Month: June 2013

By www.CentralBankNews.info     Israel’s central bank held its policy rate steady at 1.25 percent, saying inflation is expected to remain around the center of its target range in the coming year, its recent rate cuts were a response to slower economic growth, home prices have moderated and the upward pressure on the shekel should ease as the U.S. Federal Reserve plans to remove its policy accommodation in the future.
   

London Gold Market Report
from Adrian Ash
BullionVault
Mon 24 June, 08:25 EST

PRECIOUS METALS fell for the 5th session in six Monday morning in London, with gold retreating to $1280 per ounce as the US Dollar rose and most other tradable assets fell once again.

 London and Paris’ stock markets dropped 2.0% by lunchtime. Commodities also fell, extending their worst 1-week drop since October.

 Silver prices retouched last Thursday’s 34-month low of $19.65 per ounce.

 Gold last week lost 6.9% against the US Dollar, its worst drop since the crash of mid-April and the 8th worst Friday-to-Friday of the last 5 years.

 “The relatively mild nature of the attendant ETF [trust fund] liquidations at only 18.8 tonnes is surprising,” writes Marc Ground at Standard Bank, noting that the 19 weeks of consecutive exchange-traded gold fund selling have averaged more than 28 tonnes.

 “Perhaps the ETF sell-off is losing momentum.”

 For the gold price, however, “We’re down 40% from the [2011] top,” said Tom Kendall, head of precious metals research at Credit Suisse, to CNBC this morning, “and that’s some very strong momentum for gold bulls to fight against.

 “What we’ve seen is a lot of fear removed from the markets over the last two to three years. One of the big fears now playing against gold prices is the fear that we’re going back into a world of positive real interest rates.”

 Government bond yields rose further Monday morning as debt values fell, taking 10-year US Treasury yields up to 2.64%.

 Nearly one percentage higher from 12 months ago, 10-year US yields are now well above the last reading of US consumer price inflation at 1.7%.

 “Right now equities, bonds and gold are very over-sold,” said Dr.Marc Faber – author of the Gloom, Boom & Doom Report – to Bloomberg on Friday, “and they could easily rally.”

 Compared to the stock market however, “sentiment in bonds and gold is incredibly negative. In other words, as a contrarian I would rather buy bonds and gold than equities.”

 Also giving a reading contrary to the headlines about ending QE which followed Ben Bernanke’s press conference last Wednesday, “Unless the economy has essentially fully recovered by mid-2014, more QE will be forthcoming,” said Faber.

 “Gold miners are as hated as anything I’ve seen,” CNBC today quotes Arnold Espe, co-manager and vice-president of mutual fund portfolios at USAA.

 World-leading gold miner Barrick will this week lay off one third of the 400 staff at its corporate HQ, the Toronto Sun reports.

 In US gold futures and options, speculative traders last week slashed their bullish betting below the “net long” low of late 2008, new data showed Friday.

 Globally, fund managers now hold a record-low allocation to commodities, according to Bank of America Merrill Lynch.

 US investors have meantime pulled a record volume of money out of bond funds this month, according to TrimTabs Investment Research, beating the previous low of October 2008.

 “Lost decade for bonds looms with growing stocks returns,” says a newswire headline today.

 Meantime in China – the world’s second-heaviest market for gold after India – the Shanghai and Shenzen stock markets today sank 5.3% and 6.1% respectively, the worst 1-day drops in 4 years.

 With overnight interest rates still high, but well below this month’s spike above 10%, “Overall bank liquidity conditions are at a reasonable level,” said the People’s Bank in a statement on its website this morning.

 Instead of pumping loans into China’s money markets, the PBoC tells commercial banks to “prudently manage risks that have resulted from rapid credit expansion.”

 Over in India today, shares in major gems and jewelry companies sank by up to 20% on rumors of fresh government action to try and curb gold demand and thus imports.

 “Falling gold prices, [Reserve Bank] policy, and impositions of high taxes are primary reasons,” the Economic Times quotes A.K.Prabhakar at Anand Rathi Financial Services, who also warns that “demand for gold will slump further” if buyers are forced to show their tax-number PAN card.

 Purchases worth over 500,000 Rupees ($8,300) already require the buyer to present their PAN card, which is issued by the Income Tax Department.

 A central bank committee proposed in February making PAN cards mandatory for all gold purchases. India has a 1% wealth tax, applied on assets and portfolios worth over INR 1,500,000 ($25,000).

 The government of neighboring Sri Lanka at the weekend imposed a new 10% import tax on gold, aimed at restricting gold smuggling to India spurred by New Delhi’s recent curbs.

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich, Switzerland for just 0.5% commission.

(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 HY Markets Forex Blog

The European market fell for the fifth day as stocks continue to trade lower on Monday, while investors raise concerns over the tapering of the Federal Reserve’s bond-buying program and the risk of cash crunch in China.

The European Euro Stoxx 50 fell 1.10% to 2,521.68 at 10:00am GMT, while Germany’s DAX declined 0.75% to 7,731; Lenxess fell to a low 2.75% at the same time.

Italy’s UniCredit rose 1.26%, while carmakers Daimler gained 1.14% and Enel dropped 5.54%.In France, the French CAC 40 tumbled 1.17% to 3,615.90 at 10:00am GMT, as retailer Carrefour slid 2.50% lower.

UK’s FTSE 100 lost 0.60% to 6,078.50, while Severn Trent gained 1.33%.

The Ifo Business Climate index , slightly picked up to 105.9points in the month of June ,from previous record of 105.7 in May , according to reports from the Ifo institute for Economic Research .

The manufacturing activity in Germany came in at 48.7 points for the month of June, from the revised record of 49.4 in the previous month, while the services sector came in at 51.3 in June from previous record of 49.7 in May, according to reports from Markit Economics.

While in Asia, the stock market declined on Monday. The Shanghai Composite index closed at 5.3% lower. Golden Sachs cut its estimate for the Chinese economic growth for this year to 7.4% from previous prediction of 7.8%.

China’s benchmark money-market rates rose last week, as the People’s Bank of China (PBoC) refrained from using open-market operations to ease a credit crunch.

The post European stocks falls with concerns over Chinese credit crunch appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

The Japanese yen fell 0.56% to 98.46 yen against the US dollar on Monday, as it continues to fall before the data that is likely to indicate that the US goods and housing market are recovering.

The Japanese yen was seen at a low 0.46% at 151.60 yen against the British sterling, while yen was buying at a low 0.45% at 129.02 yen versus the single European currency. The U.S. dollar rose 0.1 percent to $1.3106 against the euro, with a four day gain after touching $1, 3087. The Dollar index gained 0.3% to 82.586 and reached 82.692 earlier, while the Ifo Business Climate Index data is expected to show improvement from 105.7 in May, to 105.9 in June.

According to the median forecast, the S&P 500 of home values increased 10.6 percent for the year ended April after a 10.9% high in March.

Comments from the Federal Reserve‘s (Fed) Chairman Mr. Bernanke regarding the possible cutoff of its Fed’s quantitative easing program directed the US currency to maintain its rally. Mr. Bernanke said the US central bank could proceed with tapering the $85 billion monthly bond-buying program later this year, if the US economy shows an improvement.

The Federal Open Market Committee (FOMC) currently decided to continue with the asset purchases, the FOMC statement revealed on Wednesday.

Investors are looking forward to Dallas Fed Richard Fisher’s speech on monetary policy in London to be held on Monday. The Department of Commerce (DoC) will publish data on Tuesday, which will show an increase of 3% in durable goods  and the home value figures ,which have risen because of the inventory level and high demand boosted by low mortgage rates .

The post Yen on 2-week low as dollar climbs on Fed tapering decision appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

What an ugly week for investors last week following wednesdays FeD meeting.
Stabilization is needed after huge drops in equities and the 10 year US bond yield rising almost 50 basispoint.

Jyske Bank Senior Strategist Ib Fredslund Madsen with his take on the week ahead.

Legal information

Video courtesy of en.jyskebank.tv

By www.CentralBankNews.info Here’s today’s Central Bank News’ link list, click through if you missed the previous link list. The list comprises news about central banks that is not covered by Central Bank News. The list is updated during the day with the latest developments so readers don’t miss any important news.

By MoneyMorning.com.au

It has been one crisis after another over the past five years.

The US debt crisis…the Eurozone crisis…the credit crisis…the subprime crisis, and so on.

But perhaps now the crisis has come closer to home. Five years ago people once more dubbed Australia the ‘Lucky Country’ due to the closeness to China.

China – many thought – was Australia’s saviour. Forget about the ‘Old Country’ and those dunderheads in America. The action is in Asia.

Remember, we’re lucky. We’ll benefit from the 50-year boom in commodities.

How quickly things change…

Now, don’t get us wrong. We’re not saying that China won’t be the world’s most powerful nation within the next 50 years. That’s entirely possible – probable even.

What we’re saying is that economic growth doesn’t advance in a straight line without problems.

You only have to look at the economic growth of the United States in the 19th and 20th centuries. They suffered countless recessions, depressions and panics on the way from colonial backwater to the world’s most powerful nation that at one point made up 50% of global GDP.

And so knowing that problems do arise from time to time, you have to be prepared to deal with it.

That’s Not a Stock Market Bubble

And the best way to deal with it is in the Australian stock market right now.

With the big rally from the middle of last year through to July, many investors, commentators and analysts think the Australian market is in bubble territory.

And with the recent 500 point drop on the S&P/ASX 200 index, many of the same people think the Australian market could fall further.

But they couldn’t be more wrong.

The Australian market closed last Friday at 4,738 points. That’s 17.6% above the May 2012 low point. Although that may be a bigger percentage gain than the long-term average annual gain for Australian stocks, it’s far from being a bubble-sized gain.

But let’s go back further, to March 2009. The main index has gained 50.7% since the low point following the 2008 financial meltdown.

Is that a bubble? No, not really.

It’s an average annual gain of 12.7%. Sure, it’s a good return, but it’s hardly bubble territory. And if you look at the chart you’ll actually see that since 2010, the Australian market has been mostly flat.

In fact, if you started investing in 2010 the only gains you’ll have made would be from dividends. We don’t know about you, but to us that hardly looks like Tulip, South Sea or Dot-Com bubble type gains:

Source: Google Finance

But that’s not all. Even though the main index is up 17% over the past year, one group of stocks has gone through the wringer over the past two years.

Market Bubbles Don’t Look Like This

Last week our old pal, Diggers & Drillers editor Dr Alex Cowie, showed us a research report from Canadian-based broker Canaccord.

The research included analysis on 139 Australian resource stocks. These stocks covered the full range. They include gold, copper, iron ore, nickel, rare earth, oil and gas.

You don’t need a Harvard degree to know it has been a tough time for resource stocks. But what’s even more amazing is that according to the Canaccord research, of the stocks analysed the average fall from the top of the resource cycle to the bottom is 78.1%.

The poor performance of resource stocks is a major reason why the Australian market has performed so poorly compared to US and European markets.

But that’s not the only reason.

For most of the past five years the financial markets have focused attention on the multiple US and European debt and currency crises.

But now the focus is on the Asian time zones (notwithstanding the US Federal Reserve’s money printing woes). There are now serious worries that the Chinese economy is slowing fast.

Add to that the issue about Japan’s enormous debt position. Suddenly, being close to Asia is more of a risk than a benefit.

You could say we’re now in an ‘Asia-Zone’ crisis.

And yet, this isn’t new news. Greg Canavan has warned about China’s structural problems for the past two years. And here in Money Morning, Murray Dawes has told you to keep an eye on Japanese bond yields for the past couple of months.

So to our mind stock prices already have much of the downside risk baked in. The market knows China has over-stimulated its economy, and it knows Japan has a huge debt problem.

Beaten Down Value in Australian Resource Stocks

While we can’t guarantee stocks will soar from here, we can say there are many more potentially profit-making opportunities on the ASX than most in the mainstream would have you believe.

The numbers from Canaccord show that. After leaving resource stocks alone for most of the past year, we’ve tipped resource stocks in two of the past three issues of Australian Small-Cap Investigator.

And as someone who’s constantly on the lookout for value in a beaten down market, it’s hard to look past Australian resource stocks right now.

In short, while others see the past few weeks of volatility as a reason to ditch stocks, we take the other side.

If you’re looking for a chance to buy what is still hands down the best way to build wealth – the stock market – this is a great time to think about shifting more of your asset allocation from cash into stocks.

Cheers,
Kris
Join me on Google+

From the Port Phillip Publishing Library

Special Report: The Sixth Revolution Has Just Begun

Daily Reckoning: How to Play ‘Spot the Stock Market Bubble’

Money Morning: Money Weekend’s Technology FutureWatch 22 June 2013

Pursuit of Happiness: Calming a Property Market Storm

Australian Small-Cap Investigator:
How to Make Big Money from Small-Cap Stocks

By MoneyMorning.com.au

I believe people are a product of their environment, and that the most successful investors embody five key ‘traits’ for lack of a better term.

So here they are…the five traits I believe will help boost your profits and keep the bears at bay.

Get Out of Your Comfort Zone

Every investor falls into a comfort zone sooner or later, whether it’s because they ‘know’ their investments or become overly familiar with certain methodologies. Sometimes this works for them, but the majority of the time it works against them for one simple reason…the markets change over time.

Really successful investors will deliberately go outside their comfort zones. They’re the ones who have stacks of magazines and books all over their homes. They read voraciously and make it a point to engage others around them in a never-ending process to learn more about the world.

Dr. Mark Mobius, Executive Chairman of Templeton Emerging Markets Group, is perhaps the ultimate example of what I am talking about. Overseeing research in 18 global emerging markets offices, he’s always on the go and commands an almost encyclopaedic knowledge of the investing landscape.

He revels in change because it’s synonymous with opportunity.

Persistence

Average investors tend to try something once then move on. If it works, great. They’re a genius. But if it doesn’t, something must be wrong with the method or the recommendation or the source. They simply move on.

But successful investors follow up diligently and assume personal responsibility for their efforts. If an investment doesn’t work out the way they plan, they’ll be back. They never assume that a single shot is enough…not in life and not when it comes to their money.

Case in point…many investors are surprised to learn that professionals don’t think twice about taking 3, 4 or even 5 swings at the same investment before they settle into a position they like.

Take Jim Rogers, for example. He is one of the most successful investors on the planet and one of the most persistent, prescient thinkers I’ve ever met. When he latches onto something, it’s rare he’ll let go.

Yet, he’s also the first to tell you that he doesn’t know everything and doesn’t hide from trades that he’s messed up over the years.

In fact, Rogers frequently notes during interviews in a very self-deprecating manner that ‘he hopes he’s smart enough’ to buy or sell at some point a reporter has picked out for him.

More often than not, he is.

Healthy Scepticism

If you’re like me, you get all sorts of junk mail every day touting everything from the newest six-headed singing bass I can’t live without to the miracle hair cure discovered by some company I’ve never heard of.

What makes adverts so great is the ‘copy’. That’s the term for the language used to evoke a response which usually involves taking out your wallet and forking over a bunch of money. It’s a finely tuned science.

Here’s the thing…the better you are at reading it, the easier it gets to sort out opportunities, especially when it comes to reading about new companies in new industries.

To do it right, you need a healthy sense of scepticism. My grandmother, Mimi, had a finely tuned radar and saw to it that I developed one too. You’ve heard me reference her before in Money Morning as the voice of investing reason.

Mimi and I would play a game to see just how outrageous we could be whenever we learned about a new company that interested us. First, we’d review the analyst reports and company data. Then, we’d pretend to be the company’s marketing staff and make up outrageous claims.

Our goal was to understand the transition from what’s plausible to what’s possible. When we got a match…we knew we had an investment worth consideration.

Make Decisions that Benefit Others

All too often the modern media perpetuates the image of ‘lone wolves’ when it comes to making money. That may work for a little while, but in reality, the most successful investors are those who understand their own limitations and seek help to overcome them, especially when doing so benefits others.

Sir Richard Branson of Virgin is a great example of what I am talking about. Always on the go, he’s just as likely to ask you about what you do for fun as he is to engage you on the finer points of environmental management and leaving the world a better place for those who follow us in the future.

I know because that’s exactly what we discussed over dinner in London years ago when we wound up seated next to each other by happenstance at Nobu (which by the way is one of my favourite places to eat).

Sir Richard, and others like him, will often connect the dots later, knowing that the cascade is a lot bigger down the line…when the results start rolling in. But thinking about others is always the beginning of the line.

Freedom to Fail

Our society is hopelessly wedded to the notion of high-powered people climbing the ladder of success without a stumble. Consequently, we like to believe that the legendary investors of our time are infallible.

Yet, if you look at who’s made it and who hasn’t, it becomes very clear that those who freely talk about their failures along the way are the truly successful ones.

Love him or hate him, George Soros is a great example.

He’s quick to recognise when he’s wrong and has famously acknowledged on several occasions that he’s survived because he’s capable of recognising his mistakes.

Most investors can’t. They’re too focused on being ‘right’ when being profitable is the higher priority, at least when it comes to long term success.

Keith Fitz-Gerald
Contributing Editor, Money Morning

Publisher’s Note: This is edited version of an article that first appeared here.

Join Money Morning on Google+

From the Archives…

The 12 Most Important Rules Every Investor Must Know
21-06-2013 – Vern Gowdie

The US Economy Butterfly Effect
20-06-2013 – Murray Dawes

Beware The Federal Reserve’s Deadly Game of Poker
19-06-2013 – Dr Alex Cowie

Why Thursday Could Be a Key Day for Silver…
18-06-2013 – Dr Alex Cowie

The Single Biggest Mistake a Technology Investor Can Make
17-06-2013 – Sam Volkering

USDJPY’s upward movement from 93.79 extends to as high as 98.56. Further rise would likely be seen, and next target would be at 100.00 area. However, the rise from 93.79 would possibly be correction of the downtrend from 103.73, another fall is still possible after correction. Support is now at 96.80, a breakdown below this level will indicate that the upward movement from 93.79 has completed, then the following downward move could bring price back towards 85.00.

Forex Signals

Large Currency Speculators decreased US Dollar bets last week. Euro bets turn bullish

The weekly Commitments of Traders (COT) report, released on Friday by the Commodity Futures Trading Commission (CFTC), showed that large futures traders and speculators sharply scaled back their total bullish bets of the US dollar last week. This is the third straight weekly decrease for US dollar bets after USD long positions reached their highest level on record (Reuters data) on May 28th.

Non-commercial large futures traders, including hedge funds and large International Monetary Market speculators,slashed their overall US dollar long positions to a total of $14.55 billion as of Tuesday June 18th. This was a decrease from a total long position of $28.28 Billion registered on June 11th, according to position calculations by Reuters that derives this total by the amount of US dollar positions against the combined positions of euro, British pound, Japanese yen, Australian dollar, Canadian dollar and the Swiss franc.

See Full COT Report and Charts Here…

US Dollar surged last week vs major currencies on Fed Outlook

The US dollar surged against the other major currencies in forex trading action last week as Federal Reserve Chairman Ben Bernanke’s comments and outlook rocked the financial markets. Mr. Bernanke said the US Fed bond-buying program could possibly be scaled back in 2013 and likely to wrap up in 2014 if growth, employment and inflation data all continue to improve. The end of this program is seen as US dollar positive and helped the US dollar gain ground against all the other major currencies last week.

Looking forward to this week, the question will be whether last week’s US dollar strength will extend into this week and, perhaps, beyond.

See Full Post and Commentary Here…

This Week’s Economic Calendar highlights:

Tuesday, June 25

United States — durable goods report
United States — consumer confidence report
United States — new home sales

Wednesday, June 26

United Kingdom — Bank of England financial report
United States — GDP report
United States — personal consumption expenditure
New Zealand — trade balance

Thursday, June 27

Euro zone — Germany employment report
Japan — national consumer price index
United Kingdom — GDP report
euro zone — consumer confidence
United States — weekly jobless claims
United States — pending home sales

Friday, June 28

Euro zone — Germany consumer price index
Canada — GDP report
United States — University of Michigan survey