USDCAD broke above 0.9885 resistance and reached as high as 0.9946 last Friday, suggesting that lengthier consolidation of the downtrend from 1.0055 is underway. Further rise would likely be seen and the target would be at the upper line of the price channel on 4-hour chart. Support is at 0.9890, only break below this level could indicate that a cycle top has been formed at 0.9946, then further decline to test 0.9815 previous low support could be seen.
By Chris Vermeulen – www.TheGoldAndOilGuy.com
Dollar index 4 hour chart is forming a bear flag. Until the lower blue support line is broken the flag will continue higher.
Crude oil has a big pop yesterday as it continues up its support trend line. It looks as though it may take a run at the $100 per barrel level over the next 1-2 weeks.
Natural gas had bullish inventory numbers yesterday sending the price sharply higher. It tagged our $4.50 resistance price but could not close above it. This morning it is trading above that level and may confirm a breakout.
Gold continues in a clear down trend with high volume resistance, down trend line and a moving average holding it down. It seems everyone is turning bullish here on gold, but in my contrarian view that is signaling another short term top. Stick with the trend until proven wrong.
Silver is trading similar to gold. Still in a down trend but is much more volatile.
Bonds have been pullback since the December and have formed a falling channel. Price remains bearish which is actually bullish for the stock market.
SP500 index continues its uptrend but is trading at a 2% premium above my key support/trend moving average. The SP500 has the potential to drop 2-4% at any time and if so we will be looking to get long with the overall trend.
Each month on average the broad market provides a pullback that signals a broad market entry point. During an entry point you can get long the index, sectors or stocks, and trade options which have formed bullish chart/volume patterns. Unfortunately the last batch of signals that took place was just before the fiscal cliff which we passed on taking because price could have gone either way based on the outcome and the move was going to be big. When Risk is higher I tend to steer clear of entry points.
So now we just have to wait for the next broad market pullback to start building long positions in various ETFs.
Chris Vermeulen – www.TheGoldAndOilGuy.com
| COUNTRY | MSCI | NEW RATE | OLD RATE | 1 YEAR AGO |
| RUSSIA | EM | 8.25% | 8.25% | 8.00% |
| BRAZIL | EM | 7.25% | 7.25% | 10.50% |
| SRI LANKA | FM | 7.50% | 7.50% | 7.50% |
| SERBIA | FM | 11.50% | 11.25% | 9.50% |
| CHILE | EM | 5.00% | 5.00% | 5.00% |
| MEXICO | EM | 4.50% | 4.50% | 4.50% |
NEXT WEEK (Week 4) 10 central banks are scheduled to decide on monetary policy: Japan, Turkey, Nigeria, Canada, Argentina, the Philippines, South Africa, Latvia, Angola and Trinidad & Tobago. The overriding focus will be on the Bank of Japan which is under pressure to find a way to wrest the country from the grip of deflation.
| COUNTRY | MSCI | MEETING | RATE | 1 YEAR AGO |
| JAPAN | DM | 22-Jan | 0.10% | 0.10% |
| TURKEY | EM | 22-Jan | 5.50% | 5.75% |
| NIGERIA | FM | 22-Jan | 12.00% | 12.00% |
| CANADA | DM | 23-Jan | 1.00% | 1.00% |
| ARGENTINA | FM | 23-Jan | 9.00% | 9.00% |
| PHILIPPINES | EM | 24-Jan | 3.50% | 4.25% |
| SOUTH AFRICA | EM | 24-Jan | 5.00% | 5.50% |
| LATVIA | 24-Jan | 2.50% | 3.50% | |
| ANGOLA | 25-Jan | 10.25% | 10.25% | |
| TRINIDAD & TOBAGO | 25-Jan | 2.75% | 3.00% |
‘China has set its initial target for economic growth at 7.5 percent for a second year and tightened its inflation goal to the lowest level since 2010…’ – Bloomberg News
The Chinese government must be the world’s best economic forecasters. They set a target and whadda-ya-know, they get it almost spot on. Today’s Age reports:
‘The December quarter GDP growth rate of 7.9 per cent was faster than expected and up from 7.4 per cent in the September quarter, which was a three-year low.’
Perhaps this boost from the previous quarter explains the sharp iron ore price rise (see chart in today’s other article Money Weekend Market Digest ). The price had almost doubled since last September’s low. But after hitting a new high last week, the price has hit a snag.
What does it mean? Has China done all of its iron ore buying for the year? If so, why has it stopped? Has China’s stimulus program already stopped? We know, that’s too many questions. And unfortunately, we don’t have all the answers. But we can shed some light on the risk and reward of resources investing…
Although, if this is the end of China’s second boom, it will pay to go easy on building up your share portfolio. Our old pal Greg Canavan is convinced this second boom is a trap for unsuspecting investors. He lays out his reasons for a Chinese economic collapse here.
One thing’s for certain, the uncertainty over China, the Aussie government’s mining tax, and the ability of companies to secure funding, investors are getting restless. According to the Australian:
‘The world’s most influential mining investor has slammed the big miners as “reckless and profligate”, a day after Rio Tinto revealed a $US14 billion writedown on a series of botched acquisitions.
‘Evy Hambro, portfolio manager at BlackRock’s $US12 billion World Mining Fund, also predicted further writedowns from the resources industry, singling out Xstrata and Glencore as likely to reassess the value of their assets following their merger.’
Give ‘em a break. We’re serious. Forecasting business conditions and consumer demand is hard at the best of times. Big investors like Mr Hambro seem to forget that.
It’s hard for businesses to forecast the future because of so much interference by central banks and governments. Think about it, most businesses have no more clue than you about whether or how much money a central bank will print or how much a government will cut or raise taxes.
So the idea that mining companies have been ‘reckless and profligate’ is a bit harsh.
Let’s put it this way. During the 2003-2007 mining boom, Aussie mining firms invested a lot of money and raised a lot of capital from investors. They used this cash to invest in infrastructure and new projects.
It seemed like a no-brainer. And those companies that didn’t raise money and invest early enough, soon found themselves in trouble by the end of 2008 when it became almost impossible to get investors to part with cash.
But imagine if the mining boom had only lasted from 2003-2005. We’re sure investors would have called mining companies that raised capital and invested in their business reckless and profligate too. ‘What were they thinking? Did they think they were going through a never-ending mining boom?’
But that’s what happens. Mining executives have to make a decision. If they want to invest in a mining project they have to go the whole way. There are certain minimum fixed start-up costs that firms incur regardless of the size of a mine.
You can’t buy half a truck…or only part of a processing facility…or just lay half the rail track to the port. In many cases it’s all or nothing. Some companies choose to do nothing and investors rip them for under-utilising capital.
The breaking news for Mr Hambro is that things aren’t likely to change anytime soon.
Between now and the end of the year the stock market will either go up or go down. If it goes up those firms that have spent and invested will be heroes. If the market goes down, those same companies will be ‘reckless and profligate’.
We guess it’s tough being a CEO. But that’s why they get the big bucks.
Cheers,
Kris
PS. Read our new weekly feature, the Money Weekend Market Digest…
From the Port Phillip Publishing Library
Special Report: The Big Money Secret of Ironstone Mountain
Daily Reckoning: Let the Iron Ore Wars Begin!
Money Morning: What Lower Interest Rates Mean for Australian Stocks in 2013
Pursuit of Happiness: Is it Really Possible to Make Money from Your Home?
Diggers and Drillers:
Why You Should Invest in Junior Mining Stocks
Another week, and another Western government decides to interfere in foreign country’s business. This time it’s France sending troops, tanks, warplanes and helicopters to its former colony of Mali. Apparently to ‘liberate’ Mali.
But just as the Arab Spring overflowed from one country to the next – Tunisia, Egypt, Libya – so the Mali invasion has already kicked off problems in another French colony – Algeria. According to MSN Money, ‘Oil prices rise on Algerian hostage drama‘. Brent Crude (the benchmark for European oil) hit USD$111 yesterday, the highest price since last October.
Events like this make it even more important that nations become energy self-sufficient. That’s something we’ve focused on in Australian Small-Cap Investigator.
It was a big week for gold stories. Germany’s plan to repatriate 300 tonnes of gold from vaults in New York back to Frankfurt had the market chattering about the reasons. Is it because Germany wants to make sure the gold exists? (There have been plenty of rumours suggesting the US doesn’t have anywhere near as much gold as it’s supposed to have.)
Is it to shore up the euro, as Matthew Partridge claimed this week? Is it because Germany fears an exit by the UK from the European Union will mean an end to the pan-European experiment? Or is it just Germany thinking about its own future, and the need to secure its finances before the next economic collapse?
Last week was the Consumer Electronics Show in Las Vegas. We’d love to go there one day. It’s the biggest electronics fair in the world. The show has everything there to do with electronics.
PC World magazine highlighted the ’20 standout devices from CES 2013′. You can see them here. Our top three picks for no particular reason are: Samsung 85 inch (2.13 metres!) HD-TV; Oculus Rift – virtual reality headset; Asus Qube – streaming for Google TV.
Last week the Australian Financial Review reported:
‘Researchers at Melbourne’s Walter and Eliza Hall Institute are looking for corporate backers after making a discovery they say could change the lives of millions of diabetes sufferers – even substituting tablets for insulin injections – and potentially generate big profits.’
We love seeing reports like this. The Walter and Eliza Hall Institute is a great example of the power and virtue of capitalism. How so? In short, Walter Hall was an initial investor in Queensland Mount Morgan gold mine in 1882. The mine operated for over 100 years, and by the time Walter Hall died in 1911, it had made him a multi-millionaire.
After his death, Eliza Hall was determined to make sure their wealth was put to good use. So she set up a trust that established and funded the Walter and Eliza Hall Institute. 100 years later and the Institute is on the verge of revolutionising the treatment of diabetes…something that may not have happened if it wasn’t for the millions made by Walter Hall from the Mount Morgan mine.
Last Thursday was the end of the road for Rio Tinto [ASX: RIO] CEO, Tom Albanese. Although Rio investors may have done pretty well the past five months, things haven’t been great since the failed takeover by BHP Billiton [ASX: BHP]. And it has been a long time since Rio shares traded above $150.
We’re sure it’s just a coincidence that iron ore prices finally halted a four-week run that had seen the price rise 34%…and almost double since the low last September:
But iron ore’s price run has created an anomaly. Iron ore is a key ingredient for steel. Another key ingredient is coking coal. Yet the coking coal price has hardly budged in six months. That’s odd. Investors usually pick out this anomalies quick-smart, but that hasn’t happened yet. Is there more to the story than we think? There could be. If the iron ore price keeps falling and the coking coal price stays where it is, it could suggest the Chinese economic rebound isn’t as strong as you’re led to believe.
From the Archives…
What Lower Interest Rates Mean for Australian Stocks in 2013
10-1-2013 – Kris Sayce
My Investing Resolution for 2013: Profit With the Rulers of the Universe
10-1-2013 – Bengt Saelensminde
Downside in the Yen: Shinzo Abe and the Three Bears
9-1-2013 – Murray Dawes
China’s Economy is Still Heading for a Hard Landing — Here’s a Better Bet
9-1-2013 – John Stepek
InvestorPlace once again offered up its 10 best stocks for the year with its annual stock pick contest, featuring 10 buy-and-hold plays from 10 market experts. The goal is to deliver outsized returns from Dec. 31, 2012 to Dec. 31, 2013 without trading in between.
In today’s podcast, Charles Sizemore of Sizemore Capital Management and Jeff Reeves of InvestorPlace talk about half of the picks and offer our personal take on the investments. On the whole we’re very bullish on the list for retirement portfolios… but we do handicap the short-term potential of each pick in terms of this “swing for the fences” contest where you’re trying for big gains in a horizon of just 12 months.
The picks we cover include:
SUBSCRIBE to Sizemore Insights via e-mail today.
The post A Rundown: 5 of the Best Stocks for 2013 appeared first on Sizemore Insights.
By www.CentralBankNews.info Mexico’s central bank left its benchmark interest rate unchanged at 4.50 percent, as expected, but switched course and said it may now have to cut interest rates in light of lower growth and inflation.
Banco de Mexico, which in recent months has warned that it may have to raise rates if inflation picked up speed, said the balance of risks to inflation had improved, especially in light of the government’s commitment to sound public finances, and headline inflation this year is expected to fall below last year’s level to around the central bank’s 3.0 percent target.
Core inflation is expected to fall below the 3.0 percent level, the bank said.
“To consolidate the described environment, it may be advisable to reduce the interbank interest rate to facilitate the adjustment of the economy to lower economic growth and lower inflation,” the central bank said, adding: “In any event, the Board will monitor the progress of all the factors that could affect inflation in order to be able to reach the 3 percent target.”
By www.CentralBankNews.info Thailand’s central bank revised upwards its forecast for economic growth this year due to the momentum in private demand to 4.9 percent in its latest Monetary Policy Report from a previous forecast of 4.6 percent in its October inflation report.
The Bank of Thailand (BOT) also revised upwards its forecast for 2012 to growth of Gross Domestic Product of 5.9 percent from a previous forecast of 5.7 percent. For 2014 the BOT forecasts GDP growth of 4.8 percent.
The policy report, which is issued to “enhance public understanding of the BOT’s policy stance” also said exports were projected to recover gradually and contribute more significantly to growth from the second half of 2013 onward, which will help shore up economic momentum after some fiscal stimulus measures expire.
“Going forward, the MPC (monetary policy committee) assesses downside risks from the global economy to decline but still remain somewhat elevated,” the report said, adding the fan chart for growth thus remained downward-skewed, but to an extent lesser than in the previous projection.
The BOT’s headline inflation forecast for 2013 was maintained – it expects headline inflation of 2.8 percent – declining to 2.6 percent in 2014. In 2012 the inflation rate was 3.0 percent.
The forecast for core inflation, which the BOT targets, was also unchanged in the report. In 2013 the BOT forecasts core inflation of 1.7 percent, down from 2012’s 2.1 percent, declining further to 1.6 percent in 2014. The BOT targets core inflation of 0.5-3.0 percent.
“Given reduced downside risks from the domestic economy, inflation fan charts are balanced this time, compared to the previous ones that were skewed to the downside,” the report said.
The policy report largely mirrors the BOT’s statement following the last meeting of the MPC on Jan. 9 when it voted unanimously to maintain the policy rate at 2.75 percent.
However, the MPC added that it was closely monitoring financial stability risks that might arise from persistently high credit growth, rising household debt and volatile capital flows.
London Gold Market Report
from Ben Traynor
BullionVault
Friday 18 January 2013, 08:00 EST
SPOT MARKET gold prices hovered around $1690 an ounce Friday morning in London, having touched a one-month high in earlier Asian trading, while European stock markets opened slightly higher after gains in Asia, following the release of the latest economic growth figures from China.
“[Gold] support is at $1625, the January 4 low,” say technical analysts at bullion bank Scotia Mocatta.
“We are neutral until we see a clear break of $1694.”
Heading into the weekend, gold was up 1.6% for the week by Friday lunchtime in London.
Silver meantime also touched a one-month high this morning, before easing back to $31.72 an ounce, a 4% weekly gain.
“It can only be a question of time before buoyant [exchange traded fund] demand causes the silver price to rise,” say commodities analysts at Commerzbank, noting that yesterday saw the largest inflows into silver ETFs since December 2010, taking total ETF holdings to a new record of nearly 20,000 tonnes.
“Gold ETFs, by contrast, have recorded outflows of 16 tonnes since the start of the year,” Commerzbank adds, “which points to reduced interest in gold.”
“We are still in a period of trial, trying to rebuild the confidence into the gold market,” says Ole Hansen, head of commodity strategy at Saxo Bank.
“While we still stay above the 200-day moving average around $1662, there is a lot of nervousness in the market.”
“Momentum matters a lot in the gold market, and its absence is a major reason for a rising sense of unease,” adds a note from Australian investment bank Macquarie.
“On 27 March 2013, assuming gold does not spike higher in the meantime, 406 trading days will have passed since gold hit its record (nominal) high of $1921 an ounce in September 2011. That will mark gold’s longest period without setting a new all-time price high since it exceeded its (infamous) $850 an ounce 1980 high in January 2008.”
The Macquarie analysts add however that if the US Federal Reserve continues its current policy of buying $85 billion a month asset purchases to the end of the year, and gold’s historical relationship with quantitative easing remains, “the by the end of 2013 gold should be well over $2000 an ounce”.
The US Mint meantime has suspended sales of its 2013 silver American Eagle bullion coin, produced specifically for investment purposes, as it has run out of stock. Just over six million ounces of silver American Eagles have been sold so far this month, close to the amount sold over the whole of January 2012, last year’s biggest month.
“There is always a big boom in the new year when the new issue comes out, and you will see a drop in the next month,” BullionVault’s Miguel Perez-Santalla told newswire Reuters earlier this week.
China’s economy grew at 7.8% over the course of 2012, the slowest rate since 1999, official data published Friday show. Fourth quarter growth however was 7.9% year-on-year, up from 7.4% in Q3 and following seven quarters of slower growth.
“Overall the economy has been stabilizing,” says a statement from China’s national statistics bureau.
In September last year, China’s government announced 1 trillion Yuan of new infrastructure projects.
“[Friday’s data release] reinforces our view that the growth recovery is on track,” says Zhiwei Zhang, chief economist China at Nomura.
“As growth recovers and inflation rises, the likelihood of cuts to the reserve requirement ratio or to interest rates declines. We expect authorities to focus more on controlling the risks from inflation and shadow banking.”
The Bank of Japan meantime will consider open-ended asset purchases and has agreed to a new inflation target of 2%, double the rate currently targeted, Reuters reports, citing “sources familiar with the BoJ’s thinking”.
Gold imports to India, traditionally the world’s biggest gold buying country, could fall by a quarter if the government raises import duties from 4% to 6%, according to Bachhraj Bamalwa, chairman of the All India Gems & Jewellery Federation.
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. Ben writes and presents BullionVault’s weekly gold market summary on YouTube and 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.
