Month: April 2012

By MoneyMorning.com.au

If you look at this chart from the Reserve Bank of Australia, you can see the the Australian retail market looks like the bony back plates of a stegosaurus… Jaggedly climbing up and then dropping down all the way along the line…

The growth in the dollar value of Aussie spending has halved. And based on the decrease in the volume of sales, no matter how hard K-Mart tries to flog $5 t-shirts, we aren’t buying as much stuff as before.

Take a look at the train-wreck performance of some Aussie retailers…

Aussie Retail Stocks – Not worth the paper they’re issued on

Click here to enlarge

The chart above shows how these retail stocks have fallen up to 56.85% since 18 December 2009:

• JB Hi-Fi [ASX: JBH] down 53.90%
• Premier Investments [ASX: PMV] – down 37.46%
• David Jones [ASX: DJS] – down 56.85%
• Harvey Norman [ASX: HVN] – down 53.95%
• The Reject Shop [ASX: TRS] – down 11.25%

If you bought these retail stocks at the start of last year and you’re still holding them, we admire your grit. It takes a strong stomach to watch your money disappear.

When you combine the negative return of retail shares with the shrinking sales growth of Australia’s retail industry, it’s enough to make you want to ditch the retail sector all together.

But regardless of whether the Australian retail market is just going through a rough patch, or taking its last gasps, there are still ways for you to collect gains from this sector.

You see, while it seems like you’d have to be mad to invest in Aussie retailers right now, the retail sector is turning a corner. Not here. But overseas. And surprisingly, it’s a rebound in US retailing that could boost your portfolio.

Retail sales in the US rose 0.8% for the month of March data shows. This comes after a 1% gain in February.

The sales growth isn’t the same as at the start of the last decade. But the last two months could be a sign that retail in the US is an investment opportunity.

As Kris wrote in Money Morning last week on Wednesday, the retail stores he visited in the US were chock full of customers. Of course, many of the items were heavily discounted. But still, at least the foot traffic is there.

Westfield: A Retail Stock to Watch

And ASX-listed retail company Westfield [ASX: WDC] may be one of the first companies to cash in on this turnaround in US retail sales. And that could spell gains for you.

This week, the company announced it sold eight second-tier shopping centres, or ‘malls’ as they’re known in the US. A second-tier mall is simply a major mall in a suburban area. It’s the main offering for shopping in that region, without major competition.

Anyway, the recent sales netted Westfield a cool $1.154 billion. Taking the share price 3.5% higher in the process. But Westfield hasn’t sold out completely. It has retained a 10% interest in the malls. So if the market improves further, Westfield will still get some of the gains. You could say Westfield has hedged its bets… that’s sensible.

These sales come after Westfield sold a 45% stake in another group of malls back in February. Pocketing $2.2 billion.

By waiting to sell these properties, Westfield has taken advantage of a rebound in commercial property prices in America. In fact, the company achieved ‘book value’ for all properties, meaning the price paid was what the valuation was on the company’s books.

So, now the company has offloaded a few properties and scored some extra cash along the way. What’s next?

Firstly, some of the cash will go towards repaying the company’s $14 billion debt. And shareholders will score a special 2-cent distribution.

But most of the cash will underpin Westfield’s future plans. And that plan is to take advantage of a stronger retail market in the US.

‘The proceeds from the transactions will initially pay down corporate debt and then be redeployed in higher-return redevelopment opportunities in the US, including the World Trade Centre,’ said Peter Lowry, CEO of Westfield.

The investments have already begun. Even before the retail sales figures in the US showed signs of a rebound, Westfield had already committed $612.5 million in a joint venture redevelopment of the retail part of New York’s World Trade Centre.

Already Westfield nets $994 million in rental income from its 55 American malls. Yet, the rental projection for the new shopping destination at the World Trade Centre isn’t available. You can expect that figure will be higher once these new centres are operational.

Right now, the Aussie retail sector isn’t profitable. Maybe that will change.

However, if Westfield has read the US market right, chances are it will be one of the first companies to benefit from a return to consumer spending.

And since it’s an Aussie company, listed on the ASX, that means potential gains for you.

If you’re chasing a retail investment, Westfield might be worth adding to your portfolio.

Shae Smith
Editor, Money Morning

From the Archives…

Small Caps – A Way to Bet on Developing Markets…Without Investing Overseas
2012-04-013 – Kris Sayce

All Transactions to be Conducted in the Presence of a Tax Collector
2012-04-12 – Simon Black

How You Can Use Government Intervention to Profit on the Stock Market
2012-04-11 – Kris Sayce

Australia – The Pacific Pawn in USA Versus China
2012-04-10 – Dr. Alex Cowie

If Ron Paul Were US President…
2012-04-09 – Mark Tier

Westfield – The Aussie Retail Stock That Could Make You Money

By MoneyMorning.com.au

Not long ago, the future of Microsoft Corp (NASDAQ: MSFT) was slipping through its grasp.

Then it introduced Kinect.

Today, the tech giant is using Kinect to win big on a breakthrough that will literally touch millions of lives.

It is one of the reasons why Microsoft’s stock has gained more than 20% this year.

What is Kinect?

You may recognize it as the best-selling add-on to the Xbox 360 video game. But it’s much more than that.

It represents a revolution in how we will communicate with our computers, our TVs, and our smartphones.

For Microsoft, Kinect is literally a game changer. They lead the world in the technology behind it and it promises to be big.

But not just for Microsoft…not by a long shot.

The Promise Behind Microsoft Kinect

The magic behind Kinect is that it responds to body gestures.

And while Kinect did debut to rave reviews, Microsoft executives really didn’t understand how Kinect could change the world — and rack up new sales.

But since its introduction in 2010, hackers have found dozens of very cool uses for Kinect– none of which did much for Microsoft’s bottom line.

This got the software giant to thinking that maybe they were sitting on a potential gold mine.

That’s why Microsoft is now tapping the genius of young entrepreneurs to better monetize the technology behind Kinect.

You know, the type of guys who live and breathe cutting-edge high tech.

In fact, Microsoft recently picked 11 start-ups to work at its Kinect development offices in suburban Seattle. It’s a savvy move.

After all, these guys get out of bed every day looking to create the Next Big Thing.

Already, the program shows great promise. Here are some of the slick high-tech ideas these young turks are already tackling:

• Styku only hopes to reinvent how people shop online. The startup’s idea is to provide you with a personal avatar that lets you “try on” clothes virtually before you buy them.

• Jintronix uses Kinect and 3D gaming to improve rehabilitative therapies for patients suffering from a motor disability. Virtual reality could be a godsend for stroke victims who want to rehabilitate from their homes.

• GestSure Technologies targets surgeons and hospitals. It wants to bring touchless interfaces into the operating room. Doctors could access computer data during surgery without compromising cleanliness.

• Ikkos uses algorithms to teach movements. Parents will love this one. It’s designed to help people develop the body mechanics of an Olympian.

It’s too soon to tell if any of these start-ups will ever go public and give savvy investors the kind of big gains that have been pushing the Nasdaq to new heights lately.

But don’t worry. Kinect is bound to provide its share of breakouts.

First of all, Microsoft recently released a version of Kinect for Windows and is now pushing a version with developer software.

In fact, I predict we will see hundreds of applications using Kinect by the end of this decade. And many of them will be practical for everyday use.

“Kinected” Carts Follow Shoppers

Take the case of Whole Foods Market Inc. (NASDAQ: WFM). The upscale food store is working on a smart shopping cart equipped with Kinect.

How cool is this? The Kinect cart can automatically follow a shopper through the store. Not only that, it can import a shopping list.

But it gets better — the system can direct a customer to items on store shelves. It can even scan goods as they are placed in the cart.

My gut tells me they will come up with an app that accepts wireless payments as you roll past a digital register.

And that’s just the start. Turns out Microsoft is working with roughly 300 companies to develop more Kinect uses with Windows.

The list includes big-cap leaders like American Express (NYSE: AXP), Boeing (NYSE: BA) , Mattel (Nasdaq: MAT) , Toyota (Nasdaq: TM) and UnitedHealth Group (NYSE:UNH), to develop Kinect for Windows applications.

In the near term, Kinect likely will have its biggest impact on businesses that can make good use of large screens.

But it won’t be long before Kinect becomes a mainstay of PCs, smartphones and tablet computers.

Let me close by saying it’s impossible to predict just how much Microsoft can earn from stand-alone sales of Kinect.

That’s going to depend on how many applications emerge and how popular they become with the public.

But this much is clear.

Less than a decade ago, operating a computer with the wave of your hand was the stuff of science fiction – remember the movie Minority Report? Now it’s becoming reality.

Michael A. Robinson

Contributing Writer, Money Morning (USA)

Publisher’s Note: This article originally appeared in Money Morning (USA)

From the Archives…

Small Caps – A Way to Bet on Developing Markets…Without Investing Overseas

2012-04-013 – Kris Sayce

All Transactions to be Conducted in the Presence of a Tax Collector

2012-04-12 – Simon Black

How You Can Use Government Intervention to Profit on the Stock Market

2012-04-11 – Kris Sayce

Australia – The Pacific Pawn in USA Versus China

2012-04-10 – Dr. Alex Cowie

If Ron Paul Were US President…

2012-04-09 – Mark Tier

For editorial enquiries and feedback, email [email protected]

Why Microsoft Kinect is a Virtual Goldmine

Source: ForexYard

The 17-nation euro appreciated against the majority of its currency counterparts during Tuesday’s trading as trio Spain, Italy and Holland managed to sell bonds. The fact that these euro nations sold bonds is extremely positive as no sooner then yesterday, investors believed the debt crisis in the Euro-zone was worsening.

The shared currency rose 0.4 percent against the U.S Dollar during the New York trading session as while as showing a 0.4 percent rise against the Japanese Yen.

The euro saw further gains versus the greenback after figures indicated that Home Sales fell at a slower rate for the year ended February. The Home Sales report included 20 cities from the United States.

There are still a number of key financial reports expected for release on Wednesday and Thursday which could affect the movements of the Euro, the U.S Dollar and  other major currencies. The reports include  speech from the ECB President Mario Draghi,GBP Gross Domestic Product, US Interest Rate Decision,FOMC Statement as well as New Zealand Interest Rate Decision.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Article by Investment U

Most of the major tech firms – Oracle (ORCL), EMC (EMC), Hewlett-Packard (HPQ), Dell (DELL) – continue to take steps toward looking more and more like IBM.

On January 22, 1984, Apple ran a television commercial introducing the Macintosh computer during the broadcast of Super Bowl XVIII. Inspired by George Orwell’s book 1984, a woman hurls a sledgehammer through a giant screen – in a fiery explosion – where a “Big Brother” figure is speaking to a bunch of nameless, unemotional faces.

The takeaway was, of course, that IBM (NYSE: IBM) was taking over the world. Buying a Mac would show off your individuality and support of independent thought.

That commercial was one of the most memorable and successful of all time. If the spot ran today, few would assume that the Big Brother character was IBM. A more logical assumption would be that it was Microsoft, Google, Facebook or, ironically, Apple itself.

Fact is, to this day, IBM remains firmly entrenched as the leader in enterprise technology. Its full-year sales – in the neighborhood of $100 billion – trumps the GDP of roughly 120 countries of the world.

It’s like a virtual Wal-Mart of information technology. In other words, when looking to fill technology needs, a Chief Information Officer is almost guaranteed to do business with IBM in some capacity.

“No one ever got fired for going with IBM,” goes the old corporate adage.

But that doesn’t mean an up-and-coming innovator can’t grab a nice chunk of market share. And earn us a fat profit along the way…

This Thoroughbred is Fast…

Most of the major vendors in this space – Oracle (Nasdaq: ORCL), EMC (NYSE: EMC), Hewlett-Packard (NYSE: HPQ), Dell (Nasdaq: DELL) – continue to take steps toward looking more and more like IBM. I realize that’s a bit counterintuitive. I mean, most “innovators” innovate. So why in this case is the course of action to mimic the leader?

Simply put, the strategy works. For starters, IBM has the broadest product portfolio, which enables its sales force to sell complete solutions. It’s akin to firing a shotgun versus a competitor’s rifle.

An IBM sales representative can combine many products and address a slew of customers’ needs with a single deal. Niche competitors must identify a sole need and provide a single solution, repeatedly. A shotgun always has a better chance of hitting the target.

More favorably still, with such clout, the IBM sales team bypasses mid-level managers, going straight to the top – the CEO or some other person with the name “Chief” in their title – to make the sale.

Big Blue is the standard-bearer. Period.

That being said, as an analyst embedded in the industry for 14 years, I can tell you that a handful of companies are beginning to close the gap in the race to rival IBM. I already mentioned the major horses in the field.

To the winner will go the spoils – incredible share price appreciation in the months ahead. So envy the investor who knows how to handicap this race. He’ll be the one cashing the winning ticket, as the others rip up theirs and order another beer. Who would you rather be?

Get Your Bets Down…

Oracle, Cisco and EMC have the talent, the expertise, and the willingness to make the needed changes to make a run at the finish. Hewlett-Packard is coming off significant changes and is well positioned, but likely lacks the resources to make a strong closing run. Dell is simply in a race above its class.

Leading Contenders (…And the Morning Odds)

Oracle (3:1) – With its acquisition of Sun Microsystems now complete, Oracle is a new player in the race to rival IBM. The company and its famous jockey Larry Ellison, have shown a willingness to make major splashes through large acquisitions. While new to this class of race, make no mistake, this horse knows how to win.

Bet on Oracle because it has the best chance of transforming itself into a bigger, broader entity.

EMC (5:1) – EMC is missing too much to be a serious contender. It lacks the services division and the systems divisions to go toe to toe with IBM.

EMC’s best strategy would be to cozy up nicely with Cisco. The companies enjoy a good relationship, but I would wait to see what happens before placing a big bet on EMC in this race.

Hewlett-Packard (10:1) – Hewlett-Packard already resembles IBM. That’s why they won’t surprise anyone and are unlikely to win at the end. A good company, yes. A good stock – sometimes. But the winner in this race – unlikely. Throw in a couple of years of management upheaval, and it would be amazing if this horse still knows what it was bred for.

Dell (50:1) – Dell is probably in the worst shape on this list. It may actually try to make a run at this strategy (the acquisition of Perot Systems a couple of years ago is an example) but it’s in no position to make a serious run. Dell would be better off wearing yellow – and staying afraid of the big boys. But it may not, and it may try to make a run. And if it does, it will not succeed. This company is beginning to understand the value of having a software portfolio, but this is potentially too little too late, at least for the foreseeable future.

IBM (even money, 1:1) – IBM shares have recently hit all-time highs. The strategy works. Even with a new CEO the firm is unlikely to be de-railed. In the race to “look like” IBM, is there anybody in a better position than Big Blue itself? Let the others try – they may have some success. But it will be IBM standing alongside any of the winners listed above.

Good Investing,

Gary Spivak

P.S. Although I think IBM is probably the safest play here, there’s one stock I think is better suited than the ones I mention above in challenging Big Blue.

To find out the stock I’m recommending to Investment U Plus subscribers today, click here.

Article by Investment U

By TraderVox.com

Tradervox (Dublin) – Speculation of faster economic growth in Canada led the loonie to advance against most of its trader peers as euro tumbled over political turmoil in Netherlands and France. The Canadian dollar had fallen to the lowest against the US dollar as demand for safe assets boosted the greenback and the Japanese currency. The loonie later advanced against the US dollar after the Bank of Canada officials indicated that an increase in interest rate is likely to occur this year.

The Canadian dollar rose by 0.1 percent to trade at 99.13 cents per US dollar after touching 99.79 cents earlier. However, this gain could not be maintained after the release of Canada Retail Sales report. The report showed that Canadian retail sales notched lower on February to -0.2 percent lower than the market estimate of flat growth. The previous readings for January was at +0.5 percent.

After the release of the report, USD/CAD was pulled from sub 0.9900 level to 0.9920. However, the weakening loonie is balanced by a suffering greenback as Case-Shiller HPI report for the month of February showed a contraction of -3.5 percent. The USD/CAD cross is trading at 0.9906 just 0.01 percent up heading towards the first hurdle at 0.9930 the April 24 high exposing the 10 day moving average of 0.9948 then 21 day moving average at 0.9956 and then the April 17 high of 1.0012.

The report released earlier today showed that the Core Retail Sales without the automobile factor surpassed market expectation hitting 0.5 percent against 0.4 forecasted. It had risen from negative 0.8 percent registered in January.

A report showing that US New Home Sales plunged by 7.1 percent to 0.328 million in March has caused the US dollar to lose grounds against most pairs including the Canadian dollar. The new data is expected to affect the FOMC announcements hence causing panic in the market. The Canadian dollar has increased by 0.16 percent since the release of the report.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

Article by Investment U

Dwolla may well be one of the biggest “disruptors” on the financial services scene today.

Here is a bit of financial trivia. In the 116-year history of the Dow Jones Industrial Average, which component stock was the first (and only) to go into corporate liquidation?

Does the name “U.S. Leather” ring a bell?

In 1896, when the DJIA was put together, U.S. Leather carried a market cap of $2 billion (in today’s dollars). From boots to bookbindings, belts and buggy whips – leather was as much a key ingredient of the fast-growing national economy as steel or coal. Manufacturers had no other choice if they needed a material that was tough, durable and flexible.

All that changed in the twentieth century’s first decade. Autos began to displace horses as means of transportation. The first rubber-soled shoes hit the market, and so did the first pneumatic rubber tires. Rayon, the first manmade fiber, went into mass production in 1905.

U.S. Leather’s monopoly position and profits disappeared. By 1920, the keepers of the DJIA booted the company out of the index.

So here’s what I’m wondering… Is the protected, insular world of big banks about to go the same way as U.S. Leather?

Here’s what got me thinking about the analogy. One word: Dwolla.

Financial “Disruptor”

Dwolla.com is a new, but fast growing payments processing company based in Des Moines, Iowa.

If you (and a merchant) have both registered with Dwolla and downloaded the company’s smartphone app, you can buy goods and services, just like any card-based transaction. And like a debit card, Dwolla is tied into your bank account. If you buy a cup of java at a coffeehouse, Dwolla debits your account, and credits the merchant’s (at near instant response times). Simple enough.

But that doesn’t explain Dwolla’s huge growth since it opened its doors a little over two years ago. Back then, it was processing a tiny $200,000 in transactions a month. A year later, that figure grew to $4 million, and now – $30 to $50 million a month.

Here is why Dwolla may well be one of the biggest “disruptors” on the financial scene today. To use Dwolla costs:

• $0.25 for any transaction costing $10 and up (to a maximum of $5,000).
• For transactions under $10, there is no cost at all, to you or the merchant. There’s nothing pre-paid, no setup fees, no annual fees, and no account maintenance costs. Nada.

How can that be? Especially when banks charge (or try to charge) monthly debit card fees against your account, and per use “swipe fees,” not to mention ATM withdrawal fees (now averaging $2.40 per transaction) whenever you use a machine not belonging to your own bank?

Dwolla took one very important, extra step when it set up its business: it built its own secure, proprietary, all-digital, payments network. And by doing so, Dwolla sidestepped the biggest cost to consumers and merchants everywhere: interchange fees.

The “Squishy Center” of Banking Profits

Think of an interchange fee as a toll (roughly 1.1% to 2%) added to every transaction that’s processed on the nation’s electronic payments superhighway. Every time you buy something with your debit or credit card, the credit card companies like Visa and Mastercard add a little extra to the bill. Click here to read Visa’s recent PDF outlining its latest interchange fees. Those fees, duly collected, are sent on to whatever bank issued the credit or debit card to you.

For banks, those interchange fees add up… big. Consider that in 2010 alone…

• Merchants paid $28 billion in total interchange fees to banks (estimated by the Cardhub.com website).
• JPMorgan Chase (NYSE: JPM) collected $5.9 billion (5% of total revenue) in non-interest credit card income – the bulk of it from interchange fees.
• Bank of America (NYSE: BAC) brought in $8.1 billion (or 7% of total revenue) through similar means.
• Even a mid-size bank like Regions Financial (NYSE: RF) collected non-interest card income of almost $1.1 billion (again, mostly through interchange fees), representing 18% of its revenue base.

The irony is that, in 2011, and this year as well, bank income from interchange fees is on the decline anyway, because of new federal rules (the Durbin amendment). Wells Fargo, for instance, saw its interchange fee revenue drop by $611 million, or 36%, simply because of the rate caps.

But Dwolla’s appearance on the scene could finish the job, and do the same thing to large banks that eBay and Craigslist did to newspapers, what Netflix did to Blockbuster, what Apple and Amazon are doing to book publishers right now: Gut out the “squishy center” of their jelly donut full of profits.

Here’s one example: Rick Vosper, an executive in the bicycle retail sector (and a fan of Dwolla) estimated that if half the nation’s 3,000 specialty retail bike shops (and their customers) used Dwolla (instead of credit cards) for purchases, it would result in $67 million less in interchange fees going to the banks. That’s just one small industry. What happens when Starbucks or another retail heavy-hitter embraces Dwolla?

For now, Dwolla is still small. Its user base of consumers and merchants is still in the hundreds of thousands. But the company is growing fast – it just picked up another round of VC financing (TV star Ashton Kutcher among those investors) in February. And the company’s growth in leaps and bounds has the payments-processing industry watching carefully (especially those potential relics of twenty-first century finance… the big banks).

Good Investing,

Jeff Yastine

Article by Investment U

By TraderVox.com

Tradervox (Dublin) – The euro had experienced its biggest decline after concerns rose about the region’s ability to fight debt crisis. This came as Netherland and France prepared for political realignments following elections in the country. However, the euro has continued to gain momentum advancing against the yen on speculation the Bank of Japan is set to announce another monetary easing on April 27. Last week, BOJ Governor Masaaki Shirakawa reiterated his commitment to monetary easing.

However, the main reason for the euro advance is the positive Dutch auction which went smoothly without any surprises.  According to Jeremy Stretch, who is the Head of Currency Strategy at Canadian Imperial Bank of Commerce, this is a good thing for the euro and it is the reason why the euro has increased a bit against major peers. He also indicated that people are wary of the yen and they are reluctant to rush in to buying the Japanese currency ahead of the BOJ meeting set for the end of the week.

The euro advanced against the dollar by 0.1 percent to trade at $1.3165 at the beginning of the European session, after it had fallen to 0.5 percent in the Asian market registering the worst decline since April 13. The 17-nation currency was up by 0.1 percent against the yen trading at 106.88 yen. It had earlier lost 0.5 percent to the Japanese currency. The yen remained unchanged against the dollar trading at 81.17 yen per dollar.

The euro increased after Netherlands sold 1 billion Euros worth of note which is represent 3.75 percent. The notes are due in 2014 and have an average yield of 0.523 percent. It also sold 995 million euros of 4 percent bonds due on 2037 at a mean yield of 2.782 percent. However, the political situation in Europe may continue to weigh on the euro as investors avoid riskier assets.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

London Gold Market Report
from Ben Traynor
BullionVault
Tuesday 24 April 2012, 08.00 EDT

SPOT MARKET gold prices climbed to $1643 an ounce Tuesday lunchtime in London – a 1.2% gain from yesterday’s low, but still below Friday’s close – as Eurozone concerns focused on the Netherlands after yesterday’s government collapse.

Based on the PM London gold fix, gold prices remain 3% below their 200-day moving average.

Silver prices rallied back above $31 an ounce by Tuesday lunchtime – though they remained around 2% off where they began the week – while European stock markets edged higher following Monday’s steep drop and commodities also made gains this morning.

The Euro meantime regained a bit of ground against the Dollar, though remained below last week’s close, with the Federal Open Market Committee due to announce its latest monetary policy decisions tomorrow.

“If the Fed fails to hint at more quantitative easing, we may see a sharp drop in gold prices,” says Hou Xinqiang, analyst at Jinrui Futures in Shenzhen, China.

“With the Dollar being slightly stronger, there is no reason at the moment to be interested in gold,” adds David Wilson, metals research and strategy director at Citigroup.

Since this time last year, the Dollar Index, which measures the strength of the Dollar against a basket of other currencies, has risen nearly 9%.

Over the same period, sales of investment gold coins by the US Mint have fallen more sharply than those for silver, the latest US Mint data shows.

The Netherlands successfully sold €1 billion of 2-Year government debt – as well as a further €0.995 billion in 25-Year government bonds – at auctions on Tuesday, following the collapse of its government a day earlier.

Average yields were little changed on previous similar auctions. The spread between benchmark 10-Year yields on Dutch and German government bonds however hit a three-year high Monday, as 10-Year bund yields fell to a record lows below 1.64%.

The collapse of the Dutch minority government, after it failed to get backing for its austerity plans, “is clearly credit-negative for the Dutch sovereign,” says Sarah Carlson, London-based senior analyst at ratings agency Moody’s.

“It generates both political and policy uncertainty.”

“The Dutch are on the edge of a negative rating action,” said Chris Pryce, director, Western Europe at fellow ratings agency Fitch last week, speaking to the Telegraph.

The newspaper reports that the Netherlands has half a million homeowners – nearly 3% of its population – in negative equity. Dutch central bank governor Klaas Knot has warned that borrowing costs will rise if the country loses its AAA status, as its debt is not regarded by investors as a safe haven in the same way as that of Germany and the US.

Here in the UK, public sector net borrowing was £15.9 billion last month – up from £15.1 billion in March 2011 – according to data published Tuesday by the Office for National Statistics.

Excluding the effects of financial interventions – the government’s preferred measure – net borrowing last month was £18.2 billion – compared to £18.0 billion a year earlier.

The March figures mean that borrowing as a percentage of GDP fell from 9.27% in the financial year 2010/11 to 8.30% in 2011/12. Preliminary first quarter GDP figures are due out Wednesday.
“They are making gradual progress in reducing the deficit,” says Royal Bank of Scotland economist Ross Walker.

“[But] it’s going to get more difficult in subsequent years…we haven’t really had any significant current expenditure cuts.”

Overall debt meantime rose from £905.3 billion (60.5% of GDP) to £1, 022.5 billion (66.0% of GDP) in the year to the end of March.

Gold prices in India rose to their highest level in two months, India’s Economic Times reports, hitting Rs 29,100 per 10 grams as many Indians celebrated the festival of Akshaya Tritiya, traditionally considered an auspicious day to buy gold.

Central banks worldwide added nearly 58 tonnes of gold bullion to their reserves last month, with Mexico and Russia each buying over 16 tonnes of gold.

Ben Traynor
BullionVault

Gold value calculator   |   Buy gold online at live prices

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.

(c) BullionVault 2011

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.

By TraderVox.com

Tradervox (Dublin) – Consumer price inflation report from Australia showed that inflation slowed in the first quarter of the year hence providing the RBA with the scope to make the anticipated rate cuts. The report pushed the Australian currency down against most currencies in the market.

Traders have increased their bets on Reserve Bank of Australia reducing the interest rate from the current 4.25 percent expected to be done during its next meeting in May. The report adds pressure to the already weakening Aussie as market searches for save haven assets.

According to Mitul Kotecha, the RBA will most probably make a rate cut of 25 basis points. The sentiments are shared by most analysts in the market who expect a first cut in May and another in June. The sentiments of lowering the interest rate were also shared by the RBA officials who have indicated that RBA would be willing to cut interest rate if the situation called for it.

The Australian dollar has decreased against most of its peers as traders placed bets on RBA rate cuts. The Aussie dropped by 0.5 percent against the dollar to exchange at $1.0270 in Sydney where it had fallen to $1.0247 which is the weakest it has been since April 11. The Australian Dollar was down 0.7 percent against the yen to exchange at 83.16 yen. Its south pacific counterpart, the Kiwi, declined by 0.1 percent against the US dollar to trade at 81.30 US cents; it had weakened by 0.6 percent yesterday. Against the yen, the New Zealand dollar declined by 0.3 percent to trade at 65.74 yen.

Some analysts are claiming that the Australian dollar is vulnerable, and it might find strong support at $1.0225 -$1.0260. If it breaks downward past this level, then this would open doors for 1.0125. Reports from US and Canada might marginally affect the Australian dollar only increasing marginally if they are worse the market expectation.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

By TraderVox.com

Tradervox (Dublin) – The sterling pound has advanced against the US dollar after a report showing that the Britain’s deficit increased more that the market was expecting. Prior the release of the report, the sterling pound had increase to almost 20-month high against the euro. The pound had increased by 1.8 percent last month making it the best performer among 10 of its peers.

After the release of the report showing that the UK budget deficit increased to £15.870 billion against market estimate of £14.4 billion, the pound increased by 0.1 percent against the greenback to trade at $1.6151, it had earlier touched $1.6155 which is the strongest it has been since October 31. The figure was at £9.93 billion in its previous reading. The pound was little changed against the euro maintaining a 81.62 pence per euro level. The pound had increased to 81.48 pence earlier yesterday which is the strongest since August 23, 2010.

However, at the UK pound is retracing its gains after the report of UK public sector debt. This report indicates that the UK net debt is at 66 percent of GDP which is the highest since the records began. The GBP/USB is appreciating at 0.11 percent currently at 1.6140; the next barrier is at 1.6167 which is the October 31 high. The currency had touched this level before paring its gains. If it breaks this level, the next hurdle will be at 1.6255, the August 2 high. However, if the pound continues to pare its gains, a breakdown of 1.6060 would expose April 20 low of 1.6039 which would open the door for 1.6009.

The trend will be determined by the Housing Price Index and New Home Sales report to be released later today in the US session. Trader will be keeping a close eye on these two reports as well as reports from Canada to assess the performance of the US economy. The demand for haven assets is growing and traders are choosing the pound over the dollar.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox