Month: June 2013

By www.CentralBankNews.info

By www.CentralBankNews.info     Egypt’s central bank held its benchmark overnight deposit rate steady at 9.75 percent, along with its other main rates, and said it would soon issue a policy statement.
    The overnight lending rate was maintained at 10.75 percent and the rate of the Central Bank of Egypt’s (CBE) main operation at 10.25 percent along with the discount rate at 10.25 percent.
    The CBE raised its rate by 25 basis points in April to fend off inflationary pressures but held rates steady in May to give its rate hike time to take effect.
    Egypt’s headline inflation rate was largely steady in May, with prices up 8.2 percent from 8.1 percent in April.
    Last week, the governor of the central bank said the government was in the late stages of verifying its economic reform program with the International Monetary Fund before receiving a $4.8 billion loan that is needed to stabilise the country’s balance of payments and state finances.

    www.CentralBankNews.info

By www.CentralBankNews.info     Switzerland’s central bank maintained its monetary policy and exchange rate targets, saying the economic risks remain high and the threat of another bout of upward pressure on the Swiss franc has not been averted because international investors are still seeking a safe haven.
    The Swiss National Bank (SNB), which imposed a ceiling on the Swiss franc against the euro in September 2011, said it still stands ready to “enforce the minimum exchange rate, if necessary, by buying foreign currency in unlimited quantities, and to take further measures, as required.”
     The ceiling was imposed as investors sought refuge from political and economic turmoil in the euro area, driving up the value of the franc. The SNB set a maximum limit of 1.20 francs per euro after it had moved towards parity to the euro and has successfully fought off any rise of the franc above that level. Earlier today it was trading around 1.23 to the euro.
    But SNB President Thomas Jordan said the Swiss franc remained high and any rise in its exchange rate would “compromise price stability and would have serious consequences for the Swiss economy.”
    “The threat that the Swiss franc could suddenly come under upward pressure again has not been averted. In the current low interest rate environment, therefore, the minimum exchange rate remains the focal instrument for ensuring appropriate monetary conditions,” Jordan added.

    A high exchange rate makes Swiss exports less competitive and tends to put downward pressure on inflation, leading to tighter monetary conditions.
    “Recent developments suggest that safe-haven considerations continue to play an important role in the demand for Swiss francs. Overall, the value of the Swiss franc remains high and should fall further over the next few quarters,” Jordan added.
    In addition to maintaining its target for the exchange rate, the SNB also maintained its target for three-month libor rates at zero to 0.25 percent, and expects that to remain for three years.
    Inflation in Switzerland has remained negative for 20 months in a row and consumer prices fell by 0.5 percent in May. Lower oil prices is putting further pressure on prices and the SNB said it was cutting its inflation forecast for this year to minus 0.3 percent. For 2014 the SNB expects an unchanged inflation rate of 0.2 percent and 0.7 percent in 2015.
    The Swiss economy bounced back in the first quarter of this year, driven by private consumption and residential investment, with Gross Domestic Product expanding by 0.6 percent from the previous quarter for an annual increase of 1.1 percent.
    But Jordan said the risks remain high, mainly stemming from international developments and a weakening of the global economic momentum could not be ruled out as developments in the euro area remain uncertain and tensions can reappear on global financial markets.
    The SNB expects growth to weaken in the second quarter but still expects growth of between 1.0 and 1.5 percent for 2013.
    Lending by Swiss banks has been growing faster than nominal growth for several years and prices for owner-occupied apartments and single family homes have risen strongly.
    Given the low interest rates, which poses the risk that real estate markets will rise further, the SNB proposed activating a countercyclical capital buffer and this will take effect at the end of September. The SNB expects the buffer to enable banks to better weather any sudden economic downturn and also help counter a further rise in mortgage and real estate markets.
 
     www.CentralBankNews.info

By The Sizemore Letter

Earlier this week, I wrote that Greece had been downgraded by MSCI from “developed economy” to “emerging market.”  In this video, I dig into the details and explain what this means for investors.

The point to take away is that your emerging market ETF or mutual fund may not be invested in the countries you expect.  It may be loaded down with already mature countries such as Taiwan or South Korea…or with basket cases like Greece.

Before you buy an emerging market ETF or fund, go to a financial website such as Yahoo Finance or visit the fund’s website to take a look under the hood.  Nearly all ETFs and mutual funds provide easy viewing access to their holdings.

See also: Greece Downgraded to “Emerging Market.” But Will It Ever Emerge?

Chart Example & Free Ebook – How to Identify High Confidence Reversal Zones

Elliott Wave International Senior Analyst Jeffrey Kennedy shows you to how to use 3 technical tools to find price reversals

“Price gaps, wave relationships and Fibonacci retracements act as support or resistance for countertrend price moves. When combined, these characteristics help identify high-probability reversal zones.”

-Jeffrey Kennedy

Technical analysis offers several ways to spot pullbacks that indicate a reversal of the larger trend. When you use the Elliott Wave Principle, it can be very useful to “gain a consensus” from more than one indicator to spot a high-confidence trading opportunity.

The following lesson is adapted from Jeffrey Kennedy’s December 11 Elliott Wave Junctures educational subscription service:

Identifying high-probability reversal zones is simple, IF you know what to look for.

• Price gaps occur when the range of a price bar does not include the range of the previous bar. It acts as a reliable level of support and resistance for subsequent price action and should always be monitored.
• Elliott wave relationships help identify a range that will lead to the resumption of the larger trend. The most common relationship between waves C and A of zigzags and flats is equality, the second being a 1.382 multiple.
• Fibonacci retracements: Fourth waves tend to encounter Fibonacci support/resistance at a .382 multiple of wave three. Depending on the depth and duration of the correction, prices may also test the .500 and .618 retracements.

In the daily chart for Akami Tech Inc. (AKAM), you can identify all 3 characteristics:

• Price gap at 34.69
• Elliott wave relationship of 1.382 between waves C and A of a zigzag pattern at $33.79
• Fibonacci retracement at 50% of the prior advance at $34.04.

Using this information, you can see the very tight zone in which you may locate a probable reversal in this market (within the red circle).

Rather than focus on a single indicator, Jeffrey encourages you to combine them together to better identify high-confidence reversal zones in your price charts.

Learn About Moving Averages, One of Jeffrey Kennedy’s Favorite Indicators, in this Free 10-page eBook from Elliott Wave International Moving averages are one of the most widely-used methods of technical analysis because they are simple to use, and they work. Now you can learn how to apply them to your trading and investing in this free 10-page eBook. Learn step-by-step how moving averages can help you find high-confidence trading opportunities. Improve your trading and investing with Moving Averages! Download Your Free eBook Now >>

By www.CentralBankNews.info     Norway’s central bank left its policy rate steady at 1.5 percent but signaled that it is likely to cut rates slightly in the coming year as inflation will take longer to rise and economic activity is lower than expected.
    Norges Bank (NB), which last cut its rate in March 2012, said it was concerned that inflation expectations could become entrenched at too low a level and if the economy develops as expected, “the key policy rate should be kept lower than projected earlier,” Governor Oeystein Olsen said.
    “There are prospects that they key policy rate will remain at the current level, or somewhat lower, in the year ahead,” he added.
    At its last meeting in March, the Norwegian central bank had said it expected to keep its rate at 1.5 percent until the spring of 2014 and then start increasing the rate.
    However, the central bank has now completely dropped its tightening bias and omitted any mention of raising interest rates.
    “At the meeting, the Executive Board decided that the key policy rate should be in the interval 1%-2% in the period to the publication of the next Report on September 19, unless the Norwegian economy is exposed to new major shocks,” the NB said.

     Dropping its upward rate bias completes a gradual shift in the central bank’s policy stance in the last nine months. Norges Bank first started easing its upward rate bias in October 2012 when it delayed a planned rate rise by the end of 2012 to sometime in 2013. In January the bank maintained this stance but in March it pushed a planned rate rise to the spring of 2014.   
    Norway’s inflation rate rose to 2.0 percent in May from 1.9 percent but the central bank said it now expects it will take longer than expected for inflation to rise.
    The NB forecast that underlying inflation of between 1.25 and 1.75 percent, below the central bank’s target of 2.5 percent.
    Norway’s economy is slowing down and growth prospects for both Norway and the global economy have weakened slightly, the bank said. Wage growth is slowing, unemployment is slightly higher than expected, capacity utilization is now close to a normal level and the krone currency has depreciated.
    “Growth among trading partners is somewhat lower than expected. In Europe, the downturn is likely to persist longer than previously projected,” the bank said.
    “An extensive restructuring must be carried out in the euro area countries in order to boost their long-term growth potential. It will most likely take several years for production to return to levels prevailing to the financial crises,” it added.

    Norway’s Gross Domestic Product contracted by 0.2 percent in the first quarter from the fourth for an annual decline of 2.7 percent, a sharp fall from the fourth quarter’s 1.9 percent expansion.

Source: Brian Sylvester of The Gold Report (6/19/13)

http://www.theaureport.com/pub/na/15383

It’s a jungle out in the silver markets. Investors are holding on for their lives as the price of metals swings to higher highs and lower lows and junior equities bounce along the bottom. In this interview with The Gold Report, David H. Smith, senior analyst at silver-investor.com’s The Morgan Report, navigates the jungle by advising which explorers, midtiers, stalwarts and royalties to consider buying in tranches on the way down and selling on the inevitable way up.

The Gold Report: David, Silver Investor analyzes the long-term macro trends and specific stock catalysts in the silver market. What do you see as the risk/reward profile over the next 12 to 36 months in the space?

David Smith: A lot of people, including myself, are looking for a bottom. It may be in—or it may not be in. The secret is to focus on the upside, which could be 10 or 15 times higher, rather than asking if it could be two or three dollars lower. That makes it easier to buy at these prices.

TGR: How long could this slump last?

DS: Mining stocks have been disconnected from the metals prices for almost two years. We had major tops in gold and silver, but the mining stocks, almost across the board, regardless of quality, have gone down, down, down. The disconnect is greater than two standard deviations away from the norm. That sort of thing can last a while, but it doesn’t happen very often. In fact, there’s a 97% probability that it wouldn’t happen or that it wouldn’t stay there if it did. I think that we are nearing the end. We could see this weakness go into the late summer/early fall, but I think we are building an important base even if we go lower. The stronger that base gets and the broader it becomes, the more likely it will move violently on the upside. If you have no position waiting for this, you will be left behind.

TGR: How do investors survive the horrendous swings going on in the meantime?

DS: Volatility can be a good thing if you are prepared for it. The secret is to not wait for those swings to occur and try to predict them because you’ll be jumping on what Jsmineset’s Jim Sinclair calls a rhino horn and you’ll get speared. If you’re able to do the opposite of what most people do, to buy weakness and then sell a little bit into strength, you can smooth out the big swings. I believe that we’ll see swings of $100–200/ounce ($100–200/oz) a day in gold when this thing finally moves into the public mania phase. It would not surprise me to see $5–10/oz swings in the price of silver in one day. We saw this during the bull market that ended in 1980 and I think the price increases are going to be much greater this time around. If you have layered your positions, your mining stocks, your exchange-traded funds (ETFs), your physical purchases into weakness, when the swings happen you won’t be affected as much as most of the public.

TGR: Would you like to make any predictions about the silver prices over the next 10 years?

DS: This is always very difficult. Economic conditions are a major variable because, as you know, about 70% of the supply of silver comes from byproduct production of copper, lead and zinc. The global economy will affect how much of that is dug out of the ground. Relatively few silver miners receive most of their income from silver as opposed to base metal credits.

Additionally, some of the really large projects now in planning may be delayed or may not come on at all. This includes the Navidad project, which I visited in Argentina before it was purchased by Pan American Silver Corp. (PAA:TSX; PAAS:NASDAQ). It was estimated as a 700 million ounce (700 Moz) to 1 billion ounce (1 Boz) deposit, but due to regulatory problems, that project has been shelved. It may be quite a while before it gets going or it may not go at all.

The Pascua Lama deposit that Barrick Gold Corp. (ABX:TSX; ABX:NYSE) is working on, on the Chile/Argentina border, has also encountered serious legal issues. It could be delayed for a year or two or shelved for good. We don’t know. Barrick has already put a reported $6 billion ($6B) into this deposit. That could mean 20–30 Moz of silver annually that doesn’t go into the stream in the next 10 years. That is a significant impact on supply/demand calculations.

Also let me add that we have an exclusive interview that David Morgan conducted regarding the ownership of Pascua Lama. Right now we are reserving this for our members only.

TGR: We often hear how silver is like gold’s little brother. Other than silver having an industrial demand profile, how are these metals different as investments?

DS: Almost all of the gold that has ever been produced is still out there in some form: in central banks, in private holdings, or in jewelry. A certain amount is used in medical or industrial applications, but not on the scale of silver. When silver is used in radio frequency identification (RFID) chips or electronics, it is gone and must be replaced.

Another increasingly important factor is the emerging popularity of ETFs. Like gold, silver has been real money for people going back thousands of years. It has outlasted every paper system ever developed by humankind. It’s going to outlast the current ones as well, because it preserves purchasing power as paper money loses it.

TGR: Does owning silver equities, particularly small-cap equities, still make sense in this market?

DS: Equities make sense more than ever before because of the disconnect between the price of metals and what the companies can dig out of the ground. The entire mining sector, whether it’s a large producer or an explorer, is high risk. But after buying the physical metal, it makes sense to pick up the equities at all stages. Buy a few of the majors, then go into the midtier section and finally the explorers, which are the highest risk because they may or may not ever go into production. Put a small amount of capital in and allocate it roughly proportionately so that if one choice blows up, the others will make enough that you will still make a profit. Owning equities is very important, but be selective. Scale down any purchases into this historic decline.

TGR: Before we started our interview, you talked about the concept of keeping some money back for what you called stupid cheap prices. Tell us more about that strategy.

DS: I think Doug Casey used this term first, but it was certainly correct. Prices are now lower than what most people thought they would ever sink. I learned something very important in the 2008–2009 meltdown. I started out with about 30% cash at the top. Prices kept dropping as part of what nearly became global financial destruction. I bought quality mining companies down, down, down. Then I ran out of money before the end. I had good quality companies I had bought at pretty low prices, but I didn’t keep back a little bit for what Doug Casey calls stupid cheap prices.

That was when I learned to buy larger price differences. In other words, instead of buying every dollar on a company like Goldcorp Inc. (G:TSX; GG:NYSE), I might buy every $4 down on Goldcorp and keep a little bit back just in case the price went even lower. It was likely to be temporary because it was similar to a rubber band being stretched almost to the breaking point. If you had the courage, the money and the foresight to buy at that point, when that rubber band snapped back, you could make a great deal of money with very little commitment.

Those concepts are as important today as they were in 2008. We may or may not be at the bottom now. There are indications that the mining stocks are bottoming. Some of them may have already, but if we get one more washout, which is possible this summer, and if you have a little bit of money left, you may be able to pick up a company that today is selling for $2/share, for $0.75 or $0.50/share. You will already have your core position, but you will be buying down into that lower level.

Dollar cost averaging is one of the most powerful tools an investor can use. If you’re buying in tranches on the way down, you’re almost rooting for lower prices because you’re going to lower your cost of having that position. There is a saying that when the price goes up you never have enough shares and when it goes down you never have few enough shares. The reality is that you get your initial position in and then you can be calm and watch for lower prices.

TGR: Some of David Morgan’s recent presentations have included royalty equities. What are some royalty equities you’re telling your subscribers about?

DS: David likes stocks that pay dividends. We’re seeing more and I think this is a trend that will continue.Newmont Mining Corp. (NEM:NYSE) has a history of paying good dividends. Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) and Franco-Nevada Corp. (FNV:TSX; FNV:NYSE) are established, well-managed companies with good cash hoards. They could make the bedrock holding of a portfolio because they can keep giving you some extra profit vitamins while you’re waiting for the share prices to turn around. A lot of times the dividend can be more reflective of the company’s viability than the current share price.

TG: As of March 31, 2013, Franco-Nevada had $867 million ($867M) in working capital, another $60M in marketable securities and about $500M in a credit facility that they haven’t used. That’s $1.4B at the company’s disposal. Any idea how that cash might be used?

DS: I’m sure Franco-Nevada is looking for undervalued acquisitions, extra streaming possibilities. People like Franco-Nevada’s President Pierre Lassonde tend to make decisions that really make sense under the circumstances. The fact that the company is holding on to its money and focusing on getting costs down is what investors want to see. Companies like Franco-Nevada, Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) and Goldcorp know how to solve problems.

TGR: You mentioned Agnico-Eagle. That company has recently begun taking bite-sized pieces of a number of smaller companies in an effort to get an inside view perhaps of what’s going on in these companies. What do you make of that strategy?

DS: That’s a very viable strategy. A number of companies are doing this right now. Taking a 19% position of an exploration company with an exciting project could give exposure to some big upsides. For example,Hecla Mining Co. (HL:NYSE), which David Morgan followed some 12 years ago, was the highest gaining company percentage-wise on the New York Stock Exchange. It went up 500%. David recommended this when it was around $0.50/share and it went to $5/share. Like Agnico-Eagle, Hecla has taken a position in several of these exploration projects. If they hit well that will be nice for Hecla. If they don’t, they’re not going to be out a lot of money. It also gives a lifeline to these exploration companies that might otherwise not make it because of the tremendously difficult financing environment.

Large companies like Agnico-Eagle, Goldcorp and others are realizing that they have a responsibility to help good exploration companies keep the doors open. If all these companies blow away, the feeder stream that nourishes the large mining companies is going to dry up. It’s like the food chain. If all the baitfish in the Atlantic were gone, the big fish would die because they are dependent on that food chain. Eventually it would be a disaster.

TGR: Are there any other royalty plays you want to talk about?

DS: We were early on the scene with Sandstorm Gold Ltd. (SSL:TSX) before it did a reverse split and then formed, in addition, Sandstorm Metals & Energy Ltd. (SND:TSX.V). The spin-off is struggling a bit now, but has a lot of potential down the line. It’s going to take longer to develop. The royalty companies really have a lot less risk than an outright mining company.

We followed Silver Wheaton Corp. (SLW:TSX; SLW:NYSE) for a number of years. Everybody knows that one now. It is the premier silver streaming company with about 1 Boz under stream. It is a pretty incredible success story.

TGR: Are there some smaller silver names with near-term catalysts that could see a bump on news, whether it’s a study or drill results?

DS: A lot of companies are really undervalued right now. For example, we have followed Endeavour Silver Corp. (EDR:TSX; EXK:NYSE; EJD:FSE) for a number of years. Management constantly follows through and solves problems when they arise. First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE) is also best of breed and deserves a place in my portfolio because of its high-quality properties and relatively low country risk.

TGR: Endeavour recently bought the El Cubo project from AuRico Gold Inc. (AUQ:TSX; AUQ:NYSE) and seems to have turned that asset around. What could El Cubo add to Endeavour’s balance sheet?

DS: El Cubo is an interesting situation because Endeavour Silver has done this before. It has taken a relatively high cost property that others spent a lot of money trying to run and introduced efficiencies of scale and production to bring the cost down. I have not visited El Cubo, but I have been to Endeavour Silver’s properties in Mexico twice over the last few years. I have no doubt prices will fall even further. Endeavour is always ahead of the curve in seeing where efficiencies can be made while treating the workforce fairly. This is a company that really knows what it is doing.

TGR: Any other companies you like?

DS: A company we followed a number of years ago and now we are keeping an eye on is Silvercorp Metals Inc. (SVM:TSX; SVM:NYSE) in China. The price is around $3/share right now. It was a $22/share stock at one time. It has a less favorable tax status than it did a few years ago. Some people don’t want to buy a Chinese company, but all the silver production is sold in-country. It has base metal credits that are so significant that it takes the cost of production to a minus level when figuring the dollar price for silver. The company is ramping up production. Some it is expensive right now and there have been social issues, but that will be one to watch. It has a lot of money in the bank and it has been successful in the past.

TGR: How about one more company you like?

DS: Everyone in the industry respects Rob McEwen. I had the honor of being on a tour with him in Argentina seven years ago and have followed him ever since. He’s really someone who does both good and well in the market. He received Canada’s highest civilian honor for service to the society a few years ago. His McEwen Mining Inc. (MUX:NYSE; MUX:TSX) is looking for an elephant in Nevada. We’re not directly following McEwen Mining right now as a formal recommendation, but you should never cancel out someone like that.

TGR: One of McEwen Mining’s key projects is El Gallo in Mexico. What do you think about that project?

DS: McEwen is building a pretty good asset down there. I have a small position in McEwen Mining and given the state of the market now, if things keep declining, I would personally buy more. He also has a 49% share in the San Jose silver-gold project in Argentina and if things improve in-country, it could be a real exciting place to be an investor again.

TGR: You have written about ETFs lately. Do you think that they’ve killed mutual funds or trusts?

DS: I think ETFs can be an important part of a portfolio depending on the investor. They can be used as a management tool. Obviously you can’t redeem them for the metal and some people don’t like it because of that, but the iShares Silver Trust Fund (SLV:NYSE), which is the one best known for silver, tends to mimic the price of the metal. David Morgan has suggested the use of ETFs as a way to hedge at times in his videos to members, as a way to trade. The ETFs based on baskets of mining stocks can also lower equity risk by diversifying the portfolio.

Not all ETFs are well run. Some of them don’t perform as advertised. But they give investors more flexibility than mutual funds. You can only buy and sell mutual funds at the end of the market day but you can buy or sell an ETF just like a regular stock at any time. Some ETFs don’t have a lot of volume, but most of them do. It wouldn’t surprise me if the time comes when the mutual fund industry is just a shell of what it is today because the ETFs are providing a tremendous alternative for large and small investors.

TGR: The tag line on silver-investor.com is “Buy Real. Get Real. Be Real.” How are you staying real?

DS: I love that quote. You buy real by buying the physical metal. You start with that. You get real by looking at yourself in the mirror and understanding that the market doesn’t know you, it doesn’t have anything against you, but you need to know the rules if you’re going to persevere and survive. You stay real by keeping things in perspective. It isn’t just about making money. It’s about doing the right thing, treating people properly, being straightforward and being a lifetime learner.

TGR: Thanks for your insights, David.

David H. Smith is senior analyst for The Morgan Report, as well as a professional writer and communications consultant through his business, The Write Doctor Inc. He is a regular on HoweStreet.com. Smith has visited and written about properties in Argentina, Chile, Mexico, China, Canada and the U.S. He is an investment conference/workshop presenter at gatherings in Canada and the U.S. His work for subscribers can be found on Silver-Investor and for the general public at Silver Guru.

Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) Brian Sylvester conducted this interview for The Gold Report and provides services to The Gold Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Gold Report: Franco-Nevada Corp., Royal Gold Inc. and Goldcorp Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) David Smith: I or my family own shares of the following companies mentioned in this interview: Endeavour Silver Corp., First Majestic Silver Corp., McEwen Mining Inc., Sandstorm Gold Ltd., Sandstorm Metals & Energy Ltd. and Silvercorp Metals Inc. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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London Gold Market Report
from Ben Traynor
BullionVault
Thursday 20 June 2013, 06:15 EDT

SPOT MARKET gold and silver prices fell to their lowest levels since September 2010 Thursday, with gold dropping through $1300 an ounce during London trading and silver falling below $20 an ounce.

 Stocks and commodities also fell and the US Dollar strengthened after US Federal Reserve chair Ben Bernanke told a press conference that  “the underlying factors are improving” in the US economy, adding that the Federal Open Market Committee could begin to scale back its $85 billion-a-month asset purchases later this year, a process that has become known as ‘tapering’.

 “Although the Committee left the pace of purchases unchanged,” Bernanke told a press conference after the FOMC’s latest policy meeting Wednesday, “it has stated that it may vary the pace of purchases as economic conditions evolve… the economic outcomes that the Committee sees as most likely involve continuing gains in labor markets, supported by moderate growth that picks up over the next several quarters.”

 Bernanke went on to say that the FOMC expects inflation to move back up towards the Fed’s 2% target “over time”.

 “If the incoming data are broadly consistent with this forecast,” Bernanke said, “the Committee currently anticipates that it would be appropriate to moderate the monthly pace of purchases later this year… if the subsequent data remain broadly aligned with our current expectations for the economy, we would continue to reduce the pace of purchases in measured steps through the first half of next year, ending purchases around midyear.”

 Bernanke also reiterated that the FOMC views an unemployment rate of 6.5% as a pre-requisite before the Fed’s policy interest rate should be raised, but added that it is “a threshold, not a trigger” and that the Fed may continue to target near-zero rates for some time after that level is reached.

 The economic projections of individual FOMC members published yesterday show most expect 2015 to be the year when the Fed makes its first interest rate hike.

 Bond market interest rates have risen in recent weeks, with investor selling pushing down bond prices and thus raising yields.

 The US Dollar meantime rallied against other major currencies following Wednesday’s Fed decision and press conference. The Euro, which started yesterday trading near four-month highs against the Dollar, fell 1.5% to $1.32.

 “The combination of Fed tapering, a spike in nominal yields and a stronger Dollar has put gold under some considerable pressure,” says Ole Hansen, head of commodity strategy at Saxo Bank.

 “The markets are definitely not prepared to wait until the tapering actually begins.”

 By late morning in London, gold was down 7% on where it started the week, with silver down 10%.

 Gold prices in Euros meantime fell below €1000 an ounce for the first time since April 2011 Thursday, as gold in Sterling fell to £833 an ounce, its lowest level since February 2011.

 Bullion holdings backing the world’s biggest gold exchange traded fund SPDR Gold Trust (ticker: GLD) dropped below 1000 tonnes for the first time since February 2009 yesterday. The GLD has seen outflows equivalent to 26% of the gold it held at the start of the year.

 “The lower we go, the more it will encourage ETF liquidation,” says David Govett, head of precious metals at broker Marex Spectron.

 “The only hope for the market at the moment is for the sort of physical demand we saw a few months ago to surface again. This usually takes a day or two to come forward as the market digests the moves, so I doubt we will see much today.”

 Back in April, a sharp drop in the gold price was followed by a surge in physical gold buying around the world.

 “With the negative sentiment that we have in gold currently,” adds Societe Generale cross-commodity strategist Mark Keenan, we really do need to see a significant amount of physical buying in order to stabilize the market – which we are not seeing.”

 “I wouldn’t be in a rush to say it’s the end of gold,” says Sydney-based Nomura analyst Amber MacKinnon.

 “This is definitely a big turning point. But though we have seen some reasonable amount of stability in the US economy, there is still a long way to run…early next year will be pretty telling in terms of economic data. We’ll have to see how [US] unemployment reacts to any scale-back in [Fed] bond purchases.”

Across the Atlantic, UK retail sales growth for May exceeded analysts’ expectations, with retail sales up 1.9% compared to a year earlier.

Ben Traynor

BullionVault

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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 Profit Confidential

The spot price of natural gas remains subdued, but oil prices keep nudging toward the $100.00 level for West Texas Intermediate (WTI).

But in spite of the lack of conviction in spot energy prices, there continues to be good money in oil and gas stocks.

Countless oil companies have been doing very well on the stock market, and there is excitement within the industry that the oil and gas build-out, including the shipment of liquefied natural gas (or LNG, which is about 1/600 the volume of natural gas), is in a sustained period of economic growth.

Under the umbrella of the oil and gas industry, there are a myriad of growth stories in energy transportation and storage.

One recently listed company experiencing solid success is EQT Midstream Partners, LP (EQM), a limited partnership generating solid quarterly income and 59.4% owned by EQT Corporation (EQT) out of Pittsburg, Pennsylvania. EQT Midstream Services, LLC is the company’s general partner.

EQT Midstream Partners closed its initial public offering (IPO) on July 2, 2012 selling 14.4 million common units to acquire and develop midstream assets in the Appalachian Basin, across 22 counties in Pennsylvania and West Virginia.

EQT Midstream Partners is in the natural gas transmission and storage business, with approximately 2,000 miles of regulated, low-pressure gathering lines. Virtually all of the company’s revenues are generated under interruptible gathering service contracts.

For an old economy energy company, EQT Midstream Partners is generating significant growth. First-quarter revenues for 2013 were $44.4 million, up from $31.0 million generated in the first quarter of 2012. Earnings were $22.2 million, doubling earnings of $11.1 million in the comparable quarter.

The company’s stock market performance has been no less impressive than a burgeoning technology stock. At the beginning of the year, the position was approximately $30.00; now, EQT Midstream Partners is trading at $50.00 and yielding three percent.

The company’s one-year stock chart is featured below:

Chart courtesy of www.StockCharts.com

As mentioned, oil prices are edging higher, but the price of natural gas remains subdued. Yet countless oil and gas stocks are doing great on the stock market.

A company like EQT Midstream Partners or other limited partnership companies whose purpose is to generate income for shareholders are welcome additions to long-term equity market portfolios. If EQT Midstream Partners is doing well with natural gas prices being where they are today, imagine how well the business will develop when prices rise.

One of the big risks with this type of infrastructure investment is management. If a company’s management decides to get bold and borrow a lot of money to expand, your risk as a unit-holder goes up significantly.

Exposure to the oil and gas industry has been, and should continue to be, a profitable sector for investors. I really like the transmission and storage business, particularly for natural gas. (See “This Is an Investment Theme Worth Paying Attention To.”)

The energy industry is ramping up its marketing efforts for LNG and its bulk transportation. The chemical industry is balking, as it doesn’t want higher prices.

In any case, oil and gas transmission and storage should continue to be a very good business with all the new production coming on stream. A company like EQT Midstream Partners illustrates that old economy businesses can pay through both dividends and capital gains.

Article by profitconfidential.com

By Profit Confidential

As many of you know, I’m not keen on the near-term prospects for gold at this juncture. The metal, while still viewed as a safe haven for some, is no longer on my buy list.

Yes, central banks are buying gold, but so what? The supply of the yellow ore continues to be ample, and demand really doesn’t appear to be doing anything.

In mid-April, I was bearish on gold when it traded at around $1,480–$1,500 an ounce. (Read “Is Gold’s Near-Death Crisis Over-Exaggerated? Concerns of a Market Meltdown May Not Be.”) And here we are two months later and the spot price is down 6.5%, while the S&P 500 has gone up about 3.7% during the same time.

Now I’m not saying that I would never be a buyer; I just wouldn’t be buying at this time, due to tough resistance and selling on upside moves, based on my technical analysis.

Take a look at the chart below. The first thing you’ll notice is the presence of a firm bearish “death cross” since late February, when the 50-day moving average (as shown by the blue line) crossed below the 200-day moving average (as reflected by the red line). Since the initial move, the gap between the two moving averages has widened and gold prices are trending lower.

Chart courtesy of www.StockCharts.com

The next developments you will notice on the chart above are the two successive descending triangles characterized by lower subsequent highs.

The first descending triangle materialized between early February and early April, prior to gold tanking on the chart, falling below $1,350. We are now in the second descending triangle with support around $1,350. Failure to rally and hold could result in another sell-off.

Again, take a look at the Gold Bugs Index, comprising a basket of unhedged gold stocks; this is why this index is such a good indicator of the movement of prices due to the lack of hedging.

Chart courtesy of www.StockCharts.com

The picture for the yellow metal doesn’t look favorable. In April, Goldman Sachs advised shorting the metal and mentioned the $1,200 level. (Source: Cosgrave, J., “The Scary Number for Gold Investors: $1200,” CNBC, April 15, 2013, last accessed June 19, 2013.)

Gold at $1,200 is realistic but, of course, if inflation begins to creep higher, we could see a rally. At this stage, inflation is benign and a non-issue.

There is clearly more downside risk. Gold could rally back above $1,400, but I doubt it would hold. I would look at a rally as an opportunity to sell.

Article by profitconfidential.com