InvestMacro Forex News

by Mohammad Zulfiqar, BA

The Japanese economy has been in trouble for some time. The central bank of the country and the government of Japan have tried many different tactics to revive the economy. They have been struggling, with the interest rates in the Japanese economy being kept low to induce growth. Japan’s central bank has tried many different rounds of quantitative easing and failed, deflation became a problem, and growth isn’t there.

Not too long ago, a very aggressive quantitative easing policy was introduced into the Japanese economy. The goal was very simple: to increase both exports and inflation in the country. Exports would give a boost to the Japanese economy, and inflation would take the country from the deflationary rut it has been in for many years.

Now one must ask: what did Japan’s central bank and government anticipate actually happening in the Japanese economy? Is there inflation, and are they exporting to the global economy?

Well, it turns out they are failing at both.

Their goal of exporting more to the global economy isn’t panning out as they expected. According to the Japanese Ministry of Finance’s customs data, the trade deficit (more imports than exports) of the Japanese economy in September was 33% higher than the previous month, standing at 1.09 trillion yen, compared to 820 billion yen in August. (Source: “Seasonally adjusted Values for September 2013 [Provisional],” Ministry of Finance Japan web site, last accessed October 21, 2013.)

So what’s happening on the inflation front?

Not too long ago, the central bank of Japan stated that it wants inflation to be around two percent in the Japanese economy. In August, prices in the Japanese economy increased by 0.8 % after increasing 0.7% in July, marking the third straight increase. But hold on; there’s a catch! The majority of the increase in inflation came due to rising fuel prices and a weak Japanese yen. (Source: Kihara, L., “Japan inflation hits five year-high, wage gains needed to decisively end deflation,” Reuters web site, September 27, 2013.)

To me, this means that the efforts by the government and the central bank aren’t exactly working. I can only wonder what’s next.

Over time, one thing has become very clear: the Japanese central bank has been favoring money as a solution. If the economic misery in the country continues, then I wouldn’t be surprised to see the central bank and the government continue to print money in hopes of providing a boost to the Japanese economy.

In their previous effort to improve the economic conditions, we saw the Japanese yen collapse and the stock market soar in a very short period of time.

If all the pieces of the puzzle come together and we hear more promises of printing, then the trade will be very simple; the Japanese yen will be bearish, and the Japanese stock market will be bullish.

Investors here in the U.S. economy can take advantage of this situation through exchange-traded funds (ETFs) like the iShares MSCI Japan (NYSEArca/EWJ), which invests in companies in the Japanese economy, and CurrencyShares Japanese Yen Trust (NYSEArca/FXY), which tracks the performance of the yen. With these ETFs, shorting would provide investors with gains.

This article How Japan’s Failure Can Be a Boon for Smart Investors was originally published at Daily Gains Letter

Source: Tom Armistead of The Energy Report (10/24/13)

http://www.theenergyreport.com/pub/na/james-c-west-positive-2014-outlook-for-oil-and-gas

James C. West, lead oil services and drilling analyst at Barclays Capital, is seeing incredible growth ahead for oil production around the world. In this interview with The Energy Report, West explains how likely constitutional change in Mexico will spur momentous industry growth, along with new deepwater targets opening up in offshore China. Meanwhile, decent commodity prices and economic improvement in Eastern Europe are creating powerful oil price tailwinds. But the best news is closer to home, in North America. Find out which companies are positioned to thrive in the year ahead.

The Energy Report: James, welcome. What were the most significant takeaways for you from the Barclays Capital Conference in September?

James West: There were five major takeaways. Four of those were very positive. One was negative. The first was that the outlook for North America in 2014 has improved. We’re getting some tailwinds from commodity prices, of course, but the oil companies that previously were gas companies have now arranged their drilling programs for 2014–2016 and are relaying that visibility to oil service companies that have been operating in North America in a fairly volatile environment for the last two years. Companies are much more optimistic on the outlook for 2014 in North America.

Number two, the Eastern Hemisphere is booming at this point. Both Southeast Asia and the Middle East are growing very rapidly, as is Russia, and then there are good trends in East and West Africa. The only market not doing well, for obvious reasons, is North Africa, but I think we’ll see far-reaching effects of that strength in the Eastern Hemisphere as companies report results in the near term.

The third takeaway was the bullishness around Mexico, mostly for 2014 and beyond, because Mexico is a slight headwind for the industry right now, but should turn into a tailwind as we go into next year. There are two parts to Mexico: Number one, PEMEX (Petróleos Mexicanos) has ten tenders outstanding, which are being referred to as mega tenders by the industry, for integrated project management (IPM) work that would start early next year. The tenders are out, the bids are due soon. Those should start up pretty quickly in the first quarter of 2014 (Q1/14) and that should be a very nice boost to overall activity level. It represents about 50-plus rigs going to work.

Second, most company managements and all the consultants and people that we speak to believe that there will be constitutional reform in Mexico that will break the monopoly on the oil and gas business and allow private capital to flow in. That could take a little bit of time, and there’s a congressional vote expected at some point in October and, of course, a change to the Constitution has to be ratified by the leaders of the various states in Mexico. That should be done by year-end or early next year. Following that, we’ll see private capital coming to the market, probably to go after the five shale plays in Mexico and deepwater activity, but it may take several quarters.

The fourth takeaway was a lot of bullishness on China, both because of recent deepwater discoveries in Bohai Bay and the South China Sea, and because of the potential shale opportunity in China. That’s a market that’s been for the most part closed off to western service companies. The service activity is done primarily by the service entities of the Chinese oil companies, but shale and deepwater activity are things that are going to be done by the traditional western services companies because many Chinese service businesses lack the capabilities and expertise.

The last takeaway, as I mentioned, is a slight negative: Rig rates for floating rigs are starting to moderate. We’re starting to see some rigs that are coming down in the $25,000–50,000/day range as they absorb new capacity.

TER: Were any of those surprises?

JW: I would say that the increased optimism on North America was a surprise and so were the rig rates. More CEOs talking about the declines in offshore rig rates was a surprise. It’s pretty rare for drilling companies to expect their rigs to drop. They’re usually all very optimistic about rigs moving higher.

TER: Did the conference’s presentations change your thinking on any of the companies you cover?

JW: We came away feeling more positive of the near-term prospects for Schlumberger Ltd. (SLB:NYSE)given the bullishness around the Eastern Hemisphere, where Schlumberger is the largest international company. We also came away feeling better about some of the recent changes we had made. We upgraded Key Energy Services (KEG:NYSE). We launched coverage of C&J Energy Services Inc. (CJES:NYSE). Both are U.S. land-focused companies, so the cautiously bullish outlook for U.S. land should be a good tailwind for those two companies.

TER In our last interview, you said North American oil services was a market of haves and have-nots. You included some small-cap and midcap companies among the haves. What makes a company one of the haves?

JW: The companies in the haves group are those that are currently able to service larger E&Ps and major oil companies. That means sophisticated supply chains, higher technology content, better equipment, better crews and typically multiple service lines rather than the mom and pops or the one-product-line companies that exist in North America.

TER: You have a number of small-cap and midcap companies under coverage. Can you talk about how some of them are positioned to succeed in the strong and sustained upside market trend that you forecast?

JW: We do have a lot of small-caps under coverage. We think several are poised to succeed very nicely, especially in North America. A lot of these smaller ones tend to be North American-focused, given that it’s the largest market in the world. Superior Energy Services Inc. (SPN:NASDAQ) is one the companies we’re recommending. Then we like some of the companies that are exposed to the Gulf of Mexico because that’s one of the fastest-growing markets in the world today. Hornbeck Offshore Services Inc. (HOS:NYSE) is our preferred supply vessel company followed by Gulfmark Offshore Inc (GLF:NYSE), which actually has exposure both to the Gulf and to the North Sea. Right now the North Sea is extremely tight in terms of vessel availability.

TER: Your return on Key Energy Services has been modest, but your return on Global Geophysical Services Inc. (GGS:NYSE) and ION Geophysical Corp. (IO:NYSE) both have been very poor. Why are you rating them Overweight?

JW: We just upgraded Key three or four weeks ago, so it hasn’t been that long. Key really is a call on 2014, both the U.S. land market and the tailwinds in Mexico because it does have exposure to Mexico. You’re right about Global Geo and ION Geophysical. Global Geophysical has suffered from some liquidity concerns. Those should be going away with this next quarter as it gets its revolver credit facilities in order and also starts to generate more cash. ION Geophysical has had several quarters of earnings misses. We think that’s coming to an end. The company’s been in transition and we think shareholders will be rewarded as that transition is finalized and the earnings trajectory is better understood and growth returns.

TER: Why has Global Geo had liquidity problems and why do you think they’ll abate soon?

JW: The company had focused up to 2012 on multiclient data library shoots in North America, and those are very capital-intensive. It spent a lot of capital on that and was not getting a return on that investment. The company brought in a new CEO at the end of last year. His focus is on cash generation and on shifting more into proprietary surveys, which are cash-generating surveys. That’s ongoing right now. Q1/13 showed some good progress. In Q2/13, I think people got concerned because the cash balance dropped. That was more of a timing issue, in our view. I think you should see the cash balance rise once again for Q3/13.

TER: How has Key’s share-repurchase program affected its share price? You said it’s been 12% of its market cap since 2008.

JW: It hasn’t done a lot. Because of some poor earnings results and lack of recovery in some of its businesses, along with the slowdown that we saw in Mexico this year that caught everybody by surprise, the stock has been punished. Although it was certainly helpful to buy back stock, it’s not being reflected in the share price because of some of the other fundamentals in the business.

TER: Your target price for Key Energy is $10 right now, but the last time it was there was May 2012. It’s now around $7.50/share. What does the company need to do to make that target?

JW: It needs better traction in North America, for which the fundamentals are supportive of that happening. Number two, the earnings-revision cycle has ended for the company. In fact, starting about 12 months ago, if you look at 2013 estimates, they are down about 40% from where they were. We thought that was the bottom. That’s one of the reasons we upgraded. As we see revisions higher, or at least holding their place, that will cause a valuation rerating. In addition to that, Mexico should be a very good market next year and that’s going to be a nice tailwind for the company.

TER: You’re pretty sure that Mexico is going to make constitutional changes. What’s the basis for your confidence there?

JW: The coalition government wants to make the changes. It publicly stated as such and it’s holding a vote in late October and writing the law right now. Since that coalition government controls Congress, it looks like it will pass. We think it will be ratified. This is probably the best chance we’ve had for this constitutional change since Mexico’s industry was nationalized 70-plus years ago.

TER: What will enable Global Geo to reach your $6/share target from the $3 range, where it is now?

JW: I think continued transition toward proprietary surveys, generating cash and bringing the leverage down will help boost performance. It’s a fairly simple strategy—maybe harder to execute than we thought at first, but the stock’s trading like a distressed company right now. We think as cash builds and leverage comes down, we’ll see a rerating of that stock much higher.

TER: Global has been in that range for a number of months. What’s changed to give you hope for now?

JW: We have spent a lot of time with the company about the situation. It’s confident in re-signing its credit facility and it’s confident in its capabilities to generate cash, and we’re confident in the management team. The new CEO has a very strong background in seismic; we’re impressed by the CFO as well. We think they’re making the right decisions and the right moves to put the company back on track.

TER: The ION CEO at the conference announced a transformation. How is that transformation going? Why is it doing the transformation in the first place?

JW: ION is trying to position itself more as a provider of services, in particular services to the oil companies—surveys, multiclient data libraries, data processing, things of that nature—and getting away from its legacy as an equipment manufacturer that sold to seismic companies. That transition has been bumpy, but we’re getting closer to the end. That’s why we’re still recommending it. We think as that transition finalizes, there will be upside for shareholders.

TER: What other small-cap or midcap companies look promising to you here?

JW: We like Hornbeck Offshore because it’s mostly a pure play on the deepwater Gulf of Mexico vessel market; that’s probably the tightest market in the world right now. Utilization is full for its assets. I think that Hornbeck has the best supply vessels in the market. Its fleet is entirely high-end, so it doesn’t have an old-vessel issue. It has a forward-thinking management team.

With Superior Energy Services, you have a CEO who has very good market understanding and is formerly the COO at a company called BJ Services, which was acquired by Baker Hughes Inc. (BHI:NYSE). It’s had a long history in the industry and is very much incentivized to drive growth internationally, in the Gulf and in the U.S. markets. We really like management there. We like management at both companies.

C&J Energy Services has done a good job integrating some acquisitions that have put it in the camp of the “haves” in North America. It also has leverage to two plays that we like in North America: the Permian Basin, which we think is going to go more and more horizontal over the next several quarters, which is good for its business, and the Eagle Ford. I think C&J also is likely to announce some international expansion in the next quarter or two. C&J is newer to our coverage universe, but we’ve been very impressed so far with the management team. It has good financial strength. They’ve been disciplined about their overall growth trajectory its geographic placement put it right in the sweet spots where we think most growth will occur.

TER: Any other thoughts you’d like to share on investing in this market right now?

JW: The group itself is still attractively valued. People should be increasing exposure to oilfield services given the constructive commodity prices and the constructive capex trends in the industry. We think we’re in the early stages of a recovery in North America and in the early stages of good growth in the international markets. Our favorites on the large-cap side, which we talked about in our last interview, are and remain Schlumberger, Halliburton Co. (HAL:NYSE) and Cameron International Corp. (CAM:NYSE).

TER: You’ve given us a lot to think about. Thank you.

JW: You’re welcome.

James C. West is Barclays’ lead oil services and drilling analyst. James joined Barclays in September 2008. Prior to that, he was at Lehman Brothers beginning in October 2000. His broad coverage universe includes large-cap, diversified oil services companies, niche technology providers, offshore and onshore contract drillers, supply vessel providers and energy capital equipment companies. Prior to joining Lehman Brothers, James worked at Donaldson, Lufkin & Jenrette. He earned a Bachelor of Arts from the University of North Carolina at Chapel Hill.

Want to read more Energy Report interviews like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.

DISCLOSURE:

1) Tom Armistead conducted this interview for The Energy Report and provides services to The Energy Report as an independent contractor. He or his family owns shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Energy Report: None. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) James C. West: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

4) Barclays Bank PLC and/or an affiliate has received compensation for investment banking services from HAL and CAM in the past 12 months.

Barclays Bank PLC and/or an affiliate has received non-investment banking related compensation from SLB, SPN, GGS, HAL, and CAM within the past 12 months.

HAL is, or during the past 12 months has been, an investment banking client of Barclays Bank PLC and/or an affiliate.

HAL and CAM are, or during the past 12 months have been, a non-investment banking client (securities related services) of Barclays Bank PLC and/or an affiliate.

SLB, SPN, GGS, HAL and CAM are, or during the past 12 months have been, a non-investment banking client (non-securities related services) of Barclays Bank PLC and/or an affiliate.

5) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts’ statements without their consent.

6) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer.

7) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned and may make purchases and/or sales of those securities in the open market or otherwise.

Streetwise – The Energy Report is Copyright © 2013 by Streetwise Reports LLC. All rights are reserved. Streetwise Reports LLC hereby grants an unrestricted license to use or disseminate this copyrighted material (i) only in whole (and always including this disclaimer), but (ii) never in part.

Streetwise Reports LLC does not guarantee the accuracy or thoroughness of the information reported.

Streetwise Reports LLC receives a fee from companies that are listed on the home page in the In This Issue section. Their sponsor pages may be considered advertising for the purposes of 18 U.S.C. 1734.

Participating companies provide the logos used in The Energy Report. These logos are trademarks and are the property of the individual companies.

101 Second St., Suite 110

Petaluma, CA 94952

Tel.: (707) 981-8204

Fax: (707) 981-8998

Email: [email protected]

By www.CentralBankNews.info     Mexico’s central bank cut its policy rate by another 25 basis points, its third rate cut this year, and said it was considering further rate reductions but wanted to ensure that inflation is not affected by changes to taxes and by U.S. monetary policy.
    The Bank of Mexico, which has now cut rates by 100 basis points this year, said the balance of risks to global economic growth were on the downside and there was an absence of pressure on raw materials so global inflation is expected to remain low.
    Mexico’s economy slowed sharply in the first quarter and contracted in the second quarter but the central bank said there were signs on “incipient recovery” in the third quarter, showing that some of the adverse impacts from the second half of 20132 were starting to fade.
    “While it is anticipated that economic activity will show a recovery in the remainder of this year and next, it is expected that economic growth for 2013 and 2014 is less than the projection published by the Bank of Mexico in its latest inflation report,” the central bank said.
    The central bank cut its target for the interbank rate to 3.50 percent following earlier cuts in March and September.

London Gold Market Report
from Adrian Ash
BullionVault
Fri 25 Oct 08:55 EST

The PRICE of wholesale gold slipped but held near 1-month highs Friday morning in London, heading for the strongest week-on-week gain since mid-August at $1343 per ounce.

 Rising 1.7% from last Friday’s finish, gold prices lagged silver – up 2.3% for the week – as European stock markets held flat and Asian stock markets fell hard.

 Japan’s Nikkei share index closed Friday more than 4% down for the week, as money-market rates in neighboring China held at multi-month highs.

 Beijing today announced a new benchmark lending rate, aimed at letting market forces set key levels more transparently.

 Shanghai gold prices meantime slipped on Friday, cutting the premium over and above international benchmarks to $2 per ounce.

 In US Dollar terms, “Gold prices have now breached key resistance at the 50-day moving average,” says a note from brokers INTL FCStone.

 “We have also noticed that open interest [in the gold futures market] is rising in line with higher prices, indicative of fresh longs [ie, bullish traders] entering the market.”

 Catching up after the US government shutdown, futures regulator the CFTC will release commitment of traders data from 3 weeks ago today. More recent figures will follow next week, it said.

 “Clearly,” says global bank and bullion market-maker HSBC in a note, “gold prices [on Thursday] received a boost from a combination of weak US data, a slump in the Dollar and positive Chinese economic data.

 “The confluence of the three events is gold-bullish and helped trigger a wave of short covering,” it says, with traders betting that gold prices would fall forced to close their positions at a loss.

 “Much of this recent strength we’ve seen in gold prices,” agrees Mark Keenan of French investment bank SocGen’s Cross Commodity Research team “has been a result of short-covering in the futures markets.”

 That said, November also marks the “peak gold-buying period” in India, Keenan reminded CNBC this morning, with the festival season culminating with Diwali a week-on-Sunday.

 Gold prices in India today hit new record highs above the world’s London benchmark, with premiums to international prices reaching $130 per ounce according to Reuters, up from $100 a week ago.

 “The supply issues in India are even more acute right now,” says a note from Swiss investment bank and London market-maker UBS, “given the fast-approaching festive season of Diwali.”

 The reality, says UBS, is that the Indian government’s anti-gold import rules mean “the supply chain is currently too slow to keep up” with Diwali demand.

 Illegal inflows “may help” the note goes on, but “Internal gold supply satisfies only a small portion of demand, and the sense is that scrap sales [for recycling into new product] have actually stalled.”

This week saw several new reports of large black-market gold seizures, while the government this week repeated its commitment to restricting Indian gold coin and bullion imports regardless.

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can fully allocated bullion already vaulted in your choice of London, New York, Singapore, Toronto or Zurich for just 0.5% commission.

(c) BullionVault 2013

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 HY Markets Forex Blog

Germany Ifo business climate index came in lower than forecasted in October, the survey released by the Institute for Economic Research confirmed on Friday.

Reading for the current assessment survey came in at 111.3 points, compared the previous month’s reading of 111.4.The expectations survey showed that businesses forecasts for the next six months came in at 103.6 point against the forecasted 104.5 and the previous month’s reading 104.2.

A series of business surveys was widely watched by investors as an early indicator of Germany’s economic developments.

The readings were based on approximately 7000 monthly responses from surveys taken by firms in wholesaling, retailing, construction and manufacturing.

Germany Ifo – Manufacturing, Service PMI

On Thursday, the manufacturing and service data were released and showed mixed results in October- showing the manufacturing sector expanded for the fourth consecutive month, while the service sector indicated a decline in the sector.

The Purchasing Managers’ Index (PMI) for Germany’s manufacturing sector advanced to 51.5 points in October, compare to September’s final reading of 51.1 point, according to the preliminary reading released by Markit Economic. Analysts forecasted the figure for the sector to come in at approximately 51.4. The Manufacturing PMI climbed to a two month high in October.

The respective flash reading for the German services sector saw a decline of 52.3 in October , compared to the previous reading of 53.7 in September , dropping to a two-month low.

Germany is still going through coalition talks between the ongoing Chancellor Angela Merkel’s Union of CDU/CDU and the opposition Socialists from SPD.

The third-round talks that was held in Berlin, rounded-up with an agreement to enter official coalition negotiations last week. Some of Angela Merkel’s main priorities in the third term include sending the Eurozone’s crises, trimming-down costs of Germany’s Energiewende and dealing with problem of the country’s population etc.

Interested in trading In the European Market?

Visit www.hymarkets.com and find out how you can start trading today with only $50.

The post Germany Ifo Business Climate Drops Below Estimates appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By HY Markets Forex Blog

The 17-nation European currency traded with moderate gains against the greenback on Friday after October Ifo survey  showed a negative business climate in the euro area’s largest economy in October.

The euro edged 0.13% higher against the US dollar at $1.3818 at the time of writing and declined 0.13% lower at ¥134.04 versus the yen.

Ifo survey

Business surveys from the institute for Economic Research (Ifo) showed that Germany’s business sector was worsening.  The ifo Business Climate survey, showed balances of the business situation and expectations came in at 107.4 points in October, against forecasts of 108.0 and September’s reading of 107.7.

The reading for the current assessment survey came in at 111.3 points, compared to September’s reading of 111.4. The expectation survey showed business forecasts for the next six months would come in at 103.6 points against the estimated 104.5.

Italy’s Retail Sales

Eurozone’s third largest economy posted its retail sales data for the month of August, indicating the condition for the sector remained unchanged.

The Italian National Institute of Statistics showed that the retail sales remained unchanged month-on-month on a seasonal basis and advanced 0.2% year-on-year in August, compared to forecasts of 0% and -2.3% respectively made by analysts.

US Dollar’s Weakness

The US dollar was seen declining for its second weekly loss against the 17-nation Eurozone currency and the Japanese yen.

Meanwhile, investors are predicting the Federal Reserve will certainly postpone tapering of its stimulus program till next year, after the impact of the 16-day government shutdown had on the world’s largest economy.

The US partial government shutdown  may have cost the US economy 0.25 percentage points from its fourth-quarter economic growth and approximately 120,000 jobs in October, according to President Obama’s chief economic adviser Jason Furman.

Interested in trading In the European Market?

Visit www.hymarkets.com and find out how you can start trading today with only $50.

The post Euro Slightly Changed After Ifo Survey Release appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By Chris Vermeulen – goldandoilguy.com

The precious metal market has been stuck in a strong down trend since 2012. But the recent chart, volume and technical analysis is starting to show some signs that a bottom may have already taken place.

This report focused on the weekly and monthly charts which allow us to see the bigger picture of where the precious metals sector stands in terms of its trend.

Let’s take a look at a few charts below for a quick overview, but if you want more interesting ones visit: https://stockcharts.com/public/1992897

Gold Spot Price – Weekly Chart

This chart clearly shows the trends which gold has gone through in the last three years. With simple technical analysis trend lines, clearly price is nearing a significant apex which will result in a strong breakout in either direction.

Remember, this is the weekly chart, so we could still have another month or three of sideways chatter to work through. But a breakout in either direction will trigger a large move.

Silver Spot Price – Weekly Chart

Silver is also stuck in a similar pattern.  Currently the odds still favors lower prices and for the upper resistance trend line to reject price and send it lower. But if we keep out eye on the leading indicators like gold miners, we may be able to catch a breakout or traded the rejection of resistance in the next month or so.

Gold Mining Stock ETF – Monthly Chart

Gold miners have a very sloppy looking chart. Price is extremely volatile and the recent price action in 2013 could go either way VERY quickly. I have a gut feeling GDX in the coming months could have a washout bottom and tag the $20 price level. While I hope I am wrong for many investors sake, if it does happen, it will be a very strong investment level to accumulate a position.

Precious Metals Bigger Picture Outlook:

In short, I remain neutral – bearish for this sector.  In the next 1-3 months we are likely to see some strong price action which will be great. We need a breakout or bottoming pattern to form before we get involved at this level.

I know everyone is dying to get involved in precious metals again for another huge rally… but sometimes it’s just best to wait for the big picture chart to catch up with your bias before taking a position of size.

Get My Free Weekly Trading Sector Reports
Delivered To Your Inbox: www.GoldAndOilGuy.com

By HY Markets Forex Blog

Over the last several years, many different reports have been released that made bearish predictions about the future price movements of gold. Those who want to make money by trading the precious metal can make more-informed decisions by being aware of these forecasts.

Investors who are interested in trading gold should know that many of these predictions are being made at a time when the commodity is on track to record a loss in 2013, after enjoying 12 consecutive years of gains between 2000 and 2012.

Recent depreciation in gold

Gold fell into a bear market in April of this year, having declined 20 percent from its all-time high of more than $1,900 per ounce, which it reached late in 2011. The precious metal then continued to lose ground over the next few months, falling to its lowest price in almost three years in June. At that point, gold dropped to less than $1,200 per ounce.

Investment managers flee the precious metal

Many highly visible market experts started selling their stakes in gold funds in August, according to CNN Money. George Soros, an investment manager, liquidated his entire position in the SPDR Gold Trust ETF during the second quarter of this year.

Hedge fund manager John Paulson, who has been a long-time advocate of the precious metal, cut his interest in the aforementioned gold ETF, which trades under the ticker symbol GLD, by more than 50 percent during that three-month period, the media outlet reported. Paulson’s firm wrote in an email that it had made this move “due to a reduced need for hedging.”

Bearish gold predictions

At a time when many well-known market experts have been selling their stakes in gold, several reports containing bearish predictions for the precious metal have been released. Goldman Sachs Inc. has provided more than one forecast recently that the precious metal will decline in value over the coming years.

The major investment bank sent a note to clients on Oct. 23 predicting that gold will fall to $1,144 per ounce next year, according to Reuters. Goldman Sachs stated that rising inflation-adjusted interest rates, data indicating that the U.S. economy is on the mend and the tapering of quantitative easing by the Federal Reserve could contribute to the future depreciation of the precious metal.

“Gold will likely remain volatile in a $1,250 [to] $1,350/oz range until clarity on tapering,” Goldman Sachs wrote in the note to clients, emphasizing the importance of the plans that the Fed has to reduce its monthly bond purchases, the media outlet reported.

The investment bank also lowered its price prediction for the final quarter of this year, reducing its forecast for the period to $1,320 an ounce from $1,375 per ounce, according to the news source.

Gold a “slam dunk” sell for 2014

On Oct. 8, while speaking on a panel in London, Jeffrey Currie, global head of Commodities Research in the Global Investment Research at Goldman Sachs, stated that the investment bank’s 2014 price target for the commodity was $1,050 an ounce, Bloomberg reported.

He predicted at the time that Washington lawmakers would come to an agreement that would increase the debt ceiling in time for the nation to avoid default, and stated that after this dilemma and also the partial shutdown of the U.S. federal government were resolved, the continued expansion of America’s economy would result in gold being a “slam dunk” sell for 2014, according to the news source.

Currie was not the only person on the panel in London who said that selling the metal would be a wise move next year, the media outlet reported. Ric Deverell, the head of commodities research at Credit Suisse AG, stated that of all his suggestions for those who want to make money via trading raw materials, selling gold is his top one.

After predicting at the event that gold will be worth $1,050 per ounce by the end of next year, Goldman Sachs reiterated its forecast later in October, according to Reuters. The investment bank said at the time that a major variable affecting the price of the precious metal was economic data supporting a more robust U.S. recovery, as such information would be crucial to the reduction of quantitative easing.

Government shutdown and gold

Individuals who want to make money by trading gold should also keep in mind that after the U.S. federal government was partially shut down for more than two weeks, many market experts predicted that the tapering of QE had a higher chance of being pushed back as a result of this particular event.

Pushing back the reduction of these bond purchases made by the Fed could provide upward support for gold over the coming months, as many market experts have stated that the robust bond purchases have served to push the value of the precious metal higher.

The post Investors can benefit from knowing predictions of market experts appeared first on | HY Markets Official blog.

Article provided by HY Markets Forex Blog

By MoneyMorning.com.au

For a time we felt quite lonely in our bullish market position.

For nearly a year we’ve trumpeted the idea that Australian stocks could hit 7,000 points in 2015.

But 2015 still seems so far away. So a few weeks ago we gave you another target: that the Australian index would hit 6,000 points by early next year.

So far things are going to plan.

But now we’ve got some company in our once-lonely bullish position…

The thing about being a contrarian investor is that we’re often a lone or minority voice when it comes to picking an investment trend.

When most folks hoot and holler about a raging bull market, we don’t mind tagging along, but we also play with a cautious hand.

And when others run scared, fearing the worst, screaming that the market is crashing, we take note…and then start hunting around for cheap stock opportunities.

That’s when we hoot and holler to buy stocks.

It’s also why we’ve backed stocks for the past 18 months and why we’ve picked the market to keep going higher.

But as we say, others are now starting to follow our lead.

Another Year of Big Gains for Australian Stocks?

According to CNBC:

‘The case for a continued bull market in stocks appears stronger than many would believe, Piper Jaffray Senior Technical Strategist Craig Johnson said Wednesday.

‘Setbacks that would’ve normally sent equities lower, including the Washington, D.C., budget battle and rising interest rates…had seemingly little lasting effect on the market, he said. “When stocks rise in the face of bad news, that’s very bullish.”

‘On CNBC’s “Fast Money,” Johnson said that the S&P 500 could easily close out the year at 1,800 and hit 2,000 in 2014.‘

The US S&P 500 closed this morning at 1,752. So a rise to 1,800 by the end of the year would mean a 2.7% rise. That’s not out of the question.

If the S&P 500 index hits 2,000 points next year, that would mean a 14.2% gain from here. That’s not out of the question either.

But it’s small-fry compared to the gains in store for the Australian market. In order for the Aussie market to get to 6,000 points it will need to jump 11.6% in about three months.

In order for the Australian market to hit 7,000 points it will need to soar 30.3% in just over a year.

Now, that may seem like a tall order. And we’ll agree that it’s not a normal state of affairs for a stock index to go up 30% in a year. But it can happen. And it has happened.

In fact the most recent year where stocks piled on a 30% gain was in 2009 as the market recovered from the 2008 bust.

In a bull market, stock gains of 15-20% are more common. Australian stocks gained 20% in 2004, 18% in 2005, 19% in 2006, and they were up another 19% by October 2007 as the market hit the peak.

But if you think those gains are a distant memory, think again. Despite the negative view many have of stocks, if the market carries on in the current fashion for the rest of the year, it will be the second straight year of strong stock gains.

Prepare for the Year-End Rally

Maybe it’s just us, but we get the feeling that a lot of people have forgotten just how much money they can make in stocks.

Think about it, what has all the talk been about in recent weeks? That’s right, property. Pick up a paper or scan the finance websites and the news is all about rising house prices and the beginning of a new housing bubble.

We’re even hearing talk about the wealth effect of Australian housing again. That’s where people feel better about themselves and wealthier as the value of their home goes up.

But lost in the chatter is an important point. During 2012 the Australian stock market went up 14.6%. That’s a pretty good return by anyone’s standards. And it’s a better return than anything you could have got from the housing market.

If you consider that gain came during a period of extreme economic uncertainty, we’d go as far to say it’s a great performance.

As for this year, again, as the uncertainty continued, the Australian market has so far gained another 14%…and there’s still more than two months of the year to go.

Some folks may say it’s ambitious to think the market could gain 11.6% from here to reach 6,000 points. But you know what? The November through January period is often a good time for stock investing.

Since 1984 the average return on the 1 November to 31 January period is 2.2%. Annualised, that’s equivalent to an 8.8% gain.

And based on everything we know today, there’s no way we’d bet against the market rallying hard from here.

Late Investors Playing Catch-Up

But as we said at the top of this article, we’re no longer a lone voice when it comes to forecasting a stock rally.

Remember, almost every analyst on the face of the Earth figured the US Federal Reserve would start cutting back on its money printing program this month.

They figured that if the Fed did so it would lead to rising interest rates and a falling stock market. We knew such thoughts were bunkum…and we told you so.

That’s why we told you to keep holding stocks and to buy more.

We’re glad we did. It’s now obvious the Fed won’t do anything, probably until mid next year at the earliest (we doubt even that). A lot of investors and analysts who wish they had bought into the market earlier will soon realise their mistake.

Knowing that the end of the year is usually a good time for stocks, you could see a stock surge as analysts and investors try to catch up on lost ground. Whether that means an 11.6% gain over the next three months and 30% next year…we’ll have to wait and see.

But either way, it makes sense to position your portfolio to benefit from this possible stock surge.

Cheers,
Kris+

From the Port Phillip Publishing Library

Special Report: UNAVOIDABLE: Australia’s First Recession in 22 Years

Join Money Morning on Google+

By MoneyMorning.com.au

It can sound quite fancy when someone says they’re using a ‘log scale‘ on a chart. Most people probably scratch their heads at the term. But in actual fact it’s a pretty simple concept.

Generally speaking there are two scales for charting – normal (linear) or log (logarithmic).

Let me explain the difference as this is an important concept for new technical traders to understand.

Imagine a stock that goes from $1.00 to $100.00 over a number of years. When the price initially goes up to $2.00 it’s a 100% gain in the stock price. But when the stock price goes from $99.00 to $100.00 it’s still a $1.00 price move, but in percentage terms is has only gone 1% higher.

So the same $1.00 move has caused a 100% gain in one instance and a 1% gain in another instance, depending on the stock’s starting price.

On a normal chart with each dollar separated by the same distance, you wouldn’t gain a sense of the percentage moves in the price over time. See the long term price chart of Fortescue Metals [ASX: FMG] as an example.

First using the normal (linear) scale for the price:

Now using a log scale for the price:

Both of these stock charts are of the same thing. They show the huge rise in FMG since 2002 from a penny dreadful at 1c to its current price at $5.35.

The log scaled chart has a scale that shows the percentage changes in price over time rather than the dollar changes. In other words, the distance between $1.00 to $2.00 will be the same as the distance between $2.00 and $4.00.

When the stock price moves as far as FMG has then it can make more sense to look at it with the adjusted scale. Because let’s face it, these charts seem to tell a very different story. Without the benefit of the log scale chart it looks like FMG completely crashed in 2008, whereas the Log scale chart makes the fall seem far less dramatic compared to the immense percentage rise that FMG had experienced.

If you like using trend lines on charts, it can make more sense to use a log scale chart as it can provide a clearer and more obvious trend line, especially if the price has experienced parabolic price action on the normal chart.

Murray Dawes+
Slipstream Trader

Join Money Morning on Google+