Gold & Precious Metals

GOLD  dropped below $1580 per ounce Thursday morning, while gold in Sterling and Euros fell back below £1060 and €1225 an ounce respectively, extending losses from a day earlier that following stronger-than-expected US retail sales data.

Like gold, silver drifted lower this morning, dipping below $28.60 an ounce, while other commodities were broadly flat and European stock markets ticked higher.

US, UK and German government bond prices fell, while the US Dollar Index, which measures the Dollar’s strength against a basket of other currencies, rose to its highest level since August.

The Dow Jones meantime ended higher Wednesday for the ninth day in a row, setting another new record high.

“The US stock market [is] now increasingly viewed as gold’s main ‘competition’ for investment Dollars,” says Ed Meir, metals analyst at brokerage INTL FCStone.

“We think gold lacks both technical momentum and investment interest to recover significantly from current levels,” adds a note from Credit Suisse. 

“Gold has lost its luster,” agrees Danske Bank senior commodities analyst Christin Tuxen, speaking at Bloomberg’s FX Debates event in London Wednesday.

“Some of the reasons investors had last year to buy into gold are now gone. The focus will be on interest rates not surging, but gradually moving higher.”

China’s central bank has moved from last year’s pro-growth loose monetary policy stance to a “neutral” one, People’s Bank of China governor Zhou Xiaochuan has said.

“Obviously there’s a lot of [gold] investment demand in China… a large part of why people in China bought gold is because prices went up ” says Credit Suisse analyst Ric Deverell, adding that a price fall could be detrimental for Chinese gold demand.

In the US, the Commodity Futures Trading Commission is considering whether the twice-a-day London Gold Fix, which sets the international benchmark gold price, could have been manipulated in the same way as the London interbank offered rate (Libor), the Wall Street Journal reported Wednesday.

“[The fixings are] not arbitrary,” said a spokesman for the London Bullion market Association. 

“It’s very much done on a demand-supply basis until a price is arrived at. It’s fully transparent, it’s nothing like Libor.”

Over in Europe, “substantial progress is being made toward structurally balanced [government] budgets,” according to a draft European Union summit statement obtained by news agency Bloomberg ahead of the two-day meeting which starts today.

The statement, reports Bloomberg, calls for “growth-friendly consolidation” of government finances.

Elsewhere in Europe, Ireland borrowed €5 billion selling new benchmark 10-Year bonds yesterday, the first such sale since the country was bailed out in 2010.

The volume of gold production in South Africa fell 8.1% year-on-year in January, despite total mineral production rising 7.3% over the same period, according to Statistics South Africa figures published Thursday.

Ben Traynor
BullionVault

 

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor with a specialist interest in monetary economics. Ben can be found on Google+

(c) BullionVault 2013

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

 

The Stock Market Trend That’s Torturing Bears

Posted by Chris Vermulen: The Gold & Oil Guy

on Thursday, 14 March 2013 3:02

The Stock Market Trend & Hot Sector ETF’s

Trading with the trend should be your main focus for long term success no matter what type of trader you are (Options Trader, Stock Trader, or ETF Trader) although it’s not as easy as it sounds.

The good news is that there is a simple trading model that removes 95% of trading analysis and greatly reduces trading related emotions because the key technical analysis rules based on one of the world’s best chart technicians (John Murphy) technical analysis methods have been applied to the chart automatically. The key is to identify the trend of the market. Once that is known you can focus on trading strategies that take advantage of the current trend.

Over the past few years I have been creating this indicator/chart layout tool which converts my chart reading experience, tips and tricks into a simple system removing analysis paralysis which cause most individuals to second guess what they see and don’t pull the trigger. Using too many indicators or read/listening several other traders commentaries with different views than you causes this paralysis.

My simple red light, green light model clearly shows a viewer the current trend and expected price range (high and low) looking forward a couple days. I uses a series of data points like volatility, volume, cycles, momentum, chart patterns and logic rules. It even shows extreme pivot points helping you find low risk entry prices for both bull and bear market conditions.

Recent trends and signals for the SP500 Index Daily Chart:

SPY11

Trading With the Trend – The Sweet Spots

Knowing the direction of the market is simple using the chart system above but trading with the trend is not that simple because of natural human behavior. Instead traders fall victim to trying to pick a top or bottom because they think the price is overbought or oversold and they want to catch the next big trend change.

We all know the saying “the market climbs a wall of worry”.  Well, the biggest worry most traders have is buying long in a bull market because stocks and price always look overbought and ready to top each week… This leads to people trying to get fancy picking a top only to get their head handed to them a few days or weeks later depending on how stubborn they are to exit a losing position.

The key to long term success is to buy during broad market (SP500) corrections once sentiment, cycles and momentum are starting to flash extreme oversold conditions. These show up as green arrows on the trend chart. At that point most sectors and high beta stocks like IBM, GOOG etc… should be at a key entry points with most of the downside risk removed already. Remember ¾ stocks follow the broad market so it only makes sense to follow it also.

What about a runaway stock market? This is when the stock market does not pullback but just keep grinding its way higher and higher… The only thing you can do is sit in cash, or look for a stock or sector that is having a small pause or pullback and get long with a small position until you get that broad market pullback and major by signal to add more.

Below are a few sectors showing a minor pause/pullback within this bull market.

XLP1

XLI1

XLU1

XLF1

Mid-Week Trend Conclusion:

Overall, the broad market remains in an uptrend. While I would like to see the SP500 pullback and give us another major buy signal like it did in December and February I do mind that much if prices keep running higher as it just give us more cushion and potential profits for when the trend does eventually roll over and flip signals. I hope you found this report interesting. It’s just scratching the surface of this topic but it’s a start.

Know the stock market trends by joining my free newsletter: www.GoldAndOilGuy.com

Chris Vermeulen

 

 

 

 

 

Zinc – a market for early adopters?

Posted by Michael Williams

on Wednesday, 13 March 2013 23:12

MW graphicA new idea for value investors. Our long time friend and contributor Michael Williams was one of the keynote technical speakers at the recent Prospectors & Developers Conference – the world’s largest mining and mineral industry event. He made the case for significant future demand and low supply for Zinc. Of interest to our MoneyTalks audience is his argument that Zinc could be THE place for contrarian investors looking for an early entry point.

Michael was kind enough to share this private presentation with MoneyTalks.

CLICK HERE for the full speech and presentation.

CLICK HERE to see just the charts

Pimco’s El-Erian: Interest Rates The Fed & You

Posted by Pimco CEO Mohamed El-Erian

on Wednesday, 13 March 2013 15:01

imagesWith the Federal Reserve’s easing program still providing support to bonds, they are unlikely to move in a single direction soon, says Pimco CEO Mohamed El-Erian.

“The bond market, like every other market, is artificially valued by the involvement of the Fed,” he tells CNBC. “In the short term, we think that we are range-bound on Treasurys. And the range is 1.85 to 2.25 percent on the 10-year yield.”

That yield stood at 2.04 percent Wednesday morning.

As for the long-term “a lot depends on if you believe in this handoff … from [Fed] assisted economic growth to sustained growth,” El-Erian says. “If you believe in this handoff, then you should migrate over time into risk assets. If you think this handoff is going to be a problem, then you should have a diversified asset allocation.”

He hasn’t seen anything of the mass exodus from bonds that many commentators have predicted. “What you do see is an encouraging inflow into equity funds.” 

Stock mutual funds have attracted $36 billion over the past nine weeks, El-Erian says. But that’s coming from cash rather than bonds. 

“We have seen no sign as of yet of the ‘great rotation’ that people are talking about,” he says.

When the Fed exits its easy monetary policy, it “will be one of the most challenging issues facing any central bank.”

“There is no doubt that by artificially altering prices the Fed has changed behavior, and some of the behavior that has changed is the normal lending that goes on to various sectors,” he notes. “The problem is that it has also changed massive behavior elsewhere and that is asset-allocation behavior. So it will be very delicate.”

Backing up El-Erian’s view of bonds trapped in narrow bands, the 10-year Treasury yield hit an 11-month high of 2.08 percent Friday, but now bonds are seeing buying interest having made that move.

“These are semi-attractive levels,” Justin Lederer, an interest-rate strategist at Cantor Fitzgerald, tells Bloomberg. “The U.S. is not ready to break significantly higher in yields. … There are just buyers out there.”

 

I’d rather buy something that is relatively depressed than something that is relatively high. 

Investors Are Being Chased Out Of The Gold Market

“The gold market can be extremely volatile, a normal symptom of a fiat-backed financial system inducing the public into schizophrenia”

“Clinging to the familiarity of a 67-year-long financial system, moving to periods of fearing total loss at the currency graveyard — will chase investors out.”

Worried about a Deflationary Collapse

“I do not believe in a deflationary Collapse but I am afraid of it”

I worry about the time when the current asset inflation will give way to a serious asset deflation, which will inevitably happen sometime in the future. As an observer of markets I am, therefore, concerned that the decline in gold prices could be telling us that we are about to enter a period of asset deflation.

I should like to make two points very clear. I am not sure when the asset deflation will start. Most likely, different asset classes will deflate at different times and with different intensity. The second point I wanted to make is the following. In a deflationary environment (whenever it will happen), financial assets (stocks, government and corporate bonds especially high yield bonds) would likely be the most vulnerable assets. In fact, in a deflationary collapse, I would envision money to flow into a sound currency and move out of “funny” paper monies. Therefore, I continue recommending the gradual accumulation of physical gold.

Similarly, most societies die because of their ill-conceived fiscal and monetary policies, and not because of their economic problems.

Big Stock Selloff Coming

“The stock market’s run will result in either a 20 percent correction or a more nasty sell off at some point this year, Marc Faber, publisher of the Gloom Boom and Doom report, told CNBC’s “Closing Bell” on Thursday. Faber pointed out that it’s been almost exactly four years since the stock market bottomed out. “We’re up very substantially, I think investors who today rush into stocks should be reminded of that,” he said. He sees two possible scenarios. Either a 20 percent correction for stocks and then a move higher, or a scenario that is similar to 1987 or 2000 when stocks rise strongly early in the year only to drop sharply.”

Echoing recent comments made on CNBC by Stanley Druckenmiller, founder of hedge fund Duquesne Capital, Faber said “Druckenmiller is a very thoughtful person, and I share his views that it will end badly for stocks. But unlike Stan, I believe it will end badly this year.”

 

 

 

 

 

 

 

 

 

 

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