Month: March 2012

London Gold Market Report
from Adrian Ash
BullionVault
Thurs 1 March, 08:20 EST

PRECIOUS METALS rallied in Asian and early London trade Thursday morning, with gold futures at one point recovering more than a third of yesterday’s sharp $100-per-ounce decline as global stock markets also rose.

Broad commodity markets rose, but the single Euro currency slipped to fresh 1-week lows as European banks received the €529 billion in 3-year loans they requested from the European Central Bank’s LTRO program yesterday.

“[A] credit event has not occurred with respect to [last week’s] Hellenic Republic restructuring” announced adjudicators at the International Swaps & Derivatives Association (ISDA) this morning, despite private-sector holders of Greek government debt losing some 70% of their investment.

Wednesday’s sharp plunge in physical bullion and gold futures prices “makes it quite clear that the previous rise…had been driven mainly by speculation,” reckons today’s note from Commerzbank’s commodities team.

Silver bullion briefly rose back above $35 per ounce today – a three-decade record when breached in March last year, but still 6% below Wednesday’s early jump to 5-month highs.

Traders and analysts variously point today to Fed chairman Ben Bernanke’s semi-annual testimony on Capitol Hill, profit-taking or month-end book squaring by investors, a large sell order in Comex gold futures – put at 31 tonnes or perhaps 93 tonnes – or alternatively a “fat finger” typo by a US trader, a rumor swiftly denied by the CME exchange on Wednesday.

All told, the number of outstanding contracts in Comex gold futures declined by the equivalent of 35 tonnes yesterday.

New York’s $70bn GLD gold trust meanwhile added new metal, extending February’s 13-tonne increase by a further nine to record its biggest 1-month addition since November and growing above 1293 in total, a level first seen just before their historic peak of June 2010.

“We think a large part of why gold conceded so much came down to three other factors,” says UBS strategist Edel Tully.

“$1800 was proving to be too much of a hurdle and a certain staleness had entered the market; [gold futures] positioning had increased very swiftly in recent weeks; and physical demand has been non-existent of late.”

In the United States, gold bullion coin sales to authorized dealers slowed sharply in February said the US Mint Wednesday, dropping 83% from January and falling by nearly three-quarters from Feb. 2011.

Totalling 21,000 ounces, last month’s sales of Gold Eagle coins were the lowest sine June 2008.

Gold imports to Turkey – the world’s biggest producer of gold coins – meantime ticked down to 2 tonnes from 3 tonnes in Jan., the Istanbul Gold Exchange said today.

In Asia this morning, “It’s been a long time since we saw such decent buying,” one Hong Kong-based dealer told Reuters, with “decent buying” reported by other traders on the dip below $1700 per ounce.

Indian retailers also saw stronger sales today according to newswire stories.

“We’ve seen physical flows coming off steadily since the beginning of February,” agrees Walter de Wet at Standard Bank in London. “The physical demand is just not there…and you really need that on top of the financial demand to push gold much higher.

“We had a sense that the [gold futures] market was increasingly pricing in QE3, and obviously Bernanke has put a dampener on that.”

Calling a recovery in US data “frustratingly slow” at the start of February, US Federal Reserve chairman Ben Bernanke yesterday said it was “uneven and modest by historical standards.”

“Bernanke’s comments seem to have eliminated hopes of US quantitative easing coming anytime soon,” believes William O’Neill at Logic Advisors in New Jersey, speaking to Bloomberg last night.

By not promising a fresh dose of Treasury-bond purchases, “It almost seemed as if Bernanke was trying to take the steam out of the commodity market.”

Repeating his promise of near-zero interest rates until 2014, Bernanke was accused by Republican Congressman and presidential hopeful Ron Paul of “stealing wealth” at yesterday’s hearing. Paul added that “nobody believes” official US inflation data.

Adrian Ash
BullionVault

Gold price chart, no delay   |   Buy gold online at live prices

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2012

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.

By TraderVox.com

Tradervox.com (Dublin) – The Australian dollar gained against major peers today as China manufacturing industry showed some signs of improvement. The New Zealand dollar, which is the other south pacific currency that has showed increment against major peers, was also boosted by the China’s manufacturing improvement. The two currencies gained against the dollar after a report from Manufacturing Purchasing and managers’ index showed an expansion in February for the third month in a row.

The demand for the Australian dollar declined a bit, after the nation’s building approvals climbed less than it had been forecasted in January. The gains were further tampered by the falling of business investment for the fourth quarter. The New Zealand dollar’s growth was limited by the dropping of the country’s terms of trade index.  This also resulted to a decline in the Asian stock.

According to Sue Trinh who is a senior Foreign Exchange Strategist at Royal Bank of Canada in Hong Kong, the firmness of the two currencies shows some stabilization of numbers lends support to sentiments that China will have a soft economic recovery over the short term.

Australian dollar gained 0.2 percent against the dollar to settle at $1.0757. Against the yen, the Aussie was little changed at 87.09 yen per AUD. It had earlier advanced against the yen by 0.4 percent. The New Zealand dollar was exchanging at 83.57 U.S cents against the dollar which is 0.2 percent increment. Against the yen, the New Zealand dollar dropped from 67.69 yen to settle at 67.69 yen.

The economic status in the south pacific nation also led to the increase of the Australian 10-year bonds by 0.1 percent to reach 4.07 percent. On the other hand, the New Zealand two-year rate increased by two basis points to reach 3.095 percent.

All these changes in rates were seen after the Purchasing Managers Index increased to 51.0 last month up from 50.5 in January. This statement was released today in China by the nation’s Statistics Bureau and Logistic Federation. The forecast that was given by many economists was an increase to 50.9 which closely relates to the 51.0 recorded.

Disclaimer
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Source: ForexYard

Following a hectic trading day yesterday, which eventually saw the euro tumble against its main currency rivals, traders can once again expect market volatility today. Significant news out of the US, including a speech from the Fed Chairman and the weekly Unemployment Claims figure are both expected to show growth in the US economy. If true, the USD may be able to extend its recent bullish trend as we begin to close out the week.

Economic News

USD – Positive US Indicators Boost Greenback

A better than expected Prelim GDP figure led to major gains for the dollar during the evening session yesterday. The news brought the EUR/USD to the 1.3400 level, while the USD/JPY shot up to 80.70. Additionally, positive comments from Fed Chairman Bernanke regarding the pace of the US economic recovery helped boost investor confidence and led to USD gains. At the same time, in a sign that the US economy is still in a fragile position, Bernanke has maintained his pledge to keep interest rates at their current levels through 2014.

Turning to today, traders will want to pay attention to another batch of US news that is forecasted to generate significant volatility. The weekly Unemployment Claims has the potential to lead to further dollar gains if the figure shows additional improvements in the US labor sector. Additionally, the ISM Manufacturing PMI, scheduled to be released at 15:00, is expected to show gains over last month. If true, the dollar could extend its bullish trend.

EUR – Euro Dips Following ECB Refinancing

The EUR fell against many of its main currency rivals yesterday, following the European Central Bank’s latest refinancing operation which injected 530 billion euro’s in low cost loans to euro-zone banks. While the move did generate some risk-taking, the common-currency failed to make any gains, as investors remain worried about the euro-zone debt crisis. The EUR/USD dropped to the 1.3400 level during the European session, before staging a mild upward correction. Against the Japanese yen, the euro fell close to 90 pips, hitting 107.85 before staging a reversal.

As we begin to close out the week, analysts are warning that while the ECB’s recent actions may boost euro-zone economies in the short term, the potential for further issues related to the debt crisis still exist. Countries in the region with weaker economies, such as Portugal and Spain, still risk credit downgrades or even default.

Turning to today, euro traders will want to pay attention to a batch of US data that has the potential to inject additional volatility into the marketplace. The weekly Unemployment Claims figure, along with a speech from the Fed Chairman and the ISM Manufacturing PMI are all forecasted to generate significant market activity. Should any of the news boost confidence in the US economic recovery, the euro may take further losses against the greenback.

AUD – Risk Taking Leads to Aussie Gains

The Australian dollar saw gains across the board yesterday, following euro-zone news that generated risk taking in the marketplace. The AUD/USD shot up to 1.0854, a 7-month high, while the EUR/AUD dropped as low as 1.2386 before staging a mild upward correction during the afternoon session. Against the safe-haven JPY, the aussie continued its upward momentum yesterday, reaching as high as 87.34.

Turning to today, traders will want to pay attention to a batch of US news, as it is likely to dictate the level of risk appetite in the marketplace. Traders will want to pay particular attention to the US Unemployment Claims figure. The employment situation in the US has improved steadily in recent weeks. Any additional drop in the number of people who filed for unemployment insurance last week could lead to additional risk taking in the market, which could benefit the AUD.

Crude Oil – Crude Oil Maintains Bearish Movement

Despite the gains crude oil saw yesterday following positive euro-zone news, the commodity turned bearish once again during the afternoon session. Signs of decreased demand in the US, along with fears that the high price of oil has negatively impacted the global economy, have caused the price of crude to drop for several days.

Turning to today, traders will want to monitor US news for clues as to the level of risk appetite in the marketplace. Positive news could lead to additional risk taking and boost the price of oil. Additionally, any escalation in the ongoing conflict over Iran’s nuclear program could lead to a spike in prices.

Technical News

EUR/USD

The daily chart’s Slow Stochastic has formed a bearish cross, indicating that downward movement could occur in the near future. This theory is supported by the Williams Percent Range on the same chart, which has moved into overbought territory. Going short may be the wise choice.

GBP/USD

The Williams Percent Rang on the daily chart is currently at -10 and angling downward, indicating that bearish movement could occur in the near future. The Slow Stochastic on the same chart appears to be forming a bearish cross. Traders will want to keep an eye on this indicator. If a cross forms, downward movement may occur.

USD/JPY

Most long term technical indicators are showing this pair trading in neutral territory, meaning that no significant movements are forecasted at this time. Traders will want to keep an eye on the weekly chart’s Relative Strength Index, as it is currently close to the overbought zone. If it crosses into overbought territory, it may be a sign of impending downward movement.

USD/CHF

The weekly chart’s Slow Stochastic has formed a bullish cross, indicating that upward movement could occur in the coming days. Furthermore, the Relative Strength Index on the daily chart has crossed into oversold territory. Going long may be a wise choice for this pair.

The Wild Card

Platinum

The daily chart’s Relative Strength Index has crossed into overbought territory, indicating that downward movement could occur in the near future. The 8-hour chart’s Williams Percent Range is currently at -20, further supporting the theory that a bearish correction could occur. Forex traders may want to go short in their positions today.

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.

Source: ForexYard

As of this morning the EUR/USD is hovering around 1.3333. The USD made gains of 147 pips during the night before the euro was able to recoup some of its losses. Heading into today, traders will want to keep an eye on U.S. manufacturing numbers and unemployment claims that are set to be released. These numbers will be another strong indicator of overall financial health for the U.S. economy. Should these announcements further indicate growth in the U.S. economy, there is a possibility that the USD could see further gains.

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.

By The Sizemore Letter

All around the world, same song.   And by “song,” I of course mean “economic motivators.”  It seems that every country in the world faces the same problems (yawning budget deficits) and is looking to the same solutions (raising revenues through unconventional means).

As a case in point, consider this recent headline from the Wall Street Journal:  “Japan Is Pressured to Legalize Gambling”

Tired of seeing their citizens leave their yen on the gaming tables of foreign casinos, the Japanese government is strongly considering making a bet of its own by legalizing gambling.   Any moral qualms aside, it makes sense.  Japan is the most highly-indebted developed country in the world, and its budget deficits routinely top 8% of GDP.  Closing the gap through tax hikes or spending cuts risks weakening an economy that is perpetually on the cusp of recession; better to raise revenues by less conventional means.

It’s not uncommon for countries to legalize certain vices during hard economic times.  America’s Prohibition of alcohol lasted throughout the Roaring 20s, but it barely survived three years into the Great Depression.   With the U.S. government running budget deficits among the highest in the world and with anti-government sentiment bubbling over from both the left and right, it’s fair to wonder whether legalization of “soft” drugs like marijuana may be in the cards before we finally pull out of the current Great Recession.

The economics are straightforward enough; prohibition and enforcement of vice laws are a governmental expense, whereas legalization and taxation of vices are a source of revenue.    (For the history buffs out there, it is no coincidence that the Progressive movement favored both the Federal income tax and the prohibition of alcohol; the income tax was a necessary evil to plug the holes left from vice taxes that would never be collected again.  Once the income tax was in place, booze taxes became expendable.)

Japan’s change of heart regarding gambling is little different from those of many American states, particularly in the South.  Watching the gambling and tourism windfalls going to Las Vegas and Atlantic City, riverboat and offshore casinos became a way to keep some of those touristic dollars from leaving the state.  Likewise, Japan has seen its citizens fly to Las Vegas for decades and to Singapore and Macau in more recent years.

Let’s take a look at some of the companies likely to benefit from legalization in Japan.

The Wall Street Journal mentions Las Vegas Sands (NYSE: $LVS) and Wynn Resorts (Nasdaq: $WYNN), both obvious winners as two of the largest casino operators in the world.

Another route might be to buy what the casinos themselves are buying.  Consider International Game Technology C (NYSE: $IGT), a major manufacturer of gaming equipment and supplies, or Bally Technologies Inc. Common (NYSE: $BYI), which designs the equipment and systems need to properly run a casino.  A surge in casino building in Japan should be quite good for business.

Should You Buy Casino Stocks?

A more fundamental question would be “should you consider casino stocks at all.”  The Sizemore Investment Letter has been bullish on vice investments for years (see vice investing), but we’ve chosen to focus on tobacco and alcohol stocks; casino stocks have been conspicuously absent.

There is a reason for this.  One of the biggest benefits of a good sin stock is the predictability of its revenues.  People are not likely to materially cut back their drinking and smoking during a recession.  They  might, however, decide to cut out that expensive trip to Las Vegas.  The gambling industry as represented by most casino stocks is cyclical and at the mercy of tourism and real estate trends.  And worse, as gambling establishments proliferate, another one of the casino’s traditional benefits as a vice investment is being watered down; the regulatory restraints that keep competitors at bay.  Add to that the propensity of many casino companies to be saddled with high debts, and you have a recipe for a volatile, risky investment.

If the global economy continues to recover, gaming stocks will likely have a phenomenal run.  But given the risky nature of the sector, more conservative investors might want to find their vices elsewhere.

Source: ForexYard

As the USD turned bullish during Asian trading, gold and silver dropped significantly as traders moved their investments away from riskier commodities. Gold has regained a bit of ground this morning after dropping close to 5% last evening. As of this morning, gold has picked up 1.5% and is so far stabilizing around $1722.35. Silver also took a sharp drop from 37.36 to 34.01 during late night trading. At the moment, it has steadied around 34.98.

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.

Costco (NASDAQ:COST) Q2 reported EPS of $0.90, better than analyst estimates of $0.87 per share. Revenues for the quarter rose 10% year-over-year to $22.96 billion, better than consensus estimates of $22.85 billion.Costco Wholesale is currently above its 50-day moving average (MA) of $83.09 and above its 200-day of $81.49.

Retailer Home Depot (NYSE:HD) and Martha Stewart Living (NYSE:MSO) announced they have extended their agreement to offer Martha Stewart brands at Home Depot stores through 2016 reported the Associated Press.The Martha Stewart line has been with the store since January of 2010.Home Depot is currently above its 50-day moving average (MA) of $44.19 and above its 200-day of $37.50.

The Bangko Sentral ng Pilipinas dropped its overnight borrowing rate another 25 basis points to 4.00% from 4.25%.  The Bank said: “The Monetary Board’s decision was based on its assessment that the inflation outlook remains within the target range, with well-anchored inflation expectations. Latest baseline forecasts have continued to indicate that inflation is likely to settle within the lower half of the 3-5 percent target range in 2012 and 2013. The risks to the inflation outlook also appear to be broadly balanced, with the subdued pace of global economic activity expected to temper the rise in commodity prices. Meanwhile, the upside risks to inflation stem mainly from volatility to oil prices due to geopolitical tensions in the Middle East and from the impact of strong capital inflows on domestic liquidity growth.”

The Philippine central bank also cut the interest rate by 25 basis points at its January meeting, and last raised its interest rate in May this year by 25 basis points to 4.50%, and increased reserve requirements by 100bps in July.  The Philippines reported annual consumer price inflation of 3.9% in January, down from 4.8% in November, 5.2% in October, 4.8% in September, compared to 4.7% in August, 4% in July, 4.7% in June, 4.5% in May and 4.3% in April.  Inflation is currently tracking just inside the Bank’s inflation target range of 3%-5%.