Month: March 2012

London Gold Market Report
from Ben Traynor
BullionVault
Thursday 8 March 2012, 08:45 EST

SPOT MARKET prices to buy gold were hovering around $1700 per ounce Thursday lunchtime in London, following the latest interest rate announcements from the European Central Bank and the Bank of England.

Silver prices meantime were hovering around the $34 an ounce mark Thursday lunchtime.

Earlier in the day, gold, silver, the Euro, stocks and commodities all rallied in early European trading, as reports suggested that enough Greek bondholders should agree to the bond swap by this evening’s deadline. The bond swap would see private sector creditors take losses estimated at some 70%.

“[A bond swap failure] could trigger a default, resulting in contagion and a crippling credit squeeze,” warned Swiss precious metals refiner MKS on Wednesday.

“When equities drop,” adds one trader, speaking to newswire Reuters, “the pool of available funds for investing in commodities will shrink and gold will be in a bad position…gold is a very risky asset… when gold becomes volatile, it becomes much more volatile than currency or bond markets.”

The ECB’s Governing Council decided to keep its main policy interest rate at 1% Thursday.

“With energy prices rising, inflation is likely to stay above the 2% target throughout 2012,” said ECB president Mario Draghi at today’s press conference.

“That’s tying their hands on rates for now,” reckons said Klaus Baader, London-based chief Euro-area economist at Societe Generale, speaking before the decision.

Here in the UK, the Bank of England’s Monetary Policy Committee today also voted to leave interest rates on hold, keeping them at 0.5%, where they have been since March 2009. The MPC left the size of its quantitative easing asset purchase program at £325 billion, after extending it by £50 billion at last month’s meeting.

“Businesses running final salary pensions are being clouted by QE,” says Joanne Segars, chief executive of the UK’s National Association of Pension Funds.

“Deficits that were already big now look even bigger because of its artificial distortions.”

NAPF estimates that lower yields on government bonds have added £90 billion to Britain’s pensions shortfall. BullionVault meantime calculates that the average British wage earner has seen the purchasing power of their income eroded by the equivalent of £1410 since QE began in March 2009.

The US Federal Reserve meantime may now have too low a policy rate according to a long-standing monetary policy indicator, the latest commodities note from Standard Bank says.

The Taylor Rule, which signals where the Fed funds rate should be given prevailing inflation and unemployment, is indicating the current policy rate is too low notes commodities strategist Walter de Wet.

“Whether this is a bearish signal for precious metals in general and gold specifically depends on how the Fed reacts relative to what the Taylor Rule suggests,” says De Wet.

“Should the Fed start raising rates, it could mean a rise in real interest rates, which would be negative for investment demand. However, should the Fed keep rates lower than what the Taylor Rule would suggest, we believe that the bullish case for gold especially remains intact.”

The latest US Nonfarm payroll data, showing the number of private sector non-agricultural jobs added last month, are due to be released tomorrow.

German industrial productivity meantime rose more than expected last month, climbing 1.6% from December, official figures published Thursday show.

German politicians meantime are to review the Bundesbank’s management the country’s gold bullion reserves, much of which are vaulted abroad, following criticism of the central bank’s inventory controls by the Federal Audit Office, German tabloid Bild reported Wednesday.

Switzerland’s central bank announced a 2011 profit of SFr 5.4 billion on its gold bullion holdings Friday. The Swiss National Bank’s total profit for the year was SFr13.5 billion, following a SFr19.2 billion loss in 2010.

Last September, following a period of Swiss Franc appreciation, the SNB announced it would peg its currency to the Euro at a rate of no lower than SFr1.20. Then SNB chairman Philipp Hildebrand stepped down in January after it emerged that his wife made a profit on a currency trade initiated before the peg announcement.

Israel has asked the US to supply it with so-called bunker-busting bombs and refueling planes, which “could improve its ability to attack Iran’s underground nuclear sites”, Reuters reports.

The size of the net long position of oil futures traders – which measures the difference between bullish and bearish contracts – “implies that we’ve already priced in a nine-month outage from Iran,” reckons Citigroup oil analyst Tim Evans.

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.

Southwest Airlines (NYSE:LUV) announced that its February that traffic rose 3.9 year-over-year after two straight months of declines.The airline’s capacity increased 6.2% while number of trips were up 4.5%.On Tuesday, shares of Southwest closed at $8.60.Southwest Airlines (NYSE:LUV) has potential upside of 41.5% based on a current price of $8.6 and an average consensus analyst price target of $12.17.Southwest Airlines is currently below its 50-day moving average (MA) of $9.10 and below its 200-day MA of $9.21.In the last five trading sessions, the 50-day MA has climbed 0.26% while the 200-day MA has slid 0.57%.

By TraderVox.com

Tradervox.com (Dublin) – The EUR/USD is currently trading in strong bullish markets. The currency seems to be well bid supported by strong volatility and volumes. Technically the currency is likely to continue its upward momentum and may well close the trading session around the 1.327 levels.

However on the fundamental side we have a few risk events up ahead. At 12:45 GMT there is the ECB rate decision. The central bank is likely to keep rates on hold and may well keep away from citing any market mover talks as the ECB awaits the effect of the last weeks LTRO. The LTRO funding last week was one of the largest with the ECB handing out €529 billion of liquidity. The liquidity injection saw almost 800 Euro zone banks tapping into the LTRO to meet their funding needs.

This was not anticipated and raised concerns over the funding ability of the Euro zone banks and raised brows over the financial stability of the entire Euro zone. This resulted in a sharp sell-off in Euro and other risk correlated assets. The dollar benefited from this risk averse money flow and rose to 3 weeks highs.

After this sell off the Euro was lingering around 1.319 levels in the early trades of the week. However the currency seems to have found the boost today and is seen surging into bullish zone. This boost seems to be coming from the second and most important risk event of the day-the Greek PSI Talks. The Greek Government needs considerable participation in the PSI talks to initiate the bond swap deal. This bond swap deal is necessary and crucial for the Greece if it wants to avoid a disorderly default and also to enable it to get the next tranche of money from the European Union.

Rumors are spreading around that many PSI investors are positive regarding the bond swap and the country may be able to pass the bond swap, the details of which will be available tomorrow.

This optimism regarding the Greek PSI talks is fuelling risk sentiments driving the pound, euro and the commodities into strong bullish territory.

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 TraderVox.com
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By TraderVox.com

Euro is rising against the US dollar today on the renewed hopes of PSI deal involving Greece. The positive industrial production data from Germany also boosted the sentiment and propped the single currency above 1.3200 levels. It is currently trading around 1.3240, up about 0.70% for the day. The resistance may be seen at 1.3260 and above at 1.3310 levels. The support may be seen at 1.3200 and below at 1.3160 levels. It is an important day as ECB is going to announce the interest rates. It remains to be unchanged at 1%.

Article provided 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

Source: ForexYard

Following a slow trading day yesterday, traders can look forward to significant volatility today, as significant euro-zone news is scheduled to be released. A press conference from the European Central Bank, scheduled for 13:30 GMT, is expected to shed some light on the current state of the euro-zone economic recovery. Additionally, Greece’s deadline for completing a debt swap is tonight at 20:00 GMT. Unless positive developments are seen with regards to the Greek situation, the euro could extend its losses going into Friday.

Economic News

USD – ADP Non-Farm Figure Boosts USD

The US dollar saw gains against the Japanese yen yesterday, following the release of a better than expected ADP Non-Farm Employment Change report. The ADP figure, which is considered a valid predictor of Friday’s Non-Farm Employment Change, came in at 216K, well above the expected level of 204K. Following the news, the USD/JPY shot up some 20 pips, reaching as high as 80.95, before staging a slight downward correction. Against the euro, the dollar was able to largely maintain earlier gains. The EUR/USD spent much of the day trading around the 1.3105 level.

Today, market sentiment will likely be determined by euro-zone news. Specifically, a press conference from the European Central Bank is expected to give a good indication of the current state of the euro-zone economic recovery. Any positive developments could result in the USD turning bearish against the euro. In addition, the weekly US Unemployment Claims is expected to show further gains for the US employment sector ahead of Friday’s all-important Non-Farm Payrolls figure. If true, the dollar may be able to extend its gains against the yen.

EUR – ECB Press Conference Set to Impact EUR

The euro was relatively subdued throughout yesterday’s trading session, as investors eagerly await any news regarding a Greek debt swap. Greece needs to complete a debt swap with its private investors before it is able to receive a badly needed bailout package. After hitting a three-week low vs. the USD, the euro bounced back slightly during the morning session, reaching as high as 1.3163. That trend did not last however, and by the end of the European session the EUR/USD was once again trading below 1.3100.

Turning to today, in addition to any news regarding the Greek debt swap, traders will also want to pay attention to a press conference from the European Central Bank (ECB), scheduled for 13:30 GMT. The press conference will likely be a good indicator of the overall health of the euro-zone economies. With concerns now growing that the Spanish economy is facing a possible crisis, the press conference may result in further euro losses ahead of the Greece’s debt swap deadline later tonight.

AUD – Aussie Reverses Gains against USD

The Australian dollar moved up against its US counterpart throughout the morning session yesterday, reaching as high as 1.0582, before turning bearish once again. The aussie’s gains were limited by a worse than expected Australian GDP figure, as well as investor concerns regarding the upcoming Greek debt swap. Fears that Greece will fail to complete the debt swap, have resulted in investors moving their funds away from riskier assets, like the AUD.

Turning to today, traders will want to pay attention to the ECB Press Conference, scheduled to take place at 13:30 GMT. Any negative statements regarding the euro-zone economic recovery, could lead to an increase in risk aversion. The AUD may drop further as a result. Additionally, any negative news regarding the Greek debt swap could weigh down on the aussie.

Crude Oil – Crude Oil Drops amid Euro-Zone Growth Fears

After reaching as high as $105.57 a barrel during mid-day trading yesterday, crude oil once again began to fall after fears regarding the upcoming Greek debt swap sent investors to safe-haven assets. The Greek news has raised doubts about the overall pace of the global economic recovery, despite positive growth out of the US. As a result, the commodity was trading around the $104.60 level by the end of the European session.

Turning to today, traders will want to continue focusing on European news. Specifically, the ECB Press Conference will likely be a good indicator or risk appetite in the marketplace. Should the press conference result in increased pessimism in the euro-zone economic recovery, the price of oil could fall further ahead of the all-important US Non-Farm Payrolls figure on Friday.

Technical News

EUR/USD

The Williams Percent Range on the daily chart has drifted into oversold territory, indicating that upward movement could occur in the near future. The Slow Stochastic on the same chart appears to be close to forming a bullish cross. Traders will want to keep an eye on this indicator. If the cross forms, it could be a sign of an impending upward correction.

GBP/USD

Most long-term technical indicators place this pair in neutral territory, meaning that no definitive trend is apparent at the moment. Traders may want to take a wait and see approach, as a clearer picture may present itself later on.

USD/JPY

Following the bearish trend the pair has seen in recent days, technical indicators are now showing this pair in neutral territory. The Williams Percent Range on the daily chart is at -50, while the Relative Strength Index is right around the 60 level. Taking a wait and see approach may be the wise choice.

USD/CHF

The daily chart’s Williams Percent Range is currently in overbought territory, indicating that a downward correction may occur in the near future. A bearish cross on the 8-hour chart’s Slow Stochastic supports this theory. Going short may be a wise choice for this pair.

The Wild Card

CHF/JPY

A bullish cross on the daily chart’s Slow Stochastic indicates that this pair could see upward movement in the near future. This theory is supported by the Relative Strength Index on the 8-hour chart, which has dropped into oversold territory. Forex traders may want to go long ahead of a possible upward correction.

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.

By The Sizemore Letter

Last week, I announced to the world what a momentously bad investment I had just made (see “I just made a horrible investment”).

Yes, dear reader, I was dragged kicking and screaming against my will into homeownership by my wife and two-year-old son.  My days of enjoying my Saturday mornings as an urban yuppy, drinking freshly-ground French press coffee and reading the weekend edition of the Financial Times on the patio of my Dallas Uptown highrise, are over.   Instead, they are spent at the local Home Depot (NYSE: $HD) buying rope and tools to hang a tree swing.

Men who pound away on financial calculators for a living have no business being within 100 yards of a Home Depot.  We don’t have the foggiest clue what we’re doing, and we end up spending small fortunes on tools we don’t need and have no idea how to use. And after buying it all, we generally abandon the project halfway through and end up paying a professional to redo it all.

I bring all of this up for an important reason.  The housing market has a disproportionately large impact on the health of the economy.  In addition to the obvious construction and mortgage finance industries that directly benefit from the construction and sale of homes, virtually every other industry benefits as well from an overall higher level of consumption.  When you own your dwelling, you tend to spend a lot more money on the things that go in it.  This would include furniture, appliances, electronics, decorations and artwork, and—yes—even tree swings.  Many of these purchases (though probably not the tree swings) are purchased on credit.  Thus housing and credit booms go hand in hand.

Of course, this also works in reverse. The U.S. economy has been in the dumps since the bursting of the housing bubble, with consumer spending and retail sales growth tepid at best.

All of this is about to change, and the catalyst will not be another stimulus bill or quantitative easing.  It will be demographics.

As a “thirty something” member of Generation X, I’m actually a little late to the homeownership party.  Knowing full and well what a terrible “investment” a personal residence is, I put it off as long as I could until family considerations made further delay all but impossible.  My generation is small relative to the one that came before it—the Baby Boomers—and the one that came after it—the Echo Boomers.  And our impact (or lack thereof) on the housing market has already been made.

It is the Echo Boomers that should have property developers salivating.  These children of the Baby Boomers, born in the 1980s and 1990s, form a generation even larger than that of their parents.  And they are quickly entering their peak marriage and family formation years.

The settling down of the largest generation to date will create unprecedented demand for starter homes and rentals.  Meanwhile, new supply has all but disappeared in the wake of the bust.  New home construction hit its lowest levels on record last year…breaking the record lows of the year before and the year before.

It may seem absurd to talk about given the foreclosure backlog that still plagues the market, but in a few short years we may actually have a housing shortage, at least in the cities attracting these new families.

It’s too early for me to recommend that readers buy homebuilders based on these fundamentals, and in any event homebuilder stocks have already had a phenomenal run.  The SPDR S&P Homebuilder ETF (NYSE: $XHB) has nearly doubled in less than six months, and homebuilders tend to be wildly volatile.

Figure 1: SPDR S&P Homebuilders

The best course of action would be to build a portfolio of entry-level rental properties.  While your principle residence is a terrible investment (it’s a major drain on cash flow), rental properties are an entirely different story.  If bought correctly and at reasonable prices, they generate a positive cash flow every month that is tax advantaged.  Depreciation and other charges ensure that much (if not all) of your cash income is tax free.  And real estate is a more reliable hedge against inflation than precious metals like gold or silver.

No less an authority than Warren Buffett would appear to agree.  The Economist recently quoted the Sage of Omaha as saying that he would buy “a couple hundred thousand” homes if it were practical for him to do so (see “Holding Back the Spring”).

Investors without the patience or the bankroll to buy a portfolio of rental properties can settle for apartment REITS or for the stocks of companies that cater to a recovering housing markets such as Home Depot or rival Lowe’s (NYSE: $LOW).

Oh, and about that tree swing.  It took me four hours of cursing and swearing, but I finally got it hung properly.  My two year old son loves it.

This article first appeared on MarketWatch.

Source: ForexYard

Following Asian trading last evening the Japanese yen experienced a slight drop from its recent period of stabilization. At the moment, the yen is trading up against the dollar at a rate of 81.42, which marks a significant decline for the yen since yesterday morning. The euro also made gains during late trading yesterday and is currently sitting around 107.59. Analysts explain that following a bit of news from Japan yesterday evening, the yen took a dive and diverted from its recent rebound. Figures released from Japan indicate the country’s first current account deficit in three years. Heading into to afternoon trading today, analysts are predicting the possibility that yesterday’s decline for the yen was a quick and short drop and could return to its rebound that began this week.

Read more forex news on our forex blog.

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.

The Banco Central Do Brasil slashed the Selic interest rate by a greater than expected 75 basis points to 9.75% from 10.50% previously.  In its statement, Brazil’s Central Bank Monetary Policy Committee (Copom) said [translated]: “Continuing the process of adjusting monetary conditions, the Committee decided to reduce the Selic rate to 9.75% pa, without bias, by five votes to two votes for the reduction of the Selic rate by 0.5 pp.”

 Brazil’s central bank previously cut the rate by 50 basis points in January, November, October and September, after raising the Selic rate by 25 basis points to 12.50% at the June Copom meeting last year, which at the time amounted to total tightening for the year of 175 basis points.  Brazil reported an annual inflation rate of 6.5% in December, compared to 7.31% in September, 7.23% in August, 6.87% in July, 6.71% in June, and 6.55% in May, and just outside the official inflation target of 4.50% +/-2% (2.5-6.5%).  

The Reserve Bank of New Zealand maintained the Official Cash Rate (OCR) steady at 2.50%, noting the impact of global developments.  The Bank Said: “While helping contain inflation, the high value of the New Zealand dollar is detrimental to the tradable sector, undermines GDP growth and inhibits rebalancing in the New Zealand economy. Sustained strength in the New Zealand dollar would reduce the need for future increases in the OCR. Given the medium-term outlook for inflation, it remains prudent to hold the OCR at 2.5 percent.”

Previously the Bank also held the OCR unchanged at 2.50%, while the Bank cut the rate by 50 basis points in March this year, following the Canterbury earthquake.  New Zealand reported consumer price inflation of 1.8% in Q4 2011, down from 4.6% in Q3, compared to 5.3% in Q2, 4.5% in Q1, and 4.0% in Q4 of 2010, and within the official inflation target of 1-3%.