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Timing & trends

Pullback to US$1,700 'Would See Significant Support'


Posted by Adrian Ash: BullionVault

on Wednesday, 17 October 2012 10:14

Wholesale bullion prices to buy gold recovered an early dip in London on Wednesday morning, rising back to $1,750 per ounce as European stock markets also rose and the single currency hit its best level in more than a month. 

The rising euro knocked the price for French, German and Italian investors to buy gold back to a 6-week low of €1,333 per ounce (€42,860 per kilo). 

That's some 4% below Euro-gold's new all-time high of Oct. 1. 

"I have been speaking to a number of GOLD DEALERS this week," says Swiss refinery and finance group MKS's senior trader in Sydney Alex Thorndike, "and the majority still feel there will be significant support on any extended pullback towards $1,675-1,700. 

"Most, myself included, think long-term macro investment buying and possibly even central bank demand would be seen at these levels, as well as a resurgence in physical interest from India – especially if the rupee remains strong." 

Commodities were broadly flat meantime on Wednesday, but so-called "safe haven" government bond prices ticked lower as Spanish debt rose on expectations of a formal bail-out request. 

The Moodys rating agency last night confirmed Spain's ranking above "junk" status. 

Madrid's 10-year bond yields today eased to their lowest spread above comparable German debt in 6 months. 

"Gold and the precious complex have been held afloat overnight and this morning by a stronger euro," says UBS strategist Edel Tully in a note. 

"Gold's ability to stay buoyed today will be dependent on foreign exchange moves and risk appetite." 

Silver prices today extended to 1.8% their rally from Monday's 6-week low for Dollar investors, recovering the $33 mark as the London Silver Fix approached at midday. 

The first drop in solar-panel silver demand for 12 years will likely dent 2013's average silver priceby more than 4%, according to New York-based consultancy the CPM Group. 

"China's near-term appetite for gold appears to be waning as bullion imports from Hong Kong slow," write analysts at London market-maker HSBC in a note. 

Shipments of gold bullion to China from Hong Kong – the major route for imports to buy gold – slipped nearly 30% in August from July, according to latest data from the Census & Statistics Department. 

"What we are hearing from our customers is that they were buying gold rapidly over the last couple of years," MarketWatch quotes Scotia Mocatta's managing director in Hong Kong, Sunil Kashyap, today. "But they would now see some of their stocks sold off before they rebuild their inventories." 

In base metals, "China destocking [in iron] has run its course," says Bloomberg this morning, quoting mining giant BHP Billiton's CEO Marius Kloppers, who believes that stocks of iron ore have now been depleted to provide a "base level" of demand. 

But with China responsible for 40% of global money-supply growth since 2007, "and money-supply growth in the developed world still flat on its back, a slowdown in China augurs for lower inflation – perhaps deflation – and higher real rates," says strategist Russell Napier at CLSA, Asia's largest independent brokerage. 

Higher returns to cash and bonds, after allowing for inflation, would likely dent prices to buy gold, Napier tells MarketWatch. 

"Nominal rates [are already] close to zero," he says. So sub-zero inflation would be "bad for gold." 

Over on the supply side Wednesday, South African miner Gold Fields said its ultimatum to striking workers at the Beatrix project – threatening summary dismissal – today saw 6,200 illegal strikers return to work. 

With up to 50% of South Africa's gold output now closed by wildcat action, Harmony Gold said overnight it may still implement a failed wage offer made jointly with Gold Fields and AngloGold – the world's fifth and fourth largest gold mining companies respectively. 

World No.2 gold producer Newmont today reported a 6% drop in third-quarter earnings, with a record $77 million bill for maintenance and restructuring at its operations. 

Looking to buy gold or physical silver bullion today...?

 

About the Author

Adrian Ash runs the research desk at BullionVault. Formerly head of editorial at Fleet Street Publications – London's top publisher of financial advice for private investors – he was City correspondent for The Daily Reckoning from 2003 to 2008, and is now a regular contributor to a number of investment websites.Adrian Ash



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Gold & Precious Metals

Gold & Silver Stocks Setting Up Positively During Metals Correction


Posted by Prezemyslaw Radomski via The Daily Gold

on Wednesday, 17 October 2012 08:28

Gold & Silver Mining Stocks Hold Well Despite Metals’ Correction

Despite a lukewarm, lackluster first half of the year, Gold has so far risen by 13 percent in 2012, nothing to sneeze at. The price of gold rose by about $215 in 2012, with most of the gains, $165 worth, having materialized in the last two months. This was after the U.S. Federal Reserve announced its plan to resume buying bonds to prop up the economy. The underlying bullish case for gold remains intact, given the prospect of indefinite loose monetary policy. Central banks have been supporting gold this year and it’s no wonder. They are well aware of the soon-to-be-enforced reserve requirements that call for greater holdings in gold. There is also demand from key consumers such as China and India.

Gold mining is also experiencing strikes. Members of South Africa’s biggest union this week rejected a proposal by the nation’s largest gold companies to raise wages and end strikes that have crippled the industry. This is affecting about 41 percent of South Africa’s gold output. 

While some mining companies see decreases in their outputs due to strikes, their direct competitors may benefit from this situation as investors rebalance their mining stock portfolios and substitute the less profitable companies with more successful ones. If the latter are included in popular indices (HUI, XAU), the latter are likely to show strength, especially given the open-ended QE.

The Quantitative Easing program will likely help to boost prices of virtually all stocks (and make the fall of the worst performing ones milder). Let’s take a look if that was really the case recently (charts courtesy by http://stockcharts.com.)

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The above S&P 500 Index chart does not include this week’s price action, but as we now know, stocks rallied and the S&P 500 is now above 1450.

Stocks have temporarily moved below the support lines that you can see on the above chart, but they have quickly moved higher and the situation looks bullish once again. The short-term trend simply remains up.

Let’s now have a look at the intermarket correlations to see how the situation on the general stock market could influence precious metals and mining stocks.

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The Correlation Matrix is a tool which we have developed to analyze the impact of the currency markets and the general stock market upon the precious metals sector. Once again we see the classic correlations this week as the USD Index is negatively correlated with the precious metals and the metals are positively correlated with the general stock market. The highest correlation in the past 30 days has been between the miners and stocks.

Please note that last week the miners did not decline as much as stocks did. While the correlation coefficient for the 30 trading days was very big, the one based on the past 10 trading days was only 0.6. Last week, mining stocks were simply not responding to the negative signals from the general stock market, which is unusual since they are normally highly correlated with stocks. With stocks now moving higher, the picture is quite positive for the miners in the short term – at least based on the general stock market and miners’ correlation with it.

Are the miners themselves holding well?

image05

Yes, they are.

On the above medium-term HUI Index chart (proxy for gold stocks), we see that the mining stocks didn’t decline below 500 last week and they, as surprising as it may seem, are above 500 also today even though gold and silver declined significantly on Monday.

Does it mean that the correction in the precious metals sector is over? Not necessarily – there are factors that need to be considered in addition to examining the picture in the HUI Index and S&P 500 to say that, however, it does seem very likely that the mining stocks will be a very good investment once the correction is indeed over. Assets that hold well during a correction are often the same assets that outperform when the correction ends and markets start to rally.

Summing up, the short-term outlook for the general stock market is bullish as stock prices moved back above the support line this week and the implications for mining stocks are bullish. The correction in the precious metals market may not be over at this point, but when it is over, miners might finally outperform the underlying metals once again.

In order to make sure that you won’t miss any of our free essays, we strongly suggest that you sign up for our gold & silver investment mailing list. Sign up today and you’ll also receive 7 days of access to our premium updates, market alerts, premium charts and tools. You’ll also receive 12 best practice e-mails as a starting bonus.

Thank you for reading. Have a great and profitable week!

Przemyslaw Radomski, CFA

Editor

www.SunshineProfits.com

Article Posted on October 16th by:

Jordan Roy-Byrne, CMT (Trendsman) is a Chartered Market Technician, a member of the Market Technicians Association and from 2010-2011 an official contributor to the CME Group, the largest futures exchange in the world. He is the publisher and editor of TheDailyGold Premiuma publication which emphaszies market timing and stock selection for the sophisiticated investor.

Since January 2010, The Daily Gold Premium Model Portfolio is up 129% compared to GDX (+15%) and GDXJ (+6%).  Jordan’s work has been featured in CNBC, Barrons, Financial Times Alphaville, Kitco and Yahoo Finance. He is quoted regularly in Barrons. Jordan was a speaker at PDAC 2012, the largest mining conference in the world and is a speaker for Cambridge House and Hard Assets conferences. Jordan earned a degree in General Studies with a concentration in International Economic Development. Jordan also lived and worked in Southeast Asia for 3 years in order to study economic development from an emerging market perspective. In his spare time he enjoys spending time with Mrs. Trendsman.

Contact: Jordan @ TheDailyGold.com

 

 



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Stocks & Equities

The Bottom Line: Entry Point Fast Approaching


Posted by Don Valiloux - Timing the Market

on Wednesday, 17 October 2012 07:28

The entry point for the seasonal trade in North American equity markets (on average during the past 61 years: October 28th) is rapidly approaching. The expected short term correction from mid-September has happened, but has yet to show signs of bottoming. Watch short term technical indicators for signs of an intermediate bottom. Sectors to consider include due to their favourable seasonality starting by the end of October include technology, agriculture, forest products, transportation, industrials, steel, consumer discretionary and China.

Interesting Charts

Short term momentum indicators for broadly based equity indices are recovering from oversold levels (notably a move by Stochastics above the 20% level). Typical of technical action at the start of the period of seasonal strength for equity markets!

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The recovery is happening at an interesting time, just before the U.S. Presidential election when equity markets typically start an intermediate upside move lasting until at least Inauguration Day in the third week in January.

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A word of caution about individual equities! Responses to third quarter reports released yesterday were exceptional, particularly by stocks reporting after the close. Most companies are reporting slightly higher than consensus earnings. However, many are missing consensus revenue estimates. Of companies that reported before the close yesterday, State Street gained 2.0% and Johnson & Johnson improved 1.4%. However, Goldman Sachs fell 1.3% and UnitedHealth Group slipped 0.6%. Responses to reports released after the close were downright scary. CSX added 1.7%. However, IBM plunged 3.5%, Intel dropped 2.2%, Linear Technology fell 4.0%, Apollo plunged 7.6% and Intuitive Surgical gave up 4.8%. Today and tomorrow are the days when the most S&P 500 companies are reporting third quarter results. Look for lots of volatility.

About the Great Author of this Daily ReportDon Vialoux

Don Vialoux has 37 years of experience in the Investment Industry. He is a past president of the Canadian Society of Technical Analysts (www.csta.org) and a former technical analyst at RBC Investments. Don earned his Chartered Market Technician (CMT) designation from the Market Technician Association in 1995. His CMT paper entitled "Seasonality in Canadian Equity Markets" was published in the Spring-Summer 1996 edition of the MTA Journal. Don also has extensive experience with Exchange Traded Funds (also know as Index Participation Units) as well as conservative option strategies. In 1990 he wrote a report that was released in the International Federation of Technical Analyst Journal entitled "Profiting from a Combination of Technical and Fundamental Analysis". The report introduced " The Eight Phases of the Stock Market Cycle", an investment concept that continues to identify profitable entry and exit points for North American equity markets.   He is currently a member of the Toronto Society of Fundamental Analyst’s Derivatives Committee.   Now he is the author of a daily letter on equity markets available free on the internet. The reports can be accessed daily right here at www.dvtechtalk.com.

 

 



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Currency

This can’t be a positive indicator


Posted by Jack Crooks - Black Swan Capital

on Wednesday, 17 October 2012 01:28

Screen Shot 2012-10-17 at 1.23.33 AM

Maybe it is too much to say the global financial system is coming apart at the center, but I don’t think it’s too much to say global cooperation is close to complete breakdown based on the recent dismal IMF meeting.



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Personal Finance

My goal is to change your investment results forever


Posted by Michael Campbell

on Tuesday, 16 October 2012 15:28

Screen Shot 2012-10-16 at 6.04.20 PMI hate reading junk postings so let me start by saying that if you’re not interested in finding out the techniques that Tyler Bollhorn used in September to make money on 90% of his trades or finding out how you can literally take 15 minutes a month to significantly improve your investment results then don’t read another word – and please forgive the interruption. 
 
If you’re still reading then let me get right to the point. My experience is that one of the big reasons people have trouble in the investment markets is because they don’t have a system to tell them when to buy and when to sell. What’s a shame is that with the right system and the right teacher, it’s easy – that’s right, easy – to get a set of tools that you can use immediately to improve your investment results. 
 
Speaking from personal experience - Tyler Bollhorn does a fabulous job of teaching those tools. The same tools he used in September to make money on 90% of his trades. That was obviously a great month but Tyler’s system of learning to identify new profit opportunities - and equally important, learning when to sell - has a terrific track record. 
 
Of course no system makes money every time but using a proven system certainly enhances you probability of success over time. 
 
Here’s the Deal
 
You should understand that my goal is to literally change your investment results forever. To that end I have asked Tyler to come and do two seminars - Monday, October 29th in Calgary and Tuesday, October, 30th in Vancouver – that focus on his specific techniques to vastly improve your investment results. 
 
Tyler will show how you can identify the specific patterns that indicate a stock’s going higher. As he says, “the vast majority of winning stocks show a simple characteristic early in their price trends. Abnormal price and volume activity out of the right kind of pattern will often lead to market beating trends in stocks, whether you trade to hold for days, weeks or years.” He will show you specifically what to look for and demonstrate the tools that he uses to identify these promising situations. 
 
This is just one part of the equation. Tyler will also focus on how to minimize risk and how to determine when you should sell. 
 
This Part Is Going To Be Really Interesting
 
If you are one of the people who says – “that’s fine but I don’t have the time” –Tyler will show you how your computer can do most of the work. He’ll show you how to research the entire market in only a few minutes. He will show you the technique he uses to filter the market for strong stocks and why getting tools that allow you to “read” the market is more accurate than human opinion can ever be.
 
If you don’t have even 15 minutes a day then Tyler still has a fascinating technique for you. Tyler has a strategy for trading Exchange Traded funds that requires 15 - 30 minutes a month and allows you to significantly improve your investment results. He will focus on identifying the sectors that are leading the overall market and stick with them while the trade is working. And he will show you when to get out of the trade. 
 
The Best Part – plus a Money Back Guarantee
 
Most trading seminar cost hundreds, if not thousands of dollars and if you learn some tools that help you improve your investment it is easy to make your money back many times over. Tyler usually charges upwards of $3,000 for his weekend seminar but I thought that with his new book coming out, The Mindless Investor, there might be an opportunity to get him to speak. I then asked Disnat to be the major sponsor. It’s all come together and Tyler has agreed to do an evening seminar with me on Monday, October 29th in Calgary and Tuesday, October, 30th in Vancouver – and the price is only $99. 
 
And if you can't attend in person you can order a subscription to the top-quality streaming video archive of the event.
 
As an analyst at Forex Mentor told me when he heard about the seminar – “if that price is a problem then you have no business being there.”  I agree but just to make it even easier I will personally give you your money back if Tyler doesn't deliver what I've outlined above. 
 
I think this is an incredible chance to learn how to improve your investment results. And let’s face it – it’s not hard to get $99 of value if you make even one transaction a year. 
 
Special Bonus
 
Our goal is to make sure you can use the techniques immediately and to that end I’ve asked Tyler to also make available:
  • A two month subscription to his daily newsletter and trade alert, normally a $118 cost, (for new subscribers only)
  • PLUS a two months Stockscores Advanced membership, regularly a $58 cost,  (again for new Stockscores members only). 
  • PLUS I am working one other special bonus for attendees that I’ll tell you about at the event. 
 
Finally 
 
The truth is that it’s not really about money back guarantees and bonuses. We’re just trying to make it as attractive as possible. Our goal is straightforward – we want to permanently improve your investment results – and this seminar can do it.
 
All my best, 
 
Mike
P.S.  As you may know from past conferences, I’m especially keen on educating younger people – and older people for matter – (no age discrimination allowed) – so we are allowing the first 25 ticket buyers for each location to bring a younger (or older) friend at NO extra charge. Just write that you want the 2nd free ticket in the Order Notes when completing your ticket purchase online. Or call Grant in our office at 1.877.926.6849
 
 
Or go to www.moneytalks.net and Click on Events


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