Think That Central Banks Move the Markets? Think Again

by Mark Galasiewski

The following is excerpted from Elliott Wave International’s Global Market Perspective. The full 120-page publication, which features forecasts for every major world market, is available free until April 30. Visit Elliott Wave International to download it free.

Conventional wisdom says that central banks can influence or even direct financial markets and the macroeconomy. The very existence of Elliott waves challenges such assumptions. For if markets responded to every central bank directive, how could Elliott waves exist? Parallel trend channels, Fibonacci price relationships, the similarity of form between waves of different sizes and time periods — none of that would be possible. Central bank decisions would have to coincide perfectly with turning points in Elliott waves, and we know that just doesn’t happen. But even without using waves, we can expose the conventional wisdom for the fallacy that it is.

Take, for example, this assertion in a recent article in a U.K. economic weekly: “Part of the aim of central banks in driving down interest rates is to encourage a greater risk appetite among investors.” Two key assumptions underlie that statement: a) central banks determine interest rates; and b) lower interest rates can increase society’s appetite for risk.

To see how the first assumption is false, let’s take a look at the daily chart of Australian interest rate data. It duplicates a study that Elliott Wave International has often done with U.S. interest rate data. It shows how movements in the cash target rate set by Australia’s central bank, the Reserve Bank of Australia (RBA), appear to follow those in 3-month Australian Treasury Bills. After decisive moves up in T-bills from 2006 to early 2008, for example, the RBA faithfully raised its target. T-bills have since led the RBA during the financial crisis of the past year. In fact, the record indicates that the RBA almost always follows T-bills over time.

The proper conclusion to draw is not that the RBA has orchestrated the decline in rates since the early 1980s — but that it’s been riding it. During good times, central bankers look like geniuses; during bad times, they get tarred and feathered. Closer to the truth is that their interest-rate decisions are not proactive, but reactive, and that they continually follow in the footsteps of the market for lack of any other useful guide.

Now let’s look at the second assumption: that lower interest rates increase society’s appetite for risk. A simple glance at the weekly chart shows this assumption to be false. After the 1987 crash, the ASX All Ordinaries actually rallied for two years on rising rates and then sold off through 1990 on falling rates. Stocks then rose in 1991 on continued falling rates and sold off in 1992 on even lower rates. Continue following the chart to the right and you will see that there is no consistent correlation between the direction of interest rates and that of the stock market.

The myth of central bank potency is so pervasive that conventional analysts can’t even imagine a better explanation for price trends: that the market is the dog wagging its central bank tail, not the other way around.

What is Forex ?

The foreign exchange market (Currency, Forex, or FX) is where currency trading takes place. It is where banks and other official institutions facilitate the buying and selling of foreign currencies. Forex transactions typically involve one party purchasing a quantity of one currency in exchange for paying a quantity of another. The foreign exchange market that we see today started evolving during the 1970s when world over countries gradually switched to floating exchange rate from their erstwhile exchange rate regime, which remained fixed as per the Bretton Woods system till 1971.

Today, the Forex market is one of the largest and most liquid financial markets in the world, and includes trading between large banks, central banks, currency speculators, corporations, governments, and other institutions. The average daily volume in the global foreign exchange and related markets is continuously growing. Traditional daily turnover was reported to be over US$3.2 trillion in April 2007 by the Bank for International Settlements. Since then, the market has continued to grow. According to Euromoney’s annual Forex Poll, volumes grew a further 41% between 2007 and 2008.

Forex Turnover

The purpose of Forex market is to facilitate trade and investment. The need for a foreign exchange market arises because of the presence of multifarious international currencies such as US Dollar, Pound Sterling, Yen, etc., and the need for trading in such currencies. Since you aren’t buying anything physical this kind of trading can be confusing. When buying a currency think of it as buying a part in that particular country’s economy because the currency rate reflects the economical situation of the country when compared to others.

Currencies
Forex used to be a closed market because only the “big boys” because you needed between 10 and 50 million $ to open an account. But today, with the development of internet, online Forex brokers have the possibility to offer their services to “little” traders. All you need to start is a computer, fast internet connection and information which you can find on this page also.

This enormous market is like the dangerous sea where you can meet lots of sharks and dangerous waters but at the same time it is the only one where two weeks of trading can hypothetically bring you $1,000,000 out of $1,000 of initial investment.

This is certainly hypothetically because a lot of newbie traders deal with their trades as gambling, that surely bring them to having nothing in the end. You should always keep the phrase “be careful!” in your mind. This market would give you its profit possibilities only if you learn the basic things hard and make lots of demo trading.

This market is a platform for banks, transnational corporations and individual traders to change the currencies they possess into other ones. This is the spot Forex market. At this market you can trade with up to 1:50 leverage which means you can trade with the $50,000 sum having invested $1,000 onto your account.

Forex is unique among other world markets because in any time of day and night, somewhere in the world, a financial centre is open for business, banks and corporations exchange currency all the time, with a little lower frequency during the weekend.
Why to trade on Forex?

1. There is no commission fee for trading at Forex.
2. There is no intermediary, you can trade directly at Forex.
3. Forex is open 24-hours a day.
4. Nobody can influence the market for a longer period.
5. High liquidity.
6. Free demo accounts, analysis and charts.
7. Small accounts that allow everyone to try out his luck.

Hope this has answered a lot of questions you were asking yourself about Forex and that you can now start trading. Also make sure that you check out other articles on this blog which can help you earn your fortune.

Experience the Forex Markets with freedom of a Tricom Trader demo account.

Central Banks are Buying Gold for their Reserves Now!

by Julian D. W. Phillips

It is clear now that central banks are buying gold for their reserves. Here is a brief history leading to today and the present position of central banks as they turn to buying gold.Massive Gold Sales!

From the early 1980′s and for the next 20 years gold was under the threat of massive sales from the world’s central banks. Many commentators reported that the overhang of gold above the ‘open’ market was so great that such sales would eventually lead to central bank reserves in the developed world having no gold at all. Central Banks had further worsened the situation by loaning gold to mining companies, through the bullion banks, allowing them to finance gold production to a far greater extent than warranted by the price of gold during that time. This acceleration in the production of gold allowed the gold price to be pressed down $850 to $275, the point at which Britain, at the instruction of the current Prime Minister Gordon Brown instructed that Britain sell the bulk of its gold reserves. From the turn of the millennium this perspective changed dramatically.

Limitation of gold sales by central Banks!

In 1999, through the establishment of the Washington Agreement, the signatories announced to the world that it need not fear uncontrolled sales of gold reserves for the next 5 years. While the U.S. and Japan were not signatories, they gave tacit agreement to such a limitation. Since then neither of them have sold gold on the open market. Following the end of the ‘Washington Agreement’, a second agreement, called the Central Bank Gold Agreement, extended the situation for another five years. This agreement ends on the 26th September this year. Sales were limited to the sales previously announced by the signatories, with the exception of Belgium and Spain who made no prior announcement to their sales. Under the Washington Agreement these were limited to 400 tonnes a year. Under the second Agreement the sales were limited to 500 tonnes a year. These limitations have not been met under the second agreement as sales are below this limit so far.

The halting of Central Bank Gold Sales!

Of great significance has been the actual slowing of gold sales from European banks, which appear to have lost all appetite for gold sales.

Indeed France was an unwilling seller, but under Presidential instruction has done so. Italy has had no plans to sell any of its gold. Germany had the option to sell 600 tonnes but has not taken this option up. Switzerland took some of this but has ceased selling now. It would be surprising if the signatories sold more than 150 tonnes of gold let alone the ceiling amount of 500 tonnes by the 26th of September this year. And next year, we expect no such sales [the I.M.F. sales are potential sales that are not part of a central bank gold selling policy] from central banks.

Central Bank buying of gold for reserves!

Just as the tide turned from damming gold in the monetary system in 1999 it appears we are rapidly approaching another watershed in the history of gold in the monetary system.

Countries not seen as an important part of the global monetary system have, in the last few months, turned buyers of gold. Ecuador [28 tonnes - 920,000 ounces - doubled its reserves from 26.3 tonnes], Venezuela bought gold [ 240,000 ounces - 7.5 tonnes - taking it up from 356.4 tonnes] , but this is not deemed of great significance.

Russia at last, after talking about it for over one year has begun to buy gold. It was reported that Russia has bought as much as 90 tonnes of gold for its reserves, lately [Previously it held 495.9 tonnes]. This is much more significant as it is a large figure in the small gold ‘open market’. Prime Minister Putin is reported to have said that Russia wants to see gold forming 10% of Russia’s reserve. The slow process of getting them up to that level could have begun. Even so Russia has little influence on global central bank thinking, so such increase are not thought to directly influence the principles behind gold as a reserve asset. So as not to minimize such purchases, if Russia were to keep up this pace of acquisition, it would be able to buy 360 tonnes a year and have a very significant impact on the gold price.

But the principles behind gold, as a reserve asset, are affected far more by the following news. Last week the European Central Bank reported that one signatory to the Agreement purchased gold [which for the first time we have seen them do it], because the purchase was not simply of gold coin [which has happened before - seemingly for good housekeeping reasons] but simply “of gold”. In other words the ranks of central bank selling in Europe have been broken and one has turned buyer!

We feel more positive now in our belief that European Central Banks are unhappy sellers and are inclined to change their views to the buy side. The very fact that one central bank in Europe has turned buyer confirms this. There is little doubt in our minds that there are conflicting views now amongst the heads of the leading European central banks on gold now.

Major changes taking place in central bank policies on gold!

According to the World Gold Council’s new chief Executive Aram Shishmanian, in the Middle East the new monetary union there intend to have “gold play a prominent role in Gulf CC economies.” He said, “It may play a role in that basket of currencies on which the GCC common currency will be pegged”. Of course, please bear in mind that the inclusion of gold in a basket of currencies, would simply be for valuation purposes and does not, of itself, imply that these central banks will buy gold for their reserves.

He continued, “Gulf central banks, along with the central banks of Brazil, Russia, India and China are expected to increase their gold reserves. Central banks with low reserves of gold are looking to increasing their reserves. They are trying to analyze what the right balance should be. They are becoming aggressive. Currently the belief is that if more than 20% of a central bank’s reserves are in gold, it is overweight, but this perception is changing! The metal is becoming an assert class in the region and Gulf investors are looking at long-term investments in gold as a hedge against inflation.” We are certainly not in a position to contradict what he says. After all he has the resources and contacts to be authoritative on the matter.

However after nearly 30 years of opposition to gold by central banks ands occasionally governments, it is a remarkable turnaround that tells us that gold is returning to the monetary arena again! [The gold world has expected this for so long it feels a bit like seeing an oasis in the desert.]

If right, expect to see both Russian and Chinese gold production go straight into those countries reserves and not even reach the open market. That will account for nearly 600 tonnes of supply disappearing. Now add to that the halting of sales from European central banks, a perceived 500 tonnes a year. If this trend continues gold, as an investment, will be fully rehabilitated.

Institutional demand will follow!

But this is by no means the largest effect that this change of heart will bring about. The recognition by central banks that gold has a role in the monetary system will influence investors, both institutional and individual. Should that happen and say 5% of funds placed in gold by funds such as Pension funds, then an amount of $920 billion, in the States alone, could head gold’s way. Only a five figure gold price could accommodate that volume of money in the gold market. Now add to that the same inclination in the rest of the world. Any such rise in price will stunt the demand for sure, but be certain that gold is not simply in a bull market.

If the World Gold Council’s CEO is correct, then he will have confirmed that 2009 and 2010 will be the year that heralds the return of gold to the global monetary system!

“Gold is always accepted and is the ultimate means of payment and is perceived to be an element of stability in the currency and in the ultimate value of the currency and that historically has always been the reason why governments hold gold.”

How the Forex Market Trades Around the Clock

The forex market is the largest financial market in the world, trading around $1.5 trillion each day. Trading in the forex is not done at one central location but is conducted between participants through electronic communication networks (ECNs) and phone networks in various markets around the world. 

The market is open around the clock from 6am AEST on Monday until 7am AEST Saturday. The reason that the markets are open around the clock is that currencies are in high demand. The international scope of currency trading means that there are always traders somewhere who are making and meeting demands for a particular currency.

Currency is also needed around the world for international trade, as well as by central banks and global businesses. Central banks have relied on foreign-exchange markets since 1971 – when fixed-currency markets ceased to exist because the gold standard was dropped. Since that time, most international currencies have been “floated”, rather than pegged to the value of gold. 

At each second of every day, countries’ economies are growing and shrinking because of economic and political instability and infinite other perpetual changes. Central banks seek to stabilize their country’s currency by trading it on the open market and keeping a relative value compared to other world currencies. Businesses that operate in many countries seek to mitigate the risks of doing business in foreign markets and hedge currency risk.

To do this, they enter into currency swaps, giving them the right, but not necessarily the obligation to buy a set amount of a foreign currency for a set price in another currency at a date in the future. By doing this, they are limiting their exposure to large fluctuations in currency valuations. Due to the importance of currencies on the international stage there needs to be round-the-clock trading at all times. Domestic stock, bond and commodity exchanges are not as relevant, or in need, on the international stage and are not required to trade beyond the standard business day in the issuer’s home country. Due to the focus on the domestic market, demand for trade in these markets is not high enough to justify opening around the clock, as few shares would be traded at 3am, for example.

The ability of the forex to trade over a 24-hour period is due in part to different time zones and the fact it is comprised of a network of computers, rather than any one physical exchange that closes at a particular time. When you hear that the U.S. dollar closed at a certain rate, it simply means that that was the rate at market close in New York. But it continues to be traded around the world long after New York’s close, unlike securities.

The forex market can be split into three main regions: Australasia, Europe and North America. Within each of these main areas there are several major financial centers. For example, Europe is comprised of major centers like London, Paris, Frankfurt and Zurich. Banks, institutions and dealers all conduct forex trading for themselves and their clients in each of these markets. 

Each day of forex trading starts with the opening of the Australasia area, followed by Europe and then North America. As one region’s markets close another opens, or has already opened, and continues to trade in the forex market. Often these markets will overlap for a couple hours providing some of the most active forex trading. So if a forex trader in Australia wakes up at 3am and decides to trade currency, they will be unable to do so through forex dealers located in Australasia but they can make as many trades as they want through European or North American dealers. With all of this action happening across borders with little attention to time and space, the sum is that there is no point during the trading week that a participant in the forex market can’t potentially make a currency trade.

Dollar firmer on rate cuts support

February 06, 2009 07:45am

THE dollar opened firmer as traders overlooked short-term data to focus on what the Federal Government and the central bank will do to drive an economic recovery.

The domestic currency is expected to firm today as investors read the Reserve Bank of Australia’s (RBA) quarterly statement on monetary policy for clues on future interest rate cuts.

At 7am AEDT, the dollar was trading at $US0.6545/49, up almost one US cent from yesterday’s close of $US0.6455/58.

During the offshore session, the currency traded between a low of $US0.6461 and a high of $US0.6579.

The dollar briefly touched its overnight low soon after midnight AEDT as the highest US jobless claims since October 1982 boosted the US dollar, as traders resorted to blue chip denominations in response.

US Labour Department data showed 626,000 first-time unemployment claims were filed in the final week of January, more than market expectations of 580,000.

The dip in the dollar had been shortlived, as traders looked favourably upon the Federal Government’s $42 billion stimulus package and the RBA’s latest 100 basis point rate cut, which took the cash rate to a 45-year low of 3.25 per cent.

“There’s been a positive tone to the Australian dollar in the last 24 to 48 hours,” Mr Corcoran said from Toronto.

“The Australian Government and the Australian Reserve Bank have been very pro-active … The market has been rewarding that.

“People are certainly looking to get beyond the immediate data release and look to the longer-term outlook.”

The dollar rose to a three-week high against the euro after the European Central Bank (ECB) left a benchmark interest rate on hold at two per cent.

“The market has been punishing central banks who have been sitting on rates,” Mr Corcoran said.

“We saw that today with the ECB leaving rates unchanged.”

In times of prosperity, investors do the opposite by backing higher interest rate currencies for their higher yields.

The RBA’s quarter statement on monetary policy is due for release at 11.30am AEDT.

The dollar was expected to climb above $US0.6600 if the central bank signalled more rate cuts to kick start the economy.

Currency Crisis: First Sterling, Now the Euro, and Then…?

by Adrian Ash
How to get a jump on the big central banks as interest rates race towards zero worldwide… OF SIX CENTRAL BANKS voting on interest rates this week, only the European Central Bank in Frankfurt failed to reduce its cost of money to either record or multi-year lows, holding rates steady at 2.0%. The market’s reaction? Forex traders trashed the Euro vs. those currencies now paying way less than inflation… The result for Eurozone investors? Gold leapt to a new record high by the PM Gold Fix in London, recording a new all-time high above €719 an ounce… Big picture? That puts the Gold Price right back at its long-term high for European cash savers, as measured by the old pre-Euro war-horse, the lost and lamented German Deutsche Mark… Gold in 2009 has already hit new record highs for Australian, Canadian, Indian and even Swiss gold buyers. British gold buyers saw the price surge to £662 an ounce in January – up by 100% from just 18 months earlier. Because as the UK Pound Sterling slid on the forex market, gold proved itself as the ultimate hedge amid a currency crisis. Now the Euro looks ripe for coming under “speculative attack” from currency traders trying to get even. The Dollar-Yen shock starting in summer 2008 whacked pretty much all asset classes. But the biggest losers by far were those currency gamblers still backing the favorites – those fillies sporting the best rates of return – as the going switched from ‘good’ to ‘heavy’. During the previous half-decade, the interest-rate gap had paid time and again. Sell the Dollar – and dump the Yen! – in exchange for anything bearing a strong or rising interest rate payment. But the bottom fell out of this strategy in mid-2008. Racing first to the bottom, the Japanese Yen (zero-hour: May 2001) was then first out of the blocks when debt needed redemption, and currency gamblers all scrambled to cover their shorts. Close on its tail came the almighty Dollar (zero-hour: Dec. 2008)…and thus a new form-guide emerged amongst currency traders. Low yield good, zero yield better. Because in a world of deflation, destroying savers and cutting debt-service costs might just help spark an economic recovery. That’s why, when early in Prague today the Czech central bank slashed its interest rates to an all-time low, the Czech Koruna actually bounced vs. the Euro… That’s why today’s 100-basis point cut to South African rates worked to stem the slide in the Rand – now trading one-third below its US-Dollar value of last February despite paying fully 1,050 basis points more… That’s why, midday here in London, the Bank of England took its base rate further into record-low territory at 1.0%…yet currency traders pushed the Pound Sterling to a two-week high above $1.4650… That’s why on Tuesday, when the Reserve Bank of Australia cut its interest rate to a 45-year low, the Aussie Dollar bounced from near-6 year lows in response… That’s why on Wednesday, after the central bank of Norway cut its target interest rate by 50 basis points to 2.50%, the Norwegian Krone turned higher after losing one-third of its value vs. the Dollar since July last year… And that’s also why, on Thursday – when the world’s No.2 behind the Fed, the European Central Bank (ECB), opted to keep its rates flat – the Euro lost 2¢ from this week’s high to trade below $1.2850…despite paying returns to cash fully 200 basis points above the Dollar. Priced in Euros, the value of gold – which yields nothing already, but also carries no counter-party or inflation risk – rose to €720 an ounce, more than 14% higher for 2009 to date. In short, Thursday’s foreign exchange action confirms the currency markets’ perverse verdict on falling premiums. First seen last year as the US Fed and Bank of Japan cut their rates to zero and their currencies leapt, this deflation-bent view of lower interest rates says that rewarding savers – rather than debtors – is beneficial to a currency’s future. Whereas failing to cut is a negative. So if we were in the business here at BullionVault of making short-term calls on the currency markets (which we’re not; we just enable private individuals to buy and sell gold, securely, at the tightest possible prices), we’d expect the Euro to suffer right up until the ECB next meets in March….or until currency traders start taking ECB chief Jean-Claude Trichet at his word and begin pricing in record-low Eurozone rates ahead. “I don’t exclude that we could reduce interest rates at our next decision,” Trichet told a new conference after today’s “No change” decision. Asked whether he’ll go for a half- or quarter-point cut, M.Trichet replied “It would probably more be the first figure.” You tell ‘em Jean-Claude…and you tell ‘em straight! But once the Euro starts paying “probably more” like zero than anything better, what next for the currency markets to kick around? The Yen…? The Dollar…? Everything and everyone all at once…? In this race to the bottom – which even the “inflation-vigilant” European Bank now says it will join – private investors with something to lose might want to get a jump on the currencies, and move straight into zero-yielding Gold Bullion. After all, gold has already proven its value as a “currency crisis” defense for UK investors this year. And if all currencies tipped into crisis together, we’d guess that defense would soon trade sharply higher from here.

Birth of a New Cyclical Bull?

BIG PICTURE - “Bull-markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria”

The coming year may go down in history as a bullish one. After the shocking asset-liquidation witnessed in 2008, the following 12 months are likely to provide above-average investment returns. Given the negative economic news and awful investor sentiment, my assessment may sound absurd but it looks as though the bear-market ended late last year and we are now in the early stages of a new cyclical bull-market. Below are some of the reasons why I believe the skies are clearing for a 4-5 year bull-market:

• Surging liquidity - central banks have pumped trillions into the banking system
• Low-interest rates - yield on cash and cash equivalents is at a historical low
• Declining corporate bond yields- risk appetite is returning
• Declining Ted Spread - inter-banking lending rate has declined, a positive sign
• Low valuations - various stock markets are trading at very attractive multiples
• Horrendous investor sentiment - a contrary bullish indicator
• Volatility has peaked - VIX has topped out and is falling
• US Dollar rally has ended - bullish for the markets
• Global stock markets are making higher lows - sign of base building
• Huge amount of cash on the sidelines - US$8.85 trillion or 74% of US market cap

Now, I am well aware that the above prognosis goes against the mainstream bearish view. After all, most professional and amateur investors are very worried about the state of the global economy and many are expecting a horrendous economic depression. Furthermore, according to some prominent bears, our world is heading into a deflationary bust and the Dow Jones Industrial Average is about to contract by another 50-60%.

For sure, anything is possible in the business world, but at this stage, a 1929 style economic depression is out of the question. Back then, the US economy contracted by a whopping 46%, unemployment went through the roof and thousands of Americans lost their entire savings as roughly 10,000 banks went bust. This time around, the US economy has barely shrunk, the unemployment rate is not even close to the 1982 recession and not a single person has lost money due to a bank-run. So, at least the current circumstances do not warrant a prolonged economic depression.

Let there be no doubt that the US economy is certainly struggling – housing starts, permits and home sales are at multi-decade lows, auto-sales have slumped, retail sales have contracted, unemployment is rising and manufacturing is at the lowest level since 1980. Despite all these negatives, the state of the world’s largest economy is still nowhere near as bad as it was during the Great Depression.

It is interesting to note that Professor Nouriel Roubini (who correctly forecasted the extent of this economic slowdown) was recently interviewed by the Financial Times. During the interview he stated, “We are going to avoid the Great Depression and a severe recession even if there is a risk of protracted slow economic growth”.

If Professor Roubini is correct about the economy, then I suspect global equity and commodity markets will see explosive moves from the current levels. We must remember that the investment community is manic-depressive and most participants have already factored in a gut-wrenching economic recession or worse. So, if the current recession does not morph into the widely expected prolonged depression, investors will have to re-think their investment strategy and this will be the catalyst for a powerful rally. Given the dismal yield available in cash and government bonds, when investors search for higher yields, capital will flow towards the beaten down equity and commodity markets. At the same time, US Treasuries will witness a spectacular crash. Figure 1 shows the astonishing decline in the yield available on 3-month US Treasury Bills.

Figure 1: Yield on US Treasury Bills (1941- present)

As the financial crisis worsened over the past year, a growing number of investors parked their money in the ‘safe haven’ of US government bonds. This massive inflow of capital pushed up the value of US Treasuries and drove down the yield to almost zero.

In my view, US government bonds are now grossly inflated. I have no doubt in my mind that when global stock markets show further signs of a recovery, investors who are holding these overvalued US Treasuries will look for a higher return on their capital. And everybody will look to exit through the same crowded door. This selling mayhem may cause an epic crash in US Treasury Bills and send the yield sharply higher (Figure 1).

Over in the precious metals department, so far gold has fulfilled its ‘safe haven’ role by holding up relatively well in this post-bust environment. However, if my assessment about a recovery in equity and commodity markets is correct, it is possible that gold may under-perform other assets over the following months. Now, I am not saying that you sell your gold bullion but at this juncture, I prefer the hardest-hit industrial metals, silver and platinum over gold. Those metals which suffered the most over the past six months are likely to rebound the most in the ongoing recovery.

In summary, I maintain my view that global equity and commodity markets put in important lows in the final quarter of 2008 and we should see big upward moves in the months ahead. So, I would suggest that you hold on to your positions in commodities, commodity-producing companies and precious metals as we pass through the bottom of this business cycle.