Month: November 2011

There’s an old saying on Wall Street about insider buying: there are many possible reasons to sell a stock, but only one reason to buy. A sale could be prompted by any number of different cash needs, like an upcoming tax bill, sending kids to college, buying a house, boat, or car.

Housing starts fell slightly in October, down 0.3% to a seasonally adjusted annual rate of 628,000 units. Economists had anticipated a bigger decline in housing starts.

Nov. 17 (Bloomberg) — Grant Lewis, head of economic research at Daiwa Capital Markets, talks about the European Central Bank’s role in backing indebted nations. He speaks from London with Andrea Catherwood on Bloomberg Television’s “Last Word.”

The Banco Central de Chile held its monetary policy interest rate unchanged at 5.25%.  The Bank noted: “Domestically, output figures are evolving close to projections in the last Monetary Policy Report’s baseline scenario, while domestic demand is somewhat stronger. Labor market conditions remain tight. Headline inflation has been somewhat higher than expected because of the incidence of fuels and foodstuffs. Core inflation figures remain contained. Inflation expectations are close to the target.

Chile’s central bank previously also kept the monetary policy interest rate unchanged at 5.25% at its October meeting.  The Bank last raised its monetary policy interest rate by 25 basis points to 5.25% at its June meeting this year.  Chile reported annual consumer price inflation of 3.7% in October, compared to 3.3% in September, 3.2% in August, 2.9% in July, 3.4% in June, 3.3% in May and 3.2% in April this year; within the Bank’s inflation target of 2-4%.  

The Bank of Japan held its interest rate steady at 0-0.10% and made no changes to its 55 trillion yen quantitative easing program.  The Bank said: “Japan’s economic activity has continued picking up, but at a more moderate pace mainly due to effects of a slowdown in overseas economies.  As for domestic demand, business fixed investment has been increasing moderately and private consumption has remained firm.  On the other hand, exports and production have continued to increase, due in part to the restocking of inventories abroad that had declined after the earthquake, but at a more moderate pace mainly reflecting the effects of the slowdown in overseas economies.”


At its October meeting the Bank of Japan expanded its asset purchase program by another 5 trillion yen to 55 trillion yen, and previously announced additions to its quantitative easing program during its August meeting.  The Bank had previously changed its asset purchase program in March this year, when it added a further 5 trillion yen to its target.  Japan reported annual headline consumer price inflation of 0% in September, down from 0.2% in both August, July and June, and 0.3% in both May and April.  

The Bank has previously forecast real GDP growth of 0.2-0.6% in fiscal 2011, and 2.5-3.0% in fiscal 2012.  Meanwhile, nominal GDP growth in Japan was recorded at -0.5% in June and -0.9% in March, placing it at -1% in both quarters on an annual basis.  The Japanese Yen (JPY) has gained around 6% against the US dollar so far this year; the USDJPY exchange rate last traded around 76.98

Tintin is a million-dollar business and has been raised into art. Join us on our visit to Brussels. If you think Tintin is merely a comic strip, you’re wrong.

By Mads Qvortrup & Jan Rørkær. Cameraman/editor: Jan Rørkær.

http://www.comicscenter.net/    – a comic strip museum in the centre of Brussels.

http://www.museeherge.com/    – The Hergé Museum. The museum, which opened this year, is designed and built soley for the works of Hergé. It is situated 20 minutes east of Brussels.

Produced by: Anette von Benzon, [email protected]

Bio: Professor Mads Qvortrup

Mads Qvortrup has served as an adviser to the British government and a speech writer for Tony Blair, among others.

Mads Qvortrup is the author of five books on politics, including a book on Danish prime ministers, Fogh, Kragh, Schlüter og Stauning (Borgen 2009), as well as A Comparative Study of Referendums  (Manchester University Press 2005). He has written for such newspapers as the  Guardian, the Glasgow Herald and the Sunday Express, and he often appears as an expert on BBC World and Danmarks Radio (Danish Broadcasting Corporation).

In addition to being a journalist and adviser, Mads Qvortrup taught for five years at the world-famous London School of Economics and was a guest professor at the University of Sydney in Australia.

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Video courtesy of en.jyskebank.tv

A Beginner’s Guide to Commodity Investing

by Carl Delfeld, Investment U Senior Analyst
Thursday, November 17, 2011

I’ll never forget my first visit as a teenager to the commodity-trading pit of the Chicago Mercantile Exchange (CME). The swirling bright colored jackets, the shouting and rapid hand signals (looked like arm wrestling to me) were captivating and reminded me of past family gatherings.

It was also the polar opposite of my later visit to the currency trading floor of JP Morgan at 1 Wall Street – row after row of white shirts hunched over computer screens and dry IMF statistics.

Commodities sure looked like more fun to me.

My image of commodity markets hasn’t changed all that much since. It’s a volatile and wild ride where even a tiny bit of new information affecting supply or demand can send prices spinning. Weather, transportation costs, economic forecasts, currency movements and many other factors go into how prices change minute to minute.

I approach commodities trading cautiously since expert traders focused all day on one commodity, such as wheat, get it wrong as often as they get it right.

Still, I have to admit, the idea of making or losing a pile of money in a very short time gets my blood pumping.

So how should you approach commodities, and what should you do right now?

The Game Has Changed

Even a decade ago, most investors didn’t even think of investing in commodities except through companies like Alcoa (NYSE: AA) for aluminum, Freeport-McMoRan (NYSE: FCX) for copper, or Comstock Resources (NYSE: CRK) for natural gas.

But the game has changed.

The arrival of exchange-traded funds (ETFs) and notes (ETNs) gives average investors the chance to get into the game with a just a click of the mouse.

The choices are staggering:

• Coffee – iPath Coffee (NYSE: JO)

• Sugar – iPath Sugar ETN (NYSE: SGG)

• Lead – iPath Lead ETN (NYSE: LD)

• Nickel – iPath Nickel ETN (NYSE: JJN)

• Corn – Teucrium Corn Fund (NYSE: CORN)

• Grains – iPath Grains ETN (NYSE: JJG)

• Cotton – iPath Cotton ETN (NYSE: BAL)

• Tin – iPath Tin ETN (NYSE: JJT)

• Aluminum – iPath Aluminum ETN (NYSE: JJU)

• Silver – iShares Silver Trust (NYSE: SLV)

• Oil – iPath S&P GSCI Crude Oil Index (NYSE: OIL)

• Palladium – ETFS Physical Palladium Shares (NYSE: PALL)

• Natural gas – iPath Natural Gas ETN (NYSE: GAZ)

• Timber – Claymore Beacon Global Timber Index (NYSE: CUT)

• Livestock – iPath Livestock ETN (NYSE: COW)

The “Core-Explore” Commodity Strategy

Given the complexity and volatility involved in commodities, you must have an established strategy if you plan on having any success. So here’s an easy one:

• First, having a small allocation in a broad basket of commodities in your core portfolio makes a lot of sense.

This should make your overall portfolio less volatile and help preserve capital since commodities don’t usually move lockstep with stocks. In addition, raw materials provide you with a natural inflation hedge.

A great conservative play right now would be the PowerShares DB Agricultural ETF (NYSE: DBA). These agricultural commodities are down only marginally this year and tend to be less volatile than precious or industrial metals. In addition, the long-term bull story of a world population growing at a rate of 200,000 a day plus rising incomes driving higher food prices is very convincing.

To meet this growing demand, the World Bank estimates that farms worldwide will have to produce more food in the next 50 years than it did in the previous 10,000 years.

Here are the commodity weightings in this basket:

1. Sugar: 12.44%

2. Coffee: 11.91%

3. Cocoa: 11.21%

4. Live cattle: 8.68%

5. Corn future: 8.33%

6. Soybean future: 8.14%

7. Wheat future: 5.64%

8. Corn future: 5.35%

9. Lean Hogs future: 5.19%

10. Soybean future: 4.42%

• Second, for your trading portfolio, explore for commodities that have pulled back sharply.

So far in 2011, the perception of a weakening world economy has driven many commodities sharply lower. Nickel is down 30 percent, copper is down 24 percent and aluminum is down 17 percent so far this year. China is a big consumer of these industrial metals and concern that its economy is slowing has hit them pretty hard.

This is exactly why you should be getting interested in these industrial metals. You want to get in when markets have pulled back and, even better, when they are beginning to trend up. Keep an eye on the iPath Industrial Metals ETF (NYSE: JJM). The lower entry price gives you some downside protection but always have a sell stop in place in case markets move against you.

Now get out there and add some commodities to your global portfolio today.

Good investing,

Carl Delfeld

Article by Investment U

Has this ever happened to you? You don’t see clearly your chart. You occasionally entered a losing position when switching from the chart to chart because of an extreme tiredness. Was your loss so monstrously huge? Have you followed bushido code and left to find a couple of swords for hara-kiri? If so, then my post addresses not you, but those traders who carry on challenging the market even with the slit-eyes.

I am not religious, you know, but still I remember that even God rested on the seventh day after he created our world. It so says the Bible. Of course, we are just mortals and are too far from making something of that “God-like” scale.

However, we do what we are capable of. And we, the traders, when doing our Forex trading must not forget about taking a break. That will surely help us to refocus. If going further, you can even schedule your breaks.

When I was a kid and prepared for any of exams (tried to read much and memorize it) my mother told me: “You’ve read this book, so now you put it under the pillow and sleep. During the night, all the things you had read about will float into your head, and you will pass.” It really worked I’m telling you.

When I grew up enough to trade Forex, I realized – it’s everything being identical. You need time to absorb the intensity that comes with trading. The time to clean your head is becoming much more precious then. And don’t you think that being a professional full time trader keeps you away from the things above.

I got a life-teaching example which speaks for itself. Once lurking on forums, I found a guy’s post (or tip) with a real call in the headline – DO NOT TRADE TIRED!

Then he the story which was a result of losing 70 pips on EUR/USD trading because he was tired. Very late night he woke up to his chart alarm after sleeping for two hours only. Somehow, he managed to reach his PC and enter an E/U long and then returned to bed. When he woke up, the trade hit the target and reversed significantly. However, his pillow’s “call” had to stay unheard as while patting himself on the back this guy noticed the trade was still open!!! His tiredness made him forget to set a Stop Loss and Limit Order. Couldn’t be clearer what I am trying to say.

I think everyone from FX trading community either have friends or himself made such mistakes hopefully once.

Do you need vacation without any Forex?

Vacation… and it’s a vacation that you need. It will clean your head up. Even a couple of day-offs may do the trick, not necessary would it be a two-week trip to Greenland to forget about all the humanity. When you are back in business, you are more focused and ready to perform more in less time.

We are all biological beings and feel when it’s time to get some nap or just not trade, for instance.

So, if you are an early riser, you better not trade at night. This rule works vice versa. A night owl should abstain from trading in the morning. Trading the most exciting session could be much less effective then.

Fortunately, Forex environment keeps many sessions, which are more natural for you – at other times.

As an example, try to fill your “trading mood” into certain session times. While you are into extreme moves, you can choose the European and American sessions overlapping on Friday. No Sydney session then. Though, if you feel like range-trading, you better skip the most volatile sessions.

Admit, that adapting trading times to your behavior easier than changing your behavior. So just wait for the better conditions and rest.

As a rule, it refers to news-traders category. They are better skip Monday trading as it’s generally sparse with events. Maybe it’s a weekend?

Alternatively, (another side of the medal) you should skip some Thursday, which are too crowded with simultaneous releases. Tough “traffic” cherishes uncertainty, so think twice and keep your money safe.

Written by Alexander Collins, who is chief executive officer and founder of Forexeasystems (http://www.forexeasystems.com/). If you are tired from manual Forex trading, try to trade during the News. Try now Forex freebie called FX Pulse from Forexeasystems which displays actual Forex news directly on your chart in a second after its release. Another benefit is the trend detection which shows you not only the trend but also the strength from the trend from multiple time frames. Download FX Pulse and use it for free.

On image (ProFx 2.0 and FX Pulse) 

Source: http://fxmadness.com/2011/11/02/general/a-break-from-forex-trading-can-save-your-money/

Join Forexeasystems at Google+ https://plus.google.com/101464848506138381916

London Gold Market Report
from Ben Traynor
BullionVault
Thursday 17 November, 08:30 EST

SPOT MARKET gold bullion prices fell to $1741 per ounce Wednesday lunchtime in London – 2.6% down for the week so far – while stocks, commodities and government bonds also sold off as tensions grew between France and Germany.

As yields on French, Italian and Spanish government debt spiked, leaders of the Eurozone’s two largest nations were in disagreement over how best to solve the crisis.

Silver prices fell to $32.83 per ounce – a 5.5% drop for the week – while on the currency markets the Euro held steady against the Dollar at around $1.34. Since the start of the week, however, the Euro has dropped over 2% against the US currency.

“The technical picture [for gold] looks weak,” says one Hong Kong gold bullion dealer.

“The US Dollar is strong and there does not seem to be a good solution for Europe… gold is probably not going to break above $1800 soon.”

Demand for physical gold, however, has continued to grow in recent months, new figures published today show.

Global gold bullion demand in the third quarter was 6% higher than during the same period a year earlier – coming in at 1053.9 tonnes – according to the World Gold Council’s latest Gold Demand Trends report, published on Thursday.

Central banks worldwide remained net buyers in Q3 2011 – purchasing 148.4 tonnes of gold bullion.

“A number of banks continued their well-publicized programs of buying,” the report says, “while a slew of new entrants emerged wishing to bolster their gold holdings in order to diversify their reserves.”

“We don’t know exactly who the central banks are,” Marcus Grubb, managing director, investment at the World Gold Council told Bloomberg television this morning.

“But if you look back over the last year, the buyers tend to be those countries that aren’t suffering the debt problems we have in Europe. They tend to be the surplus countries in Latin America, Central Asia and of course the Far East. We suspect the buying is coming from those central banks.”

Global gold jewelry demand fell 10% year-on-year – with world’s biggest market India seeing a 26% drop in jewelry demand by volume. Over the same period the Rupee has fallen 13.2% against the Dollar – with the Rupee gold price hitting all-time highs this week.

Third quarter gold investment demand, by contrast, rose 33% worldwide compared to Q3 2010.
“[Gold’s] popularity as an investment asset has definitely increased,” said Grubb. “It is a hedge against fiat currencies and a hedge against currency devaluation. For example, in the Eurozone it’s particularly attractive at this time as an investment.”

European gold demand grew 135% year-on-year to 118.1 tonnes of gold bullion– with Germany Europe’s biggest gold buyer.

Elsewhere in Europe this morning, yields on Spanish 10-Year bonds hit a Euro era high of 6.78% Thursday morning. Italian 10-Year yields also spiked, hitting 7.1% at one point.

France and Germany meantime continue to disagree over what role the European Central Bank should play in resolving the crisis.

“We consider that the best way to avoid contagion is to have a solid firewall,” French finance minister Francois Baroin said Wednesday. Baroin has said he would like to see the European Financial Stability Facility granted a banking license, enabling it to access ECB funds.

“We haven’t won the argument. We won’t make it a casus belli, but naturally we continue to think it would be the best way to bring stability to Europe.”

“If politicians believe the ECB can solve the problem of the Euro’s weakness,” German chancellor Angela Merkel said today, “then they’re trying to convince themselves of something that won’t happen.”

Yields on French 10-Year government debt rose to 3.8% this morning – while the spread above German 10-year yields set a new Euro-era record at 204 basis points (2.04 percentage points).

“Unless the Eurozone debt crisis is resolved in a timely and orderly manner, the broad credit outlook for the US banking industry could worsen,” ratings agency Fitch said Wednesday.

Fitch warned there is a “serious risk” to US banks’ creditworthiness as a result of their exposure to European sovereign debt.

Here in London meantime, the volume of gold bullion cleared in October fell from a month earlier, according to figures published Thursday by the London Bullion Market Association.

A daily average of 662.5 tonnes of gold bullion  was transferred between LBMA clearing members last month – down 4.3% from September.

By contrast, October saw a 12.4% rise volume of silver bullion transferred between LBMA clearing members – with an average of 6139.8 tonnes transferred per day.

The total volume of silver and gold bullion traded each day will, however, be several times larger, since the clearing statistics only show net transfers of gold between London’s largest, market-making bullion banks.

Elsewhere, in the silver market, leading precious metals consultancy Thomson Reuters GFMS published its Interim Silver Market Review today, giving its latest silver market estimates.

Silver fabrication demand – which includes the jewelry sector – is forecast to grow nearly 4% this year, with more modest growth in 2012.

Industrial demand “will reach a new record high in 2011, with a near 4% gain”, the report says, while total supply is expected to remain “broadly stable” – with an estimated 4% growth in mining output and 10% growth in scrap supply expected to be offset by falls in government sales and producer hedging.

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.

(c) BullionVault 2011

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.

Pennsylvania Leading the Shift to Natural Gas

by David Fessler, Investment U Senior Analyst
Thursday, November 17, 2011

Sometimes “luck is where you find it,” as the old saying goes. In my home state of Pennsylvania, it’s right under my feet.

We’re experiencing a natural gas boom here. Unemployment is below the national average, and dozens of companies have locked up the drilling rights on hundreds of thousands of acres.

Natural gas deposit here, to use a baseball term, is something akin to a “double header.” The first “game,” which is well underway, is the Marcellus Shale formation. It’s generally located about 4,000 to 5,000 feet below the surface.

The second “game” is the Utica Shale. It’s below the Marcellus, but is about four times the size, covering eight states and part of Canada. A few wells have been drilled in Ohio in the liquid part of the Utica.

Here in Pennsylvania, it’s all but untapped. It could contain four or five times the amount of gas that the Marcellus, which is estimated to contain nearly 500 trillion cubic feet of natural gas.

The Big Switch is Underway

One hundred years ago, Pennsylvania anthracite coal had the title of the best coal in the world. Its BTU output per ton is higher than any other coal ever found in the world. It still is, although there’s very little of it left.

But trains, homes and power plants all ran on the stuff. As recently as 2001, coal accounted for 57 percent of Pennsylvania’s power generation. Not any more. Now natural gas is the fuel of choice. Take a look at the graph below from the EIA.

You can see that in the last decade, coal has shrunk to only 46 percent of Pennsylvania’s power generation. As power companies replace aging coal-fired plants with new, high-efficiency gas powered units, coal’s share of power generation here will continue to decrease.

Natural gas makes all the sense in the world. It’s far cleaner than coal or oil, and we’ve got more than a 100-year supply. Natural gas generation in Pennsylvania has steadily increased over the last decade, as seen in the chart below, also from the EIA.

It’s a dramatic rise, increasing 10-fold in the last decade. Natural gas now accounts for 17 percent of Pennsylvania’s power generation, up from just two percent a decade ago. Almost all of it has been at the expense of coal. Most coal-fired power plants in Pennsylvania were constructed from the 1960s through the 1970s.

Nearly all of the natural gas-fired plants have been constructed since 2001. Much of the switch has to do with price. In the last two years, coal prices have shot up 54 percent, while natural gas prices have risen only eight percent in the same timeframe.

It’s pretty much a no-brainer for power companies. The cost of constructing a natural gas-fired power plant is also about 75 to 80 percent less than building a coal-fired one. Much less pollution control equipment is required, since natural gas is much cleaner burning.

Pipelines to Benefit

I’m a big fan of natural gas pipeline companies, and a number of them have significant operations in Pennsylvania. Many of them are structured as limited partnerships, and pay a healthy dividend. Atlas Pipeline Partners, L.P. (NYSE: APL) provides natural gas gathering, processing and treatment services.

It operates in the Permian Basin in Texas, and has a large gas gathering operation in Pennsylvania and West Virginia. As more and more wells are tied into its system, Atlas will gather and process more and more gas. Increased profits will flow right to unit holders. Right now, its dividend yield is 6.1 percent.

I also like MarkWest Energy Partners, L.P. (NYSE: MWE). It too is structured as a limited partnership, and operates in Pennsylvania and other major gas production areas. It currently yields 5.67 percent.

The stock recently touched a new 52-week high, but it has plenty of room to run. Look to accumulate either company on deep market pullbacks. Natural gas is clearly here to stay.

Pennsylvania’s in the middle of playing a natural gas double-header. It’s welcome news, especially to the thousands of people who are now gainfully employed by the hundreds of companies operating here to bring our valuable gas up to the surface and to the increasing number of power plant operators who want to use it.

Good investing,

David Fessler

Article by Investment U