InvestMacro FX

By Fast Brokers

Gold is topping out after making an incredible bull move on Friday.  The precious metal seemed to have overextended itself by re-approaching the critical $1000/oz level rather quickly.  Gold is now turning back from our 2nd tier downtrend line as volume falls off, a sign that bulls have overextended themselves.  Gold continues to exert its strong positive correlation with crude and tends to serve as a leading indicator for U.S. equities.  Investors are using it as a hedge for inflation as they exit the U.S. Dollar.  Gold has made bull move after bull move on considerable volume during its present uptrend past $900/oz, making a retest of $1000/oz seem likely.  There are 3 obstacles in the uptrend’s path, with the final test being $1000/oz.  Our next two downtrend lines should prove to be power forces and act as consolidation zones.  The 3rd tier downtrend line is critical since it connects through February 20, or 2009 highs.  A strong, fundamental bull move through our 3rd tier on large volume could be an indication that $1000/+ may finally become a reality.  The S&P futures have inched above their own yearly highs. Considering the positive correlation between the two investment vehicles, the pieces are falling into place for Gold’s uptrend.  We maintain our bullish outlook trend wise for gold despite the upcoming challenges as the fundamentals and momentum remain in favor of the bulls.

Fundamentally we find resistances of $983.25/oz, $985.33/oz, $987.29/oz, $989.03/oz and $992.23/oz.  To the downside, we see supports of $980.56/oz, $978.11/oz, $975.81/oz, $972.59/oz, and $970.35/oz. Gold is currently trading at $981.05/oz.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The EUR/USD kept steamrolling through May 22 highs on increasing volume, and is distancing itself from the psychological 1.40 level on Monday.  It appears the action may not slow today with the 8:00 bar on the 4 hour registering a higher volume than the previous 5 sessions.  Additionally, our trend lines are reaching their much anticipated inflection point.  With the EUR/USD making a key fundamental move to the upside, it appears investors are choosing to go the way of the uptrend.  That being said, investors should keep a close eye on volume, because as soon as it tails off, the EUR/USD should reach a near-term peak.  We’re already witnessing a slight pullback after the run higher earlier this session.  If Friday wasn’t the peak in volume, then it seems today may be the top with the bulls running out of energy.

Regardless of any near-term peak, the EUR/USD remains in great shape.  The currency pair continues its bull run with all foreseeable medium-term downtrend line pressures fading into the distance.  Even though the EUR/USD’s uptrend has played out beautifully, the currency pair is approaching some near-term obstacles which could result in some consolidation.  These obstacles include 12/29 and 12/18 highs.  Therefore, the 1.43-1.47 area could prove to be a bit challenging in the near-term.  While a wide 10% range, 1.43-1.47 gives you an idea of where the EUR/USD might bounce around.  1.43 would naturally serve as the 1st consolidation point with investors awaiting the results of the ECB meeting on Thursday.  We won’t see too much data from the EU until then, giving all the more reason to anticipate an incoming period of consolidation.  If the EUR/USD can manage to pop above 1.4432 then the currency pair may ignore 1.43 consolidation and accelerate near-term gains.

Meanwhile, economic data around the globe continues to improve.  Investors are shrugging off the GM bankruptcy in what appears to be a buy on the news.  While investors are anticipating the ECB to keep its benchmark rate at 1%, the central bank pulled a trick card last meeting by announcing the purchase of covered bonds.  As a result, investors will be paying more attention to the ECB’s action and if inaction language concerning their alternative monetary policy actions.  The EUR/USD should continue to benefit as long as the global economy recovers and investors exit the dollar from fear of inflation in the U.S.  Therefore, it appears we are returning to pre-crisis norms of a weak dollar and pricey oil.

Looking over the EUR/GBP, this currency pair is threatening to making a very bearish move beneath December 08’ lows.  Therefore, we could continue to see relative weakness in the Euro as compared to the Pound, making the GBP/USD a stronger currency for the time being.  Despite our anticipation of upcoming consolidation EUR/USD, we maintain our bullish outlook trend wise due to the fundamental and technical moves made over the past few weeks.

Fundamentally, we find resistances of 1.4222, 1.4290, 1.4325, 1.4374, and 1.4432.  To the downside, we see supports of 1.4187, 1.4117, 1.4078, 1.4024, and 1.3987.  The 1.40 area serves as a psychological cushion with 1.45 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.4208.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The Cable exploded from our 2nd tier downtrend line and the psychological 1.60 level, darting to new annual highs on impressive volume.  In fact, the volume compares to the action we saw during the bottom of the selloff in mid-January.  Therefore, the GBP/USD is making a loud statement for its bull trend both fundamentally and technically.  Meanwhile, the EUR/GBP is threatening to make a key bearish technical move, exemplifying the relative strength of the Pound right now.  Britain’s PMI came in better than expected, continuing the theme of an overall uptrend in manufacturing and production.  Britain’s economic data has outpaced both the EU and the U.S. over the past month and a half, and the Cable has reacted accordingly.

Meanwhile, the S&P futures are breaking out to new yearly highs, adding fuel to the fire of the uptrend of both the Cable and the EUR/USD due to their positive correlation with U.S. equities.  However, as with the EUR/USD, we notice an upcoming zone of technical resistance which may result in some near-term consolidation.  For the Cable, the next obstacle becomes October 30 highs, making the psychological 1.65-1.66 zone a possible area of consolidation.  The GBP/USD has made quite a run as of late, and it wouldn’t be surprising to see some bulls cash in profits.

We’re going to see some more important economic data surface from Britain over the next few days leading up to Thursday’s interest rate decision.  With the EU pretty quiet until Thursday, we could see the GBP/USD exert higher comparative volatility for the time being.  Investors will watch for continued confirmation of a recovery in British economic data along with good news from the U.S. economy.  Despite our anticipation of approaching consolidation, we maintain our bullish outlook on the Cable trend wise due to the incredible progress made fundamentally over the past week.  The GBP/USD has left behind our key 2nd tier downtrend, meaning there is quite a bit of room to work with to the upside.

Fundamentally, we find resistances of 1.6388, 1.6462, 1.6522, 1.6587, and 1.6679.  To the downside, we see supports of 1.6343, 1.6307 1.6233, 1.6170, and 1.6073.  The GBP/USD is currently exchanging at 1.6386.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The USD/JPY is fighting back above our 2nd tier uptrend line again after U.S. Personal Spending came in slightly above analyst expectations.  U.S. equity markets are reacting positively, giving USD/JPY bulls an incentive to hold on.  Additionally, U.S. Treasuries are attempting to stabilize while Geithner reassured the Chinese that U.S. debt is still a safe investment.

Why is this important for the USD/JPY?  Well, investors have been selling the currency pair despite the uptrend in U.S. equities, showing a loss of confidence in the Dollar.  The USD/JPY is normally positively correlated with the S&P.  With the Carry Trade burnt, investors are moving the currency based on more comparative economic fundamentals.  The U.S. is making a concerted effort to restore faith in the Dollar, which is keeping the USD/JPY afloat above our 2nd tier uptrend line.  For if this trend line doesn’t hold, we could witness a sharp reversal towards our 1st tier uptrend line as the currency pair buckles under the pressure of its downtrend.

Action in the USD/JPY serves as an important gauge as far as the Dollar is concerned.  If the Yen continues to appreciate against the Dollar despite rising U.S. equities, this could be a sign of a loss of confidence in America’s ability to balance its budget in the future.  Therefore, it will be interesting to see if the USD/JPY can rise should U.S. equities continue their breakout to the upside.

On another note, Japan reported an encouraging improvement in Average Cash Earnings, another indicator that business is picking up.  Therefore, all signs continue to point towards a global economic recovery/stabilization.  China’s Manufacturing PMI is still showing expansion, which bodes well for Japanese exports due to the economic coupling of the two nations.

Despite the USD/JPY finding near-term support, we maintain our bearish outlook on the USD/JPY trend wise.  We haven’t seen any game-changing, fundamental moves to the upside to swing the momentum.  There are still 5 downtrend lines bearing down on price with the highly psychological 100 level hanging in the distance.  However, the USD/JPY may begin to wake from its sideways action as our trend lines collide.

Fundamentally, we find resistances of 95.82, 96.33, 96.90, 97.45, and 97.98.  To the downside, we see supports of 95.12, 94.43, 93.77, 93.11, and 92.65.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 95.72.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

Source: ForexYard

After depreciating consistently over the past few weeks, the USD is now traded over 1.41 against the EUR, and over 1.62 against the GBP. This week on Thursday, at 11.45 GMT, the ECB will deliver its periodical Interest Rates statement. Forecasts show that the number is expected to stay at 1%. Such a decision could create strong volatility for the leading currencies, as many have expected the ECB to force movement in the EUR. Forex traders should prepare for what is shaping up to be a fool of opportunities’ trading week.

Economic News

USD – Dollar Losses Strength at All Fronts

Last week, the Dollar continued its bearish trend against all the major currencies, and the EUR/USD saw a six month high, as the pair was traded at the 1.4150 level.

Last weeks publications from the U.S economy were characterized with contradicting indications. While some showed that the public has retained its faith in the U.S economy, others have shown that it is still early to say that the crisis is behind us. And it appears that until sharp evident will sign the end of the crisis, the Dollar’s bullishness could continue.

The main news from the U.S last week were the Consumer Confidence, which delivered a surprising positive result, providing the best figure in 8 months. However, the weekly Unemployment Claims remained above 600K for the 17 consecutive times. This number is simply overwhelming. In addition, the New Home Sales report, which is considered to be one of the most reliable indicators regarding the housing sector, showed a rather disappointing figure, as only 352K new single-family homes were sold during April.

As for the week ahead, a batch of data is expected from the U.S economy, and this could be a fantastic week for traders to enjoy the heavy volatility of the market in order to enlarge their profits. Special attention should be given to the Non-Farm Employment Change expected on Friday, as this indicator tends to have an immense impact on the leading currencies and on top of them the USD. Currently it seems that if the actual result will be similar to forecasts of 520K, a reverse of trends could take place by the weekend.

EUR – EUR Soars on Positive German Data

Last week, traders who went long on the EUR made some significant profits. The EUR saw rising trends against the USD, the GBP and the JPY, as its most impressive uptrend was against the Dollar.

The two main news events from the Euro-Zone last week came from the German economy. Germany holds the largest and strongest economy in the Euro-Zone, and thus the relevant publications from this economy usually have a hefty impact over the EUR.

On Monday, the German Business Climate report was published, and even though it failed to reach expectations, the result was still the best figure in 6 months, showing that businesses around Germany are starting to feel improvement in their current business conditions. Then on Thursday, the German Unemployment Change indicator showed that merely one thousand individuals have lost their jobs during April. This was the best figure in 6 months as well. The combination of the two surveys seems to be 1 of the main reasons that strengthened the EUR against the major currencies.

Looking ahead to this week, the most notable publication from the Euro-Zone will be the Minimum bid Rate, which is of course the European Interest Rates announcement. Currently, analysts suspect that the European Central Bank (ECB) will leave interest rates at 1.00%, however, in case that the ECB will decide to manipulate rates, this will sure have a high impact on the EUR.

JPY – Mixed Signals from the Japanese Economy

During last week’s trading session, the Yen saw mixed result against the leading currencies. Whilst the JPY depreciated against the EUR and the Pound, it saw rising trends against the USD.

The leading indicators which were published from the Japanese economy showed mixed signals that could explain the large volatility of the Yen. The Japanese Trade Balance, which measures the difference in value between imported and exported goods during April, delivered an unexpected negative figure, making it the ninth month in a raw on which Japan sees more importing activity than exporting. These figures are devastating for the Japanese economy, which is built on its export. On the other hand, The Preliminary Industrial Production showed an increase of 5.2% in April as opposed to March. This means that the Japanese consumers feel more secure in their economic condition, and this has the potential of pulling the country out of recession.

Ad for this week, traders should pay special attention to the Capital Spending report, scheduled for Wednesday. This report measures the change in the total value of new capital expenditures made by businesses, and is expected to show a 27.1 decrease in the last quarter. If the real result will be similar, a bearish trend for the JPY could take place.

Oil – Crude Oil Breaches the $67 line.

Crude Oil is traded near six month high as a barrel of Crude Oil is currently valued for over $65.

Crude Oil was boosted from the weak Dollar, as many other commodities such as Gold reacted in similar ways to the weakening USD. The one thing that these commodities have in common is that they are all valued in Dollars, and as such, when a dramatic change in the Dollar value itself takes place it usually has an immediate impact on commodities such as Crude Oil as well.

In addition, it seems that the summer is supporting oil’s prices as well. As the vacation season begins, more and more air flight companies which were under the risk of filing for bankruptcy, are reporting higher than expected profits, stimulating them to expand their business activity, and therefore dramatically elevate the demand for oil. For as long as demand rises, and the USD depreciated, the prices of Crude Oil could reach higher, maybe even $70 a barrel.

Looking ahead to this week, traders should follow the main news from the U.S economy, as the changes of the Dollar will surely continue to dominant oil’s fluctuations. And if the USD will expand its free fall, don’t be surprised if a barrel of oil will reach $70.

Technical News

EUR/USD

The bullish trend is loosing its steam and the pair seems to consolidate around the 1.4140 level. The daily chart’s RSI is already floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

GBP/USD

The price of this pair appears to be floating in the overbought territory on the daily chart’s RSI indicating a downward correction may be imminent. The downward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the downwards breach occurs, going short with tight stops appears to be preferable strategy.

USD/JPY

The daily chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, the 4-hour chart’s RSI is already floating in the oversold territory indicating that a bullish correction might take place in the nearest future. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

USD/CHF

The hourly chart is showing mixed signals with its Slow Stochastic fluctuating at the neutral territory. However, a bullish cross forming on the 4-hour chart’s Slow Stochastic implies that upwards correction might take place in the nearest time frame. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.

The Wild Card – Crude Oil

Crude Oil prices rose significantly in the last month and peaked at $67 per barrel. However, daily chart’s RSI is floating in an overbought territory suggesting that a recent upwards trend is loosing steam and a bearish correction is impending. This might be a good opportunity for forex traders to enter the trend at a very early stage.

Forex Market Analysis provided by Forex Yard.

© 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 GCI Fx Research

€

The euro strengthened sharply vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4165 level and was supported around the US$ 1.3925 level.  The common currency reached its highest level since 30 December as traders dumped U.S. dollars ahead of the U.S.-Sino summit in China.   There is growing concern the U.S. may lose its “AAA” credit rating even though Moody’s Investors Service maintained its credit rating this week.  The U.S. government now owes a record US$ 63.8 trillion.  Many data were released in the U.S. today.  The University of Michigan final May consumer sentiment indicator improved to 68.7, up from 65.1 at the end of April.  Also, first quarter gross domestic product contracted 5.7% while the real personal consumption expenditures index was up 1.5%.  The 5.7% contraction was better than the 6.3% decline in the fourth quarter.   Additionally, the May Chicago PMI fell to 34.9 from 40.1 in April.  In eurozone news, French unemployment worsened in April while the May flash eurozone inflation rate was 0.0% y/y, off 0.6% m/m.  EMU-16 April private sector loan growth eased to 2.4% from 3.2% in March while the annual M3 money supply growth rate was off to 4.9% in April from 5.0% in March.  European Central Bank member Draghi said the chances of eurozone deflation “now appear slight.”  Other data saw German April retail sales climb +0.5% m/m and fall 0.8% y/y.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.20 level and was capped around the ¥97.00 figure.  Many data were released in Japan overnight.  April construction orders were off 25.9% y/y to ¥562.8 billion while the trade deficit printed at ¥24.62 billion between 1 – 10 May.  Also, April industrial output was up 5.2% m/m and off 31.2% y/y.  Other data saw April core consumer price inflation off 0.1% y/y, consistent with expectations.  Bank of Japan’s Policy Board is expected to keep its monetary policy unchanged for the foreseeable future, especially after upgrading its assessment of the economy earlier this week.  The Nikkei 225 yesterday stock index climbed 0.75% to close at ¥9,522.50.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥134.25 level and was capped around the ¥135.70 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥153.25 level while the Swiss franc moved lower vis-à-vis the yen and tested offers around the ¥88.90 level. In Chinese news, the U.S. dollar closed at CNY 6.8273 in the over-the-counter market.  Treasury Secretary Geithner travels to China this weekend and meets with leading Chinese officials on Monday.  Treasury officials said the Obama administration is “attuned to the interests of our investors and plan to listen closely to what they have to say.” The Chinese government has recently been critical of the effects of U.S. policy and how they impact the value of China’s massive foreign reserves, about 70% of which are said to be denominated in U.S. dollars.  The Treasury also said the “U.S. dollar will continue to play a very important role for a very long time.”

₤

The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6195 level and was supported around the $1.5915 level.  Data released in the U.K. today saw May Nationwide housing prices rise 1.2% and fall 11.3% y/y.  Also, May GfK NOP consumer confidence was steady at -27, unchanged from April.  Cable bids are cited around the US$ 1.5535 level.  The euro appreciated vis-à-vis the British pound as the single currency tested offers around the ₤0.8800 figure and was supported around the ₤0.8705 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0655 level and was capped around the CHF 1.0860 level.  Data released in Switzerland today saw the May KOF leading indicator remained unchanged at -1.86.  U.S. dollar offers are cited around the CHF 1.0975 level.  The euro and British pound weakened vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.5075 and CHF 1.7150 levels, respectively.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

The U.S. economy contracted in the first quarter of 2009 by 5.7 percent according to the latest release by the U.S. Commerce Department. The preliminary estimate report released today showed that the U.S. Gross Domestic Product was better than the advance estimate released in April that registered a 6.1 percent fall in the January to March quarter. Real GDP fell by 6.3 percent in the fourth quarter of 2008. Today’s GDP numbers surpassed the 5.5 percent contraction that the economic forecasts were expecting for the first quarter and marked the first time since the 1974-1975 period that GDP has shrunk for three quarters in a row.

Contributing to the decreased GDP for the fourth quarter were declines in business inventories, exports and housing. Exports declined sharply in the quarter as exports of goods and services decreased by 28.7 percent after falling by 23.6 percent in the fourth quarter.

On the positive side, consumer spending, which makes up approximately two-thirds of U.S. economic activity, increased in the first quarter by 1.5 percent after decreasing sharply in the previous two quarters.

Forex – U.S. dollar declines in Forex Trading.

The U.S. dollar has been falling in forex trading today against the major currencies.  The dollar has declined versus the euro, British pound, Canadian dollar, Australian dollar, New Zealand dollar, Swiss franc and the Japanese yen.

The euro has advanced versus the USD for the second day as the EUR/USD trades at 1.4136 in the afternoon of the US trading session at 3:21pm EST after opening the day at 1.3983 according to currency data from Oanda.

The British pound has climbed today as the GBP/USD trades at 1.6142 after opening the day at 1.5962.

The dollar has lost ground against the Japanese yen today as the USD/JPY has decreased from its 95.19 opening to trading at 97.67.

The dollar has fallen against the Canadian dollar after opening at 1.1116 earlier today to trading at 1.0939 later. Meanwhile, the USD has also declined against the Swiss franc as the USD/CHF has gone from 1.0809 to trading at 1.0678.

The Australian dollar has gained for the second day in a row versus the USD as the AUD/USD trades at 0.7994 after opening today at 0.7873 while the New Zealand dollar has also increased versus the USD as the NZD/USD trades at 0.6385 after opening the day’s trading at 0.6259.

USD/CAD Chart – The US Dollar falling sharply today versus the Canadian Dollar in Forex Trading and the USD/CAD is trading at its lowest level since September 2008.

By Robert Prechter

The following article is excerpted from a brand-new eBook on gold and silver published by Robert Prechter, founder and CEO of the technical analysis and research firm Elliott Wave International. For the rest of this fascinating 40-page eBook, download it for free here.

Have you ever traveled abroad and taken a look at the local currency and wondered how the citizens of that country could take seriously what looks like “Monopoly money?” I’ve got news for you: You’re using the same stuff. Monopoly money is the money over which some government has a monopoly. It is the currency of the realm only because the state makes it illegal to use any other type.

Promissory notes issued by a state and declared the only legal tender are always doomed to depreciate to worthlessness because of the natural incentives and forces associated with governments. A state cannot resist a method of confiscating assets, particularly one that is hidden from the view of most voters and subjects. By extension, it is unreasonable to advocate a standard for such notes, which is simply a state’s promise that its currency will always be redeemable in a specific amount of something valuable, such as gold. A gold standard of this type is only as good as the political promises behind it, reducing its value to no more than that of paper. It could be argued, in fact, that a state-sponsored gold standard is far more dangerous than none at all, as it imbues citizens with a false sense of security. Their long range plans are thus built upon an unreliable promise that the monetary measuring unit will remain stable. Later, when the government’s “IOU-something specific” becomes, as Colonel E.C. Harwood put it, “IOU nothing in particular,” reliability disappears and the arbitrary reigns. Although the populace tends to retain its confidence in the currency for awhile thereafter, the ultimate result is chaos.

The only sound monetary system is a voluntary one. The free market always chooses the best possible form, or forms, of money. To date, the market’s choice throughout the centuries, wherever a free market for money has existed, has been and remains precious metal and currency redeemable in precious metal. This preference will undoubtedly remain until a better form of money is discovered and chosen. Until then, prices for goods and services should be denominated not in state fictions such as dollars or yen or francs, but in specific weights of today’s preferred monetary metal, i.e., in grams of gold. Anyone might issue promissory notes as currency, but the acceptance of such paper certificates would then be an individual decision, and risks of loss through imprudence or dishonesty would be borne by only a few individuals by their own conscious choice after considering the risks. Critical to the understanding of the wisdom of such a system is the knowledge that private issuers of paper against gold have every long run incentive to provide a sound product, just as do producers of any product. As a result, risks would be minimal, as the market would provide its own policing. Thievery and imprudence will not disappear among men, but at least such tendencies in a free market for money would not have the potential to be institutionalized, as they are when a state controls the currency. From a macroeconomic viewpoint, occasional losses resulting from dishonesty or imprudence would be extremely limited in scope, as opposed to the nationwide disasters that state controlled paper money has facilitated throughout history, which have in turn had global repercussions. As Elliott Wave Principle put it, “That paper is no substitute for gold as a store of value is probably another of nature’s laws.”

That being said, it is also true, and crucial to wise investing, that markets come in both “bull” and “bear” types. Being a “gold bug” at the wrong time can be very costly in currency terms. For nearly three decades, gold and silver’s dollar price trends have confounded the precious metals enthusiasts, who for the entire period have argued that soaring gold and silver prices were “just around the corner” because the Fed’s policies “guarantee runaway inflation.” Yet today, 29 years after the January 1980 peaks in these metals and despite consistent inflation throughout this time, their combined dollar value (weighting each metal equally) is still 40 percent less than it was then.

It is all well and good to despise fiat money, but it is hardly useful to sit in gold and silver as if no other opportunities exist. In contrast to the one-note approach, which has had an immense opportunity cost since 1980, competent market analysis can help you make many timely and profitable financial decisions in all markets, including gold and silver.

For more in-depth, historical analysis and long-term forecasts for precious metals, download Prechter’s FREE 40-page eBook on Gold and Silver.

About the Author

Robert Prechter, Certified Market Technician, is the founder and CEO of Elliott Wave International author of Wall Street best-sellers Conquer the Crash and Elliott Wave Principle and editor of The Elliott Wave Theorist monthly market letter since 1979.

By Fast Brokers

The EUR/USD has climbed steadily through all of our trend lines, 1.40, and is currently trading just above May 22 highs.  This is a very bullish move, and it appears the currency pair is on the verge of a near-term breakout to the upside.  The key will be sizable volume backing today’s movement.  Today’s gains come despite a lower than expected CPI reading from the EU, meaning traders are feeding off of a strengthening S&P.  Investors also saw stronger than expected German retail sales and M3 money supply.  The rising M3 combined with a stabilizing economy means the ECB can feel more comfortable about maintaining their benchmark rate at its present level, with the possibility of rate hikes down the road.  We also need to keep in mind that the ECB has played their cards conservatively as compared to the central banks of Britain and the U.S.  Therefore, the Euro is in a relatively advantageous position to appreciate in the near-term should global economic conditions continue to improve.  What has transpired over the last 24 hours seems to confirm our consistent bullish outlook.  Though we may see a little weakness today due to intermittent profit-taking, the EUR/USD is making a clear statement.  Meanwhile, our 1st tier downtrend and 1st and 2nd tier uptrend lines are all reaching an inflection point late Friday/early Monday.  Therefore, we anticipate volume to pick up over the next few trading sessions.

With the EU finished for the week, investors will be paying close attention to U.S. equities and the release of Prelim GDP, Chicago PMI, and Revised Univ. of Mich. Consumer Sentiment.  Should these data points beat analyst expectations and U.S. equities react positively this would only provide more fuel to the EUR/USD’s uptrend due to the strong positive correlation.  In fact, the fundamental movements of the EUR/USD and the GBP/USD could be sending a message that U.S. equities are positioned for a breakout of their own.  With economic data trending upwards around the globe, we are seeing a return to risk, which bodes well for the EUR/USD.  We maintain our bullish outlook on the EUR/USD trend-wise due to the aforementioned reasons.

Fundamentally, we find resistances of 1.4078, 1.4117, 1.4187, 1.4222, and 1.4290.  To the downside, we see supports of 1.4024, 1.3991, 1.3955, 1.3922, and 1.3889.  The 1.35 area serves as a psychological cushion with 1.40 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.4070.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The Cable busted through our 2nd tier downtrend line and the psychological 1.60 level as investors return to risk.  We view the defeat of our 2nd tier downtrend line as a significant move, giving a green light to the Cable’s bull trend.  Our 2nd tier downtrend line stretches back to July 2008 highs, meaning the GBP/USD has a ton of room to the upside with all near-term downtrend pressures out of the way.  Investors are reacting to a much stronger than expected Nationwide HPI release, showing home values are improving in Britain.  Today’s release counters this week’s evidence that Mortgage Approvals are slowing down.  After fighting off a dismal CBI release yesterday, bulls were waiting for a bit of good news to run with.  Even though Britain’s economic releases have been mixed this week, investors should keep in mind Britain released a wave of optimistic data over the past month.  Today’s key gains in the Cable reflect the fundamental movements made by the EUR/USD and crude.  Therefore, investors are returning to risk in a hurry as the global economic climate improves.

Investors will be waiting for the key economic data surfacing from the U.S. today.  If the numbers exceed analyst expectations, we could witness a strong near-term rally with U.S. equities depreciating the Dollar and sending the European currencies higher.  Regardless, the Cable has made a statement showing that the bull trend is alive and well.  Keep an eye on volume to see if it confirms the key upward movement occurring.  We maintain our bullish outlook in the Cable due to the aforementioned reasons.

Fundamentally, we find resistances of 1.6129, 1.6233, 1.6307, 1.6388, and 1.6462.  To the downside, we see supports of 1.6062, 1.6011, 1.5949, 1.5886, and 1.5822.  The GBP/USD is currently exchanging at 1.6128.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.