27 April 2013
Berita Semasa 27 April 2013 ...
Gold, Silver sell-offs - been here before but this time is different
This time, physical demand had been surging just before paper price declines led by the manipulated futures market. Also, hedge funds have also been piling in to short the market to a historic degree based on the negative technical picture.
The precious metals have seen dramatic sell-offs before, although the primary difference between previous precious metal declines and the recent drop is the current shortage of physical metal.
It is also worth considering how well the commercial bullion traders are positioned for a rally after these past two days of sharply dropping prices, especially when the latest price drop came on top of a physical market signalling tightness all along.
Major dealers in North America and the EU seem to be out of physical precious metal stock almost across the board. This physical shortage had been developing for some time, in contrast to the 2008 drop.
In terms of the supply fundamentals, the loss of Kennecott’s Bingham Canyon mine last week, in addition to further postponements for Barrick Gold’s big Pascua Lama Project were as bullish as can be.
Goldman was also openly signaling the rest of the market by notably revising their gold price forecast lower just ahead of the big down move, followed by more major banks revising their price forecasts lower.
Precious metal prices have now been falling overall or range bound for almost two years. Contrast the current situation with the historical September 2010 to April 2011 period, when 30 percent down moves occurred after a short covering rally as a speculative pile-on ensued.
This time, physical demand had been surging just before paper price declines led by the manipulated futures market. Also, hedge funds have also been piling in to short the market to a historic degree based on the negative technical picture.
In contrast, J. P. Morgan Chase et al have been slowly exiting or reducing their notable precious metal short position over the last month without a drop in the market’s open interest. Normally, heavy downside direction in price tends to be accompanied by a reduction in open interest.
Frankly, the most recent selloff seems like just an orchestrated opportunity for the big shorts to cover.
Record highs in equities have been seen recently, despite persistently soft economic data that misses one week after another virtually across the board. Complacency and universal bullishness seem to prevail, despite data indicating that little if any real economic recovery is actually underway.
Another notable occurrence has been the persistent referencing of CPI and employment numbers by authorities and the mainstream media, despite the obvious disconnect of this data from the reality faced by most people.
The last straw was the blatant early release of FOMC Meeting Minutes so that the markets could react when precious metal sentiment was already horrible. According to the latest FOMC Minutes, money creation via asset purchases by the Fed seems likely to subside later this year. Furthermore, London seems to be anticipating that Mark Carney's arrival at the Bank of England will see a more activist monetary policy stance arise in the UK too.
Nevertheless, the world's stock of fiat money is not contracting - quite the opposite, in fact. Japan has just launched another round of monetary stimulus on steroids, which will see the developed world's most indebted economy create a proposed $1.4 trillion in Yen in a bid to break the country free from depression and the perceived threat of deflation.
Once again, the same price pattern seems to be emerging. A massive dump in early overnight trading, followed by a margin increase pulls the rug out from under precious metals support as the market approaches key technical levels.
The panic selling feeds on itself as stops are triggered. The market moves much farther down than statistical or historical norms would suggest seems probable. This latest sharp decline, led by the Asian session, resulted in the biggest two day decline in the price of gold seen over the past thirty years.
From a technical perspective, the sharp move down seen a few days ago broke below the 38.2 percent retracement level of the big post-2008 gold rally from 681.40 to 1920.75, prompting traders to shoot for the 50 percent retracement level at 1301.07.
This 50 percent Fibo level now seems to offer the market both a target and a rallying point to buy gold ahead of. The substantial bounce already seen from the recent 1321.09 low just ahead of this objective indicates that the market’s desire to sell may well already have been satisfied.
Interestingly, it often seems to be the case that when market sentiment is apparently beyond repair, the seeds for a new rally are quietly being sown.
Sumber : Google
26 April 2013
Berita Semasa 26 April 2013 ...
Gold, Silver and the currency chronicles
The big shorts in the precious metals markets have acted as the governor, preventing the true expression of the paper currency value of real money for decades.
The Forex market may actually be seeing the beginning of the crack up boom where traditional currencies like silver and gold will naturally reassert themselves just as world monetary expansion begins to truly accelerate.
The big shorts in the precious metals markets have acted as the governor, preventing the true expression of the paper currency value of real money for decades.
It seems to be no coincidence that their market dominance was enabled in large part by the luxury of interested parties enjoying cheap access to the world’s main reserve currency.
It seems relevant to review some of the recent historical events and circumstances that have brought the currency market to its present tenuous state.
The first factor to consider is the credit bust. For too many years, going back to the 1990’s, the Fed’s and other major central banks’ policies have incentivized leveraged speculation. This has fostered a massive inflation in the global pool of speculative finance that created situation where too much market-based liquidity or “money” has been chasing too few risk assets.
The second factor is the massive rise in monetary stimulus programs. One result of these huge quantitative easing and bailout packages is that unprecedented monetary creation is largely bypassing real economies on its way to creating bubbles in global securities markets.
The third factor is the realty of unbalanced government budgets. The recent U.S. government budget released showed an increase in spending, as the much-publicized debt ceiling limit is repeatedly increased and adherence to it postponed. Nevertheless, that ceiling was an important - albeit probably symbolic - gesture that telegraphed to the rest of the world there would be some limits to the huge debt already accumulated by the United States.
Finally, the recent banking crisis in Cyprus has provided the world with a template for the first direct bail-in, where bank investors and depositors help pay for its failure to operate in a commercially viable manner.
Japan recently announced further radical stimulus measures to help stimulate its flagging economy. This increasing trend toward boosting the Japanese money supply has resulted in a sharply weaker Yen, which has declined from a historic high of 75.55 Yen to the Dollar seen in October 2011 to a recent high of 99.94 touched on April 11th of this year.
Another remarkable event has been the parabolic rise in Bitcoin observed over the last few years, only to see the electronic currency crash hard in extremely volatile recent trading. The crash came in the wake of some recent Denial of Service attacks on Bitcoin’s primary dealing website Mt. Gox that handles roughly 80 percent of its market.
The prices of gold and silver have also been hit hard enough to break a key 38.2 percent Fibonacci retracement level that in turn provoked further technical selling. The sharp sell-off in the precious metals has conveniently allowed J.P. Morgan Chase to exit some of its concentrated short positions.
Basically, the world's stock of fiat money is not contracting - quite the opposite, in fact. Japan has just launched its ‘stimulus on steroids plan’, which will see the developed world's most indebted economy create a proposed $1.4 trillion in Yen in a bid to break its economy free from depression and the questionable risk of deflation.
Nor is money creation in the West likely to subside, although earlier this month, the FOMC did hint that it might reduce its asset purchases later this year and that the committee was divided on the risks of continued super easy monetary policy.
Furthermore, current Bank of Canada governor Mark Carney's departure to head the Bank of England is expected to result in a trend toward more activist monetary policy in the UK too.
On the world’s forex market, recent weakness in the commodity currencies like the Australian, Canadian and New Zealand Dollars has been noted in the wake of the remarkable sell-off in the precious metals seen over the past week.
These currency moves tend to highlight recent U.S. Dollar strength, more so than being a reflection of the recent commodity downdraft. Nevertheless, recent events may actually represent the last gasp of King Dollar, as inflationary U.S. monetary and budgetary policies continue to chip away at the value foundation of the world’s primary reserve currency.
Precious metals now appear to have found good support, with retail physical sales reportedly booming at the lower prices, despite heavy downward pressure exerted on the paper futures markets.
The use of barter also seems to be increasing in popularity as a method of value exchange, as people turn away from fiat currencies in droves. In addition, the recent out in Bitcoin prices, has drawn considerable media attention to the use of that electronic currency as an alternative medium of exchange to fiat currency.
Falling commodity prices are simply another indication of failed policy that could well set the stage for a further acceleration in monetary expansion.
Speculative excess today encompasses all markets, with big money piled up on both the long and short sides of the financial markets.
Ultimately, it is the large shorts who seem to trigger the sell-offs in the commodities like silver and gold, probably so that they can cover their positions profitably.
Sumber : Google
25 April 2013
Berita Semasa 25 April 2013 ...
Gold recovers but pressured by outflows from ETFs
In India, gold prices have recovered to 25500 per 10 grams after having fallen to 24750 last week amidst increased demand for jewelleries and gold coins on falling prices in the wedding season which will run from April to June.
Gold prices have gained on Monday showing recovery from a sharp fall recently but concerns about outflow from exchange traded funds persist despite some brisk buying seen in India, the largest consumer of gold in the world.
In electronic trading, Comex Gold June has risen to $1421.2/Oz gaining $25.6 on Monday trade. " On daily charts,gold is showing an ascending triangel formation after a sharp fall and although recovery is not that sharp," according to Sreekumar Raghavan, Chief Strategist at Commodity Online Group.
Near term support levels are seen at $1370, $1350 while resistance is seen at $1475, 1560 levels but RSI at 32.31 is above oversold positions and moving to neutral territory, he added.
Net ETP redemptions have reached 117 tonnes for the month to date, already surpassing February as the weakest month on record. Outflows have reached 277 tonnes for the year-to-date, which is almost equivalent to inflows in 2012 at 279 tonnes. At current price levels, 270 tonnes of gold holdings are cash negative, and in our view, continue to pose the largest downside risk to prices in the near term. Although net redemptions have not hit a daily record high (32 tonnes in January 2011), they have not shown any real signs of slowing down either, according to a weekly review by Barclays Research.�
Gold posted its biggest-ever daily loss in dollar terms last Monday, shocking veteran investors, who see gold as portfolio protection against inflation and other market risks. Prices sank to around $1,321 on April 16, its lowest in more than 2 years.
In India, gold prices have recovered to 25500 per 10 grams after having fallen to 24750 last week amidst increased demand for jewelleries and gold coins on falling prices in the wedding season which will run from April to June.
At India's Multi Commodity Exchange (MCX), gold for June delivery has risen 0.94% to Rs 26293 10 grams on Monday trading. Technically, MCX gold remains weak with an RSI of 26.22 and MACD still in negative. However, on charts recovery trends are visible which can push prices to Rs 28,000 levels in the short to medium run, Sreekumar Raghavan added.
Sumber : Google
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