Month: January 2013

By MoneyMorning.com.au

This frustrating period of going nowhere continues for gold investors. 2013 continues in the vein of 2012.

In the past week we’ve had a nice move from below $1,630 an ounce to $1,680. But that only leaves us flat on the year. Gold is being left behind by other markets.

Can we expect more of the same for the rest of the year?

The Repeating Patterns in Gold’s Bull Market

Let’s start with a long-term chart of gold since 2001 (below), and a reminder of my big-picture theory.

I’ve drawn two red tram lines around gold’s fairly orderly run up. Within this, you can see that the gold price has displayed a repeating pattern. I have idealised this with the dotted blue lines.

Gold makes a move up, then enters a period of consolidation, during which it is essentially flat. The period of consolidation tends to reflect the previous run up in both duration and magnitude. In other words, if gold has a spike up, as it did in late 2003, April-May 2006, early 2008 and summer 2011, it will have a corresponding spike down.

Looking specifically at the period from 2009 to 2011, you could interpret this as one big run-up – as identified by the dotted green lines on the chart. If this is the case, then our consolidation phase has further to run.

Alternatively, you could split the period into two distinct run-ups. You could argue that we had one surge in late 2009, followed by a consolidation in early 2010. The next run up began in the latter part of the year. I have shown this with blue dotted lines. If this is the case, our period of consolidation should now be drawing to a close.

Welcome to the rather arbitrary nature of technical analysis!

What happens next?

I want to zoom in now and look at the last two years. I have marked the range of gold’s consolidation. The red line is resistance. The amber line is support.

I’m not going to pull any punches here. As long as that amber support zone is not breached, my theory that we’re in a consolidation phase remains valid. If the amber zone is broken to the downside, then it could very well be game over. I see that $1,500-1,520 support zone as that critical.

For now, we are in an intermediate-term downtrend. This began in October. I have defined this with the two blue tram lines on the chart above. The moving averages (MA) are pointed lower too, which adds further evidence to the bear case.

If you look at gold against sterling, as the chart below shows, the picture is the same: a range-bound market, with an intermediate term downtrend in place.

There is resistance at just over £1,100 an ounce and support in the £960 to £1,000 zone. A break below, say, £950 and it could very well be game over. It beats me how it could be game over for gold against sterling, but, hey, I’m just a bod. My opinion counts for nothing. It’s all about the ticker.

On the positive side, however, gold yesterday broke out to multi-decade highs against the Japanese yen. Unless you’ve been hiding in a bunker (perhaps the wisest place to be) you will have heard that the yen has been on a Bank-of-Japan-inspired plunge in recent weeks. Japanese bullion investors will be glad of their gold. It has and will continue to protect them against the profligacies of their central bank and other policy-makers. (That said the yen must be due a reversal, such has been the speed of the recent move).

Could Gold be About to See a Massive Break-out?

On another positive note, gold data-wrangler Nick Laird of www.sharelynx.com pinged me an email yesterday, which I’d like to share with you. Laird is bullish. He cites a chart pattern from Robert Edwards and John Magee’s classic Technical Analysis of Stock Trends – the consolidation, the break-out, the re-test and then the major run.

Below is the chart Nick sent me. It is of gold since 2007. Take a look at it – then I’ll try to explain the lines he has drawn on it.

Looking first at 2008, you can see the period of consolidation from early in the year as gold fell from just over $1,000 to $680. When gold broke above the two falling black diagonal lines, this was ‘the break-out’. The inverted red ‘V’ marks the re-test.

We then had that wonderful, two-year ‘major run’ all the way to $1,920 an ounce, as marked by the rising green diagonal line.

Now to the current situation. Laird feels we have had the ‘consolidation’. The move above the two falling black diagonal lines in September 2012 was the ‘break-out’. The inverted red ‘V’ marks the ‘re-test’ – which ended a few days ago.

Next comes the ‘major run’.

Here are Laird’s words: “Theoretically, this buy point is a big one. We did the consolidation wedge from 2011 through to Sept 2012 and then broke out. We have just seen the test of the breakout and, ideally, this now should be the beginning of a new major leg up similar (and bigger) than the one from 2009-2011.

“Last time we went from $700 up to $1,900. This move should be larger and over a shorter time period. This is classic technical analysis, especially over a two-year formation. A breakout will be followed by gasps of surprise.”

Now, as I say, technical analysis can be rather arbitrary. Two people can look at the same chart and offer completely opposing interpretations. To give you an example, here’s the same chart of gold with a blue trend line. Since gold broke this trend in spring 2012, it has gone back to it and failed to get through, signalling a market reversal.

You can see whatever you want to see and argue whatever it suits you to argue. So if you use technical analysis, you have to find a system that works for you.

If it’s so arbitrary, you ask, then what’s the point? Well, the beauty of technical analysis for me at least is that it quickly becomes apparent if your interpretation of the market is wrong. That makes is easier to manage your risk and your money. A move below $1,600 an ounce would invalidate Laird’s interpretation. A move beneath $1,520 invalidates mine and indicates we really are in bear market territory. But a move above $1,800 and the above chart is wrong.

I happen to find Laird’s case compelling. Perhaps that’s because it’s ‘what I want to hear’ – it ties in with my own theory that our ‘consolidation phase’ should soon be drawing to an end. On top of this, I am, after a long wait, getting a buy signal on junior mining stocks, which adds further fuel to the bullish fire – more on that next week, perhaps.

But, as we all know, events have a habit of getting in the way of plans. If they do, let’s hope I can divorce myself from my theories.

Dominic Frisby
Contributing Writer, Money Morning

Publisher’s Note: This article first appeared in MoneyWeek

From the Archives…

Why the Australian Stock Market Will Climb in 2013
11-1-2013 – Kris Sayce

What Lower Interest Rates Mean for Australian Stocks in 2013
10-1-2013 – Kris Sayce

Downside in the Yen: Shinzo Abe and the Three Bears
9-1-2013 – Murray Dawes

How the ‘China Money’ Could Push Silver 58% Higher in 2013
8-1-2013 – Dr Alex Cowie

Brightest Comet in 333 Years to Signal a Major Rally in Gold?
7-1-2013 – Dr Alex Cowie

USDJPY broke below the lower line of the price channel on 4-hour chart, and is now in consolidation of the uptrend from 82.11. Range trading between 86.82 and 89.67 would likely be seen in a couple of days. Key support is at 86.82, as long as this level holds, the uptrend could be expected to resume, and another rise towards 95.00 is still possible. On the downside, a breakdown below 86.82 will indicate that the uptrend had completed at 89.67 already, then the following downward movement could bring price back to 84.00 zone.

Daily Forex Analysis

By www.CentralBankNews.info     Brazil’s central bank held its benchmark Selic rate steady at 7.25 percent, as widely expected, repeating that stable monetary conditions for “a prolonged period” was the most appropriate strategy to ensure that inflation returns to the bank’s target.
    Banco Central do Brasil’s policy committee, which at its last meeting in November froze rates for the first time after 10 consecutive rate cuts, said it kept rates unchanged in light of the balance of risks to inflation, which worsened in the short-term, while the recovery of domestic economic activity was less intense than expected and the international environment was still complex.
    The bank added in a statement that all members of the Copom committee voted to keep rates unchanged and there was no bias indicated.
     Brazil’s headline inflation rate rose to 5.84 percent in December, the sixth month in a row of higher inflation and the highest rate in 2012. The central bank targets annual inflation of 4.5 percent, plus/minus 2 percentage points.
    Brazil’s Gross Domestic Product rose 0.6 percent in the third quarter from the second, raising the annual growth rate to 0.9 percent, up from 0.5 percent in the second quarter

    www.CentralBankNews.info

Money is rushing into stock funds at a rate higher than at any point over the last five years. And yet the Dow barely budged yesterday.

Japanese stocks, on the other hand, are moving up. Apparently, other investors are coming to think that our “Trade of the Decade” was not such a bad idea after all.

Who knows?

Bernanke, Draghi, Carney, Shirakawa… and all the others… are pumping as much money into the system as they can. They say they need more money to keep the system from falling back into recession.

They don’t mention it, but without central banks’ EZ money, zombie industries — including health, education, Wall Street, defense — would be in big trouble.

As central banks pump, the private sector is trying to wring the debt out as fast as
possible. And Gary Shilling says there will be “another five years of painful deleveraging.”

What will happen? We’ll come back to that tomorrow…

The War on Youth

Today, let’s look again at the sad plight of the young in America. They get whacked coming and going. They have few jobs and little money, thanks largely to deleveraging. But they have plenty of debt and high living costs, thanks largely to the feds’ vigorous pumping.

It’s no accident, we’ve been saying. They’re victims of dirty dealing by their parents and grandparents.

Here’s Bryan Goldberg at PandoDaily.com:

[Y]oung people need to understand how
much their grandparents’ generation has ruined things for them. The
average American retires with less than $70,000 of savings, but an
elderly man and woman receive about $275,000 in medical care during that
time — and you kids are paying for it by inheriting trillions upon
trillions in Medicare bills that granny and grandpa never intended to
pay and will be too dead to worry about soon.

You kids are beyond screwed.

It’s not hard to see how it works. Healthcare has become very, very expensive… with spending reaching over $7,000 for every single American. Who spends the money? Overwhelmingly, it is done by or for old people. Who foots the bill? Mostly younger people.

Why are the costs so high? Because healthcare costs have been collectivized. Through insurance and government, old people found they could get healthcare benefits — and that someone else would pay for them. Only 1 out of 10 dollars of healthcare spending is paid by the person who gets the service; the rest is paid by someone else, usually someone younger.

And it gets worse and worse. The baby boomer generation is big. And it expects extravagant healthcare services. But it won’t pay the costs. Someone else will have to pick up the tab. Who? Younger people.

Rotten Wood

Of course, the story is deeper and more nuanced… which is to say there’s a lot of rotten wood in this pile. Costs went up because the feds created an almost unlimited demand for healthcare, financed by an almost unlimited line of credit.

For the old-timer, it’s “use it or lose it.” If he doesn’t get the pills and the tests, it’s like a free vacation he didn’t take: lost forever.

And now, for every person who is providing something that might be described as useful healthcare… there are three others who are creating expensive new drugs, filing insurance claims, shuffling papers, defrauding the system, giving tests and threatening lawsuits.

The zombies have taken over the healthcare system.

They’ve taken over the education system too…

Here’s Goldberg again, with some advice:

If you can get into an ultra-top-tier
college, then go ahead and do it. An Ivy League degree is worth getting,
at least for undergrad. The value of a law or business degree is
becoming more and more questionable each year. But for the rest of you,
it may be worth skipping college altogether.

The world doesn’t need any more girls
with Spanish degrees from California State, Long Beach. Sorry, but it
just doesn’t. We need you gals to learn how to build software in equal
number with your male peers. They are no smarter than you, and they are
definitely way less organized and far less attentive to detail. So go
show them what you are made of.

But won’t a college degree pay for
itself? It probably won’t. According to UC Berkeley’s website, a
four-year education will cost you $210,000 in tuition and living
expenses, and a private education could run you way more. A part-time
job at Starbucks will eat into very little of that sum, and you will be
forgoing a real job during that same time. And — if I can convey just
one point in this whole article, let it be this… saving money takes
forever. Even if you do get that coveted six-figure job, you will find
that it takes forever to save $210,000. Decades even.

Yes, dear reader, education
has become another scammy rip-off. Kids are enticed to spend money, in
the hope that credentials will help them get work. They are loaded up
with debt. And then, they discover that the promised jobs don’t exist.

Would You Pay $143 for a College Lecture?

You might also wonder why it costs so much to go to college. The estimate above comes to $52,000 a year. This is $6,000 more than the average household income of $46,000.

Let’s say it costs about $1,000 a month to house a student in a dorm for the school year and give him regular cafeteria meals. That leaves $43,000 for tuition.

Maybe something big has happened since we were in college in the late 1960s. Maybe not. But from what we recall, college wasn’t worth $43,000. Not even close.

Look, let’s say you take five classes. Each class gives you two lectures a week. This is a total of 10 lectures a week. (We’re keeping the math simple in case you weren’t a math major.) There are about 15 weeks a semester… and two semesters. So, we’ll say 30 weeks x 10
lectures = 300 hours of lectures a year. At $43,000, that means each
lecture at $143.

Who would pay $143 for a college lecture by a drowsy, second-rate
professor of economics? Or a seminar with a teaching assistant? Hey, go
to the Teaching Company. You can get 30 lectures from the best
professors in the country for just $10 each… or less. And you don’t
have to park.

Or go to the Khan Academy… Or to one of the many places where you can get all the lectures you want for free.

From our own limited experience, we wouldn’t pay $143 for any of the many lectures we attended in college. None were worth it.

We had one professor who taught a course in political science.
Apparently, he couldn’t spot the fraud in his own subject. Politics has
nothing to do with science. They’re not even on speaking terms.

But the professor insisted that he was a scientist. So we stopped attending class.

Another professor led us on a deep exploration of philosophy. But he
had been so moved by Wittgenstein that he didn’t feel you could say
anything meaningful about it.

“Am I here? Are you here? What does being here mean? Who the hell knows?”

We were invited to sit around and meditate for much of the lecture.
We kept going to class to see what he would do next. Worth attending?
Maybe. Worth paying for? Nah…

A Waste of Time

Looking back on it, we see he was right. But it was an insight that
takes years of reading, thinking and reflection to understand. Like the
gallows and the grave, you have to be ready to appreciate it.

You get much more information… more ideas… better reasoning… more history… and better organization… in a $29 book.

Don’t like the idea of learning on your own? Try this: Get a
collection of 10 people together who all want to study philosophy. Hire
an out-of-work Ph.D. philosopher for $50,000 a year.

That’s eight hours a day… in a small class… for just $5,000 each.
The following year, hire an unemployed lawyer. Then an unemployed
economist. Etc. After four years you will have spent only $20,000… and
you will still be unemployed.

What happened to the education industry? Was it spoiled by too much
easy money? Students learned that they could avoid the rigors of the
real world by staying in school, at someone else’s expense. First, at
the expense of parents. Later, at the expense of taxpayers. And
finally… when the debt bubble blows up… at the expense of almost
everyone.

But the students are the biggest victims. They waste their most
glorious years — the years when Alexander conquered the world and
Chopin composed a Nocturne and three Polonaises — sitting in stifling
classes with boring professors.

After years of beer parties and trivial pursuits they come out with
such great debts they can scarcely be paid… and such dull brains they
can scarcely think.

More coming…

Regards,

Bill

Source: ForexYard

The USD/JPY fell an additional 88 pips during the Asian session last night, as recent comments from the Japanese Economics Minister, who warned that an excessively bearish yen would be bad for Japanese imports, helped the JPY recover some of its recent losses.

The EUR/USD saw minor losses during the overnight session, following comments from a euro-zone official who warned that the common-currency was gaining too much, too quickly. The pair, which is currently trading at 1.3270, lost close to 40 pips since last night.

Main News for Today

US Core CPI-13:30 GMT
• Forecasted to come in at 0.2%, slightly higher than last month’s 0.1%
• Better than expected news today could lead to dollar gains during afternoon trading

US Crude Oil Inventories- 15:30 GMT
• Forecasted to come in at 2.0M, significantly higher than last week’s 1.3M
• A higher than expected figure today could lead to a drop in crude oil prices during afternoon trading

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 The Sizemore Letter

It may sound like a harsh question.  But the man is seriously ill with cancer, and he has had no public appearances in over a month. Rumors abound that he is near death…or may already be dead.   As he is reported to be in Havana, some have even speculated that the Cuban government is essentially holding him hostage to secure its own future.

Love him or hate him, the authoritarian Venezuelan president has quite a few mouths to feed across Latin America, and his death could send shockwaves across the region.  Let’s take a look at who is most likely to be affected…and what it might mean for the financial markets.

At the top of the list is the Castro regime in Cuba.  Cuba gets about two-thirds of its oil from Venezuela, and most is either given to the island free or via loans that everyone involved knows will never be repaid.  By Wall Street Journal estimates, Venezuela accounts for 40% of Cuba’s overall trade…and Venezuelan aid and trade is worth about 22% of Cuba’s entire economy.

For all intents and purposes, Chavez is the patrón of Cuba, and the Castro regime continues to exist at his pleasure.  And if Chavez dies, his radical movement will probably die with him, or at the very least it will be significantly weaker without his cult of personality.

Without Chavez’s patronage, Cuba will have to seek a lifeline elsewhere…which means it will likely have to open its economy further to foreign investment.  Perhaps the best way to get exposure to an investment boom in Cuba and its neighbors would be via the shares of the Herzfeld Caribbean Basin Fund (Nasdaq:$CUBA).

It is by no means a pure play on Cuba (remember, we’re talking about a communist country here…), but it is a nice collection of companies in the tourism, banking, and consumer products companies of the Caribbean and Latin American regions that should benefit from Cuban liberalization.

The Castro brothers are not the only radical regime at risk from the demise of Chavez.  Bolivia and Nicaragua both depend on Venezuelan generosity, and Syria and Iran have benefitted from political and diplomatic support.  None of these are really investable themes, however, and it’s probably better that way.

One major question mark is the price of crude oil (NYSE:$USO).  Venezuela has the largest oil reserves in the world—yes, even larger than Russia or Saudi Arabia—yet its annual production places it in 11^th place globally.  Venezuelan crude oil production has been in steady decline since Chavez took power and for obvious reasons.  Professional managers were replaced with political hatchet men, and no foreign investor in their right mind would invest in the country even if Chavez allowed them.

The death of Chavez and the fall of his regime would likely mean massive foreign investment in the Venezuelan oil industry and could lead to a surge of new production…which would be incredibly bearish for the price of oil.

Alas, all of this is premature.  Chavez is still alive—as far as we know—and his death will not automatically bring free trade, peace, and prosperity to his country.  A far more likely outcome will be years of political infighting and…in the worst case…civil war.

In the meantime, all eyes are on Havana.

SUBSCRIBE to Sizemore Insights via e-mail today. This article first appeared on InvestorPlace.

The post What Happens if Hugo Chavez Croaks? appeared first on Sizemore Insights.

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 16 January 2013, 07:15 EST

THE DOLLAR gold price eased back below $1680 an ounce Wednesday morning, though it remained well within its trading range for the past month, while stock markets extended their losses for this week and US Treasuries gained.

Silver hovered around $31.30 an ounce for most of this morning, also in line with its recent trading range, while other commodities were similarly flat.

“In the short term, the combination of weaker growth and the run up to the debt ceiling and potential budget sequestration should prove supportive to gold prices,” says a note from Goldman Sachs this morning.

“[However] improving US growth will outweigh further Fed[eral Reserve] balance sheet expansion…the cycle in gold prices will likely turn in 2013.”

Federal Reserve Bank of Kansas president Esther George warned last week that the Fed’s accommodative policies could make it difficult to hit the Fed’s 2% inflation target, while St Louis Fed president James Bullard argued against linking asset purchases to economic variables such as unemployment.

Yesterday however, Minneapolis Fed president Narayana Kocherlokata said the Fed “should provide more monetary accommodation” and argued for an unemployment rate target of 5.5% – one percentage point lower than the 6.5% target announced last month.

“Continued monetary accommodation is absolutely appropriate,” added Boston Fed president Eric Rosengren Tuesday, “and indeed needed as long as we are projected to miss on both elements of the Fed’s dual mandate, inflation and employment.”

Bullard, George and Rosengren are all voting members of the Federal Open Market Committee  this year while Kocherlakota is not.

Fed chairman Ben Bernanke warned Monday of “critical watersheds” for US fiscal policy in the weeks ahead. US politicians are yet to reach an agreement to prevent spending cuts postponed to the start of March as part of the deal on the so-called fiscal cliff earlier this month. Negotiations are also expected on the federal budget and the debt ceiling.

“Washington’s activities will keep gold nervous in the next few weeks,” writes Rhona O’Connell, senior analyst at Thomson Reuters GFMS, in the metals consultancy’squarterly newsletter.

“As well as frequently being sold in times of short-term distress, gold has often experienced longer periods when it has suffered in line with a bearish commodities sector as investors have become risk averse; the much longer-term view, however, still points to gold maintaining a role as a hedge against risk. Its short-term characteristics often, therefore, appear to be in conflict with its longer-term role.”

Britain’s banking system meantime “is in a stretched position”, Bank of England governor Mervyn King warned yesterday.

“A combination of a weak [economic] recovery and…people searching for yield in ways that suggest that risk isn’t fully priced is a disturbing position,” King told members of parliament on the House of Commons Treasury Committee.

“In the context of the UK,” says a note from Standard Bank analyst Steve Barrow, “one such ‘risk’ would seem to be a ratings downgrade, which we feel is likely to occur some time this year. But while King might have been referring to the UK, the question is just as valid on a global level.”

The Euro meantime is “dangerously high”, according Jean-Claude Juncker, chairman of the Eurogroup of single currency finance ministers.

The Euro has fallen back a little this week after touching an eleven-month high against the Dollar on Monday, although it rallied this morning following the publication of data showing so-called ‘core’ consumer inflation rose slightly last month.

“Those comments from Juncker suggests that euro zone politicians are gearing up for some rearguard action and responding to the rhetoric we have had from Japan,” says Neil Mellor, currency strategist at Bank of New York Mellon, referring to comments from Japan’s prime minister Shinzo Abe, who has urged the Bank of Japan to be more aggressive in fighting deflation.

In South Africa, workers at Anglo American Platinum’s Rustenburg mine refused to go underground last night, following news that AmPlats plans to cut 14,000 jobs from a total of 60,000 employees.

Shares in the London-listed platinum miner, the world’s biggest producer, were the heaviest fallers on the FTSE 100 this morning, dropping more than 3% by lunchtime.

South Africa’s platinum industry saw a series of strike actions last year, which also affected the gold mining sector. The country’s gold output fell 32.2% in November compared to the same point a year earlier, data published Tuesday by Statistics South Africa show.

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. 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.

Source: ForexYard

The euro, along with other higher-yielding currencies, turned bearish yesterday, as fears regarding the slow pace of the US economic recovery encouraged investors to shift their funds to safe-haven assets. Meanwhile, the JPY was able to recoup some of its recent losses, following comments from the Japanese economic minister which led to doubts about how aggressive a policy of monetary easing the Bank of Japan is willing to take. Today, CPI data out of both the euro-zone and US is expected to impact the marketplace. If any of the data comes in above expectations, risk taking could boost the euro.

Economic News

USD – US CPI Data Set to Impact Markets Today

The US dollar saw a mixed trading day yesterday, as risk aversion due to a recent speech from Fed Chairman Bernanke boosted safe-haven currencies, while comments from Japanese officials caused the USD/JPY to take losses. Bernanke’s speech, in which he commented on the slow pace of the US economic recovery, resulted in gains for the safe-haven dollar against the Swiss franc. The USD/CHF gained more than 80 pips during European trading to reach as high as 0.9307. Meanwhile, signs that the Bank of Japan will not initiate as aggressive a policy of monetary easing as once thought caused the USD/JPY to fall more than 120 pips during the first part of the day.

Today, dollar traders will want to pay attention to the US CPI and Core CPI figures, both scheduled to be released at 13:30 GMT. Both indicators are expected to come in above last month’s end results. If true, investors may interpret the news as a sign that the US economy is improving, which could result in risk taking and losses for the safe-haven USD. Later in the week, traders will not want to forget to note the results of this month’s Philly Fed Manufacturing Index and Prelim UoM Consumer Sentiment figures for additional clues regarding the current state of the US economy.

EUR – Bernanke Comments Result in Euro Losses

The euro took losses against its safe-haven currency rivals yesterday, as comments from the Fed Chairman earlier in the week about the slow pace of the US economic recovery caused investors to shift their funds to less volatile assets. The EUR/USD, which after a brief rally during early morning trading that brought prices as high as 1.3387, fell more than 70 pips to reach 1.3308. By the end of the European session, the pair was trading at 1.3350. The EUR/JPY fell more than 200 pips during the first part of the day, largely due to comments from Japanese officials, to trade as low as 117.62.

The euro-zone CPI and Core CPI figures, both scheduled to be released at 10:00 GMT, are forecasted to generate euro volatility today. Should either of the indicators come in above their forecasted levels, risk taking among investors will likely help the common-currency recover some of yesterday’s losses. That being said, if the CPI data out of the US comes in below expectations, concerns regarding the pace of the global economic recovery could lead to risk aversion and losses for the euro.

Gold – High Demand for Gold Boosts Prices

An increase in demand for safe-haven assets boosted gold prices yesterday. Analysts attributed the high demand to recent comments from Fed Chairman Bernanke, regarding the slow pace of the US economic recovery, which caused investors to shift their funds to precious metals. Gold advanced more than $12 an ounce during mid-day trading to reach as high as $1684.17.

Today, gold traders will want to pay attention to the US CPI and Core CPI figures, scheduled for 13:30 GMT. If either of the indicators comes in above expectations, fears regarding the US economy may be eased, which would result in gold giving up some of its recent gains.

Crude Oil – US Inventories Data Set to Impact Oil Prices

Concerns regarding the lack of progress in negotiations among US lawmakers to raise the debt ceiling caused the price of crude oil to come off its recent four-month high yesterday. After trading as high as $94.41 a barrel during mid-day trading, prices fell more than $0.80 to reach as low as $93.57.

Today, traders will want to pay attention to the US Crude Oil Inventories figure, set to be released at 15:30 GMT. Analysts are predicting that US stockpiles will increase to 2.0M, which if true, would signal reduced demand for oil and may result in a further decrease in prices.

Technical News

EUR/USD

A bearish cross has recently formed on the weekly chart’s Slow Stochastic, indicating that a downward correction could occur in the coming days. This theory is supported by the Williams Percent Range on the same chart, which is currently in overbought territory. Opening short positions may be the smart choice for this pair.

GBP/USD

While the Bollinger Bands on the weekly chart are narrowing, indicating that a shift in price could occur in the near future, most other long-term technical indicators are in neutral territory. Traders may want to take a wait and see approach for this pair, as a clearer picture is likely to present itself soon.

USD/JPY

The Relative Strength Index on the weekly chart is in overbought territory, indicating that a downward correction may occur in the coming days. Furthermore, a bearish cross has formed on the same chart’s Slow Stochastic. Traders may want to open short positions for this pair.

USD/CHF

The Bollinger Bands on the weekly chart are narrowing, indicating that a price shift is likely to occur in the near future. Additionally, the Williams Percent Rang on the same chart has dropped into oversold territory, signaling that the price shift could be bullish. Opening long positions may be the smart choice for this pair.

The Wild Card

EUR/CAD

The Slow Stochastic on the daily chart has formed a bearish cross, indicating that downward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which has crossed into overbought territory. Opening short positions may be the smart choice for forex traders today.

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.

Source: ForexYard

The USD/JPY fell an additional 88 pips during the Asian session last night, as recent comments from the Japanese Economics Minister, who warned that an excessively bearish yen would be bad for Japanese imports, helped the JPY recover some of its recent losses.

The EUR/USD saw minor losses during the overnight session, following comments from a euro-zone official who warned that the common-currency was gaining too much, too quickly. The pair, which is currently trading at 1.3270, lost close to 40 pips since last night.

Main News for Today

US Core CPI-13:30 GMT
• Forecasted to come in at 0.2%, slightly higher than last month’s 0.1%
• Better than expected news today could lead to dollar gains during afternoon trading

US Crude Oil Inventories- 15:30 GMT
• Forecasted to come in at 2.0M, significantly higher than last week’s 1.3M
• A higher than expected figure today could lead to a drop in crude oil prices during afternoon trading

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 MoneyMorning.com.au

Mark this day in your diary. This is the day that the central bankers showed their hands. Germany looks set to announce that they want all of their gold back…thank you very much.

I assure you this is big news. Although it will probably be swept under the carpet by the mainstream media. But this news shows you that the German central bank would prefer to have its gold in its own vaults rather than risk leaving it in American, French and British vaults.

Why is Germany doing this? Are they acting now because they know there is trouble coming down the road? Probably.

As an article in Der Spiegel noted recently:

‘Germany moved some of its gold reserves abroad during the Cold War to protect them from a possible Soviet attack. Some of the gold was moved back to Frankfurt after the collapse of communism. But the Bundesbank argues that it still makes sense to store some gold in major financial centers so that it can be sold quickly if necessary. Although the Bundesbank does not provide exact details about the distribution, it has revealed that the largest share of Germany’s gold is held in New York, followed by Frankfurt, London and Paris.’

German’s Wish to Bring the Gold Back Home

Germany’s Handesblatt newspaper said on Monday that the Bundesbank has developed a new strategy that involves bringing their gold bars home from abroad. And Marketwatch said the Bundesbank’s press office has organised a news conference for Wednesday morning, and the topic will be gold reserves…

The gold price has had a nice little kick higher in recent days. This could be based on the speculation that an announcement about the German repatriation of gold reserves is on the cards. I’ll explain the very interesting set up in the gold price below.

But first I’d like you to think about the repercussions of the world’s second largest owner of gold preferring to have its gold on its own soil rather than in foreign vaults.

As Marketwatch notes, quoting Thorsten Polleit, chief economist at precious metals firm, Degussa:

‘The [German] public has been long demanding an audit of the German gold reserves and repatriation of those reserves, Degussa’s Polleit said. Some fuel was thrown on that fire in the last year by the financial crisis.

‘But the Bundesbank traditionally keeps a veil of secrecy around gold. It hasn’t had its worldwide reserves audited down to the last bar for decades, if ever, Polleit noted. So it may be a bit of a mystery just what is in the vaults of the New York Federal Reserve, which holds a 45% chunk of Germany’s gold reserves. The Bank of England and the Bank of France hold 13% and 11% each. The Bundesbank itself holds 31% of those reserves.’

So is there deterioration in the trust between central banks? Are they finally suspicious as to whether the gold they have stored in each other’s vaults is actually there?

Obviously there is first mover advantage in being the first to repatriate your gold if you’re suspicious about what is actually there. Do other central banks start to put their hands up for their gold once they realise the last in line may end up empty handed?

Of course these scenarios will be seen by the mainstream as conspiracy theories.

But the actions of central banks are the only show in town at the moment. The financial markets are now obsessed by the money printing shenanigans of the central banks. So they should be even more concerned by what central banks do with real money, i.e. Gold.

Has Germany Shown it’s Hand on Gold?

Hugo Chavez repatriated Venezuela’s gold in 2011 from the Bank of England. That news didn’t cause much of a stir because as Zerohedge noted it’s ‘one thing for a “crazy, lunatic” dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most.’

The gold has sat there unaudited for years. So why pull it out now? There would have to be a very good reason for it. Because this could be seen as a red flag to so many in the markets, Germany would need a good reason for showing their hand in this manner.

Of course we may be barking up the wrong tree and they may announce something else entirely later today. But this news is something to take very seriously and the reaction of the gold market will be telling.

A Long Term Uptrend for the Gold Price

Gold Price Daily Chart

Click here to enlarge

The current set up in the gold price is the most interesting I’ve seen for many months. I don’t have any gold stocks in my trading portfolios at the moment but I think the time is fast approaching to pick up a few beaten-down gold stocks.

There is a confluence of indicators pointing to a strong resumption of the uptrend in gold above US$1700.

My long term trending indicator is the 35 day/200 day and that shows gold is still in long-term uptrend although the trend is weak at the moment. A close in the gold price back above the 35 day moving average while in long term uptrend will be a long term trending buy signal now that the price has retested the 200 day moving average.

Also there is an ABC set up pointing at a buy signal above US$1700 when the price overlaps above ‘A’ in the chart.

The Point of control for the past year and a half’s trading is also around US$1700. So a close back above the point of control is another sign that the gold market is strengthening.

What does this all mean? From here there is a good chance of a chain reaction above US$1700 in the short term. It just needs a catalyst to make that happen. Could the announcement from the Bundesbank about repatriating their gold be the catalyst to ignite the fuse?

I can’t say for sure, but it’s worth paying close attention to what’s happening in Germany and the plans for its gold.

Murray Dawes
Editor, Slipstream Trader

From the Port Phillip Publishing Library

Special Report: The Big Money Secret of Ironstone Mountain

Daily Reckoning: A North Korean Investment Opportunity

Money Morning: How Central Banks Are Letting Inflation Get Out of Control

Pursuit of Happiness: Are You Brave Enough to Break From Technology?

Diggers and Drillers:
Five Reasons Why Gold Stocks Are Set to Rebound