Dec. 12 (Bloomberg) — Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney, talks about the Australian dollar and the euro. He speaks with John Dawson on Bloomberg Television’s “On the Move Asia.” (Source: Bloomberg)
Dabby Says Euro Crisis Leaves Isreali Stocks `Volatile’
Dec. 12 (Bloomberg) — Eyal Dabby, head of equity research at Bank Leumi Le-Israel Ltd., discusses the outlook for Israeli equity markets in 2012. He speaks from Tel Aviv with Maryam Nemazee on Bloomberg Television’s “The Pulse.” (Source: Bloomberg)
Greetham Recommends Gilts if Euro-Zone Crisis Worsens
Dec. 12 (Bloomberg) — Trevor Greetham, director of asset allocation at Fidelity Worldwide Investment, talks about his investment strategy after euro-zone countries agreed a pact to tighten budget rules at a summit in Brussels last week. He speaks with Mark Barton on Bloomberg Television’s “Countdown.”
Forex CT 12-12-11 Video News Update
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.
Fed Meeting Slips Under the Radar
Source: ForexYard
As investors remain fixated on events in Europe FX traders may overlook an important Fed meeting. If the euro zone succeeds in restoring some sense of stability investors could begin to refocus their attention on the loose monetary policy of the US and a weakening USD.
Economic News
USD – Fed Meeting Slips Under the Radar
While events in Europe have captured the attention of both financial markets and the media, investors may overlook an important Fed meeting this Tuesday. The long term trend in the currency markets has been a weakening USD and the primary cause for this has been a loose US monetary policy something the Fed is unlikely to change anytime soon.
There has been a trend of stronger US data over the past two months with manufacturing production rising 0.7% m/m in October, core durable goods rising by 0.7% m/m and retail sales up 0.5% m/m. Consumer confidence has risen sharply and PMI surveys have moved above the 50 boom/bust level.
Despite the better economic data there are two reasons why the Fed will continue on a path towards additional quantitative easing; stagnant US unemployment and a European economy that is slipping towards a recession. Last month’s +120k NFP report was a step in the right direction but a one-off payrolls report does not break a 2.5 year trend of weak US employment. With the ECB lowering its growth forecasts and now predicating 2012 GDP between -0.4% and 1.0% the threat of a euro zone recession weighing on the US economy is real. Until employment data begins to show a strong turnaround, we can expect additional moves by the Fed to support the US economy with more asset purchases.
EUR – Chinese FX Investment No Quick Fix
The announcement of an FX Chinese investment fund designated for European assets helped the EUR come of its lows on Friday after the disappointing ECB meeting and lackluster EU economic summit. However, additional Chinese money does not change the facts on the ground and leaves the EUR vulnerable to further declines.
Comments from the Bundesbank expressing the German central bank is open to the idea of increasing the funds made available to the IMF were EUR supportive and gave the EUR a temporary lift. I’m surprised by the market’s reaction to this news given Draghi’s comments from the ECB press conference, “It’s legally complex. The spirit of the treaty is that one (ECB) cannot channel money in a way to circumvent the treaty provisions…If the IMF were to use this money exclusively to buy bonds in the euro area, we think it’s not compatible with the treaty.”
As the market reacts to the news flow from Europe the EUR/USD continues to make lower highs and lower lows. This type of price action is typically considered bearish by technical analysts.
AUD – Weak Employment Data Means More RBA Easing
Last week’s release of disappointing unemployment data from Australia opens the door for further easing of Australian monetary policy. The employment change showed the Aussie economy shed -6.3k jobs in the month of November. Expectations were for an increase of +10.3k. The October numbers were revised higher to +16.8k from +10.1k though the upward revision did little to offset the headline data. The unemployment rate also unexpectedly ticked higher to 5.3% from 5.2%.
The weak unemployment data adds additional room for the RBA to cut rates for the thirds consecutive time when the RBA meets on February 7th. The Aussie central bank could lower interest rates another 25 bp. Currently the Australian interest rate stands at 4.25%.
The near-term technicals do not bode well for the AUD. Last week the AUD/USD failed to make a close above the 1.0340 resistance level from the mid-November high. Daily stochastics are falling and the pair has support at its 20-day moving average at 1.0050 followed by the November low of 0.9660.
Gold – Spot Gold Prices Ease
The price of spot gold continues to struggle in this risk-off environment as the commodity has been unable to break its recent trading range. One reason for the consolidation may be lower inflation in China and reduced growth forecasts from India. The two Asian nations make up a healthy portion of global demand. Also contributing to the lower gold price is a strengthening USD. The USD index (DXY) is just off of its November high as the USD has once again shown to be the safe haven currency of choice.
Technicals show spot gold prices have failed to make a move above the falling trend line from the September high which comes in today at $1,749. The commodity has support at the rising support line from the September 29th low which is found at $1,668. The next support is 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/CAD
The EUR/CAD dropped 600 pips with 10-consecutitve days of declines before moving higher to 1.3710. This price has important technical implications as it is the 38% Fibonacci retracement from the aforementioned decline. The price is also the previously broken support line from the October to mid-November consolidation. Forex traders should note that previously broken support lines often turn into resistance levels. The EUR/CAD looks to have support at the December 8th low of 1.3475 and 1.3400 from the September low.
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.
Aussie outlook 12 December
After the slow and choppy start to December the Aussie finally started showing signs of movement towards the end of last week. Early in Thursday’s trading session saw the market initially spiking through resistance at 1.0300; however the bulls quickly lost power and the bears pushed the market back lower towards support sitting at 1.0150.
Friday closed the day with a bullish pin bar rejecting strong support at 1.0150.
The market so far this year has often shown strong support and resistance at 1.0150 with numerous bounces of this area.
With the strength of the bullish pin bar we may yet see another bounce of this area and a move higher. A possible entry could be taken at a 50% retracement of this pin which would tie in strongly at a more detailed support area sitting at 1.0136
Initial targets could be at the 1.0300 area which may prove to be the markets next resistance level.
Who Else Wants To Invest In Cheap Resources Stocks?
By MoneyMorning.com.au
Watching Europe spiral into chaos this year has been painful.
The cat and mouse game of rumours and headlines has created a volatile market that’s been great for traders. But if you’re trying to invest with a time frame of longer than five minutes, it has been a frustrating year.
Few more so than for small-cap resources stocks.
Why? Well, smaller companies are risky and sell off faster during market falls. Also, mining stocks have suffered worse than most on the back of falling commodity prices.
The index that best represents the type of resources stocks you’ll find in Diggers & Drillers is the S&P Emerging Companies Index (XEC). The ASX200 (in blue) has fallen around 12% since the market peaked in April. Compare that to the XEC index (in red), which is now down 25% – or double the fall of the ASX200 blue chips in the same time.
Small-cap resources stocks down twice as much as the blue chips
Source: Google Finance
But, believe it or not, this could present you with an opportunity… Because at this level, these resources stocks are now cheap.
You could argue that the US, which is far and away the world’s biggest economy, is showing signs of life. By this I mean the economic data out of the US is starting to point in the right direction. There is also growing talk of more quantitative easing (read money printing) from the US Federal Reserve to gee things along. Obama has to do something to stand a chance of re-election, right? And China is also pulling a few stops out to get banks lending a bit more, which may see economic activity start to accelerate again.
And who knows… Maybe the Europeans will be able to conjure some sort of solution out of thin air… Even if they just manage to kick their debt troubles down the road for six more months.
The fact is no one knows what will happen next in the market.
You will always find people that can convincingly argue it’s about to crash, and just as many who can make a good case for it to rally.
The current market seems to more to do with government intervention than fundamentals.
And I’m convinced as the wider market becomes more aware of this, investors will turn to commodities that have real value. Tangible assets that are in short supply and huge demand. Assets that can’t be manipulated or interfered with by the government.
My focus remains on finding quality investments in the areas of the market that will still ‘work’ no matter which way the ship turns… like precious metals. This year, gold stocks have been some of the best performers in the portfolio, and have kept us ahead of the market.
And as the storm continues, I plan to keep the recommendations coming. If you’d like to read more about which resources stocks and sectors I think could give you the biggest gains in 2012, please click here…
Dr. Alex Cowie
Editor, Diggers & Drillers
[Ed Note: My old pal, Diggers & Drillers editor Dr. Alex Cowie has just released a special report and presentation. He outlines his best ideas for helping investors make the most from rising gold and silver prices… including a silver stock that could make you $4,935 for every $1,500 invested, click here for details…]
Related Articles
Special Report: Six Extraordinary Resource Investment Opportunities for 2012
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]
Why You Shouldn’t Trust Your Gold to a Banker
By MoneyMorning.com.au
You wouldn’t trust your sausages to a dog…
…So why trust your gold to a banker?
Last Friday we wrote this:
“We wonder how many investors think they’ve got gold safely stored in the bank without realising the bank has loaned it out to someone else.”
Over the weekend, the following story cropped up on Bloomberg News:
“Five gold bars and 15 silver bars underlie eight Comex contracts between the brokerage [MF Global] and its client Jason Fane of Ithaca, New York, the unit of London-based HSBC said in a court filing yesterday. Both parties have asserted claims to the bars, creating difficulties for HSBC, which is storing them, the bank said. HSBC asked a judge to decide who the rightful owner is.”
The total value of these bars is USD$850,000. So we’re not talking small potatoes. A few weeks ago, Mr. Fane had no worries about his status as owner of the bars.
Today, while he’s still confident he’s the legal owner, the decision is out of his hands. It’s up to a judge to decide.
It just goes to show that when you’re dealing with paper or electronic assets, when push comes to shove, what’s yours ain’t necessarily yours.
Look After Your Gold as You Would Your Sausages
That’s why we suggest you buy the metal, take delivery of it, and then store it in a secure facility. Preferably where you know some rascally banker won’t lend it to someone else… or even claim your gold and silver isn’t your gold and silver.
Anyways, this is a subject our old pal, Diggers & Drillers editor, Dr. Alex Cowie has banged on about for years. So we asked for his take on the story. Here’s what he told us:
“You have to be mad storing gold at a bank. It’s like getting a dog to guard your sausages!
“I feel for investors like Mr. Fane who understand the value of gold, but then stuff up the trade. The idea at the core of gold is that it’s no one else’s liability – so if you’re buying the stuff, it’s a good idea not to give it to a kleptomaniac to look after.
“But hopefully this gets people thinking. Investors who currently hold their gold electronically, through a foreign bank that doesn’t mind lending it out for you, or perhaps through a broker (which may turn out to be insolvent), should now think about the wisdom of this strategy. If enough investors see this for what it is, we should see a surge in demand for physical gold.”
What does the Doc mean by his last point? That this could “see a surge in demand for physical gold”?
Simply this…
Rushing into Gold
If investors start losing faith that there is actually any gold backing their paper or electronic gold, they’ll start trying to redeem their paper for gold. Or more likely, just sell the paper asset and buy the real stuff somewhere else.
In short, you’d get a run on paper gold assets. Like how you get a bank run when savers don’t believe the bank holds enough cash.
At the moment, investors still have faith. For instance, the Australian Securities Exchange-listed, GOLD ETF [ASX: GOLD] trades roughly at par with the entitlement to gold (currently, for each share in GOLD, an investor is entitled to 0.0969718 ounces of gold).
But if investors lose faith in paper gold, you’ll start to see physical gold trading at a premium to the paper stuff. Investors will want to hold the physical gold.
Add in the continued problems in Europe and North America and it means good news for the gold price… and good news for gold explorers and producers. Why?
Dr. Cowie explains in his article on resources stocks…
Cheers.
Kris
Related Articles
Special Report: Six Extraordinary Resource Investment Opportunities for 2012
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 Tool to Capture the Highest Yields on Earth
By Paul Tracy, GlobalDividends.com
There are about a thousand of them listed on the U.S. exchanges.
They track everything from the S&P 500… to gold… to Treasury bonds… and much more.
They are basically nothing more than portfolios of stocks, bonds or commodities that trade on the major exchanges as a single security. But underneath a placid exterior, one of America’s fastest-growing asset classes just reached a key milestone: Total assets invested in U.S. exchange-traded funds (ETFs) surpassed $1 trillion for the first time.
That represents the culmination of a remarkable episode of growth. The first U.S.-traded ETF was launched on January 29, 1993 — so it took fewer than 19 years for the ETF industry to crack the $1 trillion barrier.
To put that in perspective, it took the mutual fund industry (first launched in 1924) 66 years to surpass $1 trillion in assets.
Assets invested in ETFs have grown at a 31% annualized pace since 2000 — compared to just 6% annual growth for mutual funds. And alongside the growth of ETFs is the growth in closed-end funds (CEFs).
The differences between CEFs and ETFs are small — both allow you to buy into a basket of securities with one simple transaction. And you can buy them throughout the day, just like a stock.
Yet many investors don’t realize just how powerful a tool ETFs and CEFs can be for income investors.
Let me give you an example. I’ve told you several times about the abundance of high-yielding stocks around the world (at last count, we found 412 companies based outside the U.S. paying more than 12%).
And there are hundreds of foreign stocks listed on the major U.S. exchanges. But there are tens of thousands of foreign stocks that don’t trade in the U.S. Buying these stocks can be difficult for the average investor.
ETFs and CEFs break down all these barriers, allowing investors to buy broadly diversified baskets of dividend-yielding foreign stocks without paying higher commissions to their broker or dealing with foreign currencies.
In short, they can make buying a portfolio of high-yielding stocks from say, Brazil, as simple as buying a share of Walmart (NYSE: WMT).
And thanks to these funds, investors can capture some pretty significant returns and yields that would otherwise be untouchable.
In my High-Yield International portfolio, we hold shares of the AllianceBernstein Global High Income Fund (NYSE: AWF). AWF invests in bonds from around the world — including foreign-government bonds from emerging markets and U.S. corporate high-yield bonds.
Normally it would be next to impossible for average investors to buy the securities AWF holds. But with the fund, you can access them all in one simple transaction.
In High-Yield International, we locked in a 17.1% yield when we purchased AWF in March of 2009. And since then the fund has brought a total return of more than 160% to anyone who followed our lead. Today, even after the rebound, the shares still trade with a 8.4% yield.
Despite these positives, these funds aren’t perfect. Investors can often earn higher returns by picking individual stocks and there are management fees that cut into returns.
But by allowing serious income investors to access some of the highest-yielding securities on the planet as simply as a share of General Electric, Walmart, or Apple, the extra costs are usually worth it.
[Note: As I said, there are enormous numbers of high-yielding investments outside the U.S. borders. I’ve found more than 400 of these “other” companies paying 12%-plus yields… and thousands more paying above 6%. But most U.S. investors have no idea that these securities even exist.
Meanwhile, many of the world’s wealthiest investors — including Warren Buffett — have been quietly cashing in on them for decades. Watch this free presentation to get more details about these 12%-plus yields.]
Good Investing!
Paul Tracy
StreetAuthority Co-Founder, Chief Investment Strategist — High-Yield International
Disclosure: StreetAuthority owns shares of AWF as part of High-Yield International’s “real money” portfolio. In accordance with company policies, StreetAuthority always provides readers with at least 48 hours advance notice before buying or selling any securities in any “real money” model portfolio.
GBPUSD traded in a range between 1.5561 and 1.5779
GBPUSD traded in a range between 1.5561 and 1.5779 for several days. One more fall to test 1.5423 support is still possible, a breakdown below this level could signal resumption of the downtrend from 1.6164. Key resistance is now located at 1.5779, above this level will confirm that the downtrend from 1.6164 had completed at 1.5423 already, then the following upward movement could bring price to 1.6500 area.
