Month: December 2011

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

Source: ForexYard

The EUR/USD was trading below the 1.30 level for the first time since the beginning of the year. Market sentiment continues to move lower and the threat of an oncoming EU recession could drag the EUR lower into the year end.

Economic News

USD – Market Sleeps through FOMC Statement

The most recent FOMC statement was a non-event which is typically not the case for Fed meetings. The Fed did not adjust interest rates nor did it announce any additional asset purchases (QE3). Instead the FOMC statement was left with its standard statement, “The Committee will regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate.”

While the Fed did see some positive signs from the US economy global growth has begun to slow. Labor conditions are also improving but unemployment continues to drag. There was one dissent from the committee’s decision and that came from Charles Evans who wanted further loosening of monetary policy. The next Fed meeting is set for January. It will also be accompanied by a press conference which may be the proper environment for Bernanke to explain a new communication policy the Fed could undertake.

EUR – EUR/USD Trades Below 1.30

The EUR/USD was trading below the 1.30 level for the first time since the beginning of the year. Market sentiment continues to move lower and the threat of an oncoming EU recession could drag the EUR lower into the year end.

Italy managed to auction 5-year bonds but the fiscally pressured nation will pay 6.47% to finance the debt, an EMU high. Yesterday’s data showed European industrial production declined by -0.1% on forecasts of 0.1%. Last month EU industrial output contracted by -2.0%. Both events weighed on market sentiment which continues to turn lower as the threat of an EU recession takes hold. Today’s euro zone flash PMI surveys will likely shed some light on European growth prospects but markets are already pricing in an EU recession. Thus the EUR could end the year near its lows as a combination of the debt crisis and a slowdown in growth weighs on the EUR.

The EUR/USD has support at the 2011 low of 1.2870 with resistance at the November 30th low of 1.3260.

NOK – Norges Bank Cuts Rates by 50 bps

The NOK is trading near its lowest level versus the USD since the beginning of the year after the Norges Bank cut interest rates by 50 bps. Market expectations varied though consensus forecasts were for only a 25 bp move. This takes the Norwegian interest rate down to 1.75%. The larger than expected move may be a preemptive strike by the Norges Bank as the combination of the European debt crisis and a pending EU recession may weigh on Norwegian growth. The USD/NOK has risen above the initial resistance of 5.9350 from the November high. This exposes 6.1465, the 61% Fibonacci retracement from the June 2010-July 2011 move. The November high will serve as support followed by last week’s low at 5.7110.

Gold – Gold Sinks on USD Strength

The price of spot gold was down sharply for the third day in a row following another bout of USD strength. It is becoming more apparent that gold may not be the safe haven asset that it was previously hyped to be. In times of low market sentiment traders continue to pile into the known safe havens such as the USD and the JPY. With gold prices down 6% this week and it only being Thursday there could be room for additional declines in the commodity. Spot gold has support at the September low of $1,532. Resistance is located at the October 20th low of $1,607.

Technical News

EUR/USD

The 20-day moving average is now at 1.3420 and has served as a significant resistance level with the EUR/USD last closing above this line on November 3rd. While weekly stochastics are beginning to look oversold the monthly stochastics still have room to move lower. With the downtrend firmly entrenched the supports from the November low of 1.3260 and the October low of 1.3145 are within striking distance. A move higher may find willing sellers at the December high of 1.3550 and the November 18th high of 1.3610.

GBP/USD

Sterling has been caught in a range trading environment between the levels of 1.5780 and 1.5660 where the 55-day moving average is found. With daily and monthly stochastics moving lower the November and October lows of 1.5420 and 1.5270 look to be within reach. Resistance for the GBP/USD can be found at the November 18th high of 1.5890 followed by the falling trend line from the August high which comes in at 1.5925.

USD/JPY

The doji candlestick from December 8th stands out as the day’s low coincides with both the 55-day and the 100-day moving average. This may be the start of a base being formed for a test of the June 2007 trend line which comes in at 78.50. A break here will expose the post-intervention high of 79.50. To the downside the November 18th low of 76.55 is the last support prior to the pair’s all-time low at 75.56.

USD/CHF

The pair continues to struggle to overcome the 0.9330 resistance level despite multiple attempts to move higher. A concerted move higher may find resistance at the 20-month moving average of 0.9380 followed by this year’s high of 0.9780. The downside may be capped at the support of 0.9065 which coincides with the pair’s 55-day moving average. Additional support is located at the November low of 0.8760.

The Wild Card

EUR/JPY

A breach of the November 25th low of 102.50 has exposed the October low of 100.75. Forex Forex traders should note that a break here could open the door to the support at 88.90 from the October 2000 low. Resistance comes in at the 55-day moving average at 105.

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.

Norway’s central bank, Norges Bank, dropped its key monetary policy rate by 50 basis points to 1.75% from 2.25% previously.  The Bank’s Deputy Governor, Jan F. Qvigstad, said: “The turbulence in financial markets has intensified and external growth is now expected to be clearly weaker, particularly in the euro area. In order to dampen the impact on the Norwegian economy, the Executive Board has decided to lower the key policy rate.”  The Bank further noted: In order to guard against an economic setback and even lower inflation, we are of the view that a reduction in the key policy rate is now appropriate.”

At its previous meeting the Bank held the key policy rate unchanged, after increasing the interest rate by 25 basis points to 2.25% in May.  The Bank expects inflation to remain relatively low, but to progress towards the 2.5 percent inflation target; Norway reported annual inflation of 1.6% in September, 1.3% in August, 1.6% in July, 1.3% in June, 1.6% in May, and 1.3% in April this year.  

By MoneyMorning.com.au

Finally. We’ve found it.

The best property investment in the world. And the best time for you to jump into it could be now…

From the Herald Sun…

‘MELBOURNE homes have lost $200 in value every day for the past nine months.’

That’s $53,800 wiped off the price of an average Melbourne home in 269 days.

According to RP Data…

More than two-thirds of Melbourne’s homes having either lost value or stayed flat in price over the past three months, with just 78 of the 272 reported suburbs growing in value over that time…

And in a 15 km by 12 km square, the price of houses in 10 suburbs fell. Even though these suburbs are less than 16 km from the Melbourne CBD…

That’s right, dear reader. Property prices in 194 Melbourne suburbs have ‘softened’… And not just out in the sticks. We’re talking prime real estate close to public transport, shops, schools and the CBD…

The Reserve Bank of Australia has given you an ‘early Christmas gift’ and cut rates. The Big 4 banks have now passed those cuts on to borrowers. There are still home-buyer grants and bonuses to snap up – if you’re quick.

But you know what? Investing in a house in one of these 194 ‘depressed’ Melbourne suburbs doesn’t even come close to the best property investment in the world.

Take a look at this. This is the compounded gain you could have made if you invested $500,000 in the world’s best property investment 20 years ago…

And it still seems destined to head nor’ward today.

The chart above (from ncreif.org): ‘is a quarterly time series composite return measure of investment performance of a large pool of individual agricultural properties acquired in the private market for investment purposes only.’

In English? The return is on a bundle of farms bought purely as an investment. That’s right. The world’s best property investment is farmland.

How can that be?

Rising food demand pushes up food prices. Rising food prices pushes up the value of farmland. It just goes to show you, once again, the value of holding real assets underpinned by sound supply and demand fundamentals.

The United Nations predicts the world population will keep growing at around 80 million people a year. The International Monetary Fund says: ‘… the world faces a prolonged period of high food prices.’ Add two and two together and things should keep looking good for farmland.

But how do you invest in farmland? If you’ve got a spare $2 million you could buy it outright – but there’s no guarantees you’d make those kinds of gains. Or you could buy shares in an agricultural property trust like the US-based NCREIF… if you can track one down on the ASX.

But the answer is you don’t have to.

What you’ve really identified here is an opportunity to invest to make gains from the growing demand for food… By investing in a hard asset that has real value.

Diggers & Drillers Dr Alex Cowie has identified one rare resource that is a VITAL component of the multi-billion-dollar global agricultural industry. Farmers the world over rely on it to nourish their crops and boost production in every hectare of land they till.

A share in this commodity is just the type of ‘property’ you should think about investing in. But you can’t trade it on the open markets.

To find out how you can trade it… and how it can help you share in the gains of the World’s Greatest Property Investment, click here now.

Aaron Tyrrell
Editor, Money Morning

Related Articles

Special Report: Six Extraordinary Resource Investment Opportunities for 2012

How to Buy Gold and Silver

The Only Gold and Silver Stocks to Buy

The Secret Aussie ‘Bank Run’ is a Sign to Buy Gold

Why Gold Should Become Your ‘Stay Rich’ Asset

From the Archives…

How to Turn Paper Money into Silver and Gold
2011-12-09 – Kris Sayce

Will Silver Break Through $50 an Ounce in 2012
2011-12-08 – Dr. Alex Cowie

Investing in the Market for Survival and Prosperity
2011-12-07 – Aaron Tyrrell

China, the U.S. and the Scramble for Commodities
2011-12-06 – Dr. Alex Cowie

Santa Claus: A Market Rally Not Worth the Risk
2011-12-05 – Kris Sayce

For editorial enquiries and feedback, email [email protected]

The Best Property Investment in the World

By MoneyMorning.com.au

“Back up the truck.”

Those were the first words said by Diggers & Drillers editor, Dr. Alex Cowie, as we stepped into our Fitzroy Street office this morning.

By that the Doc means it’s a good time to buy cheap resources stocks.

Gold… down USD$87 to USD$1,576.55 per troy ounce.

Silver… down USD$3 to USD$28.94 per troy ounce.

Oil… down USD$5 to USD$94.95 per barrel.

And copper… down 16 U.S. cents to USD$3.27 per pound.

Oh, and the Aussie dollar is back below par with the U.S. dollar. It’s trading at USD$0.9903.

The best time to buy is when prices are low. Trouble is most investors think the best time to buy is when prices are high.

Of course, they don’t realise that. They think they’re doing the right thing. They buy when they feel comfortable putting their cash on the line. And that’s usually when things are looking perky.

But in this market things have a tendency to stay perky for only a short period of time.

Yesterday your editor, and our old chum, Slipstream Trader, Murray Dawes told you we had a target of USD$1,600 for the gold price…

Your editor even went a step further than The Dawes. We thought (and still think) it could even hit USD$1,500. We figured there was a chance it could hit that price over the Christmas holidays if the global economy continued to muddle on… directionless.

Turns out we got the price target right… but the timing awfully wrong. As we mentioned at the top of this letter, gold is trading at USD$1,576.55 per troy ounce. It has busted through our first target in a matter of hours rather than weeks…

And the next level (USD$1,500) is dead ahead.

As for backing up the truck, it’s hard to argue with that. All you have to figure out is what size of truck.

The gold price action is a perfect example of the point we made at the Daily Reckoning Doomers’ Ball: It’s not the timing of your forecasts that’s important, it’s your preparedness for the forecast to happen that’s key.

Put another way, the Boy Scouts’ have it right with their “Be Prepared” motto.

Just because you believe something will happen, doesn’t mean it will happen in the way you think it will.

For example, we believe in the long-term, the price of gold will go up. But because we don’t believe the price will rise in a straight line, we’re prepared to buy in small amounts over time.

And why we prefer to have most of our investments in cash right now (although looking at the latest news on Commonwealth Bank’s [ASX: CBA] “glitch”, you wonder just how safe even that is!).

Exactly how much you stick in cash is up to you. It’s all about allocating your assets where you believe you’ll get the biggest return for the least risk…

An example of how you’d do that is below:

We believe most of your capital should be in “safe” assets: cash, term deposits, dividend stocks and, yes… gold and silver. How much you allocate to each is up to you.

This is the money you don’t want to lose.

Of course, you don’t want to lose your “punting” money either. But you do need to understand that you can only make money by risking money. So what you need to decide is where you risk it.

Our preference – naturally – is small-cap stocks. But that doesn’t have to be your preference. You may choose to trade blue-chip shares or use futures, options or CFDs…

Or, if you’re like billionaire sparky-turned-mining entrepreneur, Nathan Tinkler, you could borrow a whole bunch of cash and buy and sell coal mines instead. Do whatever you’re most comfortable doing.

Just know that the bigger the risk, the bigger your potential reward… and the bigger your losses could be. That’s why we prefer small-cap stocks. Because from the outset you know your maximum loss… And if you play it smart, the loss won’t be that big.

On the other hand, Mr. Tinkler could have gone bust. But he didn’t. The thing is, for every Tinkler there’s probably a dozen or more who tried the same approach and failed. But you tend not to hear much about them.

The bottom line is this: the market has gone berserk this year… and next year will likely be the same.

That means there’s no need to rush into any risky investment all at once. But if you are tempted to “back up the truck” to the stock market, for now we’d suggest just using a small one!

Cheers.
Kris

P.S. After falling heavily overnight, gold and silver prices have levelled off. Right now gold is trading at USD$1,575.92 and silver is USD$29.07. We can’t guarantee gold and silver will rally upwards in a straight line from here, but they are certainly back in the buy zone. And if prices do move higher, you can almost be sure small-cap gold and silver stocks will jump higher too. Dr. Alex Cowie has handpicked 10 gold and silver stocks he says are best placed to gain from soaring precious metals prices. Click here for details…

Related Articles

Special Report: Six Extraordinary Resource Investment Opportunities for 2012

How to Buy Gold and Silver

The Only Gold and Silver Stocks to Buy

The Secret Aussie ‘Bank Run’ is a Sign to Buy Gold

Why Gold Should Become Your ‘Stay Rich’ Asset

From the Archives…

How to Turn Paper Money into Silver and Gold
2011-12-09 – Kris Sayce

Will Silver Break Through $50 an Ounce in 2012
2011-12-08 – Dr. Alex Cowie

Investing in the Market for Survival and Prosperity
2011-12-07 – Aaron Tyrrell

China, the U.S. and the Scramble for Commodities
2011-12-06 – Dr. Alex Cowie

Santa Claus: A Market Rally Not Worth the Risk
2011-12-05 – Kris Sayce

For editorial enquiries and feedback, email [email protected]

Backing Up a Small Truck to the Stock Market

By Chris Vermeulen: www.TheGoldAndOilGuy.com

It’s that time of year again and I’m not talking about the holiday season… What I am talking about is another major market correction which has been starting to unfold over the past couple weeks.

I have a much different outlook on the markets than everyone else and likely you as well. However, before you stop reading what I have to say hear me out. My outlook and opinion is based strictly on price, volume, inter-market analysis, and crowd behavior and you should put some thought as to what I am saying into your current positions.

Two weeks ago I sent my big picture outlook to my subscribers, followers, and financial websites warning of a major pullback. You can take a quick look at what the charts looked like 2 weeks ago: http://www.thegoldandoilguy.com/articles/the-currency-war-big-picture-analysis-for-gold-silver-socks/

Since my warning we have seen the financial markets fall:
SP500  down 2.6%
Crude Oil down 4.4%
Gold down 9.6%
and Silver down 12.2%

If you applied any leverage to these then you could double or triple these returns through the use of leveraged exchange traded funds. The amount of followers cashing in on these pullbacks has been very exciting to hear. The exciting part about trading is the fact that moves like this happen all the time so if you missed this one, don’t worry because there is another opportunity just around the corner.

While my negative view on stocks and precious metals will rub the gold and silver bugs the wrong way, I just want to point out what is unfolding so everyone sees both sides of the trade. I also would like to mention that this analysis can, and likely will change on a weekly basis as the financial markets and global economy evolves over time. The point I am trying to get across is that I am not a “Gloom and Doom” kind of guy and I don’t always favor the down side. Rather, I am a technical trader simply providing my analysis and odds for what to expect next.

Let’s take a look at some charts and dig right in…

Dollar Index Daily Chart:

SP500 Futures Index Daily Chart:

Silver Futures Daily Chart:

Gold Futures Daily Chart:

Crude Oil Futures Daily Chart:

Mid-Week Market Madness Trend Analysis Conclusion:

In short, stocks and commodities are under pressure from the rising dollar. We have already seen a sizable pullback but there may be more to come in the next few trading sessions.

Overall, the charts are starting to look very negative which the majority of traders/investors around the world are starting to notice. With any luck they will fuel the market with more selling pressure pushing positions that my subscribers and I are holding deeper into the money.

Now that the masses are starting to get nervous and are beginning to sell out of their positions, I am on high alert for a panic washout selling day. This occurs when everyone around the world panics at the same time and bails out of their long positions. Prices drop sharply, volume shoots through the roof, and my custom indicators for spotting extreme sentiment levels sends me an alert to start covering my shorts and tightening our stops.

Hold on tight as this could be a crazy few trading sessions….

By Chris Vermeulen: www.TheGoldAndOilGuy.com

By Elliott Wave International

Did European Union leaders make the sovereign debt crisis “go away” last week?

Not even close. What they did agree on is tougher budget rules:

“…17 countries of the euro zone…agreed to run only minimal budget deficits in the future and allowed the European Court of Justice the right to strike down national laws that don’t enforce such discipline properly…”
Wall Street Journal, (12/9)

Will the EU agreement prove bullish or bearish for world stock markets, including the Dow Industrials?

Let’s put it this way: The evidence suggests that government intervention in the economy does not alter the dominant trend of financial markets.

For example: Look at the DJIA chart and try to identify when the U.S. government bailed out Fannie Mae, Freddie Mac, and other financial institutions.

“[The chart below] shows that in fact these actions took place in the early portion of the biggest stock market decline in 76 years. These actions did not push stock prices back up. The market finally bottomed months later, at a time when nothing along these lines happened.

“It is no good to claim that these actions had results eventually. By that reasoning, any future turn in the stock market would prove the contention.”
Elliott Wave Theorist, March 2010

If anything, the face value of this chart argues that economic government intervention makes stocks go down.
There is simply no “cause and effect” relationship between government actions and stock market trends.

The stock market’s price pattern is governed by the Wave Principle:

“Sometimes the market appears to reflect outside conditions and events, but at other times it is entirely detached from what most people assume are causal conditions. The reason is that the market has a law of its own. It is not propelled by the external causality to which one becomes accustomed in the everyday experiences of life.

“….The market’s progression unfolds in waves. Waves are patterns of directional movement.”
Elliott Wave Principle, (p. 21)

If you found this insight into stock market behavior eye-opening, read the2011 Independent Investor eBook, an educational, powerful and FREE 50-page eBook to help you think independently about what really moves the markets.

Thousands of investors have downloaded the Independent Investor eBook, and it has changed the way they think forever. Now YOU can get this important eBook, packed with insightful analysis from 2010 and 2011 Elliott Wave Theorist and Elliott Wave Financial Forecast, free.
Download your free eBook now.

By The Sizemore Letter

Watch Charles Sizemore give his thoughts on investing in Germany to the Wall Street Journal’s Evan Newmark:

If you are unable the view the video in your browser, you can view it here.

AUDUSD continued its downward movement from 1.0378, and the fall extended to as low as 0.9883. Further decline could be seen in a couple of days, and next target would be at 0.9800 area. Resistance is at 1.0050 followed by the downward trend line on 4-hour chart, as long as the trend line resistance holds, downtrend will continue.

Daily Forex Forecast

Investing in Africa’s Solar Energy Dawn

by David Fessler, Investment U Senior Analyst
Thursday, December 15, 2011

Barring any hurricanes, windstorms, or heavy, wet, fall snowstorms, this week my 10-kilowatt (kW) solar array should go live. It will be fun to watch my electrical meter run backwards. It will do that at varying speeds, depending how much sun is shining on any given day.

My installer tells me my system will produce power even on cloudy days, just not as much. Given my current electrical load, it will pay for itself in about eight to 10 years.

If I can get my family to stop leaving lights, computers, TVs and other power-sucking appliances on, the payback will be even quicker.

My decision to install solar was a personal one. It’s not entirely based on the economics of the payback. My personal views have nothing to do with the viability of the solar market as a whole. Nor are they a reflection of the investment opportunities that may or may not be represented in the sector, which is what I’m writing about here.

Slow Out of the Starting Gate

It’s no secret that photovoltaic solar generation had a rocky start in the United States. Controversial subsidies have many critics raising their eyebrows. Like Europe, we are besieged by political and economic uncertainty.

Over the past couple of years, plummeting panel prices were the death knell for many would-be panel makers. In addition, cheap natural gas kept solar looking expensive. Not exactly great news for solar panel makers and installers.

Unlike this we-don’t-have-a-national-energy-policy country, many emerging market countries do. For them, building solar into their grids makes a lot of sense. Particularly with panel prices dropping 40 percent in the last year alone.

For the solar market to reach financial viability, there’s one continent that’s going to drive the bulk of the demand that will make it happen.

This place has some great things going for it:

• Perfect geographical location for solar power generation (lots of sun, all the time)

• Energy poverty: scarcity of energy production of any kind

• 587 million of the one billion who live there have little or no electricity

• A woefully underdeveloped – and in some places non-existent – power grid

This is also a place where payback on solar-generated electricity can come within months or even weeks. There are several reasons for this.

According to the International Energy Agency (IEA), about 85 percent of those 587 million people without electricity live in rural areas. To them, solar – despite its premium costs in developed countries – looks very cost-competitive when compared to other sources of generation.

Where is This Place, Anyway?

I’m talking about Africa. Solar energy developers are tilling fertile ground in Africa’s vast sunbelts. The reason is that most of what little electricity is produced in Africa comes from coal, oil and natural gas.

Much of the power that’s generated is incredibly expensive: about $1 per kilowatt-hour for decentralized diesel generators operating off-grid. This compares to just $0.20 per kilowatt-hour for solar.

No wonder solar companies are flocking there in droves. On the sunny, southwest coast, Namibia is very interested in solar. With a population of just two million, Namibia currently relies almost totally on coal imported from South Africa to meet its energy needs.

Right now, Namibia has inked an agreement with an American-based investment group to build a 500-megawatt (mW) solar photovoltaic power plant near the capital city of Windhoek. The project is expected to cost between $1.6 and $2 billion dollars. Africa Energy Corporation was created to specifically to finance the project.

In Morocco, the World Bank approved a $297-million loan for the country’s first concentrated solar power plant at Ouarzazate. Its initial design capacity is 500 mW, with the capability to grow to 2,000 mW by 2020.

Ouarzazate is being viewed as the proving ground for the much larger Desertec Industrial Initiative. Desertec, if implemented in its full design, will supply all of the power needs of North Africa and much of Southern Europe by 2050.

Finally, in South Africa, Spanish solar developer Abengoa was awarded the rights to build two concentrated solar power (CSP) farms in the country. With investments totaling $1.3 billion, the two CSP farms will be the first of their kind in the country.

How to Play Africa’s Solar Dawn

With a lot of the money – and ultimately the equipment – coming out of the United States, it’s almost a sure bet that American solar panel makers like First Solar, Inc. (Nasdaq: FSLR) and SunPower Corporation (Nasdaq: SPWR) will benefit on the photovoltaic side.

BrightSource Energy, Inc., currently a private company, might also be contracted to provide similar CSP plants (similar to its 370-mW Ivanpah project in the United States) in Africa.

While no specific panel manufacturers have been named, it’s a good bet that the two mentioned above will play a part in Africa’s sunny solar future. That could be the saving grace for an industry that just can’t seem to get firmly on the road to profitability.

Good Investing,

David Fessler

Article by Investment U