July 2011 Archives

PHILADELPHIA -- A jury has decided that a set of rare gold coins found in a bank deposit box rightfully belongs to the U.S. government.

The decision Wednesday caps an unusual civil case that combined history, coin collecting and whether the set of rare $20 "double eagles" should have ever let the U.S. Mint in 1933.

Federal prosecutors had asserted that the coins never circulated when the country went off the gold standard. Most of the batch was instead melted down.

But Joan Langbord, the daughter of a Philadelphia jeweler, said she found the 10 coins in her father's bank deposit bank after he died. She said that her father could have acquired them legally, perhaps through a trade of gold scrap.

One 1933 double eagle sold for $7.6 million in 2002.

Investors and consumers alike could reap the benefits as more and more start-ups step into what used to be the exclusive domain of traditional financial companies

At PerkStreet's downtown headquarters, a dozen employees - mostly twentysomethings in jeans and sneakers - are chatting or pecking at laptops in a few rooms surrounded by blond Ikea furniture and green partitions.

As at many tech start-ups, workers are paid partly with stock options. There's no dress code. Notes about what each worker is doing are scribbled on glass panels on one of the walls.

But PerkStreet isn't developing a new video game or social networking site.

Instead, it's marketing checking accounts, competing with financial giants such as Bank of America, Citibank, and Wells Fargo. The company, founded three years ago as PerkStreet Financial Inc., has already attracted tens of thousands of customers by offering a debit card with the highest cash-back rewards in the country.

PerkStreet is one of many companies in Boston and nationwide using technology to reinvent financial services. Call it Finance 2.0. Call it fin-tech - short for financial technology. Whatever you call it, the sector is exploding.

Last year alone, venture capitalists invested $834 million in scores of US financial technology firms, up nearly a third since 2008, according to CB Insights, a New York information services firm. So far this year, venture capitalists are on pace to pour more than $1.4 billion into this industry, up 75 percent from last year.

In Massachusetts, financial start-ups have collected more than $78 million in 16 deals since 2008. "Financial technology is exploding with 2011 already poised to be a breakout year,'' said CB Insights chief executive Anand Sanwal.

For consumer, it could mean more options than ever for banking and investments. Some companies are marketing products directly to consumers; others are developing technologies to allow financial institutions to offer new services, such as mobile payments.

Industry executives say a number of factors are driving this growth. First, consumers are increasingly comfortable with online financial transactions. The spread of smartphones and other mobile devices has created new ways to conduct business. And many customers are dissatisfied with traditional financial institutions.

"It looks like an area that can be disrupted,'' said Eric Mattson, chief executive of the Finovate Group, which runs a conference dedicated to financial technology start-ups.

Financial tech firms are focused on everything from banking to investing to digital payments. For instance, Square Inc., launched by Twitter cofounder Jack Dorsey, is offering a free app and thumb-size credit card scanner that plugs into a smartphone or iPad, allowing almost anyone to accept credit card payments.

The San Francisco company pockets 2.75 percent of every transaction.

HOUSTON (KTRK) -- Two people are accused in an elaborate counterfeit check cashing scheme at Houston area stores.

Dante Sumlar is the alleged mastermind of the group. Two of his alleged accomplices, Jennifer Lynn Mullinax, 40, and Christopher Antone Hill, 46, are facing charges of engaging in organized criminal activity. According to court documents, Sumlar hired a homeless man in December 2007 to try to purchase gift cards using a $5,000 forged cashier's check at a Walmart in southwest Houston. The clerk became suspicious due to the large dollar amount of the check, and with the help of a bank clerk, found the check to have the routing number from Texas State University. The employees called police.

Houston police arrested the homeless man, Steven Maheux, who told investigators that he was picked up at a homeless shelter by a black man named "Tony" and paid $200 to cash the checks. Maheux said another man named "Chris" picked him up, bought him some new clothes at Ross and drove him to the Walmart to cash the check. Maheux said Chris had eight other checks with him at the time.

Using surveillance video from Walmart, police identified the owner of the car as Christopher Hill. Court documents state Hill told police that he would drive white males around town to cash checks for a man named "Rick," who Hill also knew as Tony. Hill said he was paid $200 each day he drove and stated that a total of about $40,000 in checks were cashed.

Hill told police he knew a woman named Jennifer Mullinax who worked for Rick. Mullinax told police that Rick would pay her cash and crack cocaine to rent vehicles for him. She later told police that she knew Rick's identity from a Harris County arrest. She said she looked through bondsman file pictures and located a file on George Deshane Marshall. She told investigators that she picked up Marshall from jail after the arrest and transported him to the bondsman.

Police then discovered that Marshall was an alias for Dante Karyn Sumlar, 34. Sumlar was a fugitive wanted by the US Secret Service in Mobile, Ala. and Jacksonville, Fla.

According to court documents, Mullinax told police that Sumlar paid her up to $500 in cash and $300 worth of crack for renting cars for him until December 2007. She said Sumlar also paid her about $2,000 to answer phones in the check scheme. The forged checks had a toll-free verification number printed on them and Mullinax would answer the line when clerks would call to verify the fake checks, court documents state. She said Sumlar gave her instructions on what to say when clerks would call the number and how to act like a legit business.

In November 2010, Sumlar was located and arrested. He later plead guilty to all federal charges against him. Court documents state Sumlar said he moved to Houston in February 2007 from Alabama and used aliases Tony and Rick while here. Sumlar told authorities he alone printed all of the counterfeit checks and would make up the routing and account numbers. He also said he targeted such businesses as Walmart, Best Buy, Macy's, Toys R Us and Target, according to court documents.

The police investigation revealed 21 counterfeit cashier's checks in the Houston area for a total loss to merchants of $92,500.

NEW YORK (AP) -- Visa Inc. on Wednesday warned that its revenue and earnings growth will slow in 2012 after new regulations on the fees banks can charge for debit card transactions kick in.

The San Francisco payments network operator repeated an earlier forecast for its current fiscal year, which ends Sept. 30, for revenue growth between 11 percent and 15 percent and earnings-per-share growth of greater than 20 percent.

Next year, however, Visa said it expects its revenue growth to slow to the high-single-digit to low-double-digit range. The company expects earnings-per-share growth to slow to the mid-to-high teens.

Analysts, on average, were forecasting 11 percent revenue growth and 16 percent earnings growth for 2012.

The slowdown will reflect the rules announced by the Federal Reserve last week that kick in on Oct. 1 and next April. The first will limit the fees that banks can charge retailers for processing debit card transactions. The second will give merchants the power to decide which network handles their transactions.

Together, the two could drive down the revenue for the banks that are Visa's customers. While transaction fees are not paid directly to Visa, it's expected that the network operator will have to reduce some of the fees it charges banks. And since it operates the biggest debit card networks, giving merchants choice to go to other processors will also have an impact.

"We expect that fiscal 2012 will bear the weight of the regulations financially, and in fiscal 2013 revenue growth will regain momentum off of 2012s level," CEO Joseph Saunders said during a conference call to discuss the forecast.

Because Visa's fiscal year ends in September it was able to keep its forecast for the current year. Since the Fed moved the date the fee cap will kick in from July 21 to Oct. 1, it will have no impact on Visa's results for fiscal 2011.

U.S. debit revenue accounts for about 20 percent of the company's overall revenue, Saunders said during the call.

The CEO said Visa prepared for different scenarios while it waited for the Fed to decide on the new debit rules. Now that they are in place, Visa can go forward with its plans.

But Saunders declined to spell out how the company will respond, deferring specifics to late July, when it reports fiscal third-quarter financial results, and October, when it reports for the full year.

He did say, however, that "providing some level of incentives to specific merchants may be an effective strategy" to ensure Visa receives profits from their ability to choose processing networks.

"We will compete vigorously to maintain (the) Visa routing preference and have several strategies we will put into action to achieve this outcome," Saunders said.

For the current year, Visa's forecast translates to revenue of between $8.95 billion and $9.11 billion and earnings of at least $4.84 per share.

That is, however, short of Wall Street's forecasts.

Analysts, on average, are looking for $9.16 billion in revenue, with estimates ranging from $9 billion to $9.3 billion, according to FactSet. They are expecting earnings of $4.91 per share, with estimates ranging from $4.75 to $5.04.

Visa also said that it has completed its $1 billion share repurchase program announced in April. It bought back about 12 million shares at an average price of $77 per share.

Shares in Visa slipped 57 cents to $87.63 in extended trading Wednesday. They ended the regular trading session off 12 cents at $88.20.

* Bernanke: ready to ease money policy if economy weakens

 * Silver jumps; euro zone worries, US debt limit underpin

 * Gold option volatility spikes for third day
 (Adds comment, updates market activity, new byline, dateline,
previously LONDON)

 By Frank Tang

 NEW YORK, July 13 (Reuters) - Gold surged to a record above
$1,580 an ounce on Wednesday as the possibility of more Federal
Reserve stimulus coupled with Europe's deepening debt crisis
gave bullion its longest winning streak in five years.

 Bullion prices added to early gains after Federal Reserve
Chairman Ben Bernanke said the central bank is ready to ease
monetary policy further if the economy weakens and inflation
moves lower. Silver rallied nearly 6 percent, moving in tandem
with commodities, U.S. stock markets and risk assets.

 Fears that the euro zone debt crisis is spreading and
uncertainty over frantic U.S. talks to raise its debt limit
also underpinned precious metals. The yellow metal additionally
hit all-time highs when priced in euro and sterling.

 Gold benefits from additional U.S. monetary easing because
such a move would likely weaken the dollar and stir inflation
down the road.

 "The worst thing for gold would be to have the economy
doing well enough that the Federal Reserve starts to normalize
monetary policy, or conditions in the European Community begin
to settle down," said Mark Luschini, chief investment
strategist at Janney Montgomery Scott, a broker/dealer with $54
billion in assets.

 "As we can see, neither is happening."

 Spot gold XAU= rose 1.3 percent to $1,585.10 an ounce as
of 10:52 a.m. EDT (1452 GMT). U.S. August futures GCQ1 gained
$23.70 at $1,586 an ounce.

 Spot silver XAG= was last up 5.7 percent at $38.10 an
ounce, bringing the gold/silver ratio -- the number of ounces
of silver needed to buy one ounce of gold -- to under 42 from
43.46 on Tuesday.

 Gold is set for an eighth consecutive day of gains,
something it has not achieved since mid-October 2006, when it
rose for nine days in a row.

 It has gained around 12 percent so far this year and more
than doubled in price in the last four years.

 Gold options volatility is soaring amid gold futures' rally
this week. The CBOE gold volatility index .GVX, a fear gauge
for the gold market, spiked 12 percent to over 19.2 on
Wednesday, its third day of sharp gains.

 COMEX gold options floor trader Jonathan Jossen said one
investor sold a big position in $1,600 December call options
and bought back twice as much in $1,750 December calls.

 "It's been call buying here all morning," Jossen said.

 Gold rallied to record highs in sterling XAUGBP=R, euros
XAUEUR=R and the South African rand XAUZAR=R as well as
dollars on Wednesday.
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Euro zone debt crisis in graphics: r.reuters.com/hyb65p
Gold correlation with dollar:      r.reuters.com/ryx52s
Gold:silver ratio                  r.reuters.com/xyx52s
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

 As for market fundamentals, South Africa's powerful
National Union of Mineworkers said on Wednesday wage talks with
the country's main gold-mining companies had deadlocked and it
was preparing for a strike. [ID:nL6E7ID23G]
Prices at 10:52 a.m. EDT (1452 GMT)                           

                           LAST      NET    PCT     YTD

                                     CHG    CHG     CHG
US gold         GCQ1     1586.00    23.70   1.5%   11.6%
US silver       SIU1      38.190    2.556   7.2%   23.4%
US platinum     PLV1     1768.60    32.30   1.9%   -0.5%
US palladium    PAU1      786.65    19.20   2.5%   -2.1%
Gold            XAU=     1585.10    19.85   1.3%   11.7%
Silver          XAG=       38.10     2.05   5.7%   23.5%
Platinum        XPT=     1762.24    33.09   1.9%   -0.3%
Palladium       XPD=      783.97    21.92   2.9%   -1.9%
Gold Fix        XAUFIX=  1579.00     7.50   0.5%   12.0%
Silver Fix      XAGFIX=    36.75   184.00   5.3%   20.0%
Platinum Fix    XPTFIX=  1750.00     6.00   0.3%    1.1%
Palladium Fix   XPDFIX=   778.00     6.00   0.8%   -1.6%
 (Additional reporting by Amanda Cooper and Jan Harvey in
London; Editing by Dale Hudson)

By Richard B. Kelsky

In what seems like the blink of an eye, the check cashing industry has changed. Your business model must change with it. And it must change now.

In recent years -- particularly the boom ones that preceded the current recession -- many check cashers adopted an ostrich's approach to change. True, some trotted out the ladders, brushes and cans of Benjamin Moore, and called in the contractors and signage companies, but most did not think in terms of changing business models: disappearance of government checks, managing cash flow, P & L and balance sheet, direct deposit, debit cards, changing emphasis from transaction fees on in-store transactions to recurring revenues, and how marketing (an historic check cashing no-no) could drive revenues. Few, if any, considered analyzing their business at 20 percent less volume.

As we move deeper into this decade, the pace of industry change will only accelerate.

For tough-times guidance on business models, I suggest learning from recent immigrants entering the industry. They couple solid financial analysis with an unwavering faith in the opportunity in this country, and a commitment to succeed now, when the going is hardest. It's also wise to look toward counter-cyclical and counter-directional hedges that can offset losses in current revenues, both today and over time.

Recession is always a period of great creativity. In sector after sector, technology is enabling productivity gains and more efficient management of cash, and just about everything else. But technology is also changing the expectations of customers regarding what they'll pay and to whom.

The Business is Evolving

The primary evolutions in this business are toward the immigrant model, and recognition that ancillary and recurring revenue streams will determine future success.

Government checks are disappearing. There's no arguing this. The Feds are getting out of the check business, and the states are following close behind.

In some states, citizens have been successful in mandating a paper check option. But as cost pressures and large-bank lobbying efforts are brought to bear on state legislators and regulators, it's just as likely that attempts to preserve the paper check option are falling on deaf ears.

Direct deposit to prepaid cards is a short-term shot at mitigating the loss of government checks and a long-term opportunity of building recurring
revenue, but direct deposit and debit cards have to be managed on an ongoing basis to give them staying power (they won't manage themselves!), and you have to start working on your long-term plan today.

Cash lives. Despite the relentless drumbeat of debit card vendors, you are still in the check cashing business. That business cannot be ignored and must be nurtured. Cash remains an important component in American lives.

So the next time someone tells you cash is an extinct species, ask if they handed their debit card to that guy who just plowed a surprise foot of snow from their driveway, or towed their car off a lonesome stretch of road at 3 a.m. Or just walk by a large bank branch on a Friday evening in a major city: six ATMs, and all with a line.

Your Customer Base is Evolving

The economic crash has lost you some longtime customers. Whether they return to cash checks in the future, no one can say. Commercial check volumes have also been dramatically impacted by the recession. You will have to work smarter to grow your customer base and new lines of business.

At the same time, increased regulation is working to expand the unbanked population. The banks' response to regulations that have capped or eliminated certain fees is to limit, charge or charge more for services which, until very recently, have been provided for free, or nearly for free.

The result? More folks will be filing for divorce from their banks and realizing it's actually less expensive and easier to use your services.

Quickly changing their tune, banks have rapidly retreated from seeking out the traditional unbanked customer. Just look at their marketing, of which they are doing plenty.

I heard of one that was offering a free e-reader in exchange for opening an account with $10,000. That tells me the bank's target isn't people living paycheck to paycheck. Instead, they're going after an audience that has the leisure time to read. People who can afford to move $10K from another account for a free gift.

Their other target appears to be Gen Y, with high-tech account management promises and automated this-and-that. The problem is that now comes with a price tag.

To earn a greater share of the evolving unbanked's (and underbanked's) business, you need to better understand the shifting demographic of the customer base, and the marketing and market trends that are expanding your opportunities. Consider these:

Baby Boomers: This group thrives on old-time familiarity and steadiness of service. The problem is, this group is aging and moving away from paychecks into government benefits.

But just as aging Boomers are moving toward fixed-income, banks are creating and increasing fees, so their interest in banks is not likely to grow. Keep up the good work with this group and immediately institute programs to inspire customer loyalty and provide an increased range of services, including direct deposit.

Generation X: Gen X -- born from the '60s to as late as about 1980 -- is moving into midlife. Their stage of life, coupled with the fact that Xers came of age with PCs, means they're partial to more traditional marketing, but with a technology lean.

Generation Y: Gen Y -- born from about 1980 through the early 2000's -- require an open mind to new methods of marketing, plus conveying the feeling that you care about them personally.

Remember, this is the group that came of age with the Internet. The notion of a "mass market" that listens to broadcast TV and blindly buys what Madison Avenue tells it to is foreign to Gen Y. Its members have grown up in a peer-to-peer marketplace. An endorsement of a product or service by their digital "friends" and a caring touch has a much greater influence on their purchasing decisions.

Your Market Reach is Evolving

Smartphones have made it possible for you to reach out much farther and faster into your existing and potential markets than ever before. Since most post-Boomers communicate by text or through social media, you need to use those methods to communicate with them.

The old-school idea that your market is limited to those who already enter your premises, and that they must live within a six-block radius of your store, is just that: old school. With the right combination of technology and traditional approaches you can reach existing as well as potential customers.

Employ a combination of low-marginal-cost, high-penetration Internet and smartphone marketing, onsite marketing, and loyalty programs -- you can (and must) reach beyond your old geographic borders to draw new customers and expand your business with current ones.

Of course, expanding your market reach beyond your old-school neighborhood may mean extending it into the neighborhood of another store owner that you never before considered a direct competitor.

Like it or not, you can't avoid dealing with the shifting economics that come with being part of a maturing and fast consolidating industry. What you can do is use every technical advantage to come out on top in this Darwinian struggle to adapt and thrive.

All of this activity will involve data and data analysis. So you need to get to work to make sure every single one of your customers -- and every transaction -- is in your database, and you may have to purchase supplemental databases, as well.

Consider this: It's impossible to communicate with a walk-in customer when they're not in your store.

The Economics are Evolving

Borrowed money isn't all it's cracked up to be. In a declining revenue scenario, debt -- or more to the point, debt service -- is bad. Unless it is for growth under a realistic plan, if you don't have debt, don't start now.

Focus on profitability. Do you have a set of readable monthly financial statements? Do you actually understand them? Do you understand the difference between profitability and cash flow? Do you know how you spend your time each day? Do you start each day with a plan (even if you don't stick to it)? Or do you just seem to move from mini-crisis to mini-crisis?

Those who continue to think they can manage their business by the seat of their pants will end up losing their shirt.

Ancillary and recurring revenue are becoming more important. Whatever the source, whether wires, debit cards, bill payments, ATMs, money orders, alternative energy providers, or POB transactions, you need to focus attention on these types of products. A combination of intelligent product selection, offering of multiple competitive products, and marketing can produce significant bottom-line results.

Take, for example, competitive wire companies: smaller established wire companies which cater to single country markets, have numerous agents in their home country, and are sought out in the communities they serve here.

Similarly, as I stressed last year, because each customer's transaction pattern will drive the correct debit card for them, you need to offer a selection of debit cards. Customers keep their debit card relationships longer if they are happy.
Debit cards and other ancillary products produce recurring revenue, even though the customer is not in your store. This shift -- from on-site transaction revenue to off-site recurring revenue -- will take time. You need to start now to build recurring revenue streams for the future.

The Immigrant Model

In addition to adopting a more disciplined managerial approach, expectations per store must change.

A few years back, there were many people in this industry who made a living from only one store. While that's still possible, it is becoming increasingly less common. In fact, it's becoming increasingly difficult for two or three stores.

The good news is there is already a successful model you can emulate: The immigrant multi-store owner. Many longtime owners of single store operations might be tempted to look at the current market with a self-pitying longing for bygone days that will never return. Not so the immigrant multi-store owner, who looks to the future and sees untold possibilities, if only he can achieve sufficient scale.

Rather than a feet-in-concrete view of one store that hits an improbable home run, this model relies on hitting singles -- lots of them. It's a combination of "Don't put all your eggs in one basket" and "The whole is equal to the sum of its parts." It also includes other lines of business, if state law permits.

The math behind this model goes something like this: 1 big store x $100,000 (check cashing income) = $100,000. (Risky.) But 15 smaller stores x $35,000 (check cashing income) = $525,000. (Less Risky and Way More Profitable.) And 15 stores x $35,000 (check cashing income) + $24,000 (other lines of business income) = $885,000. (Even Less Risky and Even More Profitable.)

Which would you rather have? One four-window store with revenue at risk and sky-high overhead, or 15 one-window stores, with stable core revenue, respectable ancillary and recurring revenue sources, other lines of business and manageable-overhead? The answer is obvious.

Granted, the sustainable multi-store number may not be 15 in your market, or you may not be in a position to acquire that many locations. Depending upon your market and your appetite, it could be five or six or seven stores.

The important thing is to adopt a mentality that sees smaller-store/multi-store scale as a hedge against risk, and a door opener to greater top and bottom line growth then you'll ever see from a one-shop op.

Ultimately, success under the new model hinges on figuring out how much you can reasonably expect to make from each location, building ancillary and recurring revenue, and working and living within your means.
As I've reminded readers before, never ask more of your business than it can give. No model -- no matter how attuned to change and how successful -- can survive an owner who places unrealistic demands on the business.

Richard Kelsky is president of TellerMetrix, a provider of POS transaction, compliance, interface, electronic deposit and marketing software to check cashers, payday lenders and retail banks. He is also a New York and Connecticut Bar member, a Polytechnic Institute of NYU and New York Law School grad, a Certified Anti-Money Laundering Specialist and a frequent lecturer on business, legal, compliance, and technology issues. He can be reached at: rkelsky@tellermetrix.com

The prepaid debit and payroll card market will total $105 billion in value loaded into accounts by 2014, up from $24 billion in 2009, according to an Aite Group LLC report released June 30. For its research, Aite in February and March surveyed 500 U.S. consumers based on their use of alternative financial services, such as prepaid cards, payday loans and check-cashing services.

Nine out of 10 existing prepaid customers said they were "extremely" or "very" satisfied with their prepaid cards, but many past and present cardholders did not view prepaid cards as a long-term service. Eight out of 10 former prepaid card users said they saw the product as something only for short-term use, and six out of 10 existing prepaid customers expressed a similar view, the survey found.

"So that's a warning sign for prepaid card issuers that, even among the more loyal and satisfied customers, only a minority see it as a long-term" service, Ron Shevlin, the report's author and an Aite senior analyst, said in an interview.

The report suggests that issuers offer incentives for long-term use with loyalty and reward programs.

In the study, Aite explored four customer segments: existing prepaid cardholders, former cardholders who at some point used a card in 2010 but not in the fourth quarter, payday loan borrowers and check cashers. Participants were asked how they perceived prepaid cards and what types of extras they would like to see, such as savings accounts and paper checks. At 15% of respondents, payday loan borrowers were the least likely to view prepaid cards as a better alternative to a checking account. But nearly half, 48%, saw it is as a better option than a credit card, which Shevlin said provides hope to issuers that they could penetrate even that checking-entrenched market. "Clearly it's a minority, but there's still an opportunity to target payday loan borrowers," he said.

Another of the report's suggestions is that issuers position prepaid cards as a long-term alternative to a checking account and that they give potential customers realistic expectations of what they would receive with a particular prepaid card.

Only 14% of former cardholders surveyed described themselves as "extremely satisfied" with their prepaid cards, and Shevlin said he believes they may have had mistaken expectations, such as credit-building services or a savings account option. He suggests that issuers offer alternative card versions that include such perks or services to win back former customers and broaden the appeal for new customers.

"It seems to us like there's a really big opportunity to make prepaid cards a much more mainstream product," Shevlin said.

NEW YORK (TheStreet ) -- Gold prices were popping Friday after an unexpected and disappointing June jobs report in the U.S. triggered a flight to safety.

Gold for August delivery was adding $11.50 to $1,542.10 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,546 and as low as $1,525 while the spot gold price was jumping $9.40, according to Kitco's gold index.

Silver prices were down 3 cents to $36.50 an ounce trading more as an industrial metal, where slowing growth and demand are issues, rather than as a safe haven investment. TheU.S. dollar index was adding 0.31% at $75.14 and the euro was down 0.76% vs. the dollar.

A severely disappointing jobs number in the U.S. triggered a flight to safety into gold as investors dumped stocks headed into the weekend. In June the U.S. added only 18,000 jobs and only 54,000 private sector jobs while the unemployment rate rose to 9.2%. The employment rate can rise because more people enter the work force but in June it rose because there were just more people unemployed. Currently there are 7.5 million people collecting unemployment benefits.

The shock of the number was so severe because many analysts upgraded their job outlook based on Thursday's ADP employment report, which said the private sector added 157,000 jobs in June. Deutsche Bank had predicted that the unemployment rate would fall to 9% and raised private job expectations by 60% to 200,000 from 125,000. These kind of high expectations were slaughtered after the reading which was helping gold prices.

"Today's game changing figures ... [makes] gold increasingly attractive," says George Gero, senior vice president at RBC Capital Markets. "Technically gold is now looking like $1,575 resistance, $1,525 support, with $1,555 closing price a possible technical buy-point." Gold's record close was achieved May 2nd at $1,557.10 an ounce. Gero does point out that the one thing gold is lacking is higher open interest, otherwise known as long positions.

Before the jobs number, the metals had been in wait and see mode. After a powerful three day rally, gold and silver prices were up 3.2% and 8%, respectively, and some investors were taking profits. For some analysts, prices still have a lot more to prove.

Jon Nadler, senior analyst at Kitco.com, says "I think that the broader range for gold here is around probably around $1,475 to $1,575. We're sort of inside of that but sort of holding the $1,500 fairly decently but would need to ratchet above $1,559 to really get back into bullish mode."

Mark O'Byrne, executive director of Goldcore, a bullion dealer, said in a morning note that despite any short term action, "the long term fundamentals remain sound due to robust global and particularly Asian demand." O'Byrne sees gold supported at around $1,500 and silver at $36 due to this strong demand.

Gold and silver will now be looking to China for direction on Saturday when the country releases its June inflation reading. May's reading came in hot at 5.5%. Some headlines indicate prices could have risen as much as 6.2% in June.

Bank of America/Merrill Lynch is less positive on the metals in the short term writing in recent research note that upside to prices is limited due to the end of the Federal Reserve's $600 billion bond buying program and a stronger U.S. dollar once the U.S. government resolves the debt ceiling issue. However, "as some of these factors become less prominent, we see further upside to gold later this year, with prices potentially rising to $1,600 an ounce in the fourth-quarter 2011."

The note also said that real interest rates, the interest rate minus the inflation rate, should remain low in developed nations saddled with big debt burdens. Low or negative real interest rates make paper currencies worth less and gold and silver more attractive as a store of wealth.

The bad jobs number actually underscores the reality of low interest rates in the U.S. for an "extended period of time," the language popular with the Fed when describing its time frame.

Gold mining stocks were trading mixed Friday torn between a lower stock market and higher gold prices. Barrick Gold(ABX_) was up 0.17% to $46.27 while Newmont Mining(NEM_) was down 0.42% at $54.74. Other gold stocks, Goldcorp(GG_) and AngloGold Ashanti(AU_)were trading at $50.67 and $42.32, respectively.

--Written by Alix Steel in New York.

COLUMBUS, Ohio -- Banks are adding new fees to deal with the down economy, and some are catching customers off-guard.

Credit unions are known for a customer-friendly environment and low fees -- at least that's what Charlotte Hicks-Guest thought until her credit union debit card was declined at the grocery store.

"The next day when we looked at the account there was a $5 charge on our account that said 'debit decline fee.'" Hicks-Guest said.

Hicks-Guest said she called CME for an explanation.

"And he goes, 'Oh yes ma'am, if you don't have sufficient funds in your account, we charge you $5 for trying to make the transaction,'" she said.

CME said the fees are intended to steer customers toward overdraft protection, Ludlow reported.

Mike Adelman with the Ohio Bankers League said if there is way to charge a few for something, banks and credit unions are doing it.

"Banks are operating under wafer-thin profits right now," Adelman said.

Adelman said banks and credit unions are struggling with low interest rates, and new regulations, like one that dramatically reduces the fees they can charge when customers swipe their debit cards. 

"It's just natural, like any other business the banks and thrifts are going to have to look elsewhere for fee income," Adelman said.

Now, some customers can be charged $2 for a paper bank statement, or $7 for a copy of a check.  Customers who have online-only accounts and want to speak with a human can be charged up to $10, Ludlow reported.

And if you close your account within six months of opening it, expect to pay a $25 fee.

Even using the phone can cost you, as Hicks-Guest discovered.

"While I was on hold waiting to speak to someone, they said that if you call and you're calling to get your balance of your account there will be a $3 charge."

Some institutions are charging for other things, like $5 for debit card replacement, $5 to re-deliver a statement if a customer moves without telling the bank, and $15 to wire money to a customer's own account, Ludlow reported.

Tuesday,  July 5, 2011 3:56 PM

WBNS-10TV

Israel Switt, long deceased but once considered a "patriarch" of Philadelphia's Jewelers Row, was an honest, if curmudgeonly, dealer in coins and gold.

Or maybe he was actually an eager participant in a 1930s scheme to sell coveted gold coins stolen from the U.S. Mint.

More than 75 years later, a federal jury will determine the truth. Switt died in 1990 at 95, but for his descendants, the decision will be worth tens of millions of dollars.

At stake is the ownership of ten $20 gold pieces minted in 1933, extraordinarily rare and stunningly valuable Double Eagle coins likely worth at least $7.59 million each.

The government says that "they were stolen, and Israel Switt was somehow involved," and that it is the legal owner of the 10 coins that in 2004 turned up in a safety deposit box.

Switt's elderly daughter, Joan Langbord, and two of her sons hope to convince jurors that a Secret Service investigation into Switt seven decades ago never proved him to be a criminal. No one knows how Switt came by the coins, says attorney Barry H. Berke. So the family is the legal owner.

"The government has a theory. They don't have facts," Berke told the U.S. District Court jurors in his opening statement. Next to him sat Switt's daughter, over 80 but still involved in running I. Switt, the secondhand jewelry store her father founded in 1932. It's still on the 100 block of South Eighth Street.

She filed suit with two of her three sons, Roy of New York and David of Virginia, who were with her in the courtroom.

Their father and grandfather was a "colorful, opinionated" character, Berke said.

In his 1990 obituary, Joan Langbord said her father "could be obnoxious or irascible." She told The Inquirer: "If he didn't like you, he'd throw you out."

His business philosophy, she said, was that "the customer was never right; he was always right."

Yet his store prospered, and he received numerous awards and honors for his philanthropic work, including the Philadelphia Geriatric Center's Golden Tribute Honoree Award in 1973 and the Good Samaritan Award from Pennsylvania Hospital in 1987.

The obituary did not mention anything about the Double Eagles.

The history of the 10 gold pieces - whichever version is true - is a convoluted tale dating to President Franklin D. Roosevelt's attempt to stabilize the economy in 1933. Gold coins were taken out of circulation, and it became illegal to possess gold currency. The holders were reimbursed in paper money.