mkdir /usr/local/kvm/newvm
cd /usr/local/kvm/newvm

# this didn't work...
#virt-clone --original oldvm --name newvm --file /usr/local/kvm/newvm/root.qcow2 

# this did
virt-clone --connect=qemu:///system -o oldvm -n newvm -f /usr/local/kvm/newvm/root.qcow2