Month: May 2013

By www.CentralBankNews.info     Mozambique’s central bank held its benchmark standing facility rate steady at 9.50 percent, saying it would intervene in money markets to ensure that the monetary base does not exceed 39.70 billion meticais by the end of May compared with 38.81 billion at the end of April.
    The Bank of Mozambique (CPMO), which has held its rate steady this year after cutting by 550 basis points in 2012, said indicators of the economic climate pointed to lower economic activity, interrupting the upward trend that had been seen since July last year, while expectations regarding demand also showed a decline though employment prospects remained positive.
    Mozambique’s inflation rate rose to 4.79 percent in April, up from 4.27 percent, though well below a peak of 16.6 percent at the end of 2010.
    “The behavior of inflation in the first four months of the year reflects a scenario of a difficult early year, marked by floods that affected the food supply in some markets, especially fruits and vegetables, as well as the increase in average prices of some commodities in the international market, which weighed on domestic inflation, without neglecting the strengthening of the U.S. dollar in the domestic foreign exchange market,” the CPMO said.

    Following its recent visit to Mozambique, the International Monetary Fund (IMF) forecast that inflation would remain around 5-6 percent in the medium term despite the declining trend that was interrupted by the floods.
    The IMF said Mozambique’s economy remains robust, “reflecting the rapid expansion in coal production as well as in financial services, transport and communications, and agriculture.” 
      Last month the central bank cut its 2013 growth forecast to 7 percent from a previous 8 percent due to extensive flooding in the southern and central areas of the country in the first few months of the year, which affected mining output and agriculture. In 2012 the economy grew by 7.4 percent.
    Mozambique’s Gross Domestic Product expanded by 2.3 percent in fourth quarter of 2012 for annual growth of 8.3 percent, up from a rate of 6.9 percent in the third quarter.
    The IMF also forecast that Mozambique’s economy would expand by around 7 percent this year as mining expands and agricultural production recovers from the floods.
     The central bank said the metical was quoted at 30.02 against the U.S. dollar on the last day of April, equivalent to a monthly appreciation of 0.20 percent compared with a depreciation of 0.30 percent in the previous month, taking the cumulative and annual depreciation to 1.73 percent and 9.4 percent, respectively.

    www.CentralBankNews.info

London Gold Market Report
from Ben Traynor
BullionVault
Friday 10 May 2013, 07:30 EDT

SPOT MARKET gold bullion prices fell to two-week lows Friday, drifting lower towards $1440 an ounce during this morning’s London session before dropping sharply through that level, as stocks gained and most commodities fell as the Dollar strengthened against major currencies.

Silver fell to $23.34 an ounce, while copper prices ticked higher.

“The risk [for gold] is a break through support [will] test the $1322 low,” say technical analysts at bullion bank Scotia Mocatta, who cited $1440 an ounce as a key support level.

Heading into the weekend, gold looked set for a 2.2% weekly drop by lunchtime in London, with silver down 2.6% on the week.

The world’s biggest gold exchange traded fund SPDR Gold Trust (ticker GLD) meantime saw the volume of bullion held to back its shares climb to 1054.2 tonnes yesterday, the first daily addition mid-March. The GLD has seen its holdings fall by more than a fifth since the start of the year, taking them down to four-year lows.

Deutsche Bank became the latest investment bank to cut its gold forecast Friday, with its analysts now projecting a 2013 average gold price of $1533 per ounce, down from the previous forecast of $1637. The 2014 forecast was cut from $1810 an ounce to $1500, with the 2015 forecast down from $1930 to $1450.

On the currency markets, the US Dollar rose above the 100 Japanese Yen mark for the first time in four years Friday. The Dollar also added to gains made against the Euro Thursday, which followed the release of the lowest weekly US initial jobless claims figure since January 2008.

“Gold’s been put a little bit under pressure because of the Dollar move,” says Afshin Nabavi, senior vice president at Swiss bullion refiner MKS.

“Physical-related demand had been very strong up to yesterday. The lower gold goes, the more physical demand will come in.”

“People in Hong Kong are still complaining about tight supply,” one dealer in Singapore told newswire Reuters Friday.

Japan’s Nikkei 225 stock market meantime closed up nearly 3% Friday, hitting a five-and-a-half-year high as the Yen weakened against the Dollar.

The Bank of Japan last month announced that it will double the monetary base over the next two years, buying between ¥60-70 trillion of assets a year, after prime minister Shinzo Abe said policymakers will do “everything possible” to achieve an inflation target of 2%.

“In general, if you ease monetary policy, your currency will weaken,” International Monetary Fund deputy managing director Naoyuki Shinohara told an audience in Tokyo Friday, adding that poor fiscal discipline from the government risks giving the impression that is being financed by the central bank.

“Most central banks…still have a bias to ease,” says a note from Morgan Stanley.

“Given this disposition, it doesn’t take much in terms of downside surprises in growth or inflation to tip the balance for more central banks to pull the trigger for more easing.”

Today’s meeting of G7 finance ministers and central bank governors near London is “an opportunity to consider what more monetary activism can do to support the recovery,” said UK chancellor

George Osborne yesterday, “while ensuring medium-term inflation expectations remain anchored”.

“Central banks are our best friends,” Mohamed El-Erian, chief executive of world’s largest bond fund Pimco, said earlier this week.

“Not because they like markets, but because they can only get to their macro objectives by going through the markets…the hope is that improving fundamentals will validate what central banks have done.”

Gold mining companies meantime reduced their gold hedge positions during the last three months of 2012, according to the latest analysis from precious metals consultancy Thomson Reuters GFMS.

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 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.

By www.CentralBankNews.info

By HY Markets Forex Blog

One of Japanese biggest electronic manufacturers has announced to step back from consumer gadgets due to their full year net loss of 754.25 billion yen which is almost matching last year’s net loss of 772.17 billion yen.

Panasonic announced to pull way from consumer electronics to with rival Sony which accounts for more than half of their revenue. The Electronic giant is expecting to return a fourfold increase in profits by next March.

Panasonic assets dropped to 5.4 trillion yen from 6.6 trillion at the end of the latest business year.

According to reports Panasonic are expected to return a net profit of 50 billion yen, an operating profit of 250 billion yen and revenue of 7.2 trillion yen.

Panasonic are expected to cut more jobs adding to the 40,000 job cuts they have had in the past two years according to reports.

The electronic giants have helped weaken the yen which is currently 100yen against the US dollar for the first time since April 2009.

Panasonic plans to spend $2.5 billion to invest into the business after the sales decreased from $92 billion in the past six years.

Like Panasonic domestic rivals such as Sony, the company has suffered in television sales due to tough competition and the company is depending on the asset sales to revive to profits and growth of the company.

The post Panasonic Hits Full-year net loss of 772.17 billion yen appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

For the first time since April 2009, Yen has fallen as low as 101.20 per dollar, down by another two percent from Thursday‘s rate of 98.65. In the past six months yen has declined above 20% against the US dollar.

The sudden drop is believed to help exporters profit .The Japanese yen have not been able to exceed  the level of coming close to the 100 yen to the US dollar .

According to reports and data released, applications for unemployment insurance had fallen to its lowest level for the first time in five years.

For the past two weeks, foreign bonds have been said to have been bought by Japanese investors for an estimate net total of 514bn yen ($5.2 billion) which is a sign of a massive monetary which might push to seek higher profits abroad.

A weaker yen is a benefit for Japanese exporters and makes good cheaper to foreign buyers for the exporters which could help boost sales such as Toyota and Sony, have reportedly increased their profits due to the weak Japanese yen.

However, the yen’s fall might not be all good for the economy as if the economy doesn’t show any signs of improving the cost of raw materials and energy of imports will increase which would not benefit the Japanese economy. “For manufacturers, overall we are thankful that the trend is the yen’s depreciation, but we are seeing signs of raw material costs rising. Of course that does not mean we will decrease manufacturing in Japan, but we need to think how these costs can be absorbed,” Yasuyuki Yoshinaga, CEO of Fuji Heavy Industries Ltd says to reports.

The post Yen breaks below 100 against US dollar appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By MoneyMorning.com.au

Don’t look now…but resource stocks are going up!

It’s been quite a week in fact.

The Metals and Mining Index (XMM) has had its longest winning streak in six months: over five straight sessions of gains, it’s up 9%.

And this makes it the biggest weekly gain for eighteen months.

After a twenty-five month long slide in resource stocks, is this the start of the rally we have been waiting for…?

It could be. And if it is, what is the best way for investors to profit most from it?

The US markets are setting all-time highs…

The Australian market is at a five-year high…

But the Australian resource sector…missed the memo completely.

The Australian Metals and Mining index (XMM) is the lowest it has been in four years.

It is back to levels not seen since the GFC!

While the rest of the world has been cracking the bubbly, resource investors have had less to smile about. It’s been a long hard slog in the trenches for the last 25 months.

But it has also been the genesis of the most outstanding investment opportunity the market has offered up in a long time.

After going vertical for months, most Australian bank stocks are now the most overbought in thirty years. To me they look like a great opportunity to buy high and sell low.

But…if you’re the type of investor that likes to buy low and then sell high…the deeply oversold Australian resource sector looks like a much better prospect for getting the equation the right way round.

Source: Bigcharts

It may not be tomorrow, next week, or next month…but we’re getting close to a major money making opportunity in Australia’s most unloved sector: resources. On Wednesday I wrote to you about why we should expect a recovery; and why we could well be on the cusp of another sixteen years of commodity price rallies.

So…

How Should You Play it?

‘How about BHP?’

[Alex: Yawn]

Sorry, you lost me there. Something about BHP? BHP isn’t my idea of an exciting stock market investment.

Why?

For a start, a mega-cap miner like that covers so many commodities you don’t get to focus on a specific commodity that you may like.

But the MAIN reason I leave BHP to the automaton fund managers is this: it’s much easier to get a 100% gain on a stock with a $100 million market cap, than it is to get a 100% gain on a stock with a $1 billion market cap.

Here’s an example of what I mean…

Take Panaust (ASX: PNA). It’s one of Australia’s biggest copper stocks.

In July 2010, it had a market cap of $7.5 billion.

Between July 2010 and April 2012, the copper price gained 25%.

But multibillion dollar copper producer Panaust managed to climb just 2.3%.

In comparison, Discovery Metals (ASX: DML) had a market cap of $200 million back in July 2010. And over the same period, Discovery climbed 108%.

The point is this: For nimble investors, it’s easier to leverage commodity price moves with smaller stocks.

Those were happier days for Discovery’s shareholders. I advised Diggers and Drillers readers to take profits at that point, to lock in a 108% gain. It paid to be disciplined, as the share price has come crashing down since then.

Take another example.

Gold gained 20% between April 2011, and May 2012.

<Newcrest (ASX: NCM), with a market cap of $25 billion, completely failed to monetise this move. Investors were sorely disappointed as they saw the share price crash by 38%, even while gold rose 20%.

Meanwhile, smaller gold stocks were locking in the gains.

Mid-cap gold producer, Regis Resources (ASX: RRL) gained 40% in this time.

Small-cap gold explorer, Azimuth (ASX: AZH), gained 60% in the same period.

It’s pretty clear that if you do your homework, and filter out the contenders from the pretenders, small-cap resources are capable of far more rewarding moves than the bungling big-caps.

The conditions have to be right though.

Today, the conditions are right. We are the end of a bear market for resources, or very close to the end of it.

Winter is turning to spring in the resource sector. So it’s time to stop being bearish, and start thinking about the massive opportunity ahead. I’ll have more for you on this theme in the days and weeks ahead.

Dr Alex Cowie
Editor, Diggers & Drillers
Join me on Google+

PS. The S&P/ASX 200 continues to trade near the top of its three-month range. But it’s struggling to move much higher. Even bumper bank profits and an interest rate cut couldn’t give the market the boost investors wanted. In today’s Money Morning Premium, Kris asks financial planning veteran Vern Gowdie what investors should do as income stocks trade at sky-high prices. Click here to upgrade now.

From the Port Phillip Publishing Library

Special Report: TORRENT SIGNAL 3

Daily Reckoning: India’s Balance of Trade – a World out of Balance

Money Morning: Can Australian Stocks Defy Gravity if The Australian Dollar Falls

Pursuit of Happiness: The Government’s Idea of Wealth Creation

By MoneyMorning.com.au

Legendary investor Jeremy Grantham, of Boston based fund manager GMO, recently said:

‘The investment business has taught me – increasingly as the years have passed – that people, especially investors (and, I believe, Americans) prefer good news and wishful thinking to bad news; and that there are always vested interests to offer facile, optimistic alternatives to the bad news. The good news is obviously an easier sell.‘

After 26 years in the financial planning industry, Grantham’s observation resonates loud and clear with me.

We repeatedly hear that ‘every cloud has a silver lining’ – so this saying is the perfect platform for industry marketing efforts to promote the positive in every situation.

Markets rise to record levels – they’re set to go even higher.

Markets fall to records lows – they’re cheap and destined to turn and go higher.

The industry view is ‘there’s never a bad time to invest in markets’.

Even a cursory study of market charts shows this isn’t true. The Australian share market is still some 25% below its late 2007 high. So selling or not buying at that stage would have been an excellent call.

You’ll Never See a Market Bubble Like This Again

The reality is there are some times when there just isn’t any good news out there. Sometimes you have to be patient and wait for the reward to outweigh the risk.

This view is a curse to both the investment industry and anxious investors searching for a pre-determined rate of return on their capital.

In my opinion the world we find ourselves in today is vastly different to the one that shaped the investment community’s generally optimistic views on markets.

For the best part of three decades (1980 to 2007) the greatest credit bubble in history powered the global economy, and by extension investment (share and property) markets. We developed an addiction to continuous growth.

From 1982 to 2007, the Australian share market grew by a staggering 1,500% (460 points to 6850 points). In the 130-year history of the Australian share market, there has never been (and most likely never will be) a 25-year period of performance that comes close to this one.

Surely it’s no coincidence this occurred at the same time as the greatest credit expansion.

What is less well known is that from 1968 to 1982 the Australian share market managed to eke out a paltry 10% gain over the entire 14-year period (420 points to 460 points). That’s less than 1% per annum growth.

But the great credit expansion came to an abrupt end with the subprime implosion. Subprime lending was the bottom of the credit pyramid. Like all Ponzi schemes, the pyramid collapsed when they could no longer expand the base.

The great credit contraction began in 2008 and five years later all corners of the globe are feeling the effects of this ‘cooling’ process.

If the Economy is Recovering, Why…

Central bankers and politicians (the world over) are desperately trying to re-ignite the rampant consumerism that was so prevalent in those heady pre-GFC days.

Initially, policymakers responded with relatively modest and measured ‘strategies’. The fleeting success of these ‘strategies’ has gradually led to the situation we have today – unlimited and indefinite money printing combined with zero bound interest rates – any pretense of caution has been thrown to the wind.

The US share market has been the major beneficiary of Bernanke’s firm stance to rebuff the effects of the great credit contraction.

From its lows in 2009, the US share market has recovered to record highs. The investment industry trumpets this as proof the worst is over.

If the global economy was genuinely recovering why are the money printing efforts intensifying?

Why are central banks keeping interest rates so low with no prospect of an increase even remotely visible on the horizon?

Why has the commodities index fallen 20% over the past two years?

Why has the Baltic Dry (shipping) Index fallen 75% over the past two years?

Why is there a currency war?

The latest Daily Sentiment Index of traders (published by trader-futures.com) registered an overwhelming 90% of bulls on the S&P. Only 10% of traders aren’t convinced of Bernanke’s Ponzi scheme. When pretty much everyone is on one side of the boat, the boat tips.

Remembering Stein’s Law

In the rush to participate in Ben’s party, it appears investors have forgotten or ignored Stein’s Law: ‘if something cannot go on forever, it will stop’.

Excessive money printing and artificially inflated markets won’t cure the ills created by the great credit contraction. Debt needs to expunged from the system. This will be a long and painful process – the exact opposite of the euphoria created by credit expansion.

Eventually economic reality and markets will collide – unfortunately the higher the market, the harder the fall.

The ‘silver lining’ in this dour outlook is that patient investors will be rewarded handsomely.

It’s ironic the massive damage to be inflicted by Bernanke’s Ponzi scheme will see him rewarded with a lifetime pension, whereas Madoff was punished with a lifetime in prison.

Vern Gowdie
Contributing Editor, Money Morning

Join Money Morning on Google+

[Ed Note: Vern has been involved in financial planning since 1986. In 1999, Personal Investor magazine ranked Vern as one of Australia’s Top 50 financial planners. His previous firm, Gowdie Financial Planning, was recognized in 2004, 2005, 2006 & 2007, by Independent Financial Adviser (IFA) magazine as one of the top 5 financial planning firms in Australia. Vern has been writing his ‘Big Picture’ column for regional newspapers since 2005 and has been a commentator on financial matters for Prime Radio talkback. His contrarian views often place him at odds with the financial planning profession. In his leisure time Vern remains active with triathlons and pilates.]

From the Archives…

The Market Rebounds, but We’re Still Not Selling…
26-04-2013 – Kris Sayce

Is This the Last Hurrah for the Australian Dollar?
25-04-2013 – Murray Dawes

Here’s Proof the Silver Bullion Market is Alive and Well
24-04-2013 – Dr. Alex Cowie

Stand By for the Recession Rally in Resource Stocks: Take Two
23-04-2013 – Dr. Alex Cowie

A New Take on Hard Asset Investing
22-04-2013 – Kris Sayce

By www.CentralBankNews.info     Sri Lanka’s central bank cut its benchmark by 50 basis points to 7.00 percent, saying a downward adjustment to policy was “appropriate in order to stimulate domestic economic activity, particularly since inflation and inflationary pressures are at levels that do not pose any immediate risk to the economy.”
    The Central Bank of Sri Lanka, which last cut its rate in December after raising it twice earlier in the year, said it had become “somewhat concerned by the slower-than-expected pick-up in economic activity in the first few months of 2013 and has been of the view that there is now a need to stimulate the domestic economy, particularly in the light of the gradual moderation in headline inflation and subdued demand pressures in the economy.”
    The central bank added that there was greater space to change policy right now and a capacity to return to a higher growth path without fueling inflationary pressures.
    In April, Sri Lanka’s inflation rate fell to 6.4 percent from 7.5 percent and last month the bank said it expected inflation to remain at this level.
     Core inflation eased to 6.1 percent in April, reflecting a sharp deceleration in monetary expansion which is also expected to keep demand pressures in check, auguring well for inflation, the bank said.
    In the fourth quarter of last year, Sri Lanka’s Gross Domestic Product expanded by 6.3 percent from the third quarter for an annual rise of 6.3 percent.
     For the full year, the economy grew by 6.4 percent, but the central banks said indicators had pointed to moderation in economic activity in the first quarter of 2013 due to lower external demand.
    In addition to cutting the repurchase rate to 7.0 percent, the central bank also cut the reverse repurchase rate to 9.0 percent and raised the reserve maintenance period of commercial banks to two weeks from one week to “offer greater flexibility to commercial banks in managing their liquidity.”
    The reserve ratio was maintained at 8.0 percent.

    www.CentralBankNews.info

USDCAD remains in downtrend from 1.0293, the price action from 1.0051 is likely consolidation of the downtrend. Resistance is now located at the upper line of the price channel on 4-hour chart, as long as the channel resistance holds, the downtrend could be expected to resume, and another fall towards 1.0000 is possible. On the upside, a clear break above the channel resistance will suggest that the downward movement from 1.0293 had completed at 1.0013 already, then further rally to 1.0200 area could be seen.

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