InvestMacro Forex News

By David Banister, ActiveTradingPartners.com

One of the most common questions I field from my forecast and trading subscribers is can we buy Gold stocks yet? We have seen Gold consolidating and correcting following a 34 fibonacci month rally that I discussed last fall was going to top out around 1900 per ounce. This type of rally went from October of 2008 to August of 2011 and we saw Gold rally from $680 to $1900 per ounce during that time.

In order to work off the bullish sentiment that was at parabolic extremes, Gold is required to spend a reasonable amount of time in relation to the prior 34 month move to wash out the sentiment and create a strong pivot bottom. While this continues, the Gold stock index has taken it on the chin as money rotates out and into other hot areas like Technology and the Internet 2.0 social media boom. To wit, the GDX ETF peaked out last fall around 67 and current trades under 47 as of this writing.

However, there may be a silver lining developing in those dark mining stock clouds very soon. It does appear that we are in the 5^th and final wave of this pessimistic decline in Gold stocks per my GDX ETF chart below. A typical bottoming pattern ends after 5 clear waves have taken place, and in this case I have targets between $43-$47 per GDX share for a likely pivot low in Gold stocks. Contrarian investors may do well to begin picking the better names in the sector and “scaling in” over the next short period of time.

Gold itself has recently corrected from 1793 per ounce to 1620 in the last several weeks. This has spooked the crowd out of Gold and put further pressure on the Gold mining stocks as well. Should Gold hold the $1620’s area and rebound past $1691 you will see the Gold stocks take off just ahead of that and from these 43-46 levels on the GDX ETF provide very strong returns to investors with the iron stomachs.

The best way to make money long term in the market and to grow your capital is to develop a method where you can define your risk levels within reason near the apex of a downside move, and then scale into that final apex and catch the rally on the upside. This is difficult to do but at my ATP service we have developed a strong methodology that takes advantage of “herd behavioral characteristics” and takes advantage of typical panic selling and panic buying to do just the opposite. We have not yet bought into the Gold Stock sector but I assume fairly soon we will be dipping our toes in the water while others have all rushed out of the sector right near the apex lows.

David talks live about MRM method
You can also download the mp3 audio file for this interview on your computer by clicking here WITH A RIGHT BUTTON CLICK and selecting SAVE FILE AS from the drop down menu.

Consider joining us for 90 days trial period and play along.  We provide all the alerts in real time via Email and internet posting. We provide daily updates on all positions and 24/7 Email access to me for any questions. By David Banister, ActiveTradingPartners.com

For the month of February, China suffered its largest trade deficit in more than a decade. A decline in demand for China’s exports has resulted in a sharp decline in sales. Meanwhile, Chinese consumers are ratcheting up their own spending levels with imported goods gaining a greater share of disposable income further closing China’s trade surplus.

Last month, China’s Premier, Wen Jiabao, announced the government’s intention to focus economic growth more on domestic consumption, and less on exports. This policy is clearly an attempt to reduce China’s economic dependence on outside markets and do more to encourage economic activity within its own borders. Of course, this is still developing and in recognition of the fact, the government has reduced its annual growth target from 8.0 percent annual growth to 7.5 percent.

Certainly, exports will continue to play an important role in helping the world’s second largest economy maintain growth. However, shipping levels to both the U.S. and especially Europe have been on the decline for the past few years and according to a report by RS Platou Markets AS, a unit of Norway’s biggest ship broking group, this trend is likely to continue.

“European imports from China will be much, much lower going forward,” said Rahul Kapoor, a Singapore-based analyst at Platou Markets. “If you see falling freight rates, that would imply that European demand is falling off a cliff.”

China’s Emerging Consumer Class

Starting in earnest in the 1980s, China underwent an industrial reform fuelled by a massive population making the transition from farm laborers to factory workers. Jobs were needed for these migrant workers and while most positions were repetitious and required little in the way of specialized skills, China’s workforce has evolved and is now home to some of the most technologically advanced manufacturers.

Wages have climbed as a result of this shift in the workforce and this has given rise to a more demanding consumer base. It is this group that China hopes can pick up the slack should export sales continue to decline.

Keep in mind, also, that almost half of the country’s 1.4 billion citizens still live in rural villages and many are moving to the cities to earn regular paycheques. This group represents the largest pool of untapped consumers on the planet and China hopes to use the power of this group to help maintain current growth levels despite the projected slump in exports.

In order to promote activity, it is expected that officials will ease monetary policy. These actions could include lower lending rates as well as a decline in the mandatory reserves that banks must segregate from operating funds. This will increase the available cash in the banking system and promote lending.

Article by forexblog.oanda.com

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By Central Bank News
Here's today's Central Bank News link list, click through if you missed the previous central bank news link list.  Remember, if you want to submit links for inclusion in the daily link list, just email them through to us or post them in the comments section below.

Source: ForexYard

Unexpected results went in favour of the British currency as the Pound reached a two-month high against the Euro. Financial reports showed that services growth increased in the previous month as well as house prices having the same outcome.

The British Pound also made gains against 16 of its currency counterparts today prior to the anticipated Bank of England’s Monetary Policy meeting which will be held tomorrow. The U.S Dollar was the one Majors holding its ground against the Sterling as the British currency weakened as a result of  a decline in worldwide stocks pushing demand for the safe have Greenback.

The Sterling further extended its gains over the 17- nation currency after ECB President Mario Draghi claimed that the economic outlook remained subject to downside risks.

There are a number of key events on the economic calender for tomorrow including:  the Bank of England’s Monetary Policy Meeting, U.S Initial Jobless Claims and the Canadian Ivey PMI

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.

A strike on Iran, however limited, would push the current internal power struggle to a premature end that would not be in the US’ best interests – that is the message, whether intentional or not, of the recent “intelligence leak” that has provided the Obama Administration with justification for standing down with regard to Iran.

Earlier this week, the media had a field day with “intelligence leaks” suggesting that there is no imminent threat of Iran achieving nuclear weapons capabilities, apparently with the concurrence of Israel’s Mossad.

There are two things to be avoided in this discourse, the first being the obvious reality that intelligence is used to support policy decisions and “leaks” are one tool through which this is accomplished.

Also less important is the discussion on Iran’s nuclear weapons program, which can be largely summed up by noting that civil nuclear programs can enrich uranium which can be used for nuclear weapons and that Iran can decide at any moment to pursue this path. It is an unknown that has been used to push public opinion in a number of directions.

Interestingly, the public (media) can so easily accept “intelligence leaks” that accuse Iran of developing nuclear weapons but cannot accept a “leak” to the opposite because of an ingrained fixation on themes that are Cold War-ish in nature.

This is not about nuclear weapons. It is about containing Iran on a number of levels.

On a foreign policy level, the bloody window of opportunity to ensure that Syria will no longer be a part of Iran’s efforts to create a Shi’ite triangle of influence against Saudi-led Gulf Cooperation Council (GCC) interests in the region will do much to contain Iran.

On another level, though, foremost to containing Iran is understanding the internal struggle for power, when to harness the momentum and when to step back, recognizing how external actions could play out.

Despite his loud rhetoric, Washington should not be too quick to desire the final demise of Iranian President Mahmoud Ahmadinejad, whose demise for now seems nonetheless imminent. Presently, the situation in Iran is ideal for Washington: Supreme Leader Ayatollah Ali Khamenei is in a stronger position than ever before, but that power comes at the price of responsibility and he must move with extreme caution in order to cement power ahead of presidential elections in 2013, where he hopes to see the final defeat of Ahmadinejad.

The 2 March parliamentary elections in Iran cemented what well-placed informants inside Tehran working for Jellyfish Operations told Oilprice.com last summer: that plans were in the works to remove Ahmadinejad from power and that if politics did not do the trick, more nefarious means would be used. The first indication, they said, would be for Ahmadinejad to lose his grip over the oil ministry – a development that happened soon afterwards, gradually chipping away at hispower base ahead of parliamentary elections.

On 2 March, Khamenei managed to secure a solid majority for his conservative circle – a circle that largely controls the country’s foreign policy direction and its nuclear program. It is a majority that will shut out problematic reformist voices and continue to reduce the chances of opposition conservatives, including Ahmadinejad’s own support base, to realize a comeback.

The Supreme Leader’s power is not yet solidified, and there are circles of conservatives whose direction of support remains elusive, and for this reason, he must tread carefully, and so must the US and Israel.

The next decisive political event will be presidential elections in June 2013, by which date Khamenei will have had to ensure that all his ducks are in a row for the final demise of his rivals. Particularly, though not solely, Khamenei will seek to further chip away at Ahmadinejad’s power, and external influences could help him achieve that. Specifically, an attack on Iran, while Ahmadinejad is still president would do wonders to that end. A limited attack on Iran during Ahmadinejad’s tenure that targeted only its nuclear facilities, which would be most likely, could be absorbed and used as additional political ammunition for the Supreme Leader.

Importantly, Khamenei has other ducks to line up as well, and his new power means that his decisions and the consequences of those decisions will fall on his own shoulders and determine the allegiance of conservative circles whose support has not yet been decided – an argument laid out most astutely by Omid Memarian writing for opendemocracy.net.

For now, the US and Israel would do best to proceed with an equal amount of caution and avoid adding any velocity to Ahmadinejad’s demise. No one wants to see Khamenei’s conservatives solidify unrivaled power.

Source: http://oilprice.com/Geopolitics/

By Jen Alic of Oilprice.com

(VIDEO) The Only Time You’ll Hear Bob Prechter Suggest Joining the Herd

By Jill Noble

In this clip Prechter explains why people herd in financial markets — and then makes one suggestion to his audience at last year’s inaugural Socionomics Summit that you may find surprising.

What’s especially noteworthy about what you just saw is that almost every single attendee at the packed-house event really did take Prechter’s suggestion!

Last year’s Summit was a sold-out event, and was full of finance professionals, social mood researchers, Elliott wave analysts and more.

Yet after the day-long Socionomics Summit ended, these individuals found themselves all herding together — as the dialogue continued downstairs at the Georgia
Tech Conference Center‘s lobby and bar.

This year’s Socionomics Summit: New Initiatives in Social Mood Research and Application promises to be another fantastic networking opportunity,
with plenty of chances to mingle with an impressive group of like-minded individuals.

Don’t miss your chance to join this growing community at the 2012 Summit. REGISTER NOW>>

Editor’s note: Additional video from Prechter’s presentation on herding is available here>>

This article is syndicated by The Socionomist, a publication of the Socionomics Institute, and was originally published under the headline (VIDEO) The Only Time You’ll Hear Bob Prechter Suggest Joining the Herd. The Socionomist is designed to help readers understand and anticipate waves of social mood. Copyright © 2012 Socionomics Institute.

Article by Investment U

The State of Washington, among other responsible parties, is sick of folks getting burned on the Iraqi Dinar and other foreign exchange scams. So are we…

Amman, Jordan has some of the worst traffic I’ve ever seen. Swarms of cars zoom around traffic circles that were meant to create a street scene like London’s and, maybe, a sense of order.

The funny thing about this Middle Eastern capital’s hustle and bustle is how much of the movement is dominated by cars with Iraqi license plates. Land Cruisers, Infinitis, Benzes…

They’re nice cars – the cars of the people who could afford to get the heck out of Dodge at a time when even sitting on the world’s fifth-largest oil reserves couldn’t make staying worthwhile. Things have gotten awfully hairy over the past decade in Mesopotamia, and even with improvements, it’s one of the most dangerous places in the world.

Nevertheless, you may have heard or seen some recent hype surrounding Iraq’s currency, the dinar. Some heavy spenders are bullish on the dinar, considering it a bet on a young democracy with a major natural resource bounty. These loud voices in the online forex world claim to be riding a wave only a fool would miss.

Well, to paraphrase an old American saying, if you’ll buy the dinar, I’ve got a bridge in Baghdad to sell you!

The Sad Truth About Iraq’s Growth Prospects

Those heavy spenders are in fact shelling out big money to grab your attention on Google and other search engines as you check to see what’s up with Iraq.

They want to catch you at the door of the digital library before you read too much, because there’s a sad truth that undermines Iraq’s growth prospects.

That activity created by Iraqi refugees isn’t limited to Amman. Political and commercial centers around the region still buzz with Iraqi professionals, nearly a decade after the U.S.-led invasion that toppled Saddam Hussein’s dictatorship.

More than half a million Iraqis sought refuge in Jordan since 2003, and over twice that number fled to Syria. They’re shopkeepers and accountants, doctors and janitors. They’re also pieces of the economy that’s supposed to profit enough to make the Iraqi dinar a good investment. The U.N. reports that Iraqi refugees who returned home aren’t happy about it.

They’ve got some decent points to make, these forex hype artists: Iraq’s Central Bank recently cut the dinar loose from its peg of 1170 to the U.S. dollar. After being locked there since January of 2009, it’s risen a tidbit to 1160 per USD.

Iraq’s oil production is also back to pre-war levels, according to the CIA World Factbook. However the snoops’ encyclopedia doesn’t say whether those pre-war levels account for sanctions on Saddam before his ouster.

Iraqi petroleum output, essentially dormant because of danger these many years, is set to rise to 2.6 million barrels a day in 2012. Great news!

False Logic…

The salesmen have these points to make… but they often don’t make them. Instead, they lead with generalities and investment logic that isn’t logical at all.

“Don’t miss this opportunity to profit from Iraq’s developing democracy!” one insists.

Is that enough for you? Why don’t you invest in the island nation of Vanuatu? Its sandalwood-backed currency is the vatu and it’s a blossoming parliamentary democracy. To boot, its name isn’t synonymous with military disaster, horrific civil war and economic disorder.

Foreign exchange opportunists will gladly give you dinars for dollars… and some of them are so willing to do this deal, they’ll trade it to you in person.

In person! As in cash-on-delivery! Have you paid for anything at all COD in the past 20 years, much less a stack of money from a mess of a country?

Take a look at this chart:

Would this excite you if it were a stock? Granted, the downward movement here shows that the dinar is gaining strength against the dollar. And you’re right to note that it’s trading sideways, which can be a sign of a breakout.

But buying dinars really can be thought of as buying stock in Iraq, and Iraq’s a “company” with unstable leadership, no clear economic policy and plenty of rubble to deal with.

The State of Washington, among other responsible parties, is sick of folks getting burned on the dinar and other foreign exchange scams.

So are we…

Buyers of these dinars don’t know what they’re getting, even when the dealer has an easy-to-obtain U.S. Treasury Money Services Business certificate. What’s worse is that there’s no way you’ll be made whole if you get burned.

Foreign exchange means “exchange” in two ways: First, you’re exchanging one currency for another in hopes that the one you buy will appreciate in value against the one you sell. You can also bet the opposite way, of course.

Exchange is also a big word because currency moves on exchanges just like stocks do. You can trade some euros at the local bank for dollars when you come back from a nice trip, but you can’t do the same in dinars.

In fact, you have to be in Iraq to redeem dinars. Needless to say, we wouldn’t advise showing up in Baghdad with a suitcase of precious paper.

Instead, we advise looking into the many thousands of opportunities to make money from the world’s most dynamic economies that won’t leave you broke or dead.

Go long on fast-growing economies by investing money you know, in investments you know even better.

We’ll help you get around the obstacles along the way, in whatever form they take.

Good Investing,

Sam Hopkins

Article by Investment U

Article by Investment U

While the P/E ratio is one of the oldest and most frequently used metrics, it can also get you into some trouble if taken out of context.

Don’t make this amateur investing mistake…

In this latest bull market and period of new IPOs, there are a lot of people on the Street clamoring about where a stock is selling or its “multiple.” And they all act as if this number is the end-all be-all.

The reference is to the P/E ratio. While it’s one of the oldest and most frequently used metrics, it can also get you into some trouble if taken out of context.

What is it Exactly?

The P/E ratio measures the relationship between a stock’s price and its earnings, or profits per share. Here’s the calculation:

P/E = price per share/earnings per share (EPS)

You take a company’s stock price and divide it by its last 12 months of earnings per share. This is a trailing P/E. Everyone wants more earnings for every dollar you invest. So in theory, a lower P/E is considered more attractive…

What Does it Tell You?

The P/E ratio gives us a clue to what the market is willing to pay for a company’s earnings. The higher the P/E, the more the market is willing to pay for the company’s earnings – and vice versa.

Some investors interpret a relatively high P/E as overpriced (The best gauge of whether a P/E is high or not is to compare it to very similar industry competitors.) On the flip side, the market may be very bullish about the company’s future and has bid up the stock price – leading to a higher P/E.

A company with a relatively low P/E may be overlooked or ignored by the market. This is the ideal prize for value shoppers. But this same position could mean that the market has driven the stock price down because the company just has bad fundamentals.

An Incomplete Picture…

But P/E paints an incomplete picture, and here’s why:

1. The P/E ratio usually looks backwards. If one company is able to double its earnings in a few short years while another remains stagnant, the former could be a much better value despite a higher multiple. Yet you wouldn’t know it from the single-snapshot picture the P/E provides.
2. The “forward P/E” published by some sources is a better tool, because it uses the next year’s pro forma earnings instead of last year’s earnings. But this picture is still limited since it’s just an educated guess at next year’s earnings.
3. Remember that accountants can do some creative things with reported earnings. While one company may report a largely honest number, another may be manipulating earnings per share to meet market expectations.

The Lesson to Be Learned

First of all, P/Es need to be placed in a context that gives them meaning in which they’re compared to competitive companies or to an industry average.

And maybe most importantly, the P/E ratio should never be the only metric used when trying to determine whether a company is currently overvalued or undervalued. It doesn’t matter if it’s a trailing or a forward P/E. No ratio should be used in isolation for that matter.

The P/E becomes more useful if you can get a grasp on just how much in earnings a company will be able to achieve over the coming years. But in order to do this, you’ll need to study the underlying business and understand its margins, scalability and competitive position within the industry.

So long story short, the P/E is a helpful metric. But don’t make the common amateur mistake of letting it be an end-all, be-all valuation metric.

Good Investing,

Jason Jenkins

Article by Investment U

Source: ForexYard

Gold and silver prices sharply fell as a result of a strengthening U.S Dollar post Fed Minutes Meeting.The two metals were coming off a two-day rally prior to the FOMC Meeting which was held yesterday. The yellow metal experienced its biggest decline in four weeks.

Hopes for further monetary stimulus was talked down during the Fed Meeting which resulted in a rising Greenback causing both gold and silver to sharply fall.

There is talk suggesting the recent rallies in Gold prices were nothing more than a limited correction, as investors are showing concern over the metals’ current market situation.

Gold which is known to be a safe haven usually benefits from expectations of monetary stimulus.Due to the fact that investors would turn to the metal as a safe store of value and inflation hedge. Meanwhile, the U.S Dollar continued to strengthen during Asian and European trading today.

Gold and silver’s downfall is largely due to a rising Dollar, which puts great pressure on dollar- denominated commodities as they become alot more expensive for holders of other currencies.

Gold prices were also affected by the protests in India which have moved into a 19th day. The strike has a big impact on the precious metals market as India was the second largest bullion consumer in the fourth quarter.

As long as the Greenback goes from strength to strength, gold and silver prices will struggle to maintain a steady position in the markets.

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.