Dedicated Servers for Ecommerce

If you are currently engaged in any facet of ecommerce, even service sectors, a website makes up a great deal of your business. Therefore, it is a safe assumption that you pay for hosting your website in some fashion. If you do not already have a dedicated server, perhaps you should revisit the decision for the best hosting options for your business.

What is a Dedicated Server?

Most web hosting companies set up accounts or on a shared server. You essentially share the total hard drive and bandwidth allowance with many others. This may not be the best hosting option and can present many problems such as security and traffic bottlenecks. On a dedicated server, the server is completely yours, and there are not other websites utilizing the same machine. The server is dedicated completely to you and your business.

Advantages of a Dedicated Server

Several advantages can make a dedicated server the best hosting choice for you. These include:

Server Security –Dedicated servers increase the security of your website tremendously. There are no other webmasters using the same workspace, and simple mistakes or user error that might occur due to shared machines simply no longer existent.

Storage Space – As the entire server is dedicated to a single customer, there is tremendously more storage space available for website pages, images, and features.

Data Transfer – As with storage space, there is a great deal more bandwidth available for data transfer. Traffic to your site no longer competes with traffic for other websites reducing bottlenecks and slow server response time.

Control Panel – Having your own server offers additional opportunities for control. Sharing a server indicates that you have only limited control of server features and functions, but with a dedicated server, webmasters have greater control and access to the day-to-day functions of the host.

Software Options – Dedicated servers also allow more software and script options. The server has greater storage capacity for this information, and there is no need to align coding or features with other users of the same machine.

Disadvantages of a Dedicated Server

The sole disadvantage of a dedicated server is the cost. It is only logical that obtaining an entire server versus a piece of a shared server would be more expensive, but the rate often makes webmasters baulk. It is important to consider the fee as related to the total cost of shared server space when determining if a dedicated server is the best hosting option for you business, despite cost. A single credit card safety incident or an exorbitant bill for bandwidth overage should level the playing field almost immediately.

Am I ready for a Dedicated Server?

Websites grow at different rates, but as the success of a business grows, so does the need for additional hosting capacity. If you are approaching the limits of your current hosting company or have concerns about safety, such as storing credit card information on the same server as others or simply if your current company is the best hosting company for your needs, it is definitely time for a dedicated server.

Hosting UK – Is It Worth It?

No matter where you are located, businesses seem to clamor to host your website. The top hosting positions among these companies are not only hard to award, but hard to define as well. There are simply too many needs to be met for too many different websites to conclusively have ideal criteria for a hosting website. All top hosting contenders do meet standard requirements for standard hosting services, and overseas companies often will meet these needs for a lower price than US or Europe based competitors, but should hosting be outsourced overseas?

Why the Difference in Price

Foreign web hosting offers the same packages as top hosting companies for considerably less cost in most cases. While some overseas companies may simply be offering low rates as a sales ploy, other offer rates that adequately reflect the cost of living in that country. Overhead costs can be tremendously lower in countries such as India or Pakistan , which means the web hosting services can be offered for less.

This makes it difficult to determine the best route for selecting top hosting companies based solely on price. Low prices can be tempting, but there is always the question of quality. Do the budget services offer the same level of service? Like all things, that answer simply depends on the company. Overall, webmasters should not write off or immediately sign up for foreign hosting companies simply based on rates. There are many other determining factors to consider.

Location, Location, Location

Much like real estate, location matters. The closer your server is to your clients, the faster those clients will be able to access your website. Even in a virtual existence, the physical distance between servers and end users can make a difference. Most internet marketers target United States and European citizens, so by hosting halfway around the globe, website response time for target demographics may be adversely affected.

Customer Service

Many foreign companies are highly trained in customer service and are highly respectful of customers and other individuals. Customer, in this case meaning webmasters, care is a top priority for most of these companies as they realize they must work a bit harder than top hosting companies in the United States to garner the same level of respect and reputation.

Having stated that, hosting in countries with different customs as well as time zones can also be frustrating for webmasters. The same problems that complicate any sort of outsourcing affect web hosting as well. Communication gaps, misunderstandings, and difficulty finding a common time to work together, despite the claims of 24/7 service, can all plague individuals outsourcing hosting. These problems, of course, are not a guaranteed byproduct of overseas hosting, but rather should be determined on an individual basis.

How to Choose the Best Web Hosting Service

One of the most crucial decisions that most online businesses have to make is choosing the best web hosting service. With a popular or well known and reliable Internet Service Provider (ISP) you won't face many problems, however with a poor web hosting service provider it can be a nightmare.

Choosing the right kind of web hosting service can be a very daunting task at times as there are some very important features that you need to make sure of. Here you can find below what exactly to look for when choosing the best web hosting service.

Amount of web space: A web hosting service provider would usually assign you a certain amount of space on their server. You need to ensure that does it have the right amount of space for your website and your business requirements. You might want to expand your online business tomorrow and would require much more space. So it's imperative for you that the web hosting company should be able to provide you with ample of space especially if your website is rich in graphics or has video clips.

FTP access: FTP access is very crucial since it provides the ability to upload new pages. Some web hosting service providers allow you to just design your web pages with their own personal web builder. This may be useful for beginners however you need to ensure if they provide you the facility to expand later when you enhance your online business capabilities.

Degree of reliability, security and speed of access: Speed, security and reliability are extremely important for the success of any online business. While choosing a reliable web hosting service you need to ensure that this is taken care of. A site that is not available, not updated on time or is down, will lose many online visitors. If an online visitor finds your site listed on a search engine, and he tries to access it but finds it down, he is sure to move on to the next link and you lose an important customer or visitor. Even slow working websites are very frustrating. So how do you know if a hosting company is reliable or not? By word of mouth or feedback from others! If that's not possible then you can yourself try accessing your site during peak hours and non-peak hours too. Your site has to be secure of intruders at the same time, especially if it's an ecommerce website.

Dependence and support: Does the web hosting service provide 24x7 supports? Do they respond rapidly to your issue? Can you depend on them? If you need 24-hour technical support that larger companies need then expect to pay substantially more. In fact, people are much more expensive than machines.

Pricing plans : Price is also one factor that you should look out for when choosing the best web hosting service. It's not necessarily true that the most expensive hosts are the best. Simply compare prices and services before you finalize one.

Data transfer (Bandwidth): You also need to see if the hosting company provides you with sufficient bandwidth for efficient data transfer. After all it's your website and you need to ensure that you are getting the best services for the money you invest.

A Sundry of Options for UK Web Hosting

Since the birth of the internet, millions upon millions of websites have been created. They may contain different information and designs, but they all have one thing in common. Web hosting, one of the most important functions in the website process, allows website owners to put up their creative masterpieces. Regardless of what they do decide to display, this type of program gives them the independence to say whatever they'd like.

One of the biggest misconceptions of web hosting is that every package is the same. We all assume that one size fits all, and that there are no in betweens. Surprisingly, this is just the opposite. Depending upon the type of website you are making, and its popularity, you may need something much more professional and expensive. Nonetheless, there are affordable packages, no matter how tiny or large your budget is.

If you are just starting out and want no string attached, there are plenty of alternatives. Free hosting allows you to not only create a website, but it helps beginners, no matter how much experience they have. Although there are popup downsides and other annoyances, free web hosting will give you everything that you need. If you are not sure if you even want to extensively design one, Geocities or AngelFire is great to experiment with.

Are you looking for something a bit more customized? For many webmasters, shared hosting is a favorite. This means that an abundance of websites are actually on one server. While this only costs a few dollars a month, there are still issues that come along with it. For instance, if a fellow webmaster were to have done something illegal, chances are your website would be shut down as well. This is because you share an IP, which of course can be quite dangerous. For this reason, you must be careful when choosing people to share a host with.

While these are great alternatives, many professional companies enjoy dedicated hosting . Fortunately, the website is the only one on the server, which results in a lot less complications. With freedom comes a plethora of features, which include extra bandwidth, visitor trackers, and your own I.P. As a result, you do not have to worry about illegal situations occurring within your server. Everything is based around your needs.

Reseller hosting is another admired amenity. If you are a webmaster and are looking to make some extra cash, this is a great opportunity. In simple terms, you purchase a web hosting package from a company and divide the space into several sections. These sections can easily be purchased by fellow webmasters, who are in need of space. With this business in place, you will effortless make a few dollars.

Regardless of what you are looking to make, web hosting is necessary. From free companies to dedicated servers with only one website, there are endless opportunities. Although people assume that there is only one type of package, this article clearly shows how wrong the myth can be. The only requirement is that you are ready to work hard, be innovative, and stand out among the crowd. With these factors in mind, you could be to the top in no time.

How to Make Money with Web Hosting

We all know that web hosting is the basis of all web sites. It helps us attract visitors, it displays what we are desperately trying to get across, and it allows us to survive in the cut throat internet world. While these are all important qualities that come with web hosting, there are many other opportunities. Dying to make extra cash? Surprisingly, web hosting can actually help with your bills. In a few simple steps, you will be on your way to a richer lifestyle.

Fortunately, there is a new trend in the web industry. Reseller Hosting, which consists of purchasing a web hosting package and reselling it for a larger price, has been making webmasters just a few cents richer. Although this sounds like a daunting task, it actually only requires a large amount of space. Once the webmaster acquires such a large server and bandwidth, he/she is able to divide it up among other people. As long as they are willing to pay a monthly fee, you will never get screwed over.

Regardless of how much money you want to make, purchasing this re-seller hosting does not cost much. For an average of $30/month, you can purchase enough space to make a profit. While all of these websites will be on a shared server, the majority of webmasters do not mind this downside. After all, not everyone can shell out thousands a month just to acquire their own dedicated server. Once you have found a few loyal customers who will not create any illegal material, you will be generating a profit every single month out of the year. Fortunately, until you stop your hosting, you will never be out of a job.

In order to sell this type of hosting, you absolutely need to network. Regrettably, there are many webmasters trying to follow the trend. For this reason alone, you should look in unpopulated areas. Try and find a website or forum that has not yet been tackled by other masses of website owners. For instance, find websites similar to your own. If you do not have one, look on webmaster-related forums such as Digital Point or Webmaster-Talk. These areas are populated with thousands of interested clients, who will be more than happy to jump on the bandwagon, if you do have a great deal.

Still desperately trying to find other ways to market? Many website owners advertise through blogs and buy text link ads. As a result, people will be more apt to find what you are offering. If this doesn't work, you could even start marketing in a local newspaper or a newsletter that goes out to professional companies who are always looking for alternatives. Nevertheless, there are plenty of consumers out there. You just need to be creative and put in the effort, in order to get anywhere.

For years web hosting has been flooding the market. However, it has just recently become a form of revenue for webmasters who just don't own their own web hosting company. It is a wonderful alternative to an additional part time job, especially if this is what you love to do. Networking with others, controlling a server, while working on your website certainly sounds like the perfect occupation.

Gold vs. the Dollar

The PRICE OF GOLD is now holding just below $1,000 and consolidating, writes Julian Phillips of the Gold Forecaster.

Why is it at a high point having fought to get there over the last 18 months or so? Since it first broke through the 30 year high of $850 it has held its ground. It has steadily built a base over $850 and is moving if it has not already moved to a clear Point of Resolution, where it will show itself as either having had its day or is at the beginning of a new day.

Which way will it go? As many believe that it moves the opposite way to the Dollar, it is telling us that the Dollar is also at a Point of Resolution. The atmosphere surrounding the US currency at the moment is telling us that it is about to descend possible to the lowest level ever seen against the Euro.

Objections to the US Dollar's behavior are not only coming from China but now from Europe. The US keeps saying they have a “strong Dollar policy”, but few now believe this. Overall the official consensus is that the Dollar should descend another 20% or more, but this will hurt the recovery badly. Consequently, theGold Price is waiting for action on this front. Will central banks try to ‘manage’ the Dollar exchange rate up or will they let it fall, or is that just too simple a pair of conclusions?

Gold since the dawn of man has been money, but in our lifetime (if you are younger than 40) gold has ceased to be money, but it has held an important place in the reserves of the developed nations, in particular. And now we are watching European signatories of the Central Bank Gold Agreement, which has bee on the go since the turn of the century, slowing their gold sales to barely a trickle. Why are they not selling more?

Yes, the International Monetary Fund (IMF) has now agreed it will sell 403 tonnes and opened its way to sell either in the ‘open market’, which will affect the gold market, if only to do so slowly, or to sell direct to another buying central bank in large amounts at market related prices.

If a major central bank like China or Russia buys direct, they will want the lot at a market related price, we would imagine. But don’t think for one minute that European central banks are making way for the IMF in this new Agreement. Look at the table of sales in this latest issue [for subscribers] and you will see that in essence they have completed their sales!

So we must ask ourselves, why have central banks on balance become net buyers? Again, the darkening of the monetary skies is telling us that they are regaining their respect for the shiny metal. This implies a dropping confidence in paper money.

With the “accelerated supply” of gold produced in the eighties and nineties of the last century having eaten up most of the known, large gold deposits, it is increasingly difficult to source new and viable deposits. Yes, it is different in China, where the government is favoring gold production, and gold individual gold ownership (as a hedge against uncertain paper currency values) and is now beginning to issue the Yuan internationally, to assist in holding down its exchange rate.

The only source of quick gold supply comes from a rapidly rising Gold Pricepersuading gold holders to sell their gold (because they think the price has peaked). This happened in India earlier this year where 900 tonnes of gold was sold as scrap gold. However, with India being a nation who sees gold as money and as security, they will sell because they think the Gold Price will fall only. Once it has formed a new ‘floor’, back in they go, as they have started to do now. So expect scrap sales to decline quickly around current Gold Prices. After all, to Indians, gold is the ultimate money! They will always continue to favor it over paper money, as financial security.

On the other side, and with the advent of the gold Exchange Traded Funds, institutions across the world, who had not previously been allowed to own gold (in the form of bullion and coins) were now able to directly impact the Gold Priceby buying the shares of these funds. In turn, these funds went into the gold market and bought gold itself, with this money. We believe that up to 1,500 tonnes of gold is held in these funds, so far, and the demand has hardly been tapped yet. That is only in three years, showing how much even institutions want a safe-haven against the uncertainties building up in the future. Expect this demand to continue to burgeon!

Traditional bullion demand itself is strong from China westwards to the UK and onto the US. This demand and investment demand have proved to be the most remarkable and heavy form of new and old demand over the last three years and looks set to continue to grow and perhaps substantially, from now on. It will want to see clear evidence of economic or currency breakdown, before it jumps rapidly though.

But why will demand overshadow supply? Here we are at $1,000 and demand is still strong overall. What is this telling us?

• It tells us that a glance into the future of the global economy, of global currencies has and is still making major global, institutional central banking and high wealth individuals trepidatious;
• They look at the global currency world and see it heading into uncharted waters, where the US $ may fall into the hole it dug itself into;
• They look at the recovery itself and see that little has been done to avert the causes of the ‘credit-crunch’ except to repair the damage it did;
• They see a major shift in economic power away from the States and Europe to the East. This upending of the present balance of economic power is bound to deeply disturb the financial world.

They see that a combination of all of this is a dubious place for the prudent investor! Prudence is found in a place where such risks do not rule. Alternative investments such as gold and silver have proven to be the place to be since the beginning of this century.

Gold Miners to Catch Up?

The MERCENARY GEOLOGIST, a.k.a. Michael S. "Mickey" Fulp, is a Certified Professional Geologist with a bachelor's degree in Earth Sciences from the University of Tulsa and a master's degree in Geology from the University of New Mexico.

Fulp's near-30 years' experience as an exploration geologist has come from working with junior explorers, major mining companies, private firms and investors as a consulting economic geologist, specializing in geological mapping, property evaluation and business development. He launchedMercenaryGeologist.com in late April 2008.

Here Fulp speaks to The Gold Report about the outlook for Gold as well as Gold Mining stocks, plus the crucial importance of doing your own due diligence in whatever investment you make...

The Gold Report: You've been traveling quite a bit this summer...

Mickey Fulp: Yes, I focused mainly on the northern tier of North America, which is what I generally do in the summertime. I looked at some gold companies, some uranium companies and some rare earth companies; those are the sectors I'm following. I was in the Yukon, Saskatchewan, Northwest Territories, Quebec, Wyoming, Idaho, Armenia, Haiti – to name a few places. All in all, it was quite a busy summer.

TGR: You've gone to some remote places, which can be fun but also arduous traveling. From a geologist's perspective, it's apparent why you, as the Mercenary Geologist, look at your sectors from the mining angle. Each is so different in terms of what drives value, though, how do you build expertise in these three different sectors?

Mickey Fulp: All are quite different in what drive their values. I study commodities and commodity trends as part of my basic research. As you may be aware from my recent Mercenary Musing called The Trouble with Geologists, I'm an economic geologist. I meld both economics and geology disciplines. I'm always looking at sectors that appear undervalued, trying to determine whether there are upcoming catalysts that will tend to make those sectors appreciate.

TGR: What are the key elements that help you decide whether a sector is undervalued? Are you looking at company financials? At the overall sector relative to other investment opportunities?

Mickey Fulp: That's a very good question. It's basic commodities study. For instance, Gold drives the Venture and the Toronto markets in the junior resource sector. When the price of gold is robust, those companies tend to do well. We've seen that happen this year with the increase in the price of gold.

TGR: Gold, of course, is the big topic in the news, closing over $1,000 for more than seven trading days in a row before dropping a bit. What's going on in gold?

Mickey Fulp: I think it's the weak US Dollar. I am generally bullish on Gold, but I am far from being a gold bug. I'll stick with the prediction I made in January when I said gold was going to be range-bound this year between $750 and $1,050. I believe I missed that on the low side, but I think gold will finish the year in the present range, perhaps it could make $1,050, but I don't expect it to go higher than that.

TGR: What's holding it back?

Mickey Fulp: The fundamentals of the gold market are still not good. Jewelry demand at these prices has dried up in India and the Middle East, which are the biggest consumers. We're seeing that offset somewhat as Chinese people are now able to own gold and the government is encouraging its citizens to buy it. I think that gold is a bit overbought right now. I know I'm in the minority on this position, but we shall see at year end if my predictions are right.

TGR: If Gold is a little overbought – assuming you're talking about the actual commodity – what does that mean for the juniors in the sector?

Mickey Fulp: We'd seen a disconnect between the price of gold and the juniors' values last year; the juniors lagged behind. But then in the early part of this year the strongest gold juniors began doing remarkably well. Certainly that correlates with the fact that gold has been trading at $900-plus for a number of months now.

If you look at valuations from the highs of the junior market in October to November of '07, gold juniors are still trading at deep discounts. So I think there's room for up-trends in this marketplace.

TGR: If they're still trading at a discount from where they were at the highs, who's to say that the highs were the correct market caps for values of these companies?

Mickey Fulp: What is the correct market cap? The market does what the market will do. There's no predicting what these valuations are. It's driven by market psychology. In November of '07, we were using $65-$70 valuations for ounces in the ground for a junior explorer. Now, those valuations are in the $40-$45 range. What's fair market value? It's what the market says it is at any particular time. So if you use the metric we were using a couple of years ago, the gold sector is still undervalued.

TGR: But if people who say gold may go to $1,500 before the end of the year trigger a market mania, won't that continue to lift up the whole gold sector and make the discount from the highs of 2007 go away?

Mickey Fulp: Sure, if gold goes to $1,500, we'll see tremendous increases in valuations of gold companies, particularly the producers, and that will filter down to the explorers, too. But I won't buy the idea of $1,500 gold in the foreseeable future.

The gold explorers are the ones that have really done well this year. Early on in the year, I said that cash flow was king and that you wanted to go in and find small gold producers. That really hasn't played out; what's been king – and that's been driven home this summer – is the explorers. Companies that issued a release of 100 meters of over a gram per ton of gold went flying. So the emphasis and the attention have focused on the gold explorers. For some of the companies I'm involved in, that's been quite good.

TGR: When we interviewed you in June, we talked a bit about Armenia...

Mickey Fulp: Yes. Armenia is certainly an emerging market environment. Miners there are encountering very encouraging results and have been very well-received by the marketplace.

TGR: Anything else you would like to tell our readers?

Mickey Fulp: I'd say, "Do your own due diligence, dude." I borrow that alliteration from my friend Otto Rock who writes the Inca Kola News blog. The successful investors in this business are the ones who research and study companies before investing in them. You don't want to be throwing darts at the board. It's a high-risk business; it's gambling. But you can skew the odds in your favor by doing careful research.

GAAP: Crazy But True about Gold

"ALL THINGS must pass," George Harrison mournfully crooned on his 1971 album of the same name, writes Eric Fry in the Rude Awakening.

"All things must pass away...Sunrise doesn't last all morning. A cloudburst doesn't last all day..."

And neither, of course, does a superpower's global economic hegemony.

America's dominance of the global economy is falling victim to self- inflicted wounds – namely, extreme and rising indebtedness. America's recent flood of red ink would make a banana republic blush.

As a result, risk-free Treasury bond may not be as "risk free" as they used to be. A few days ago, the highly regarded hedge fund manager, Julian Robertson, revealed that he is purchasing long-term put options on long-term Treasury bonds. In other words, he thinks their long-term value is lower from here. And his reasoning is persuasive.

"If the Chinese and the Japanese stop buying our bonds," Robertson explained during a CNBC interview, "we could easily see [interest rates] of 15% to 20%...

"It's a question of who will lend us the money if they don't. Imagine us getting ourselves into a situation where we're totally dependant on those two countries. It's crazy."

Crazy, yes, but true.

The US financial markets, especially the credit markets, benefit greatly from both familiarity and reputation, more than merit; past reputation, more than future reliability. But "reputation" doesn't pay the bills.

The growth of emerging economies is "symbolic of the relative, less dominant position the United States has, not just in the economy but in leadership, intellectual and otherwise," former Federal Reserve Chairman Paul Volcker said in an interview with Charlie Rose last week.

"I don't know how we accommodate ourselves to it," Volcker continued. "You cannot be dependent upon these countries for three to four trillion Dollars of your debt and think that they're going to be passive observers of whatever you do."

The US government, like one giant General Motors, is technically insolvent. And yet, it borrows at low 'triple-A' rates of interest because of its long-term legacy of world-beating economic success. That triple-A credit rating does NOT come thanks to America's recent history of extreme indebtedness.

The fiscal condition of the United Sates has deteriorated dramatically during the last several years. On the basis of current obligations, US indebtedness totals "only" about $12 trillion. But when utilizing traditional "generally accepted accounting principles" (known as GAAP) – the kind of accounting that every public company in the United States MUST use – US indebtedness soars to $74 trillion.

This astounding sum – including things like the present value of the Social Security liability and the Medicare liability (i.e. real liabilities) – is more than six times US economic output...

Perhaps this mind-blowingly large debt load would seem less mind-blowing if it were decreasing. But it is not. Instead, the current US administration is amplifying the long-standing American habit of spending money it does not have.

The chart below tracks the federal budgets for both America and Brazil as a percentage of each country's gross domestic product. Back in 1998, the US ran a budget surplus, while Brazil was running a deficit equal to 9% of GDP. But the two nations have since traded places. At last count, the US budget deficit totaled an astounding 9% of GDP, while Brazil's deficit totaled only 3.3%...

And yet, the US government pays only 3.28% in interest per annum to borrow money for 10 years. The Brazilian government must pay 5.05% to attract investors to its 10-year bonds.

Thus, the yield spread between these two borrowers is 1.77 percentage points – or 177 "basis points" – and gives the advantage to the United States, despite its massively greater debt burden.

At this point, a brief tutorial may be in order...

Like a polite dinner guest, the bond market does not express its opinions in absolute terms. Rather, it renders a relative judgment.

It prices specific bonds relative to other bonds, or specific credit instruments relative to others. This relative pricing is known as the "yield spread" – and the most common yield spread comparison is made relative to US Treasury bond yields. So for example, if a certain 10-year bond issued by a corporation or a foreign nation is yielding 6.50% at the same time that the US 10-year note is yielding 4.50%, that bond is said to be trading 200 basis points over Treasurys. In other words, it's paying 2.00% more than the US debt.

The higher the spread over Treasurys, the riskier the debt is perceived to be. Because the United States Treasury is deemed to represent the ultimate "risk free" debtor. And this is where our story takes an interesting turn...

The yields on foreign sovereign bonds (i.e. government bonds) have been falling closer to US yields for several years. This process has been unfolding gradually, and in fits and starts. But over time, the trend is clear. What's not clear is who is moving closer to whom.

Are foreign sovereign issuers becoming MORE credit-worthy or is the US government becoming LESS credit-worthy? Or is it a little bit of both?

Whatever the case, the nearby chart illustrates the result. Using a four-year rolling average of yields (to smooth out the trend), it is easy to see that Developed World interests rates are converging toward US rates. Canadian and French sovereign 10-year interest rates, for example, have been moving closer to US rates for several years. (And in fact, French rates have dipped below US rates several times during the last several years).

Endless Stimulus and $2000 Gold

SELF-AVOWED "old rock hound" Byron King earned his bachelor's degree in geology at Harvard, and then worked as a geologist in the exploration and production division of a major oil company, says The Gold Report.

After "earning his wings" in the US Navy and the US Naval Reserve, logging more than 1,000 hours of flight time in tactical jet aircraft and recording 128 aircraft carrier landings, Byron practiced law in Pittsburgh before becoming a prolific author and popular investment speaker.

Now a core contributor to Agora Financial's Daily Reckoning, Whiskey and Gunpowder and Penny Sleuth, he also edits the Energy and Scarcity Investor andOutstanding Investments newsletters.

Here he speaks to The Gold Report about the "bottomless pit" of stimulus spending and why he sees $2,000-per-ounce gold on the not-too-distant horizon...

The Gold Report: We've seen quite a rebound in the markets since we spoke in May, and governments across the world have begun releasing some positive economic news. Are we out of the recession as Bernanke has told us?

Byron King: I don't agree with that all. It's like at the funeral home where they put really good makeup on the corpse and people walk in and say, "Oh, he looks so good." Then you think to yourself, "Wait a minute. If he looks so good, why is he dead?" That's where we are now, I think, with our economy. We're still in the recession, it has been well-masked.

Let me digress and say that yes, the stock market rebounded. The "sell in May, go away" thing didn't work this year. So if you stayed in the market, you probably benefited very well from the market recovery. But it was a recovery not rooted in fundamentals. Part of it is that we've had a banking recovery, too. But that was because of massive infusions of new liquidity out of the Federal Reserve and the Treasury Department into the financial sector. That's not the prescription for long-term health.

As with someone really sick in the hospital, the problem isn't putting him on life support; the problem is getting him off the respirator. Now the question is how to stop hemorrhaging public money into the system, and in fact, begin pulling some of it back out.

TGR: Let's assume for now that the government isn't prone to taking the patient off the respirator. Do you expect diminishing returns in terms of less recovery seen for every Dollar the government puts into the system?

Byron King: That's a great point. We're there, at the point of diminishing returns in terms of what it takes to get another Dollar of real GDP. It doesn't matter how much green ink they use down at the Bureau of Engraving and Printing or how many ones and zeros they create in the Federal Reserve. At the end of the day, how much have we improved? How much have we built our economy? Look at numbers like new business formations, numbers that indicate the health of growing businesses – hiring, recalls, overtime certain types of gross output figures, job creation. You're not seeing healthy numbers for those things in the economy.

Gold Supply

IF WE'RE RIGHT ABOUT where the price of gold is headed, writes Jeff Clark, senior editor of Casey's Gold & Resource Report, the general public will someday clamor to buy all things Gold.

While Gold Mining stocks will be where the real leverage is, the rush will start with gold itself. As a gold editor, I have a very natural question: Is there enough to go around?

According to the US Census Bureau, there are 6.783 billion earthlings. Meanwhile, CPM Group, a highly respected industry organization, estimates there are 4.8 billion ounces of above-ground gold in the world. And this includes jewelry, electronics and dental gold.

So, even if everyone around the world volunteered to have their chain, cross, or tooth melted into a coin, we're already short if everyone wanted, say, to own a single ounce each. Those towards the end of the line are out of luck.

However, it's worse than that. Of all the physical Gold ever mined:

• 2.1 billion ounces, or 43%, is found in jewelry, decorative, and religious items;
• Private stock – gold already held by various private parties – accounts for 1.1 billion ounces;
• Official reserves (central banks, IMF, etc.) stand at 1 billion ounces;
• Industrial use accounts for 530 million ounces.

Very little of this is likely to come available for purchase in Gold Bar or coin form. After all, most private investors aren't selling any of their gold right now, and neither are many banks or institutions. Most everyone is buying.

So for those who don't yet have that solitary ounce (or you greedy investors who want more than one), this pretty much leaves us with mine production and scrap sources.

CPM forecasts that total new supply in 2009 will be around 122 million ounces. Only a small percentage of this is made into Gold Coins and bars, but if all of it were, it would amount to less than two one-hundredths of an ounce, or about half a gram, for every man, woman, and child on earth this year. A product of this dimension is about half the size of that small button on your shirt collar.

Since this supply is only available annually, it means 0.018% of the global population – one in every 55 people – could buy a one-ounce Gold Coin this year. Or, said differently, it would take 55 years before everybody had one, assuming the population never increased and supply never decreased. Reality is that both those factors are moving in the opposite direction, however. And it's worse than that.

Actual 2009 coin production will be around 5 million ounces (excluding medallions or "rounds"), leaving two one-hundredths of a gram of gold (or 0.3 of a grain) available this year for each of the planet's inhabitants. This is about half the size of the sesame seed that fell off your hamburger bun at dinner last night. It means that only 0.0007% of earth's citizens – or one in 1,356 – can buy a one-ounce Gold Coin this year, and it would take 1,356 years for everyone to get one.

About Forex and Dollar Rate

WE HAVE BEEN waiting such a long time for clarity on how International Monetary Fund (IMF) is to conduct its gold sales of 403.63 tonnes, writes Julian Phillips of the Gold Forecaster.

The IMF Executive Board has now approved those gold sales. Now the head of the IMF, Dominique Strauss-Kahn, has said "These sales will be conducted in a responsible and transparent manner that avoids disruption of the gold market.

"Most importantly, the sales are strictly limited to 403.3 metric tonnes, which is one-eighth of the fund's total holdings, so the IMF will continue to hold a relatively large amount of its assets in Gold."

Prior to selling this gold on the open market, the IMF is prepared to sell the gold directly to central banks or other official sector holders. These sales to official sector holders will be conducted at market prices and would shift official gold holdings without changing total official gold holdings.

Any IMF Gold Sales onto the open, international market would be phased over time, it says. Regular external reporting on gold sales will also be provided to assure markets that gold sales are being conducted in a responsible manner.

Let's be clear on this: If the IMF is to offer this Gold to other central banks before offering the gold to the open market they are likely to receive bids that would certainly confirm that central banks value gold in their reserves and are prepared to buy it in even at these prices! Whether it received a few or many bids is irrelevant. If all the 403 tonnes were sold this way, then that confirmation would elevate gold as a reserve asset and a measure of value once again.

And if there is an amount left over, it will be sold in a manner that will not brutally bring the Gold Price down, since it must avoid disruption of the gold market.

Which large Dollar surplus holding nations can afford to make this investment? Far more than just China or Russia, we believe. Indeed, we expect the IMF is already receiving offers from these central banks. So will any of this gold make it to the open market? What if only 100 tonnes are left for the market? What if none is left? Sales of this gold to any central bank will be positive for the Gold Price. Sales of all of it will bring a confidence to the market that will send it to new heights.

We believe that this statement from Strauss-Kahn, in itself extremely positive for the Gold Price, will represent confirmation of gold's role in the monetary system.

Economic Dark Matter

IT SEEMS WE'RE NOT the only people trying to figure out where all the money went from this decade's debt bubble.

"Where did all the debt go?" asked Bank of England economist Spencer Dale in a speech last Thursday in Exeter. Sadly for US and British households, however, let alone savers and investors, he had fewer answers than even us here atBullionVault.

"Household debt as a proportion of income increased from 100% to 165% in the 10 years to 2007," Dale noted of the United Kingdom. "[Yet] this big run up in debt was not used to finance a surge in spending," he added, as if taking his cue from our essay of last Wednesday, Economic Dark Matter, and scribbling his speech the next morning as the train crawled through Reading.

"Where did it all go?"

Where indeed...? Because as the chart shows, the surge in Britain's household debt ratio starting 10 years ago coincided with a marked slowdown in consumer spending growth.

In the US, the same picture...with personal indebtedness ticking higher from the same point in time, too. Which hardly seems fair. Just imagine! Borrowing a record multiple of gross income – fully 120% in the US by 2007...and a whacking 170% by the start of '09 here in the UK – just to ease up on discretionary spending.

"In fact, there was no such boom," Spencer Dale went on in this week's speech, pretty much quoting yours truly. But just like his policy-making predecessor,Stephen Nickell, five years before him, he thinks the missing billions – borrowed but not spent in the shops or malls – are explained away by "developments" in the housing market...

"House prices trebled in the ten years to 2007. And mortgage debts were accumulated to pay for the housing that had become so much more expensive. The conventional wisdom that the sharp increase in household debt was associated with the house price boom of the past decade is well founded."

So far, so good. The missing digit in our grand sudoku puzzle – that economic dark matter which forced consumers deep into hock without consumption soaring – lies in house prices. Right? Not quite, says Dale.

"What is less often appreciated is that much of that rise in household debt was matched by a comparable increase in the value of financial assets held by households."

Just like Nickell in late 2004, the Old Lady's man sees a matching asset to balance the debt. Borrowing here must equal new savings there. The volumes, though swollen, still equal each other. Net-net, we all got richer by taking on debt. That's why economists call it a balance-sheet, stupid!

Story of Gold Market

The Gold Report: Malcolm and Marshall, you started the Encompass Fund in June of '06 with the intent of investing in a wide array of sectors, "to minimize or avoid sharp declines in the market," as it says on your site. However, according to your stock chart, you had a fairly dramatic decline in Q4 '08 with a pretty dramatic recovery since then. Tell us a bit about what happened there.

Malcolm Gissen: What happened was that prior to and in 2008 we emphasized resource companies in our portfolio, and we believed that these companies were performing well. We had confidence in management. In the case of the resource companies, many of them continued to expand their resources, in some cases, very substantially. So we felt we were pretty comfortable with holding these positions in our portfolio.

In the second half of 2008, a number of these companies experienced very sharp declines in their stock prices. We were alarmed, so we called the companies and asked if they knew what was going on. Their only explanation was that somebody was dumping a lot of their shares, which we, of course, could see in the market.

But it wasn't until very late in the year, when these companies spoke to and visited hedge funds, that the hedge funds would tell them that they had experienced a lot of liquidations and, as a result, were selling all of their resource company positions – and selling them as quickly as they could. In some cases, it was program trading. In other cases, they just dumped the stock. In the case of the junior mining companies, where the stock was generally thinly traded, it had a profound impact on stock prices when hundreds of thousands of shares or, in some cases, millions of shares, were unloaded in the marketplace, driving down the price of a number of these companies anywhere between 50% and 95%. When we saw that happen late in the year and realized the cause, as managers of the Encompass Fund, we decided we would buy more shares of some of the companies. We did that and that is one of the reasons the Encompass Fund has gained about 80% this year.

Marshall Berol: There were several things we did, but when we saw what was happening with the markets in the fourth quarter of 2008 and what was happening with the companies that the Fund was invested in, we went back and reviewed each of the companies for how well we thought they could survive (i.e., a good investment going forward), and sold several of the companies we felt were weaker because of finances or the projects, or the time involved in getting the projects moved along, and factors of that nature. So those companies we sold at that time, and as Malcolm said. We increased the positions in some of the companies that we did own and felt were strong companies with good management, finances and projects that we felt would be worth owning going forward. Fortunately, that has worked out this year.

Malcolm Gissen: I would say I have not been surprised at how well many of the companies in the Encompass Fund have performed this year. Marshall may not agree with this – and we don't agree on some issues – but I expected that good companies that performed well from an operations standpoint would outperform. I felt that the resources companies that were continuing to expand their resources would excel since I didn't think the prices of the resources were going to decline much. I felt there would continue to be demand for the resources and so I've not been surprised by the performance and, in fact, think that there's more to come. I don't think the story is over yet.

Marshall Berol: Yes, we're definitely of the view that the resource investment story is not over. We're still in the early innings. There are a lot of reasons we believe that the demand for resources will continue to expand. It's supply-demand in the case of gold and, to a lesser extent, silver. It's the storehouse of value. There's the inflation aspect. A lot of aspects come into the various resources – whether it's the metals or energy – that we feel has a very bright future going forward.

Economic Child's Play of Gold

EVEN KNOWING THE plain fact that the economy is in a recession if not depression, it is still the kind of headline that grabs your attention, says the Mogambo Guru at The Daily Reckoning:

"Recession Worse Than Prior Estimates, Revisions Show" writes Bob Willis at Bloomberg.com.

"The first 12 months of the US recession," he says, "saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed."

By this time I am losing interest, as I suspected as much, and would have been surprised if things had turned out otherwise. I say this with a certain haughty-yet-snotty attitude because the Austrian school of economics is so easy to grasp, so intuitively correct and now so provably correct, that it is easy to anticipate the long-term outcome when a central bank is creating excessive amounts of money and credit, especially when the majority of it is used to expand government spending.

Child's play!

Seeing the future clearly in economics is easy, unlike forecasting other social institutions, like marriage, which I thought meant that I would be happy for the rest of my life, but which meant that I did not remotely understand the full ramifications – none of which, and I emphasize NONE, were even hinted at when we were dating, which should be grounds for some kind of legal action so that I can get my life back, instead of having it wasted by her, and the stupid kids, and the stupid relatives, and the stupid neighbors, and the stupid job, and all the stupid stuff you have to do as a result of being so stupid as to say "Goodbye!" to a life of mindless, selfish hedonism in the first place where, with any luck, you would be dead by now, lying in some gutter with a big smile on your stupid face, instead of putting up with spouses, children, neighbors et al who are all so stupid that they don't Buy Gold, silver and oil even after I always deliberately end the "Happy Birthday" song with, "And if you're not Buying Gold, silver and oil, then you are not going to get your wish because the Wish Fairy knows that you are too stupid to know what to do with that kinky stuff for which you are secretly wishing."

But this is not about any of that, but about the way that the government has now "changed the way it accounts for natural disasters, such as Hurricane Katrina," which ought to make you suspicious, especially as it was done for "eliminating much of the prior volatility in income calculations", whatever in the hell that means.

I imagine that the government could use it as an excuse to "find" more money to spend by reducing accrued costs or disguise the fact that government is incompetent. Either one.

I personally think it is the latter, and not just because I am a suspicious and paranoid little rat who thinks that the government is an expensive, disastrous, giant dead-weight loss that is out to get me, but because another interesting change is that "Personal income was revised up over the last decade, after the government boosted its adjustments for the underreporting and non-reporting of income using more recent data from the Internal Revenue Service."

Of course, I think this is so the government can now say, "Hey! Income was up over the last decade, so shut up about how we are a bunch of incompetent and dangerous bunch of arrogant pinheads who actually believe the stupid stuff we say, like how we say that continual government deficit-spending and continual expansions of money and credit by the Federal Reserve are some kind of blessing and not the most stupid things that we could have possibly done!"

The "found money", in case you were wondering, apparently comes from income increases as a result of the housing boom, and "in the most recent years reflect gains from rents, interest and proprietors' income", as if that distorted boost to income is now "the new norm" or something! Hahaha!

Finally, the Commerce Department "shifted food services, which include meals purchased at restaurants or served in schools, out of the food category."

Paradoxically, "As a result, the Fed's preferred inflation gauge – which tracks consumer spending and excludes food and fuel – was pushed up by 0.2 percentage points for the three-year period from 2006 to 2008."

Later, they explained that "The reason for this is that costs of meals away from home are not as volatile as fresh food, the government said, and therefore services should be included in the measure commonly known as the core index."

Gold vs. US Government

JUST LIKE poor young Pip in Charles Dickens' Great Expectations, central banks keep inheriting unwelcome bequests.

Today's "legacy assets" are toxic derivatives; a decade ago it was gold reserves. Both are proving hard to shrug off, but for very different reasons. Both legacies also come thanks to previous central-bank history; the fossils remain only too livid today.

And 10 years from now, if not sooner, just how welcome the current central-bank must-have become – freshly printed government debt, bought with money that doesn't exist until the central bank wills it?

Seeking first to defend against inflation and war, the West's central banks built up huge reserves of the ultimate hard money – Gold Bullion – during the early-to-mid 20th century. Long before the turn of the millennium, however, these hoards grew to look quaint and expensive. Unyielding and relatively useless to industry, gold simply sat there, down in the vaults, costing money to store but returning no interest.

Who needed crisis-proof gold when Western Europe (if not the Balkans or Mid-East) was enjoying its first generation of peace-time in history? And who needed fine gold when the Nasdaq index of tech stocks was priced for 20% annual earnings growth over the next decade and more?

In short, who needed gold when we'd got Alan Greenspan, as the New York Times asked in May 1999. "The argument against retaining gold is that its day is past," wrote Floyd Norris with uncanny timing, just two days before Gordon Brown's Treasury announced its ham-fisted sale of half the UK's gold bullion hoard.

"Once it was useful as a hedge against inflation that would hold its value when paper currencies did not. Now financial markets have their own sophisticated ways, using exotic derivative securities, to hedge against inflation."

You could butter your toast with the irony. But it wouldn't taste sweet or provide much nutrition. Whereas a further glance back at history might.

"With huge gold stocks available for sale, [governments] may discourage excessive price increases but naturally do nothing to prevent sharp decreases," reported an investment piece for Medical Economics published in October 1977. (Our thanks to the author for finding and faxing it to BullionVault this week.)

"The government specter [over the gold market] can't be expected to disappear quickly," F.D.Williams continued, some 32 years ago. "Gold will continue to be part of many national reserves for a long time. The stocks are so large, they can't all be dumped at once."

Compare and contrast with today's unwanted bequest – those toxic derivatives the US Treasury chooses to call "legacy assets" as if it played no role at all in producing them. Unlike state-hoarded gold, it only encouraged their creation; it didn't want to look after the damn things. And quite unlike the market for state-hoarded gold, a ready stock of willing mortgage-bond buyers also looks unlikely to gather.

"The PPIP, which was beset by multiple delays as regulators tried to figure out the best means of removing many of the troubled assets from banks' books," as CNN reports, "is still not up and fully running yet." It's not been for lack of incentives.

Gold vs. the Dollar

WE ARE enjoying our month in the country, writes Bill Bonner in The Daily Reckoning from his French chateau.

Not exactly a vacation...but close. We work in the office from 8am until lunchtime at about 2pm. Then, we turn our attention to other things. In the summer, that means painting.

We're repainting the billiard room, because Elizabeth decided that the curtains needed to be changed. And then, we're repainting a farmhouse, top to bottom, before renting it out.

Painting is a fairly relaxing occupation. You can do it while thinking about other things. Rolling the walls or cutting in the corners, some men might think of going hunting...or playing golf. We try to figure out what is going on in the world economy. For these are remarkable times we live in. We see what is happening...pretty much what we expected.

But we're not sure where it leads.

Regular readers may have noticed a shift in our thinking recently. Well, you can blame latex. As we were painting in the billiard room we began to see that governments are even more incompetent than we had realized. They can't even create inflation on demand!

A few months ago, we were preparing for inflation...even hyperinflation. Now we're not so sure. The depression and the Chinese vigilantes may hold off inflation...even for years.

Does this mean you shouldn't buy or even sell gold? Well...we wouldn't go that far. Even in the Great Depression, Gold Bullion and gold-mining stocks rose in price. And the one and only sure thing is that the world monetary system is dangerously unstable. We'll hold gold until it settles down. Just don't count on getting rich from it in the short-term.

About Gold Review

The GADERENE SWINE RULE, as theologian Douglas Wilson explains it, states that just because a group is in formation, doesn't mean they know where they are going, writes Joel Bowman in Eric Fry's Rude Awakening.

Humanity, as we know, is hardly immune to swine-borne afflictions. This very day, possessed by the demonic spirit of fiscal and monetary insanity, man races towards his own cliff. Predictably, and perhaps fatally, he neither looks to see where he is going nor questions whether he is in intelligent company.

The economy is still sinking, he realizes, but stocks are still rising. Eventually the twain shall meet, though perhaps only in passing. Even so, everybody believes the worst is over and that stocks ought to continue on their lunar trajectory. The stimulus is working, they say. The problem is not that anyone believes this...just that everyone believes it. It is deluded groupthink on a mass scale.

When Britain nicked $30 billion from their future generations to pay for their present day financial malaise, for example, Prime Minister Gordon Brown was on hand to offer his defense of the theft.

"We now have a unique opportunity to do, in a 21st-century way, what was done in the 20th century by the New Deal," Brown said. "As they built roads and bridges to create the infrastructure for the years ahead, we can use this period of adjustment to build both the technological base and human capital to equip us for the opportunities ahead."

Politicians like Brown, in other words, are stealing from the future in order to pay for the road to get there. The problem is, it's not Brown's money to spend. It must be borrowed, and then taxed to redeem the creditors. Rarely during these "periods of adjustment" does the concept of paying for one's own road even enter the public discourse. And why would it? The victims of this crime are not even alive yet to defend their property. It's like taking candy from an unborn baby.

Sadly, Britain is but one pig in the mad rush off the cliff and into the sea. In Australia, the list of qualifications for receiving a government handout doesn't even include the rather lenient clause, "must have heartbeat". In a vintage display of bureaucratic bumbling, the Australian government recently mailed checks totaling $14 million to no fewer than 16,000 deceased estates. Recipients need only to have remained alive long enough to fill out a tax return for the 2008 financial year.

Not wishing to leave anyone out, dead or alive, Kevin Rudd's government also sent checks to serving members of the nation's prison population and some 25,000 expatriates – all part of Prime Minister Rudd's own $10 billion brand of economic Viagra.

Return of the Resource Story

NOT MANY PROFESSIONAL investors anticipated the devastation 2008 would visit upon the markets, says The Gold Report.

But having done that, Malcolm Gissen and Marshall Berol started a no-load mutual fund – the Encompass Fund – in June 2006. Malcolm Gissen foundedMalcolm H. Gissen & Associates Inc., an investment advisory services firm, in 1985. Marshall Berol has been engaged since 1982 as an investment manager in San Francisco, CA, joining Gissen in 2000.

In this exclusive interview with The Gold Report, Malcolm and Marshall share why they believe "we're still in the early innings" of the resource investment game and foresee a bright future for the all-star junior miners.

The Gold Report: Malcolm and Marshall, you started the Encompass Fund in June of '06 with the intent of investing in a wide array of sectors, "to minimize or avoid sharp declines in the market," as it says on your site. However, according to your stock chart, you had a fairly dramatic decline in Q4 '08 with a pretty dramatic recovery since then. Tell us a bit about what happened there.

Malcolm Gissen: What happened was that prior to and in 2008 we emphasized resource companies in our portfolio, and we believed that these companies were performing well. We had confidence in management. In the case of the resource companies, many of them continued to expand their resources, in some cases, very substantially. So we felt we were pretty comfortable with holding these positions in our portfolio.

In the second half of 2008, a number of these companies experienced very sharp declines in their stock prices. We were alarmed, so we called the companies and asked if they knew what was going on. Their only explanation was that somebody was dumping a lot of their shares, which we, of course, could see in the market.

But it wasn't until very late in the year, when these companies spoke to and visited hedge funds, that the hedge funds would tell them that they had experienced a lot of liquidations and, as a result, were selling all of their resource company positions – and selling them as quickly as they could. In some cases, it was program trading. In other cases, they just dumped the stock. In the case of the junior mining companies, where the stock was generally thinly traded, it had a profound impact on stock prices when hundreds of thousands of shares or, in some cases, millions of shares, were unloaded in the marketplace, driving down the price of a number of these companies anywhere between 50% and 95%. When we saw that happen late in the year and realized the cause, as managers of the Encompass Fund, we decided we would buy more shares of some of the companies. We did that and that is one of the reasons the Encompass Fund has gained about 80% this year.