does not guarantee and cannot be held responsible for the accuracy of any statistic, statement or representation made. We recommend that you consult qualified professional advisors to determine the applicability of this information and opinion. The publisher is not a registered investment advisor. Readers should not view MOUNTAIN VISION as offering personalized legal or investment advice.
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