Month: March 2012

By CountingPips.com

Today, I am pleased to share a forex interview and commentary on the latest major forex events and trends with currency strategist David Song from DailyFx.com. David is an active trader and studied macroeconomic policies under a visiting scholar at the Federal Reserve Bank of St. Louis while attending the Zicklin School of Business at Baruch College. He focuses on economic developments and central bank rhetoric to forecast long term currency price action and has been quoted by many major news sites including Reuters, Dow Jones Marketwatch, and CNN Money.

Q: What would you say is the major global theme in currency markets at this time? What do you feel is driving major currency trader sentiment?

With the headline-driven market, the major fundamental theme driving currency prices is the global threat of the sovereign debt crisis. World policy makers continue to strike a cautious tone amid the ongoing turmoil in the euro-area, and the risk for contagion will continue drag on investor confidence as European officials struggle to meet on common ground. As the governments operating under the single currency become increasingly reliant on monetary support, we are likely to see the European Central Bank carry out its easing cycle throughout 2012, and the Governing Council may have little choice but to push the benchmark interest rate below 1.00% as the region continues to face a risk for a prolonged recession.

Q: The Federal Reserve looks increasingly unlikely to inject QE3 into the economy any time soon. Do you agree with this, and if so, could this be considered bullish for the USD?

In light of the more robust recovery in the U.S., the Fed certainly has limited scope to expand its balance sheet further. As we expect the FOMC to bring its easing cycle to an end in 2012, the shift in the policy outlook instills a bullish forecast for the U.S dollar, and we should see the committee continue to soften its dovish tone as stronger growth paired with sticky prices raises the risk for inflation. Indeed, market participants see the Fed starting to normalize monetary policy over the next 12-months amid the shift in the policy outlook, and the rise in interest rate expectations should strengthen the dollar further as the central bank prepares to wind down its balance sheet while dismissing the zero-interest rate policy (ZIRP).

Q: As more bailouts are most likely necessary for further euro zone countries, do you feel that the EUR/USD inevitably will trend lower? What is your outlook or forecast for the EUR/USD?

We maintain a bearish outlook for the EURUSD as the fundamental outlook for the euro-area remains bleak, and the pair looks poised for a major move to the downside as it appears to be carving a head-and-shoulders top in March. In turn, we expect to see fresh yearly lows in the EURUSD, and the pair may ultimately give back the rebound from back in 2010 as European policy makers struggle to restore investor confidence. As the EU maintains a reactionary approach in addressing the debt crisis, the efforts could arguably be too little too late, and the implementation of the crisis-fighting measures are likely to come under scrutiny as the group now looks to promote growth.

Q: The USDJPY has surged to its highest level in almost a year, can you comment on this currency pair and do you feel that the forecasts to go higher are correct?

The recent surge in the USDJPY comes as the Federal Reserve talks down speculation for QE3, and the rise in interest rate expectations should carry the dollar-yen higher as the Bank of Japan continues to embark on its easing cycle. As the BoJ pledges to meet the 1% target for inflation, it looks as though the central bank will further expand its asset purchases over the coming months, and the disparity in monetary policy will heavily influence the exchange rate as these developing fundamental themes take shape.

Q: There was a lot of talk last week about US treasuries prices making moves, can you explain how this can affect the US dollar and the currency markets?

As market participants speculate the Federal Reserve to normalize monetary policy ahead of the 2014 pledge, expectations for higher interest rates have sparked demands for U.S treasuries, but this development will have the greatest impact on the USDJPY as the BoJ looks to maintain its zero interest rate policy for a prolonged period of time. Indeed, the shift in central bank rhetoric will heavily influence the USD, and we should see the correlation between risk sentiment and the dollar continue to decouple as interest rates are set to go higher.

Thank you David for taking the time for participating and sharing your views in this latest forex interview. To read David’s latest currency analysis and trading strategies you can visit DailyFx.com.

General Mills (GIS) announced that earnings fell by 0.2% though sales were 13% higher. The company earned $391.5 million, or 58 cents per share, for the fiscal quarter that ended on February 26, versus $392.1 million, or 59 cents per share in the same period last year.

Gordman’s Stores (NASDAQ:GMAN) shares rose 24% on Tuesday after the company released its earnings late Monday.The company reported Q4 reported EPS of $0.53, better than analyst estimates of $0.50 per share. Revenues for the quarter rose 10% year-over-year to $185.10 million, missing consensus estimates of $186.11 million.

London Gold Market Report
from Ben Traynor
BullionVault
Wednesday 21 March 2012, 08:30 EDT

WHOLESALE MARKET gold prices rose to $1660 an ounce Wednesday morning London time – more or less where they ended last week – before easing ahead of US markets open, while stock, commodity and government bond prices held broadly steady following news that the UK government deficit rose sharply last year.

Silver prices meantime dipped below $32 per ounce around lunchtime – a 1.8% drop on the week so far.

“Silver is in a short-term downtrend and is likely to breach support…at $31.81,” says the latest technical analysis note from bullion bank Scotia Mocatta, who add that the next target would be $30.48.

Over in India, the strike by Gold Dealers in protest at last week’s gold import duty hike entered its fifth day Wednesday.

“We harbor little doubt that gold remains vulnerable,” says a note from UBS precious metals analyst Edel Tully.

“Upside drivers are lacking and physical markets have yet to show a convincing response to lower prices.”

Here in the UK, the latest Bank of England Monetary Policy Committee minutes published on Wednesday show that two of the nine MPC members voted in favor of expanding the Bank’s quantitative easing program by £25 billion when the MPC met earlier this month. The majority voted to maintain the size of the program at £325 billion.

The decision to leave interest rates at 0.5%, where they have been since March 2009, was unanimous.

The MPC minutes noted significant risks to economic activity that might result in inflation falling materially below the [MPC’s 2%] target in the medium term”.

MPC member Spencer Dale however, who voted to six times for a rate increase in 2011 – said in a speech Tuesday that in his view “inflation is just as likely to be above as below the inflation target in the medium term”.

The UK government deficit meantime rose to £12.9 billion last month – more than double consensus estimates – figures published hours before Wednesday’s Budget show.

Lower tax receipts contributed to the deficit growth, the Financial Times reports, with HM Revenue & Customs data showing an 8% fall in self-assessment tax revenues compared to February last year.
The news “provides a very uncomfortable background for the budget,” says Investec economist Philip Shaw.

“The fact there has been a worsening on this scale is a big surprise.”

Britain is expected to issue the second largest amount of government debt – known as gilts – on record this coming fiscal year, according to a Bloomberg survey of primary bond dealers.

“The government has a tough balancing act,” says John Wraith, London-based fixed-income strategist at Bank of America Merrill Lynch.

“Growth is going to be at best anemic, and it’s going to take a long time to reduce gilt issuance. They need to reduce debt, but if they stick rigidly to their fiscal consolidation plan, they risk killing growth.”

The FT argued this week that UK policymakers are engaged in financial repression, holding interest rates below inflation and creating a captive market for government bonds in an effort to lower the real value of national debt.

Federal Reserve chairman Ben Bernanke will warn of the US financial system’s exposure to Europe when he appears before the House Oversight Committee today.

“US financial firms and money market funds have had time to adjust their exposures and hedge their risks to some degree as the European situation has evolved, but the risks of contagion remain a concern for both these institutions and their supervisors and regulators,” Bernanke will say, in prepared remarks published ahead of the testimony.

On Tuesday, Bernanke gave the first in a series of four college lectures on the Fed’s role in the economy, in which he described a gold standard as a “waste of resources” and a “far from perfect monetary system”.

“Since the gold standard determines the money supply, there is not much scope for the central bank to use monetary policy to stabilize the economy…Under a gold standard, typically the money supply goes up and interest rates go down in a period of strong economic activity—so that’s the reverse of what a central bank would normally do today.”

Congressman Ron Paul last year asked Bernanke if he though gold was money, to which the Fed chairman replied ‘No’. Last month, Paul held up a silver coin while questioning Bernanke, saying that it “is what the market has always said should be money”.

Russia’s central bank gold holdings 3.1 tonnes of gold last month, equivalent to 0.35% of its official reserves, data published Tuesday show.

Over in the US meantime, holdings in the world’s largest gold ETF, the SPDR Gold Trust (GLD), fell 3 tonnes to 1290.2 tonnes yesterday, having held steady for one week. Silver bullion holdings in the iShares Silver Trust (SLV), the world’s biggest silver ETF, remained steady at 9752.7 tonnes.

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.

Today the National Mint of Mexico continues its long tradition of minting some of the world's finest silver bullion with their Libertad Series of bullion coins.

Owning physical bullion is the most traditional way to invest in silver.

Physical bullion bars and coins are typically the most affordable silver investment vehicle. And they can be easily converted to cash at any time, with silver spot prices globally quoted and negotiable internationally.

For investors who take personal possession of their silver bullion, there are no storage fees. For those with larger holdings, there are a number of highly reputable firms that offer programs for allocated storage. (For instance, Asset Strategies International (ASI) offers storage at the Perth Mint in Australia)

The most widely recognized silver bullion coins are government-issued, such as the American Silver Eagle and Canadian Silver Maple Leaf. Others include the Austrian Silver Philharmoniker and British Silver Britannia. But one of my personal favorites is the Mexican Silver Libertad.

The Mexican Silver Libertad Coin

Mexico is the single most important producer of silver in the world. The region has historically yielded over 10 billion ounces of silver, and currently accounts for about 20% of the world’s total silver mine production. According to the USGS, nearly 160 million ounces of silver were mined in Mexico last year.

The country is also home to one of the world’s oldest silver mints. Originally established by the Spanish in 1535 following their conquest of the Aztec Empire, Casa de Moneda de México was the first mint in the Western Hemisphere.

For over three centuries, prolific silver deposits in the newly acquired colonies allowed the Spanish Empire to mint massive quantities of silver coins – including the famous Spanish dollar, which was globally circulated during the seventeenth and eighteenth centuries.

Today the National Mint of Mexico continues its long tradition of minting some of the world’s finest silver bullion with their Libertad Series of bullion coins.

Exceptional Quality and Design

The Mexican Libertad features exceptional quality and design, and is among the most affordable bullion coins on the market today.

The National Mint of Mexico produces both gold and silver bullion Libertad coins. They’re available in a wide array of weights, from 1/20 ounce to 1 kilo. However, the 1 troy ounce denomination is by far the most available and popular bullion coin of the Libertad Series.

Struck in the pure .999 fine silver, the Mexican Silver Libertad coin is highly recognizable among all bullion dealers.

Like other government-issued bullion, the Silver Libertad is sold at a premium over silver’s spot price. And the premiums for 1 ounce silver Libertads are on par with the American Silver Eagle and other government-issued bullion coins. Sometimes the premiums are even a bit lower. Premiums will vary by dealer, the number of coins purchased at once, and method of payment. But here are a few current premiums from three large online bullion dealers:

Assets Strategies International (ASI) is another place to get good deals on Silver Libertads. ASI doesn’t have their prices quoted online, but the company has multiple contacts with large wholesale dealers and always has great prices.

Various Designs Over the Years

Since its initial minting in 1982, the Mexican Silver Libertad has shared one design with a few different versions. They look very similar. And can be a bit confusing to first-time buyers. But here’s the short of the Libertad’s design versions…

From 1982 to 1999, the obverse of the Silver Libertad featured the Mexican Coat of Arms; a Mexican Golden Eagle perched on a prickly pear cactus devouring a snake. From 2000 to date, the obverse shows the current Mexican Coat of Arms surrounded by historic national heraldic designs.

From 1982 to 1995, the reserve of the Mexican Silver Libertad featured a front-facing winged Goddess Victoria (the archetypical personification of good over evil) standing on her right foot upon a pillar. From 1996 to date, the Libertad has featured an angled look at the same Victoria. The new angle gives Victoria more overall depth. But I personally prefer the look of the earlier Libertads.

You can easily find both design versions of the Libertad in coins shops and from online bullion dealers. The older Libertads will sometimes carry a slightly higher premium because there were less minted. But as you saw in the table above, premiums on the more recently minted Libertads are on par, or lower, than other government-issued bullion coins, like the American Eagle. And I think the Libertad is a beautiful, affordable way to diversify any silver bullion investment.

Another Affordable Mexican Silver Coin

For one year in 1949, the Mexican mint produced the Onza – a medallic silver-sterling silver bullion coin. The Onza was minted in 92.5% silver. But it weighs 33.625 grams, so the coin still contains one full ounce of pure silver.

Beginning in 1978, Mexico’s national mint reproduced the Onza for three years, ending in 1980. The 1949 and 1978 Onzas have high numismatic value, and sell for high premiums over silver’s spot price. The 1949 coins are sought after because of their age, and the Onza’s production was limited to 280,000 coins in 1978.

However, the Mexican mint produced over 10 million Onzas between 1979 and 1980. And you can still buy them today at reasonable prices.

The premium on random year Mexican Onzas from Apmex, for instance, will range from 3% to 10%, depending on how you pay and how many you buy at once. Assets Strategies can also get Onzas at very reasonable prices.

The design of the Onza… well, I don’t think it’s anything special. You decide.

Quick Last Word…

With the popularity of silver at a 30-year high, there are a number of new bullion products on the market today. But government-issued bullion coins are the most recognizable.

For investors looking to own silver bullion, the Mexican Silver Libertad is a very affordable option that offers both exceptional quality and high recognizably.

Good Investing,

Luke Burgess

Article by Investment U

Could Japanese stocks be the best value play of 2012?

The investment surprise of 2012 so far isn’t the orderly Greek default, the sudden sell-off in U.S. Treasury bonds, or even the big move up in the Dow. It’s the astonishing outperformance of Japan, a market that’s even topping highflyers like China, Korea and Brazil.

The Wall Street Journal summed it up well last Thursday:

“Japan’s Nikkei Stock Average climbed above the 10,000 mark to close at its highest level in more than seven months, riding a surge in the dollar against the yen triggered by the bank of Japan’s surprise moves in February to stimulate the economy. The index has gained 19% this year, well above the 8% advance in the Dow Jones Industrial Average and the 6.7% gain in the U.K’s FTSE 100 index.”

Yet the Journal also noted “most U.S. investors have missed out on the big gains.” Not Oxford Club members, however. Chief Investment Strategist Alexander Green has been pounding the table on the Tokyo market for months now.

In a research note to members in February, Alex wrote:

“Japanese consumers and investors are flush with cash. They have largely ignored domestic stocks after decades of sub-par returns. But eventually that money will find its way out of mattresses and back into Japanese equities. When it does, the Tokyo market will lift off.

“This is doubly true when institutional money managers return to this country in a serious way. For years, global fund managers have outperformed the world benchmark simply by underweighting Japan. But let the Shinkansen leave the station without them and they will dash after it. Institutional money could hit the Japanese market like its coming out of a fire hose. When it does, you want to own what they’re buying. In short, Japanese equities are overdue for a significant rally.”

Oxford Club members know he backed up this forecast with two ETF recommendations, iShares MSCI Japan Index (NYSE: EWJ) and WisdomTree Japan Small Cap Fund (NYSE: DFJ). And then followed with a recommendation of Toyota (NYSE: TM) to Oxford Club members and to Investment U Plus subscribers in February. Both funds have pushed higher in recent weeks and Toyota has tacked on almost 20 points in less than two months.

Alex remains resolutely bullish. I recently caught up with him at the beautiful Grand Del Mar in San Diego for the 14^th Annual Investment U Conference. He had this to say about the “unexpected rally in Japan” that he’s been calling for:

“This bull market in Japan is likely still in its infancy. The Bank of Japan has joined the Federal Reserve, the Bank of England and the European Central Bank in upping the level of quantitative easing. That will drive the yen lower and improve the sales and profit margins of big Japanese exporters like Toyota.

“Japanese stocks are still among the world’s cheapest. The Japanese market’s price/book ratio – the value of a company’s stock price relative to its assets – is currently 1.3. By comparison, the price/book ratio of the S&P 500 is 2.2. There is still plenty of upside here.”

Smart investors scour the globe for high-quality assets selling well below their intrinsic value. If you’re one of them, you owe it to yourself to heed this advice – add some exposure to the Japanese market today.

If history is any guide, you’ll be glad you did.

Good Investing,

Justin Dove

Article by Investment U

By TraderVox.com

Tradervox.com (Dublin) – Euro traded in a tight range of 30 pips for most part of the Asian session. But after the BoE minutes, the pair has given up the gains of the day and has come close to opening price of the day. The single currency is trading around 1.3240 almost flat for the day. The resistance may be seen at 1.3260 and above at 1.3300 levels. The support may be seen at 1.3200 and below at 1.3160 levels.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox

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.

Frontline (NYSE:FRO) shares fell 7.3% on Tuesday.The company was downgraded from market perform to underperform by Wells Fargo (NYSE:WFC).Frontline is currently above its 50-day moving average (MA) of $5.17 and above its 200-day of $7.09.

By TraderVox.com

Tradervox.com (Dublin) – The sterling pound has dropped against the euro for the third day before BOE minutes were released at 9.30 GMT today. This came before the Chancellor of the Exchequer releases his budget report which is expected to increase the annual gilt sales to the second highest on record. However, the main event is the release of the Bank of England March meeting minutes during the European trading. Most analysts were expecting this to offer some support for the sterling pound pushing it higher against the euro and the yen.

However, this has not been the case since the release of the minutes. Sterling pound declined against major currencies but have increased narrowly against the yen. It dropped from considerably right after the release of the minutes against the dollar touching a low of $1.5848 at 9:37 GMT from $1.5920. GBPEUR pair dropped by 0.24 percent to 1.1967 after opening at 1.1995 but increased against the yen when GBPJPY pair rose by 0.28 percent to exchange at 133.15 from 132.77.

The minutes showed that two of the policy makers wanted to raise the target for quantitative easing program by 25 billion pounds, which would make a total of 350 billion pounds. However, the target was kept at 325 billion pounds after other seven members voted to keep the status quo. The members of the Monetary Policy Committee were, however, unanimous in keeping the interest rate at 0.5 percent.

Report from the Office of National Statistics has further showed that the budget deficit for UK increased in February due a decrease in taxes as spending surged. The net borrowing for this February was the highest on record. The minutes from Bank of England March 7-8 meeting show that Adam Posen and David Miles wanted the bond purchases target to be raised to stimulate the economy. This is seen as the major reason why the sterling pound has reduced against the euro and dollar.

Disclaimer
Tradervox.com is not giving advice nor is qualified or licensed to provide financial advice. You must seek guidance from your personal advisors before acting on this information. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. Opinions expressed at Tradervox.com are those of the individual authors and do not necessarily represent the opinion of Tradervox.com or its management. 

Article provided by TraderVox.com
Tradervox.com is a Forex News Portal that provides real-time news and analysis relating to the Currency Markets.
News and analysis are produced throughout the day by our in-house staff.
Follow us on twitter: www.twitter.com/tradervox