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London Gold Market Report
from Ben Traynor
BullionVault
Monday 3 October, 08:00 EDT

U.S. DOLLAR gold bullion prices began the week strongly, climbing to $1663 per ounce Monday morning London time – a 2.4% gain on Friday’s close – while stocks and commodities fell and government bonds rose following news that Greece’s second bailout agreed less than three months ago is unlikely to be enough.

Silver bullion prices also rose, climbing to $31.43 per ounce – 4.9% above where they ended last week.

“Surprisingly gold and silver has been rallying in a very thin market,” said one Hong Kong bullion dealer this morning.

“If there is no more fund liquidation in the beginning of a new quarter, and given that doomsday is just a few weeks from us, is the safe haven property of precious metals back in fashion again?”

The net long position of bullish minus bearish contracts held by noncommercial – so-called speculative – gold futures and options traders on New York’s Comex exchange fell by more than 20% in the week ended September 27, according to data published Friday by the US Commodity Futures Trading Commission.

Speculative net longs fell to 158,754 100-ounce contracts – the lowest level since May 2009, and equivalent to 494 tonnes of gold bullion – as the number of short positions rose while long positions decreased.

“The continuation of the decline in speculative longs indicates the increased caution with which participants are approaching the gold market,” says Marc Ground, commodities strategist at Standard Bank.

“Taken together with the increase in speculative shorts – which are currently at relatively high levels – gold appears to have returned to the vulnerability of several weeks ago.”

As a percentage of all open interest, speculative net longs fell to 19.2% – the lowest level since the week ended 18 November 2008, when the figure was 12.3%. The price of gold bullion at the PM London Fix that day was $738 per ounce – it has not been lower since.

The gross tonnage of gold held to back shares in the SPDR Gold Trust (ticker GLD) – the world’s
largest gold ETF – also fell last week, following a sharp rise that started towards the end of August.

The GLD held just under 1232 tonnes of gold on Friday – down from 1252 tonnes a week before.

“The continued mix of default fears and economic slowdown are likely to trigger further pockets of cash generating long liquidation,” warns a note from Swiss gold bullion refiner MKS.

Despite the outflows, Friday’s GLD holdings were less than one tonne below the amount held on 6 September, the day the gold price hit its all-time intraday high of $1920 per ounce.

“To be clear, physical demand right now is not just decent, it is exceptionally strong,” noted UBS precious metals strategist Edel Tully last week.

The CFTC data also show a sharp drop in speculative net long silver positions – together with a corresponding fall in net short positions held by commercial traders (including miners, refiners and bullion banks) who take the other side of that trade.

In Europe meantime, the Greek government announced Sunday that it expects to miss deficit targets agreed earlier this year with its ‘troika’ of creditors – the European Central Bank, European Union and International Monetary Fund – despite announcing fresh austerity measures.

Greece now expects its deficit is to be 8.5% for 2011 – compared to the 7.6% forecast on which a
second bailout worth €109 billion was agreed in July.

“Greece is bankrupt,” says Michael Fuchs, deputy parliamentary floor leader for Chancellor Merkel’s Christian Democratic Union party.

“Probably there is no other way for us other than to accept at least a 50% forgiveness of its debts.” Private sector banks agreed in July to accept a 21% write-down in the value of their Greek debt holdings.

“I am warning in the most forceful way against any material revision [of July’s agreement],” said Deutsche Bank chairman Josef Ackermann on Sunday.

Ackerman is also head of the International Institute of Finance, which agreed the terms under which
private creditors would undertake a bond swap.

“If we reopen the voluntary accord of July 21, we will not only lose precious time but quite possibly also private investor support…the impact of such a move will be incalculable.”

Over in China meantime – the world’s second-largest source of private gold bullion demand – manufacturing growth accelerated in September, according to official data published Saturday.

China’s purchasing managers index (manufacturing) rose to 51.2 – up from 50.9 for August (a figure above 50 indicates sector expansion).

Here in Europe, data published today show German manufacturing grew slightly last month, with PMI rising to 50.3 from 50.0 last month.

For the Eurozone as a whole, however, manufacturing activity continued to contract, with the PMI coming in at 48.5 – down from 49.0 in August. Here in the UK, manufacturing PMI rose to 51.1 – up from 49.4 for August.

Ben Traynor
BullionVault

Gold value calculator | Buy gold online at live prices

Editor of Gold News, the analysis and investment research site from world-leading gold ownership service BullionVault, Ben Traynor was formerly editor of the Fleet Street Letter, the UK’s longest-running investment letter. A Cambridge economics graduate, he is a professional writer and editor
with a specialist interest in monetary economics.

(c) BullionVault 2011

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.

Source: ForexYard

Financial markets in Europe took another hit on Monday with more news coming from Greece regarding its debt woes.

According to a deal brokered with the IMF and the EU, Greece agreed to cut its deficit to 7.6% of GDP. However, as of Monday Greece indicated that this year’s deficit would be well over 8%.

With this target budget being missed, there is an increased possibility that Greece will default.

With news like this emanating from the EU, investors may indeed maintain reservations on the strength of the euro.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

Oct. 3 (Bloomberg) — Seijiro Takeshita, a director at Mizuho International Plc, talks about the quarterly survey of Japanese manufacturers and the Bank of Japan’s fight to weaken the yen. He speaks with Owen Thomas on Bloomberg Television’s “Countdown.” (Source: Bloomberg)

How to Profit From the Fastest-Growing Energy Sector

by David Fessler, Investment U Senior Analyst
Monday, October 3, 2011

You might think this is going to be another article about natural gas, oil shale, or the tar sands.

It’s not.

Sure, they’re all booming energy sectors, and we desperately need them to offset the decline in foreign oil imports here in the United States.

But the fastest growing energy sector between now and 2035, bar none, is renewable energy. Take a look at the graph from the EIA below.

The growth of hydro and other renewables is projected to rise 2.7 percent annually through 2035, according to the EIA’s recently published International Energy Outlook 2011.

It projects overall global energy use to increase from 505 quadrillion Btus in 2008 to 770 quadrillion Btus in 2035. That’s a 53-percent increase. Much of it will come from China and India, where strong, long-term economic growth will drive the demand for more and more energy.

Who Will Lead the Way in Renewables?

If you guessed the United States, you’re wrong. Sure, renewable energy has made some inroads due to individual state-level mandates. But the lack of a comprehensive energy policy at the federal level insures we won’t be leading the global renewables charge.

Who will it be? India and China… who else? They’re the two countries growing the fastest, and will experience the largest demand for energy. It stands to reason they’ll lead the way in the growth and implementation of renewables.

In terms of installed power generating capacity, hydroelectric should see the largest growth by far, rising to over 1,400 gigawatts by 2035. Check out the graph below.

The graph doesn’t tell the whole story, however. That’s because in terms of growth rates, solar power should increase the fastest, at 8.3 percent per year over the period.

Wind comes in at 5.7 percent, geothermal at 3.7 percent and other renewables at 1.4 percent. Hydropower only manages a two-percent growth rate, but there’s already plenty of it installed globally, so it’s overall contribution will be far greater.

What’s the Best Way to Play the Renewables Boom?

I like the long-term prospects for solar, especially on a global basis. First Solar, Inc. (Nasdaq: FSLR) is my favorite solar company. They’ll have some of the lowest-cost, highest-efficiency panels around when all the solar carnage ends.

That’s because it uses an advanced, thin-film technology that most other manufacturers have shunned. The company is vertically integrated, selling modules, panels and entire utility grid-scale solar installations.

The stock is down over 50 percent in the last year, and trades at a very reasonable P/E of 11. Expect First Solar to be one of the “last men standing.” Margins will increase and costs will continue to drop for the Arizona-based company.

Right now, shares of First Solar are selling at rock-bottom prices. But as world demand continues to ramp, First Solar will be one of the winners in the solar sector.

Good investing,

David Fessler

Article by Investment U

We get as well ISM as nonfarm payroll from the US this week. Furthermore an interesting ECB-meeting Thursdays.

Some investors are talking about a ECB-ratecut. Jyske Bank doesn’t expect that to happen.

Senior Strategist Ib Fredslund Madsen outlines the coming week.

Legal information

Video courtesy of en.jyskebank.tv

Video courtesy of ForexCT – A leading Australian forex broker, liscensed by the Australian Securities & Investments Commission, offers the MetaTrader4 and PROfit Platform to retail traders. Other services include Segregated Accounts, Trading workshops, Tutorials, and Commodities trading.

By ForexYard

U.S Non-Farm Data release is set to dominate the trading between the Dollar and its major currency pairs this week. A number of other factors are also likely to impact the forex market today, such as the US Manufacturing PMI and minimum Bid Rate. Traders may find good opportunities to enter the market following these vital announcements.

Economic News

USD – Dollar Gains on Euro Losses

The dollar saw a very volatile session during last week’s trading. The dollar began last week’s session with a falling trend against the euro and the British pound. The EUR/USD pair reached as high as the 1.3680 level and the GBP/USD reached as high as the 1.5715 level. Yet eventually both pairs reversed trends, the EUR/USD is now trading near the 1.3320 level, and the GBP/USD near the 1.5500 level.

The dollar extended gains versus the euro on Friday after data showed U.S. consumer spending adjusted for inflation was flat in August as income fell for the first time in nearly two years, forcing households to dip into savings. Purchases rose 0.2 percent after a 0.7 percent increase the prior month

As for this week, the most exciting economic release is expected on Friday, as the Non-Farm Employment Change is scheduled. Current expectations are that the labor sector in the U.S. continues to recover during October. Traders are also advised to follow the ADP forecast of this release, which is expected on Wednesday, as it is likely to create high volatility as well in the marker.

EUR – Euro Sinks against Majors

The euro fell against the dollar on Friday and was set for its biggest monthly loss in 10 months as weak German retail sales added to a grim outlook for the global economy, while markets doubted the firepower of a beefed-up euro zone bailout fund. As the result, the EUR fell sharply against the USD, pushing the oft-traded currency pair to 1.3320. The 16 nation currency experienced similar behavior against the GBP and closed at 0.8580.

A higher than expected euro zone inflation reading for September dampening any prospects of a near-term ECB interest rate cut had little impact on the common currency. Analysts said the inflation outlook was benign, with markets staying focused on the likelihood of another recession. Adding to signs the global recovery was stuttering, German retail sales tumbled 2.9% on the month in August, falling at their fastest pace in more than four years.

Looking ahead to the following week, many interesting economic publications are expected from the euro-zone. The most significant of the all will surely be the Minimum Bid Rate, which is scheduled at Thursday. The Minimum Bid Rate is in fact the euro-zone’s interest rates announcement for February, and analysts estimate that the ECB will leave rates at a record low of 1.50%. Traders are also advised to follow the ECB’s press conference which will be held at the time, as this is also likely to generate high volatility in the market.

JPY – Foreign Influence over the Yen will Likely Continue Today.

The Yen completed yesterday’s trading session with mixed results versus the other major currencies. The JPY was broadly unchanged versus the EUR yesterday and closed its trading session at around the 103.60 level. The JPY also saw bearishness against the GBP as it fall around 100 points and closed at 119.60.
As for today, Japan will be absent from the economic calendar. The JPY’s trends will be affected by the rallies of its primary currency pairs. It seems the USD and EUR are expected to continue a volatile trading session today and their crosses with the JPY will likely be as well. Traders should keep a close look on the news coming from the U.S. and Europe as these economies will be the deciding factors in the JPY’s movement today.

Crude Oil – Crude Oil Decline on Economic Concern

Oil prices slipped below $80 on Friday as the dollar strengthened and doubts remained about the resiliency of the economic recovery and Europe’s struggle with its debt crises.
Oil and other commodities denominated in dollars for global trading tend to rise when the U.S. currency falls as they become cheaper for holders of other currencies. A move away from dollar-based pricing of the world’s leading commodity could further weaken the greenback.
As for this week, traders should pay attention to the U.S Non-Farm report scheduled on Friday, as it tends to have a large impact on Crude Oil’s prices recently, especially for the short-term.

Technical News

EUR/USD

The pair has recorded much bearish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the 8-hour chart’s Stochastic Slow signals that a bullish reversal is imminent. An upward trend today is also supported by the 4-hour chart’s Slow Stochastic. Going long with tight stops may turn out to pay off today.

GBP/USD

The GBP/USD has gone increasingly bearish in the past few days, and currently stands at the 1.5520 level. The daily chart’s Slow Stochastic supports this currency cross to fall further today. However, the 2-hour chart’s Stochastic Slow signals that a bullish reversal will take place today. Entering the pair when the signs are clearer seems to be the wise choice today.

USD/JPY

The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

USD/CHF

The pair has recorded much bullish behavior in the past several days. However, the technical data indicates that this trend may reverse anytime soon. For example, the daily chart’s RSI signals that a bearish reversal is imminent. Going short with tight stops might be a wise choice.

The Wild Card

USD/DKK

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

Forex Market Analysis provided by ForexYard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The Bank of Albania decreased its main monetary policy interest rate by 25 basis points to 5.00% from 5.25% previously.  Bank of Albania Governor, Adrian Fullani, said: “The Supervisory Council decided to decrease the basic interest rate by 0.25 percent, by making its value 5 percent. This serves the achievement of the inflation’s objective in middle-term periods and at the same time it offers the necessary monetary conditions to stimulate economic activities in the country. I believe that this measure will be transmitted at the defined level,”

The Bank for International Settlements (BIS) released an interesting piece of research entitled ‘Central Banking post-crisis: What compass for uncharted waters?’ by Claudio Borio The essay covers the challenges emerging from the crisis that central banks must face, these challenges are economic, intellectual, and institutional.  The essay provides a “compass” for central banks to use in thinking about the challenges presented by the crisis, and more importantly the post-crisis environment.  “The compass is based on tighter integration of the monetary and financial stability functions, keener awareness of the global dimensions of those tasks, and stronger safeguards for an increasingly vulnerable central bank operational independence.”

By MoneyMorning.com.au

Introducing Professor Manganese: Q&A with Resources Expert, Dr Alex Cowie

Q: Copper has taken a bit of a smashing recently…what’s going on there? And do you still like ‘the red metal’

It’s not just copper. Nearly all commodities have ‘copped it’ in the last month

You can see this by looking at how the commodity indices have taken a belting recently. The ‘Continuous Commodity Index’ takes in 17 different commodities. This index fell as much as 13% in September.

So what caused the heat to come out of the market so quickly?

The commodities that make up a big chunk of this index, such as oil and copper, are heavily financialised. By this I mean a great deal of the commodity’s value is determined by financial players, rather than manufacturers and users. Instruments like Futures and Exchange Traded Funds let the market push the price of copper up and down, for example.

It’s hard to say exactly, but it seems that about a quarter of the price of copper comes from this financialisation. And if the market is having a tough time, traders and funds can quickly cause a fall in commodity prices by selling these instruments. Even though none of them would know a copper ingot if it ran into their kitchen and bit their knees off.

I’ve been using copper as a forecasting tool for years, but, because of these distortions, I am starting to ask questions about how good it is.

So it’s good to keep an eye on other commodities that don’t have these confusing influences. Traditionally copper has been called ‘Dr Copper – PhD in Economics’ as it picks the direction of economic growth. But this financialisation may have made the good doctor a bit unreliable.

Q: So if copper is distorted then what do else do you look at?

I’d like to introduce you to ‘Professor Manganese’

This metal is mostly used in steel making, so is a rough indicator of what direction global economic growth is going. It also has a simple market. No traders are out there ‘shorting 50 December 2013 manganese future contracts’ or ‘arbitraging between Chinese and US manganese ETFs’.

Producers make the stuff – and buyers use it. It’s an honest metal.

And manganese prices have actually been rising slowly for most of this year. It’s not enough to shout from the rooftops about, but it is something positive to keep an eye on.

Q: That must be one of the few indicators pointing up at the moment. Can you see any others?

There aren’t many, and it’s easy to miss them when the headlines are filled with bad news from Europe and the US.

But when everyone else was focused on the footy over the weekend, I noticed China’s Purchasing Managers Index (PMI) turn up quietly. (I’m an exciting guy… what can I say!)

The PMI is a measure of Chinese industrial production levels, new orders from customers, speed of supplier deliveries, inventories and employment levels.

So it is worth keeping an eye on, as it gives a good idea of what to expect next from economic growth and also commodity demand in the coming months.

Click here to enlarge

What’s interesting is that the PMI chart for this year has done a very similar thing to last year: a dip in March, then a rally, then a dip in August, followed by a recovery. If the script holds true then we should see the PMI keep rallying for the next four or five months.

It’s not just China though. In last week’s fog of bearishness, the market missed the fact that Chicago’s PMI turned up as well. This gives us a good idea of what is happening to US industry.

One month is not a trend, but this month’s increase is good news all the same. The index is also doing similar things to last year. This may be because of seasonal factors. If it is, then we may be looking at the start of a rally here too.

Click here to enlarge

If this really is the start of a trend for China and Chicago’s PMIs , then we should see commodity prices start to recover by year’s end.

This would be great news for resource stock investors who have had a tougher year than most.

Q: But hasn’t gold been a good place to invest again this year?

Gold got as high as US$1932 last month, and was looking ready to crack US$2000.

It has pulled back since then to the low US$1600s. The recent drop may have investors rattled, but the fact is that it is still up 15% for the year. That’s a return you won’t find in many other places in this market!

All that the fall in gold price does is to bring it back to its long-term trend. It is now hovering around gold’s 120-day moving average. This is a technical level that has often given support whenever the price has pulled back in the last few years. I’ve marked it on the chart below.

Click here to enlarge

Q: So what happens next for gold?

I’d be happy to see gold spend a bit of time at this level. The more it consolidates here, the better the chart looks.

I’m not sure it will have too long to settle though! The case for a rising gold price is as strong as ever. Government debt levels are still rising, and central banks are increasing the money supply. Meanwhile gold is in limited supply and miners produce less each year.

Adding to this we now have the European bailout fund getting closer to increasing to two trillion Euros! This will involve increasing debt levels, and can only be positive for gold prices.

We recently had the Fed announce Operation Twist. The market hasn’t been excited about this at all, and no one expects it to drive markets much.

The Fed starts Operation Twist in the States tonight, and it will last for the next nine months. The Fed won’t increase its balance sheet in the process, in other words there is no ‘money printing’. But at the same time, it will overall reduce the money making opportunities in the bond market. In turn this will push investors into riskier investments than normal.

I think that the market may be surprised at the effect the Twist has on the market. Last time it was put into play during the 1960s, the market rose 50% over the two years it was in effect.

But with money being forced to look for a home elsewhere, and not much yield available in the bond market, I think the real winner will be the gold price.

If the last few pullbacks in gold are anything to go by, gold may spend another week or two at this level.

After that, I think we will see the next steady climb, which will almost certainly take the price north of $2000.

Publisher’s note: Dr. Alex Cowie holds a Graduate Degree in Finance and Investment from the Financial Services Institute of Australia – which he puts to good use as editor of Diggers and Drillers – Australia’s premier resource stock advisory. Alex’s job is to travel the globe looking for the Aussie resource stories that are yet to be told… then tell them to his readers. You can get a look at what’s on his radar right now by going here.

What Can We Expect Next From Commodities? – A Q&A with Resources Expert, Dr Alex Cowie.