InvestMacro Forex News

By MoneyMorning.com.au

Could it be that the French Economy is the real danger at the heart of the European project?

Indeed, France’s bonds were stripped of their AAA status by yet another ratings agency – Moody’s. What’s more, Moody’s says it may cut again, citing inflexible labour markets and low levels of innovation as key problems for French competitiveness.

Oh, and then there is, of course, the matter of what looks like a shocking double dip recession spreading across the eurozone.

Yes folks, eurozone troubles keep piling up – and the infection is spreading deeper into the core.

Today, I want to show you a fascinating chart that tells you all you need to know about Europe’s ills – and why we need to continue to tread carefully here.

High Stakes: Democracy on the Line

At first sight, the chart I’m about to show you may look a bit confusing. But bear with me – it’s worth investing a few moments to understand what’s going on.

The chart shows the poll ratings for the leaders of the PIIGS nations (I’m sure you don’t need me to spell them out) through the financial crisis period. Actually, it’s not just the PIIGs, it also includes France. Oh, the French will be happy that Citi-Group saw fit to lump them in with the so-called peripherals!

You’ll notice that new leaders come in on a high. And from there, there’s only one way to go – down!

Let’s take the green line for example. It shows Berlusconi’s gradual fall from grace. But then there’s a break in the line – that’s when Mario Monti took the reins, his rating went sky-high. But only for a while. Most politicians have some sort of a honeymoon period upon taking office.

But it’s looking like they’re very short-lived these days. It’s all very well making promises on the campaign trail – but they’re much harder to keep once you’re in the job.

Take François Hollande. He may have come into the Élysée Palace all guns blazing, but just look at how quickly his popularity plummeted.

Looking at each country’s progression of leaders in turn is fascinating. And it highlights a serious problem at the heart of Western democracy…

Enough Rope to Hang Us All

As Bill Clinton once famously said, ‘It’s the economy, stupid’ and never has that been more true.

Everyone wants a slice of the economic pie. And it’s not just the welfare dependents – business is increasingly dependent on government handouts.

In fact, François Hollande recently launched his ‘competitiveness pact’. He aims to lift output by half a percent over five years by granting €20bn a year in corporate tax relief and pruning public spending by 1%.

This is not what many voters had been expecting of their socialist leader!

The point is, in the West both industry and vast swathes of the public are hooked on government. But the only way to give to one group without having to take it from the other, is to borrow the extra cash.

And for the likes of France and the UK – they’ve been able to do that. You see, as capital has fled southern Europe, the cash has migrated north.

As money floods into French bank accounts, the banks use much of the cash to buy French government bonds (for safety, you know!). And so the yields on government debt are down to just over 2%.

It’s just the same as in the UK – perceived safety allows government borrowing to continue to rise. None of the hard-core austerity… and precious little rioting in the street too.

The thing is, neither stimulus (more borrowing), nor austerity have shown any meaningful and sustainable impact on listless economies. Despite the best efforts of the politicians to spend and borrow, or indeed make cuts, the opinion polls still point downhill.

The truth is wholesale reform is required. And Western democracies are simply not geared up to delivering that. Or is it simply that the politicians aren’t made of the right stuff?

Who knows? But one thing’s for sure, things aren’t getting any better.

Money Printing Good for Some Assets

I think it was Hemingway that answered the question, ‘How does somebody go bankrupt?’ Answer: ‘Slowly at first… then, all of a sudden.’

Western nations have been gradually bankrupting themselves for decades. And though a few years of crisis may not seem like ‘all of a sudden’ – if you take the long-view, things are coming to a head pretty quick.

There’s no easy way out of the funk we find ourselves in. It’s now pretty obvious that austerity doesn’t work. So that just leaves one option on the table. Print and spend.

Yes, I know I said wholesale reform was another option – but so long as there are opinion polls, that seems highly unlikely. Doing things right will cause too much pain.

On the bright side, print and spend policies don’t need to be bad for investing.

I expect that today’s short-term economic policies will be ruinous over the long run. Not least because they’re not helping to get the economy back on track anyway.

But over the short term, I welcome the money printers with open arms. There’s no doubt it’s good news for many asset classes – not least gold.

Bengt Saelensminde
Contributing Writer, Money Morning

Publisher’s Note: This article originally appeared in MoneyWeek

From the Archives…

Retirees and the Fed Face Off
16-11-2012 – Kris Sayce

Attention Investors: This Market is Worse Than it Looks
15-11-2012 – Kris Sayce

Avoid the Slaughter: Watch This Key Stock Market Pointer
14-11-2012 – Murray Dawes

Why Lithium is Another ‘Rare’ Element on China’s Radar
13-11-2012 – Dr. Alex Cowie

Who Says Gold Doesn’t Pay ‘Interest’?
12-11-2012 – Dr. Alex Cowie

The French Economy Time Bomb Will Explode

By MoneyMorning.com.au

The bull case for the euro took a hit from a bunch of baguettes this week.

The Economist magazine ran a cover of some tasty bread sticks wrapped in French colors and topped off with a burning fuse. The headline was, ‘The time-bomb at the heart of Europe’.

Those baguettes will blow some day. France has big debts and a stupid and oversized government. But it’s hardly alone in that regard. Take Japan, for example.

The industrial and financial titan of the last forty years is on the same path to ruin as France. It’s the time bomb at the heart of Asia.

Today’s Money Weekend will show why the crisis in Japan could be the catalyst for the rerating of certain Aussie stocks.

Sumo Wrestler Recruited to Peddle Japanese Debt

Japan is a warning for the shemozzle practically every Western country is in. It has an enormous debt-to-GDP ratio of over 200%, zero interest rates, a stagnant domestic economy and an ageing population.

Now the last pillar of its strength is beginning to show serious weakness – its export sector. Japan began to run a trade deficit in 2011, after thirty years of surpluses. The government also continues to borrow money to pay for its spending.

Because of this, Japan will soon need to attract foreign money because its domestic savings can no longer support the current level of government borrowing.

But why would anyone invest in Japan with interest rates practically non-existent? Not to mention the currency risk of the yen falling thrown in as well.

The answer is they probably won’t – unless the return rises to make the risk worth it. That means the Japanese government must offer higher interest rates.

But the Japanese government can’t afford higher interest rates because paying higher rates on its huge debt would consume too much tax revenue.

That’s one reason the Japanese government is using Japanese celebrities such as a national sumo wrestling champion and an all-girl pop group to encourage the Japanese public to buy more government bonds (JGB’s).

The Japanese government is going to these lengths because the number of retail investors in JGB’s has been declining since 2009, according to the Japanese Ministry of Finance.

One reason is that Japan isn’t just running out of money, it’s running out of Japanese!

With a falling birth rate, closed immigration policy and ageing population, there just aren’t enough people to save at the rate needed to support the government by buying government bonds.

And so with a shortfall of domestic savings and the limited potential for foreign investment, the only other choice is for the Bank of Japan to print money to buy the government’s bonds (‘monetize the debt’).

Hedge fund manager Kyle Bass pointed all this out in his latest report to investors. You might’ve heard of him before. If you haven’t, he made millions (after founding his own firm, Hayman Capital) shorting the US subprime housing market before it blew up.

Now Japan is his target. He wrote, ‘Japan now sits on the doorstep to its own demise. We believe they have reached zero hour, where things will begin to unwind altogether.’ He also says, ‘Japan is teetering on the precipice of financial collapse.’

Now, many a trader and speculator has bet against Japan and lost money over the last twenty years. But the current situation puts the spotlight on one key industry – energy.

A Rising Market for Energy Meets Supply Crunch

A major reason for Japan’s trade deficit is that it now has to import almost all of its energy. Japan has few natural resources. Previously it used nuclear power to generate the majority of its electricity.

But after the Fukushima disaster in 2011 it shut down its nuclear reactors. This caused a spike in liquefied natural gas (LNG) imports.

You may have heard recently that the glut of cheap gas in the USA might find a welcome export market in Asia looking to cut its energy costs. That’s bad news for the Aussie companies with billion dollar LNG projects that now face the possibility of a major competitor and smaller revenues than they’d budgeted for.

But a US LNG export industry would take time to develop. Time is something Japan is short on. After all, it has bills to pay. That puts nuclear power back on the agenda in Japan.

Japan restarted two of its reactors in the middle of this year. This was despite considerable public protest at the time.

Check out his from Money Morning (USA): ‘The Prime Minister of Japan called restarting the reactors a “matter of national survival “, because the high cost of imported liquid natural gas was crippling the economy.’

That also explains this in the New York Times last month:

‘Japan’s stated policy of eventually ending its dependence on nuclear power has suffered another apparent setback with the announcement Monday that construction will restart on a nuclear plant in northern Japan after three local municipalities gave their consent.’

Nuclear reactors that were approved for construction before the Fukushima disaster are still getting the go-ahead for completion.

The politics of this are murky. But an obvious conclusion is this will stimulate demand for uranium.

And don’t forget that the US, China, South Korea and the Middle East all have nuclear energy in the mix to different degrees. China has the most aggressive expansion plans.

But there’s a crunch brewing in the uranium market because of supply. The current spot price for uranium is just over US$40 per pound. This is down from a high of US$140 before the global financial crisis.

That’s cheap energy for the existing reactors. The problem is at that price there’s no incentive to go into the uranium mining business.

The Uranium Market Could Be a Speculator’s Delight

You might’ve heard of Aussie uranium industry player Paladin Energy (ASX: PDN). Perth Now reported earlier this month that the company was slashing costs in the face of the falling uranium price:

‘The company said it would not expand or develop new projects in the current price environment.

‘”Paladin is of the view it would require a sustainable uranium price at or above $US85 per pound ($A81.78) to warrant any further expansion or new mine development.”‘

No new mines or projects means no new supply. Every day existing reserves are run down. It means the uranium price will have to rise, or uranium producers will go out of business.

That brings us to commodity veteran Rick Rule. He has decades of experience in the resource market. So his opinion counts. He put it like this earlier this month:

‘For the uranium industry to continue supplying power around the world, the uranium price has to go up.

‘And the uranium price can go up because the price of uranium is as little as 3% of the total cost of delivering electricity from a nuclear power plant. Even if the uranium price were to double, it would make an almost imperceptible difference in the final cost of producing electricity from a nuclear power plant.’

Uranium is shaping up to be a classic resource scenario Rule loves – a contracting industry in the face of a supply/demand imbalance in a market everybody hates.

This is a good reason to put uranium stocks on your speculative watch list.

Callum Newman
Editor, Money Weekend

The Most Important Story This Week

A key signal professional stock market traders watch is the ’200 day moving average’. When the market breaks below or above this point, it’s often a reliable guide for which way the market is going to go. The Aussie stock market had dipped below this level but rallied this week. But don’t trust the rally – the market is at the risk of a big drop according to Slipstream Trader Murray Dawes. See why in The Stock Market Gets Squeezed. Keep your eye out for an update this afternoon, too!

Highlights in Money Morning This Week…

Merryn Somerset-Webb on Two Reasons to Steer Clear of the Chinese Stock Market: ‘The real argument against anyone but stock traders investing in the Chinese stock market isn’t really anything to do with the current price or with the various theories about how equities should or could be valued, or about the noise surrounding the political changes and economic slowdown. Instead…’

Kris Sayce on Don’t be Fooled by Australian Housing’s Death Fart: ‘Bottom line: Investments should make you money. That’s not to say all investments will make you money, but that’s the goal. One thing’s for sure, borrowing to buy an expensive house is the easiest way to lose cash hand over fist.’

Dr. Alex Cowie on Picking the Hot Commodity Stocks of 2013: ‘First, a recap of previous ‘hot commodities’…In 2011 it was potash. In 2010 is was rare earths. And in 2009 it was lithium. In each case there was a trigger factor that pushed the simmering fundamentals to boiling point, triggering a mania phase in the stocks exposed to that commodity.’

John Stepek on Beware the Bank of England: UK Economy Going Down: ‘There’s one book that every central banker should read. It’s not by Friedrich Hayek or John Maynard Keynes. It’s Mary Shelley’s Frankenstein. In it, Dr Frankenstein has the hubris to believe he can use science to short-circuit nature, and re-animate something that should be dead…The parallels are striking.’

What Japan’s Energy Supply Crunch Means for Uranium Stocks

By Central Bank News
   Colombia’s central bank cut its benchmark interest rate by 25 basis points to 4.5 percent, a surprise to financial markets that had expected rates to be held steady, saying economic growth was slowing “slightly more than expected.”
    Banco de la Republica Colombia has raised rates two times this year and cut rates three times with the intervention rate now 25 basis points below the level it started the year.
    “After annual growth of 4.8 percent in the first half of 2012, recent indicators suggest that activity is moderating slightly more than expected,” the central bank said in a statement, adding that the weak global economy and decline in domestic demand was reflected in lower exports and industrial output.
     Colombia’s Gross Domestic Product grew by 1.6 percent in the second quarter for an annual rate of 4.9 percent, up from 4.8 percent in the first but down from 6.1 percent in the fourth quarter.
    The central bank said the range of forecast for this year are between 3.7-4.9 percent, with 4.3 percent the most likely. 

    The major risks to Colombia’s growth next year remains a “significant recession in Europe” and the uncertainty surrounding the U.S. fiscal issues.
    “For 2013 external demand for Colombian products is expected to show moderate but sustained growth, stable international prices and ample liquidity,” the bank said, adding economic activity should be close to the country’s productive capacity.
     Credit growth continues to slow, the bank said, adding inflation remains very close to the bank’s 3.0 percent midpoint target range. 
    In October Colombia’s inflation rate eased to 3.06 percent, down from 3.08 percent in September and 3.1 percent in August. A recent poll by the central bank showed that inflation this year is expected to end at 3.03 percent.

    www.CentralBankNews.info

No follow-through after the big surge in stocks on Monday. Nothing has changed. We still have a punky stock market that appears to want to go down.

So, let’s change the subject. Let’s talk about the frogs. We love the French. We lived among them for 15 years. We learned their language. We learned their ways.

But we never learned to love the way they treat people who try to make a buck. They act as though it were a crime… or should be. And if you actually succeed — despite the efforts of the French regulators, politicians, solidarity whiners and union bullies — they take the money away from you.

Nobody is as greedy as a Frenchman who doesn’t care about money. He pretends to think it is vulgar to earn money… but he has no inhibitions about spending it. Especially if it doesn’t belong to him. Just drag a 10 euro note through the streets of the 16th or the 9th arrondissement of Paris. You’ll soon be trailed by a small army of tax collectors.

Trouble is, the tax collectors have few targets left. The rich are deserting the country. From The New York Times:

Quite a few of France’s most wealthy already have moved abroad to avoid the country’s stiff inheritance and wealth taxes. Now, real estate agents say, the younger working wealthy are also on the move, unhappy at the prospect of a 75% tax on income of more than 1 million euro, or $1.28 million, and a capital gains tax of over 60% on stocks, bonds and company sales.

Le Downgrade

Raising taxes has cost France some of its most successful and more productive citizens. But it hasn’t done much to help the country’s finances. Moody’s downgraded its debt again on Monday. As Reuters reports:

Moody’s Investors Service downgraded France’s sovereign rating by one notch to Aa1 from Aaa, the agency said on Monday, citing the country’s uncertain fiscal outlook as a result of “deteriorating economic prospects.”

Moody’s said it is maintaining a negative outlook on the country due to structural challenges and a “sustained loss of competitiveness” in the country.

Standard & Poor’s has a AA-plus rating and negative outlook on France, which it downgraded by one notch in January from AAA. Fitch Ratings has France at AAA, also with a negative outlook.

The loss of Aaa rating from two agencies poses a problem for France, as investment funds often require their best assets to have a minimum of two top notch ratings in order to remain in their portfolios.

The zombies have their man in power: Francois Hollande. But the French president is finding that he can’t please all the zombies all the time.

France has already borrowed and spent too much. It can’t plausibly shift more of the national wealth to the zombies without destroying its credit.

This puts Hollande in a tough spot. He has to raise revenue. But he can’t squeeze the rich much harder.

This week, he explained his approach. In addition to tax hikes aimed at the rich, he also proposes to raise the sales tax from 19.6% to 20% on a range of consumer items. Plus, he’ll impose special punitive taxes on some items.

The War on Chocolate Spread

One thing in that unhappy category is palm oil, on which the tax will be quadrupled.

What’s wrong with palm oil? Apparently, some of Hollande’s zombies argue that it is bad for your health and bad for the environment.

But other zombies, also his supporters, eat a lot of Nutella — which is a bit like peanut butter, but made from hazelnuts, chocolate and palm oil. The French consume 75,000 tons of the stuff every year. For many it is an important part of the diet. So, the French Communist Party has declared that a tax on Nutella is a “tax on the workers.”

What’s poor Hollande to do? He needs to raise revenue on one side. His commie supporters are on the other. And then there are the palm oil haters!

Ooh la la! “The tide is turning for France,” remarked a fund manager interviewed by CNBC yesterday.

The French economy is not growing — with GDP increasing at 0.2% in the recent quarter, well within the range of statistical error. Its rich people are leaving. It has high unemployment. The debt rating agencies are on its case. And this week’s Economist newspaper cover shows a bundle of French baguettes with a lighted fuse. The headline: “The time-bomb at the heart of Europe.”

“French bashing,” huffed finance minister Pierre Moscovici.

P.S. On Dec. 31, a Devastating “Economic Suicide Bomb” Will Cripple the Stock Market

401(k), IRAs, mutual funds — even your savings account — could all be wiped out…

Unless you take these unconventional steps RIGHT NOW to protect your wealth.

I’ll show you 27 alternative investments that are far removed from the coming attack.

A few of them could make you a fortune, even as the stock market crumbles.

Disclaimer

By David A. Banister

Natural Gas Trade Idea

Recently we wrote about Natural Gas ETF UGAZ on the ATP Free Blog site as a sample of buying the dip or using the “cup with handle” dip buying for profits.  Our November 11^th article discussed waiting for a pullback to the 30-31 ranges on UGAZ and then going long for a reversal.

Within 48 hours the dip came into the buy range, and within a few days UGAZ ran to the $38 range for as much as a 24% reversal trade gain.  Even now some 9 days later UGAZ trades around $36 per share for nice gains.

Research In Motion Trade Idea

Another sample we had for subscribers was on November 7^th in RIMM stock.  We advised waiting for a pullback from 9.15 ranges to the 8.50-8.70 ranges.  When the pullback came this is what we sent to subscribers:

ATP Active Trade Alert

RIMM- 8.64 has fallen as projected in to the 8.50-8.75 swing entry buy ranges.

This is an active trade meaning 1-5 days likely and a stop should be placed at 4-6% below your entry and NO LOWER than 8.00 for aggressive partners who take the trade.

Now on November 20^th, about two weeks later, RIMM is trading near $10.00 per share.  The stock fell to 8.14 during the market correction which was above the $8.00 stop and above a 6% stop loss range from entry.  Partners who remained long would now be sitting on gains of 14%.

Consider joining our Swing Trading service we call Active Trading Partners and get education, advice, and on-going daily updates.  You will also receive our Market Trend Forecast service which covers Gold, Silver, and the SP 500 short and intermediate forecasts.

David A. Banister
Chief Investment Strategist
www.ActiveTradingPartners.com
www.TheMarketTrendForecast.com

DISCLOSURE: Past performance is not a guarantee of future results. Trading is risky and money can be lost on any single position at anytime. Subscribers should always consult with a Professional Advisor and determine their risk profile and risk tolerance. ATP is a subscription based service and subject to the terms of agreement.

By Central Bank News

It’s a critical time for our nation. This may be one of our last opportunities to have much to be thankful about.

It’s all about money this week. It’s another American holiday that’s been drowned out by the marketers.

The grocery stores are humming. The airplanes are stuffed. The bars will be crowded tonight. And come tomorrow… the stores want to open as early as they can.

Most retailers wouldn’t close for Thanksgiving, except reopening creates a kind of fake sense of urgency. The hourly workers are upset because they can’t spend time with their families… but I think they’re mad because they can’t be out shopping.

To me, it all feels very European. The workers are striking because they want more time off. It’s owed to them, they say. They have a God-given right to sit at home and watch football on Thursday.

I say let them have the day off. If we continue down this path, it will be a long time until this country has much to be thankful for.

The majority of us will sit down to a meal of thanks. It’s a time dedicated to showing appreciation for the things that are plentiful in our lives. The first Thanksgiving was about food and security.

But over the centuries that have followed, that has changed.

Now we give thanks for our scientific innovations… there’s an easy cure for the ailments that killed so many early settlers.

We give thanks for our technological breakthroughs… I’ve got more mapping power on my phone than the captain at the helm of the Mayflower could have dreamed of.

We give thanks for Black Friday sales… and the money it generates.

And now we give thanks for our political freedom… I can write what I want. I can say what I want. And I can own all the guns I want. Hell yeah.

But when we carve that turkey tomorrow, we should all be thankful for just one thing. It’s simple. And it’s tucked inside those headlines about Wal-Mart, the fighting in Israel, and America’s dire fiscal situation. We must be thankful our situation is not far worse than it is. By every measure, we should be in economic agony.

And — this is the rough part — if my thesis is right, this will be the last year we’ll be able to be thankful that we’ve been spared.

It’s coming our way, dear reader.

Out of everything that’s in the news this week, it’s the brewing battle in the Mideast that’s most troubling. These people are as fanatical as they are dangerous. If we think the divide between the Left and the Right is dangerous in this country, wait until we see what kind of furor ancient religious hatred can stir in a society.

Bernanke and his pals can print money until we’re all millionaires and Obama can slash taxes and increase handouts until our balance sheet implodes… but it won’t matter a lick if the world is fighting a religious war.

Again, this is not political. What’s happening in Israel is religious.

That means there is no room for compromise. The kind of half-assed schemes that keep Washington out of hot water won’t keep the Mideast from boiling over.

For us here at home, this pre-war shuffling doesn’t mean a whole lot. At least not yet. Obama has done a world-class job of deflecting (or ignoring) the issue. But the situation introduces yet another layer of risk. And the last thing investors need right now is more risk.

The risks from the region are incredible. If the battle for Israel escalates to an all-out war that involves American troops, it will turn into a circus that makes the fiscal cliff look like a crack in the sidewalk. Our nation is not in a place economically or politically to enter a battle with what are literally biblical ramifications.

The next few months are critical to your wealth. If you haven’t found the appropriate shelter… be thankful for what you’ve got. You may not have it much longer.

Disclaimer

London Gold Market Report
from Adrian Ash
BullionVault
Friday 23 Nov, 08:25 EST

The DOLLAR PRICE of physical gold rose back to $1734 per ounce in London on Friday morning, nearing the top of the last 5 weeks’ trading range as so-called “risk assets” also crept higher.

Asian and European stock markets were slightly stronger, while the single Euro currency pushed back above $1.29.

Commodity prices added 0.5% on the broad GSCI index. Silver touched its best Dollar-price in 6 weeks above $33.50 per ounce.

“Activity is muted,” said one London dealer, with US markets due to re-open but many traders extending the Thanksgiving holiday.

“[The gold price] is stuck between $1715 and $1740 area for now,” Reuters quotes Ronald Leung at Lee Cheong Gold Dealers in Hong Kong.

“But speculators are still bullish on gold, as uncertainties about the ‘fiscal cliff’ hang around and they believe that central banks around the world will stay loose on monetary policy.”

On a technical analysis, the gold price “is just a few dollars shy of its 50-day moving average sitting at $1741,” says a note from Swiss investment and bullion bank, UBS.

“More importantly, a key technical level [is] lurking at $1739.10…A break above this level, which is the month’s high, would be a crucial bullish development.

Again citing the US holiday, “Market participants may have to wait until after the weekend to see some action,” UBS adds. “[European] investors still have the day ahead to position for what may be an exciting week.”

Next week the US Treasury will seek to raise $99 billion in new debt, according to Bloomberg data.

Treasury bond prices rose Friday, pushing interest rates down to just 1.67% on 10-year debt.

“Pimco is avoiding, or trying to keep a low weighting, on maturities beyond 10 years,” said Tony Crescenzi, a portfolio manager at the giant bond-fund group, in an interview. “Because we know the Fed’s intent is to reflate a deflated economy.”

Nearer-term, he believes, “Treasuries provide good insurance against macro risk.”

British Gilts and German Bunds also rose Friday morning, reducing 10-year German yields to just 1.42% – despite stronger-than-expected Ifo business confidence data – after the S&P ratings agency cut the status of 3 more Spanish banks.

Spain’s sovereign debt prices fell, nudging 10-year interest rates up to 5.68%.

Spain’s wealthiest region, Catalonia, goes to the polls on Sunday for elections which local president Artur Mas has called a referendum on independence from Madrid.

Over in Athens meantime, negotiations continued over €31.2 billion in bail-out funds which Greece has been waiting for since June from the International Monetary Fund.

The IMF said this morning that Greek debt would be “viable” if cut to 124% of GDP by 2020. It is currently on track to hit 190% by 2014.

“It’s natural [we] look out for other types of assets,” today’s Financial Times quotes a Brazilian economist after new data showed the central bank adding more than 17 tonnes of gold bullion to its national reserves in October.

That took Brazil’s total reserves to 53 tonnes, an 11-year high.

The latest gold reserves data from the IMF also show Turkey, Kazakhstan and Russia again raising their national holdings as well.

Adrian Ash
BullionVault

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

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold today vaulted in Zurich on $3 spreads and – starting this Sunday – just 0.5% dealing fees.

(c) BullionVault 2012

Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

Risk momentum builds up as Thanksgiving weekend approaches. However, the Canadian dollar is projected to close the week in losses opposite its fellow commodity currency, Australian dollar, as data this week from China bolstered demand for the Asian currency. Meanwhile, retail sales figures from Canada disappointed investors and leads traders to purchases of the Aussie instead.

Statistics Canada reported yesterday that retail sales in September failed the 0.5 percent median estimate of economists for both the headline and core data. Headline sales rose 0.1 percent to C$39.1 Billion for the third consecutive increase. Gains at new car dealers were offset by declines at department stores and gasoline stations, according to the report. As for Core Retail Sales, purchases were little changed at C$30.3 Billion in September. Core data came out at 0.0 percent for the period.

According to a Bloomberg economist survey, the nation’s economic growth rate could likely remain less than 2 percent through the rest of this year. Consumers are reacting to slow employment growth and tighter rules on mortgage borrowing that Finance Minister Jim Flaherty imposed in July to ease the risk of a housing bubble.

Contrasting the weakness in the Maple Leaf, Bloomberg reports that the improving outlook for the second largest economy in the world has helped buoy risk sentiment this week. The private report on Chinese manufacturing released yesterday indicates expansion for the first time in 13 months. China’s HSBC Flash PMI data rose to a high of 50.4 points in November, compared with a final level of 49.5 in October. Figures above 50 indicate growth. This is the latest indicator of recovery in the real economy following last month’s data which showed solid credit growth, firmer exports and rising industrial output. Positive developments in China, being Australia’s primary trading partner, have shown bullish effects on the Aussie this week.

These economic data are anticipated to weigh on the Loonie and lead AUDCAD traders to a buy bias as the trading week comes to an end. A buy position is recommended, but be wary of probable technical price corrections.

For more news, analysis, technical charts and candlestick analysis, visit AlgosysFx Forex Trading Solutions.

By TraderVox.com

Tradervox.com (Dublin) – The Aussie continues with a spirited rally, pushing it to make a weekly gain against most currencies as global stocks rallied boosting the demand for riskier assets. Australian benchmark bond yields also rose to the highest in a month as speculation of an agreement between the European finance ministers emerged. Euro zone finance ministers have postponed the decision twice and the November 26 meeting is seen as the last time they will be meeting about Greece. Most analysts and economists expect the finance chiefs to agree on an aid package for Greece.

The Australian dollar has strengthened this week as data from China, the country’s largest trading partner, indicated that the manufacturing sector in China is improving. The demand for the Australian dollar and the New Zealand dollar was boosted despite an Australian billionaire claiming that Australia risks getting into a Europe-like crisis. According to Jim Vrondas, who is a manager at an online foreign-exchange dealer known as OzForex Ltd, the Aussie may extend toward 1.05 level despite its failed attempts to reach this level at 1.03. Jim predicted that the Australian dollar may strengthen to 1.0420 at the start of next week.

The Australian dollar rallied as the MSCI World Index of stocks rose by 0.5 percent yesterday, making it a three percent rise this week. Australian bonds rose as the Australian dollar remained supported despite swaps traders adding to bets the Reserve Bank of Australia may cut benchmark interest rate from 3.25 percent during their meeting in December. According to Jim, the Aussie is showing much strength considering the RBA’s outlook and the market predictions concerning the interest rate.

The Australian dollar rose to $1.0379 against the dollar in Sydney from its close yesterday of $1.0390. The currency had fallen to a low of $1.0288 on November 16 and has also touched its highest of $1.0425 this week.

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