Month: August 2012

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Source: ForexYard

Following slight losses during the overnight session, the USD/JPY bounced back to a one-month high at 78.93 during early morning today. The dollar saw gains across the board yesterday, after the release of better than expected US Retail Sales and Core Retail Sales reports. Crude oil and gold saw little movement during Asian trading, while the euro saw very modest gains against the dollar after dropping close to 60 pips yesterday. The EUR/USD is currently trading at 1.2332, up 15 pips from the beginning of last night.

Main News for Today

UK Claimant Count Change- 08:30 GMT
• The Claimant Count Change measures the change in the number of people claiming unemployment benefits in the UK
• Today’s news is forecasted to come in at 6.2K, slightly higher than last month’s figure
• If true, sterling could extend its recent downward trend against the dollar

US Core CPI- 12:30 GMT
• The CPI measures the change in price of goods and services
• Today’s news is forecasted to come in at 0.2%, which is the same as last month’s figure
• Any better than expected news could help the USD extend yesterday’s gains

Read more forex news on our forex blog

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.

By TraderVox.com

Tradervox.com (Dublin) – The Canadian dollar dropped against the greenback today as commodities dropped including crude oil which is the largest export to United States. The loonie had increased for the last six days, registering the longest ascent since October 2010. The risk appetite in the market had pushed the Canadian dollar to three-month high against the US counterpart. The decline came as Stocks fell halting the longest advance since 2010. According to Shaun Osborne, the Chief Currency Strategist in Toronto at Toronto Dominion-Bank, the equity market seems to take a halt which has resulted to the recent decline in Canadian dollar. He indicated that while there is no event that seems to have the potential to push the loonie back to upward trend, the descent will not be sustained for long.

The Crude Futures had increased by as much as 1.4 percent but dropped by 0.9 percent. The US stocks declined where the Standard & Poor’s 500 Index dropped by 0.1 percent. Blake Jespersen predicted that the loonie might increase to a high of 98 cents versus the US currency in the coming month. Jespersen is the managing director of foreign exchange at Bank of Montreal in Toronto. Shaun Osborne had also expressed similar predictions, saying that the loonie might strengthen to 98 cents against the US dollar after forming a gravestone Doji chart in Aug 10. This chart is a candlestick formation which is formed by opening and closing prices when they are equal and occur at the low of the day. This is an indication of balance in demand and supply.

The Canadian dollar dropped by 0.2 percent against the dollar to trade at 99.26 cents per Dollar at the close of trading in Toronto yesterday. The pair had touched 99.05 cents per dollar earlier in the day.

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.
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By MoneyMorning.com.au

Owning gold stocks over the last 12 months hasn’t exactly been a barrel of laughs.

Nearly every gold stock on the ASX has taken a big hit.

So-called ‘blue chips’ have been smashed. Newcrest (ASX:NCM) has fallen 36.7% in a year. Another Aussie heavyweight, Alacer Gold (ASX:AQG), has lost 43%. And midcap producers have fared even worse, like Ramelius (ASX:RMS) losing 66%.

Gold explorers have copped it even harder. The one-time market darling Ampella (ASX:AMX) has crashed a gut-wrenching 79.1% in the space of a year.

But with such drastic falls, gold stocks now look ridiculously cheap. And if I’m right, they look set to turn back up soon…

Of course, I’m not the first to make that claim.

Many, including myself, have had their fingers burnt trying to call the bottom for gold stocks this year.

But there are growing signs that the worst is now behind us.

Action in the Gold Sector

For one thing, there has been a lot of corporate activity in the gold sector recently.

Silver Lake (ASX:SLR) made a bid for Integra (ASX:IGR) for $426 million. And St Barbara (ASX:SBR) is taking over Allied (ASX:ALD) for $556 million.

This mergers and acquisition action has been great to see, as it has stirred some interest in the gold sector. It also tells us that these big players see value at current prices. Management would generally try and avoid paying $556 million if they thought it would be cheaper in a few months. So seeing a few takeovers is a good warning that prices may be on their lows.

The technical charts are telling us a few positive things, too. The market vectors gold miners index (GDX), which tracks a wide basket of large gold stocks, seems to have found a floor at last. It bounced once in May, and again from a higher level last month. This sort of price action can be a good sign.

Gold Stocks – Starting a Long Overdue Recovery?

This GDX index is also testing the 50-day moving average (the blue line), which is another good signal. We’d need a few more months of price action to argue this is the start of a recovery, but the evidence is mounting.

There is a growing chorus in the marketplace calling the bottom of the market. The wind seems to be shifting with investor sentiment, too. When I was in Kalgoorlie last week for the annual Diggers and Dealers conference, most people I spoke to were excited about gold’s chances in the next 12 months.

A poll run by a company called Aggreko showed that 61% of those surveyed picked gold to be the ‘hottest commodity’ for the year ahead. Graphite was in second place, but that’s a story for another day.

Gold has got more attention in the media lately too. Just this morning Bloomberg announced:

‘Billionaire investors George Soros and John Paulson increased their stakes in the biggest exchange- traded fund backed by gold as prices posted the largest quarterly drop since 2008.

‘Soros Fund Management more than doubled its investment in the SPDR Gold Trust to 884,400 shares as of June 30, compared with three months earlier, a U.S. Securities and Exchange Commission filing for second-quarter holdings showed yesterday. Paulson & Co. increased its holdings by 26 percent to 21.8 million shares.’

In my August issue I wrote the following to Diggers and Drillers readers:

‘After a flat 12 months, gold has fallen off many investors’ radars. At the start of August, gold was trading exactly where it was 12 months prior (both in US$ and A$ terms).

‘On the few occasions during gold’s 11-year bull market that gold has managed to tread water like this over a full 12 months, gold (in $US) then went on to gain an average of 33% over the following 12 months.

‘Mathematically, if gold (in US$) is to maintain its average annual return of around 17% per year, then a flat year needs to be followed by a ‘catch-up’ year of around double its typical annual gain, i.e. 33%.

‘The average annual gain over ten years for Australian dollar gold has been 10.7%. So if we saw a ‘catch up’ year in the next twelve months, from today’s price of A$1538, Australian dollar gold would reach A$1884.

‘Of course, this all assumes that gold is still in a bull market. After going nowhere for 12 months, many in the market, including me, have had their conviction tested at times.

‘However, the fact is that all the market forces that have driven the gold price this far are still in full effect: High market risk and geopolitical risk, central bank balance sheet expansion, negative real interest rates, record lows on AAA bonds, flat mine and scrap supply, net central bank buying…the list goes on.

‘Simply put – gold can’t hover forever in this market environment. And I suspect we are getting very close to a ‘catch-up year’.

Backing Gold Stocks

With gold standing a fair chance of another leg up before the year ends, and gold stocks showing signs of life, I tipped a gold stock yesterday for the first time in 6 months.

With the market still a very dangerous place, I made sure to pick as low risk a stock as I could.

So I went for one that is derisked in every way possible. It’s in production, has low costs, has a tonne of cash, is paying a dividend and is based in a safe location.

There’s still plenty of excitement to it too, in terms of exploration upside and increasing production. I reckon readers could make 78% on this tip over a year. That would be a good win if everything pans out as I hope.

But when the market conditions are right, gold explorers can run even harder than producers like my latest tip. So if the next few months prove that the gold sector really is turning back up, then I might be game enough to tip a few gold explorers too.

Dr. Alex Cowie
Editor, Money Morning

Related Articles

Market Pullback Exposes Five Stocks to Buy

The Dumb Money Hates Silver, It’s Time to Go Long

There is No Safe Haven – But You Should Still Own Gold

Are Gold Stocks About to Turn?

By MoneyMorning.com.au

China and high end goods: they’re a combination made in money heaven. That, at least is the current view of the industry, much of China’s population and of course of the global stock market. You can see why.

Look at UK fashion company Burberry. Not long ago it was a relatively staid UK brand. Today it has a market capitalisation of £5.9bn with a recently reported 39% rise in profits.

And the likes of Louis Vuitton, Gucci and Prada regularly report sales up 40% plus in China. The boom seems unstoppable. Prada has 22 stores in China already, and late last year said it intended to open another 50 over the next three years.

And it isn’t all about handbags and bangles. It’s about expensive cars too. The likes of BMW and Audi have stormed into China and fast reaped the benefit of a high-profit market in which customers want all the extras.

Already, 60% of the rise in sales at BMW and 74% of the rise in sales at Audi so far this year are accounted for by China. And overall China is forecast to make up 50% or so of the total sales of Audi, BMW and Mercedes by 2015. Given that there were practically no cars on the road in China 30 years ago, that’s quite an achievement.

If you are interested in amazing numbers proving stunning growth there are plenty more around. But what if it is none of these numbers that really matters? What if what really matters is about prices in the Shanghai property market and US caustic soda exports?

Behind the Headlines on China’s Economy

Take the Shanghai bit first. Where does all the money come from for the Chinese to be the world’s biggest consumers of luxury goods? From the booming economy, which is in large part a function of the Chinese property market and of construction in general.

Let’s look at how it all began. China has long been printing money to buy dollars and keep its exchange rate pegged. In a normal environment, this would have led to inflation. But that’s not what happened.

To prevent it the Chinese government set the interest rate on deposit accounts very low in order to make real interest rates (after accounting for inflation) negative. That helped keep consumption low (a mere 34% of GDP by 2010 – a record low for any country) and inflation down.

However, people hate negative interest rates – they tend to react to them by moving money off deposit and into speculation of one sort or another. The Chinese went, like the rest of us, for the obvious. They became a nation of property speculators.

Some used cash to buy flats and others borrowed money short term from unofficial lenders to get their hand on deposits to do so. But they all bought if they could – flats became a sign of security, something that would always protect against inflation.

China’s Property Bubble

Then came China’s massive 2008 stimulus programme, designed to keep the country growing at speed even as the financial crisis took out the rest of us. This focused heavily on encouraging lending to construction, infrastructure and housing.

The result? Huge credit growth and some whopping pumping up of China’s property bubble. By 2011 Chinese residential real estate made up nearly 10% of GDP; 14% of the workforce was in construction; and China was using up more cement per capita than even Spain at the peak of its construction bubble.

Prices were soaring. Edward Chancellor, of global investment management firm GMO, points to a 2010 NBER study which showed house prices up by 140% in three years in the biggest Chinese cities.

Everyone with any cash or any way of getting any cash owned houses: even on official estimates 18% of households in Beijing owned two or more properties and 40% of flats in the major cities were being bought not for use but for investment. They were often left vacant.

Overall numbers from Eclectica Asset Management suggest that China has spent twice as much as the US relative to the size of its economy on its property bubble. Not bad going given what has happened in the US since.

The boom has infected the entire Chinese economy. Chancellor reckons that around 35% of bank loans are “directly or indirectly related to Chinese property”.

Local governments have also taken out huge loans backed by land grants to finance their increasingly extreme-looking infrastructure projects, while on some estimates a good 50% of China’s GDP is linked to the Chinese property market one way and another.

That makes it pretty much the biggest emerging market property bubble ever.

We haven’t learnt as much as we should have over the last few years. But the one thing that is surely clear to all by now must be this: bubbles always pop. And so it is with this one.

When Property Bubbles Pop… Economies Follow

Chinese property prices were down 6% in the 20 major cities in China in the first quarter according to Knight Frank (although most saw minute increases in June). Transactions were also down 27% year on year in those cities.

The total floor space of residential units for sale was up 47%. At the same time housing starts are down around 15% year on year. The fact is that while there are plenty of apartments around to buy, they don’t look so easy to sell anymore.

The other thing we have probably learnt is that when housing bubbles pop, economies crumble. Is that happening in China yet? There are signs. There are regular reports of rising capital flight as rich Chinese, seeing more financial danger than opportunity at home move their money out (check out house prices in Vancouver!).

In a recent survey from the Bank of China and the Hurun Report 60% of Chinese millionaires said they were considering emigrating, with concern about worsening business conditions being one of their reasons for doing so.

At the same time, corporate profits are falling, foreign direct investment is slowing, and the trend in even China’s official GDP growth numbers is very firmly down.

And caustic soda exports from the US? These matter, because caustic soda is used in a huge variety of things – from mining to paper to water treatment. Exports surged in 2009-11 in response to China’s stimulus programme. But today, numbers from chemical intelligence agency ICIS show they are now flat. That suggests growth in many areas is also flat.

Who Will Drown in China’s Lap of Luxury?

Look at all this, and suddenly the numbers we looked at on luxury goods in the first two paragraphs here aren’t bullish. They’re bearish.

Instead of being well exposed to one of the greatest money machines in history, the world’s big luxury goods companies are over exposed to the mother of all credit bubbles, the mother of all housing bubbles and, coming one day soon, the mother of all deleveraging episodes.

The vast majority of people, shutting their eyes to the fact that the share prices of most luxury goods companies have already started to come off, will tell you that this won’t happen – can’t happen.

The Chinese government, they will say, can manage it all. They have so far. After all they have said that they intend to maintain growth and to keep property prices at a “politically satisfactory level.” These people might be right.

But before you start buying too many Prada shares you might want to check to see if they are the same people who told you that 2000-2007 was a period of Great Moderation: that US house prices never fall; that demand for houses not supply of credit is the main driver of property booms; that the ECB has a plan; and that a Greek exit from the euro isn’t possible. Just in case.

Merryn Somerset Webb
Contributing Editor, Money Morning

Publisher’s Note: This article was sourced from MoneyWeek (UK)

From the Archives…

Trusted With Trillions, Bankers Can’t Even Work Out a Two Dollar Puzzle
10-08-2012 – Kris Sayce

What This ‘Junk’ Tells You about Stock Prices
09-08-2012 – Kris Sayce

How to Defeat Your Worst Enemy in Investing: Yourself
08-08-2012 – John Stepek

The Mining Boom is Over
07-08-2012 – Dan Denning

Why the Doc Should Have Flown Further West
06-08-2012 – Kris Sayce

China’s Economy and the Mother of All Property Bubbles

EURUSD stays above a upward trend line on 4-hour chart, and remains in uptrend from 1.2042, the price action from 1.2389 is treated as consolidation of the uptrend. Another rise to test 1.2442 resistance could be expected, a break above this level will target 1.2600 area. Key support is at the trend line, only a clear break below the trend line could indicate that the longer term downtrend from 1.3486 (Feb 24 high) has resumed, then further decline towards 1.1700 could be seen.

Forex Signals

OilPrice.com

The Association of American Railroads reports the number of rail tankers carrying crude oil and petroleum products in the United States increased more than 35 percent during the first six months of the year when compared with 2011. After the U.S. Energy Department, in its report, noted the lack of pipeline infrastructure in North Dakota, British supermajor BP announced it was considering rail to bring oil from the Bakken formation there to its refinery in Washington state. In terms of the environmental footprint, meanwhile, rail deliveries account for less than 1 percent of the total emissions from the transportation sector. These findings come even though rail shipments are three times more expensive than pipeline deliveries

The AAR finds that 241,000 rail tanker cars hauled oil during the six-month period ending in June, a 38 percent increase over the same period in 2011. For June, rail deliveries increased 51 percent over their 2011 levels for the month. Each rail tanker carries around 700 barrels of oil, meaning June deliveries translated to nearly 1 million barrels per day. The U.S. Energy Department’s Energy Information Administration attributes much of the increase in rail deliveries to the oil boom under way in North Dakota, which in March became the second-largest oil producing U.S. state. Oil producers in the region, however, rely on rail to get oil out of the region and BP this week said it was considering a rail project to bring Bakken crude to its 225,000-bpd refinery in Washington. The permitting process could begin as early as next month.

Rail deliveries, however, cost, on average, $15 per barrel compared with the $5 per barrel for deliveries through pipeline systems. On the other hand, the rail system is getting less energy intensive. While the transportation sector accounts for about 25 percent of the global energy-related carbon dioxide emissions, rail represents a minor fraction of that total. Across the board, emissions for transportation are increasing in every sector except rail, which accounts for less than 1 percent of total CO2 emissions for the sector.

When completed, the entire Keystone oil pipeline network could carry about 1.1 million bpd compared with the same approximate total for the entire United States for rail. The 3,100-mile Enbridge Pipeline System, which stretches from the Athabasca oil sands facilities in Alberta to oil refineries in the Midwest, can carry, on average, 1.4 million bpd. The week before last, however, more than 1,000 barrels oil spilledfrom a section of that pipeline in Wisconsin. While Enbridge said much of the release was contained, the incident occurred one day after the two-year anniversary of the costliest onshore crude oil spill in U.S. history from a section of the same pipeline network. Though in terms of volume, pipeline transportation has proved its merit, the move by BP in the Bakken formation suggests rail transit remains a viable option for the industry.
Source: http://oilprice.com/Energy/Energy-General/Rail-May-Hold-its-Own-Against-Pipelines.html
By. Daniel Graeber of Oilprice.com

By The Sizemore Letter

Listen to Charles Sizemore explain the coming court ruling in Germany that will decide the fate of the Eurozone and the Paul Ryan nomination on Mike Robertson’s Straight Talk About Money.

Related posts:

• Charles Sizemore Discusses the Crisis on Straight Talk Radio
• Charles Sizemore on Straight Talk Radio
• Listen to Charles Sizemore on Straight Talk Radio

It is easy to find binary options trading appealing, due to the inherent gains and the flexible schedule, but if you want to stay at the right end of success you need a plan. Understanding what these digital options are being just the first step, granted a very important one but in the absence of a coherent strategy, everything will eventually crumble.

Basically the binary option is when you take a position up or down, where the payoff can be a set price or nothing. The value of the payout is preset as is the term or expiry period so if you predict that an asset will appreciate beyond a certain value and it does you will collect the payout, regardless of the margins. On the other hand if you fail to predict correctly, you will lose the binary option and the money invested. The advantage is that you can play in the Forex market with a smaller investment and still be entitled to collect a large payout.

Digital options can be hourly, daily or monthly and it takes just one mouse click to execute Easy call or Put orders and it will cost you as little as $100.  Binary options derive their financial value of fundamental assets and this is why you should try and get a firm grip on the knowledge about the underlying asset before trading digital options. Where is the asset traded and which are the relevant financial markets is just as important as knowing how to interpret the price. The latter is a good indicator about the chances of the contract ending in a certain way and the recent price movement can provide you with invaluable information about the digital options.

What is position trading?

Position trading is a long term style of trading that is very popular among players who prefer to hold trades for periods that range between a few days and several months.
Binary options should be regarded as a long term investment, so it is only natural that many of the ones trading online options like this style better than swing trading or day trading.  Traders need unrestricted access to charts and regular updates about how the market is moving, so they will use trend trading at its fullest potential. If you know how the market is faring and which is its current direction, it is possible to hold a position for several weeks or more, with the goal of maximizing your income. This means that by using position trading correctly a trader can record profits as high as a few hundreds of ticks. Unlike day trading which requires a lot of self control and discipline, Position Trading is easier and the profits are higher.

The benefits and shortcomings of Position Trading

If you are not very familiar with binary options and wonder which are the benefits of Position Trading, you should know that this style is more forgiving than the others. You can commit slight mistakes without suffering catastrophic loss and you don’t need a lot of money to start with to be profitable. Since trading online options are an uncharted territory for many, they will appreciate the advantage of a low investment. Besides being fairly easy to pick up and master, position trading will require very little involvement and with just a few minutes spent each day on it, it is considerably less stressful.

On the flip side, you should know that position trading poses the risk of serious events to occur while you are sleeping, since the positions are open overnight. Additionally the benefits of compounding are mitigated with the profits being somewhat lower than those available for day traders and the ones using swing trading. The very nature of this binary options trading style means that you will have your money blocked in an open position for a longer period, so if an amazing opportunity arises you can’t use it.
Overall, the benefits of Position Trading outweigh the shortcomings and make it a great trading strategy for beginners and experienced traders alike.

To read more Binary Options Strategies by professional traders and start trading like a pro.

Chris Vermeulen – www.TheGoldAndOilGuy.com

It is an endless debate for investors interested in gold. Should they buy a direct play on the gold price, either gold bullion itself or even so-called paper gold with an ETF such as the SPDR Gold Shares (NYSEArca: GLD)? Or should they invest into gold equities, particularly the larger, higher quality gold mining companies?

Recent history suggests the answer is gold itself. According to Citigroup, physical gold has outperformed global gold equities 120% percent of the time over the past 5 years. Stocks of the bigger gold mining firms seem to react adversely to bad news (which is normal), but the problem is they react with no more than a yawn to good news. These type of stocks are contained in the Market Vectors Gold Miners ETF (NYSEArca: GDX).

Gold Mining Stocks ETF – GDX

Evidence of this trend can been see in the latest news to hit the industry…the slowdown in expansion as recently signaled by the world’s largest gold producer, Barrick Gold (NYSE: ABX). The company’s stock has fallen by more than 30 percent over the last year due to cost overruns at major projects. The latest blowup in costs of up to $3 billion occurred in its estimate for development of its flagship Pascua-Lama project on the border of Chile and Argentina. The project may now cost up to $8 billion.

In addition, Barrick decided to shelve the $6 billion Cerro Casale in Chile and the $6.7 billion Donlin Gold project in Alaska. Barrick is not alone in its thinking among the major gold producers. The CEO of Agnico-Eagle Mines (NYSE: AEM), Sean Boyd, recently said “The era of gold mega-projects may be fading. The industry is moving into an era of cash flow generation, yields and capital discipline.”

Fair enough. But are gold mining companies’ management walking the walk about yields or just talking the talk? Last year, many of the larger miners made major announcements that they would be focusing on boosting their dividends to shareholders in attempt to attract new stockholders away from exchange traded vehicles such as GLD, which have siphoned demand away from gold equities. Barrick, for example, did boost its dividend payout by a quarter from the previous level. Newmont Mining (NYSE: NEM), which has also cut back on expansion plans, has pledged to link its dividend payout to the price of gold bullion.

So in effect, the managements at the bigger gold mining companies (which are having difficulties growing) are trying to move away from attracting growth-only investors to enticing investors that may be interested in high dividend yields. This is a logical move.

But rising costs at mining projects may put a crimp into the plans of gold mining companies’ as they may not have the cash to raise dividends much. And they have done a poor job of raising dividends for their shareholders to date. In 2011 the dividend yields for gold producers globally was less than half the average for the mining sector as a whole at a mere 1.3 percent. Their yields are below that of the base metal mining sector and the energy sector.

It seems like management for these precious metal companies have the similar emotional response shareholders have when they are in a winning position. When the investor’s brain has experienced a winning streak and is happy it automatically goes into preservation/protection mode. What does this mean? It means management is going to tight up their spending to stay cash rich as they do not want to give back the gains during a time of increased uncertainty. Smaller bets/investments are what the investor’s brain is hard wired to do which is not always the right thing to do…

Looks like there is still a lot work to be done by gold mining companies’ to improve returns to their shareholders. But with all that set aside it is important to realize that when physical gold truly starts another major rally. These gold stocks will outperform the price of gold bullion drastically for first few months.

Gold Stock Rally

Gold Miner Trading Conclusion:

In short, last weeks special report on gold about how gold has been forming a major launch pad for higher prices over the past year. Gold bullion has held up well while gold miner stocks have given up over 30% of their gains. If/when gold starts another rally I do feel gold miner stocks will be the main play for quick big gains during the first month or two of a breakout. The increased price in gold could and value of the mining companies reserves could be enough to get management to start paying their investors a decent dividend which in turn would fuel gold miner shares higher.

Both gold and silver bullion prices remain in a down trend on the daily chart but are trying to form a base to rally from which may start any day now. Keep your eye on precious metals going into year end.

If you would like to get my weekly analysis on precious metals and the board market be sure to join my free newsletter at www.TheGoldAndOilGuy.com

Chris Vermeulen