Gold Breaks Downtrend And Dollar Breaks Down

Gold is up another $12.40 today to $939/ounce.  Ever since the metal hit support at its 200-day moving average in April, gold has been rallying nicely.  And based on technicals, gold has quite a bit of room to run on the upside before it starts to hit resistance again.  As shown below, when the metal broke its multi-month downtrend at the start of May, it turned the technicals from negative to positive. 

Gold’s gain has coincided with the Dollar’s demise.  The Dollar tried to mount a comeback after taking a big hit in March, but it didn’t get close to a retest of its 52-week highs.  Once it tested and failed at support levels a couple of weeks ago, the trend turned from neutral to negative.  The next area of support for the Dollar doesn’t come into play until it gets down to its December lows.  For now, investors should play the stocks with high international revenues as a play on the decreasing dollar. 

Souce: Bespoken Research

ASX Stock and CFD Report 12-05-09

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The SFE Futures suggested a 51 point fall in the market. BHP and RIO down in ADR form overnight – 2.57% and 2.44% respectively. (BHP closed at the equivalent of 3503c, down 25c on yesterday’s close.) Metals all down overnight – Copper down 2.56%, Zinc 0.84% and Aluminium 0.32%. Nickel down 2.66%. Oil price down 79c to $57.79. Gold down $1.40 to $913.50. Bonds up with the 10 year yield down to 3.1736%. A$/US$ down to 75.90c.

Last week the banks had massive rallies so a pull-back is not a surprise – Wells Fargo was up 43.7% last week alone and JP Morgan was up 19.9%. Multiline Insurers and life and health insurers were hit the hardest – down 7.5% and 10.5% – down on the continuing debate over healthcare reform and the impact it will have on the industry. Tech stocks just up – Microsoft down 0.5% as they announced they will be raising cash through a debt issuance – didn’t reveal what amount they would raise, but last September noted they could take on up to $6bn in debt – Microsoft has $25bn in
cash. Telecom stocks comprised the only sector making a mentionable gain – AT&T will buy $2.35bn in assets from Verizon. Energy stocks down on the lower oil price after Fridays strong session – Occidental Petroleum down 3.7%. Ford Motors announced a public offering of 300m shares of common stock to partly fund the retiree health care trust.

The market is down 58. The SFE futures suggested a 51 point fall in the market this morning. Most sectors down. Resources and industrials getting hit the hardest – down 2.3% and 2.8%. BHP and RIO down 2.6% and 1.2%. Property trusts doing OK – up 0.2%. Energy  stocks down 1.7% after recent strong gains. Gold stocks mixed – NCM and LGL actually up despite the lower gold price overnight.

Broader Market Technical Analysis Update

by Roy Martens

The big picture hasn’t changed much this past month. The most surprising news, at least for the ones in the dark, was that China is hoarding Gold. Their reserves have risen a lot and they intend to expand their stockpile even further. Although this is very good news for Gold in the long run it didn’t really have a big impact on the Gold price last month, which is kind of surprising.

Such news is huge because the monetary reserves of China are enormous and although they say they will not shift their reserves into Gold at this time, I wonder if they will still hold that position if the dollar should tank.

Most likely this positive news was put aside by the announcement that the IMF intends to sell a lot of its Gold in order to raise cash and support the various countries that are in trouble, which should have a negative impact. We, however, have to look past this negative force for Gold because once the Gold reserves of the IMF (and other Central Banks) are gone there is nothing left to cap the price of Gold!

Due to the selling of the IMF ,Gold could suffer in the short term but it is my opinion that this fall (should it happen) will be a very good entry level for people that don’t already own the yellow metal.

As the Gold chart will show from a technical point of view, Gold is currently at an important stage and this upcoming month could be the set up for a rise to the highs or a fall to retest the $700 level (Impact of IMF selling Gold).

Whatever the outcome, Gold bulls are certain that Gold will reclaim its power further down the road. Will China be the only one to see the light? I don’t think so, there will be many other countries that will follow in China’s footsteps and I wouldn’t be surprised if a few of them, for example the other BRIC (Brazil, Russia, India) countries are already doing the same as China.

All charts are courtesy of Stockcharts.com

GOLD

The picture for Gold hasn’t changed much this last month. The flag pattern is still intact.

However, this pattern can’t continue for much longer because it will get too big to remain a valid flag, rather, it will then change into a channel. For now the blue lines are the most important ones to watch. They have to support Gold together with the 34 w. MA at $859.

If this level fails we can brace ourselves for a big fall, because the $700 will then be the next target again. As long as the $850 holds we expect Gold to break out of the flag pattern and start a new run at the highs.

SILVER

The Silver chart remains fairly positive. The flag pattern is still intact and completion doesn’t seem that far off.

The current correction wave could be a wave 2 but it is still too early to tell so this EW count isn’t valid yet. The chart is improving further with the 24 w. MA starting to curl up in support of an upcoming move. This move could be the wave 3 higher triggered by a breakout from the pattern.

The RSI and MACD are in perfect position to move higher and a new buy signal in the DMI (cross of buying power over selling power) will follow quickly if Silver moves higher from here on.

OIL

Oil is taking a breather after the first breakout attempt failed. It successfully re-tested the

17 w. MA for support and is moving higher again towards the resistance zone and the 34 w. MA.

The 17 w. MA is rising and should support Oil in the upcoming attempt to break the heavy resistance zone. If Oil succeeds it will trigger a huge buy signal because it will automatically mean a break above the 34 w. MA, a new LT buy signal. The first target after a breakout will be the $80 level ($78 is a 38.2% monthly fibo level shown in last month’s chart).

The technical conditions are improving slowly but are still in negative territory (RSI, MACD) while the selling power remains in charge, meaning that the current move higher is still ‘just’ a correction in the ruling downtrend.

USD

The Bulls are doing a good job supporting the USD. They have manage dto keep it above the 34 w. MA and the uptrend is still very much intact.

The downward pressure is still there and keeps building so the bulls aren’t out of the woods yet. As long as the 34 w. MA holds firm the bulls remain in the driver seat, but once it is taken out we will see a big sell signal and a trigger for a huge fall towards the 72 level.

The technical conditions are still positive but this can change very quickly. The RSI is a whisker away from triggering a sell signal and the MACD is on its way towards the 0 line. This upcoming month will be very interesting to watch.

COPPER

The chart for Copper is coming along as expected and the presented EW count fits nicely into the monthly chart that was shown last month.

The technical conditions have improved further and are in perfect position to get this wave 5 underway. The RSI is back above the 50 level and should start rising from here, the buying power in the DMI is trying to take over and the MACD is steadily rising towards the 0 line and the magenta resistance line.

If copper breaks above the resistance zone the indicators all turn positive at once and could trigger a very big move higher. The $300 level could then come within reach very fast.

Crude Oil and Gold

With Crude Oil and Gold being in the spotlight last week, especially against purchasing news out of china, we still need to keep our feet firmly planted on the ground as we take a look at the facts.

Looking at the raw data on Crude Oil provided by the EIA, it is very hard to be supportive of a bullish price action for the near term.  Crude Oil, Distillate’s, Gasoline and Propane stocks all reflect a much higher cyclical average than previously seen for this time of the year.  This is underpinned by above average production level and Crude Oil days of supply.

Taking this into consideration, these types of builds would not be a cause for concern, provided of course, that we are in a situation where demand is on the increase.  According to the IEA, “Global demand is now forecast at 83.4 million barrels per day, 2.4 million less than 2008. The pace of contraction is close to early 1980s levels, with a growing consensus that economic and oil demand recovery will be deferred to 2010″. 

And even judging by the short term movements in demand, there is really nothing to suggest an increase in the present environment.  After all, China’s Crude Oil imports did fall by 5.5% from last year and their Gasoline imports being virtually none.

The recent price action paints a slightly different picture as we approach the top of the range for this year’s prices in WTI. Having seen the sharp rejection of the downside this week, good discipline will be needed in approaching any shorts.  But it is really hard to see why we should be anything but short, targeting a correction in prices over the next couple of weeks towards $41.00.

The Gold price action is very similar to that of Crude Oil over the past week.  However, there too, the upside does seem to be fairly limited.  Much of the upside coming on the back of news saying that China had increased their reserves by 76% since 2003.  I am slightly skeptical about all this talk, as to some extent it sounds like a bid to talk up the market and I am still of the persuasion that no one country is able to buck the market.

We need to remember that we are trading far from the lows in stocks markets, and even when the carnage on equities was at its bleakest, we failed to break higher ground in Gold.  In saying that, it brings to questions whether Gold should carry a high weighting in a general market portfolio.  With little upside potential in Gold, I still believe that Gold at 780.00 remains a realistic target in the near term.

In general, I think in our current market environment, keeping it real and sticking to the facts remains the prudent strategy.

A Significance to the Gold/Oil Ratio?

Is there a hidden connection behind the Gold to Oil ratio? Some would say yes. We have often called Gold the King of Money, while Crude Oil (sometimes called Black Gold) is clearly the King of Commodities. Many hold the view that both Gold and Oil are a direct reflection of US dollar value ; as the value of the dollar falls, so gold and oil rise. From 1999 to 2009 gold has risen from $255 to as high as $1,000 while oil has risen from $12 to its peak of $147.

In 1999 when the commodity bull market began, the ratio between the gold and oil price was 21:1 (where it would take 21 barrels of oil to buy 1 oz of gold). Does this ratio offer us an indication of something deeper, or is it simply some arbitrary variation between the King of Money and the King of Commodities?

The last several years the ratio has been reasonably stable, ranging between 8:1 to 10:1. For example, in early 2006 the bull market in commodities was now seven years old; Gold was trading at $560, Oil at $62 and the ratio 9:1.Two years later in early 2008 Gold was $835, Oil $100 and the ratio 8.5:1. At this point it could be argued that the two had risen together, each equaling reflecting a loss of value in the dollar.

However the end of 2008 shows a very different picture. Now Gold was trading at $844 but Oil was at $39.50 and the ratio all the way up to 21:1. What had changed for oil? Global demand hadn’t fallen significantly, nor had the fact changed that we are only discovering 1 barrel for every 8 we consume.
Did the ratio change signify a simple slowdown in world trade? Or could it be indicating a greater importance being placed on money, a representation of ‘value’ than on commodities, a representation of ‘things’?

Where is the ratio now? Today the ratio was 17.7:1 and trending back to its average.

Tricom Today Australian Stock Report 9-4-09

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The SFE Futures suggested a 45 point rise in the market. BHP and RIO mixed in ADR form overnight BHP down 0.31% and RIO up 4.58%. (BHP closed at the equivalent of 3178c, up 36c yesterday’s close.) Metals all up overnight – Copper up 0.48%, Zinc 1.48% and Aluminium 1.15%. Nickel up 0.64%. Oil price up 0.5% to $49.37. Gold up $2.60 to $885.90. Bonds down with the 10 year yield up to 2.8596%. A$/US$ down 0.08% to 70.98c.

Nasdaq outperformed on the hope that a recovery in business spending will boost technology stock’s profits. IBM up 2.5% and Qualcomm up 2.2%. Security regulators voted to seek public comment on five proposals to curb
shortselling. Chrysler’s chairman said the government’s May 1 deadline for completing a deal with Fiat is “ample time”. Homebuilders up – Pulte Homes made a bid for Centex Corp from $1.3bn which would create the largest US homebuilder. Centex up 19% and Pulte down 10.5%. Bloomberg data suggests EPS across the S&P500 will fall 37% this quarter and another 30% next quarter. Juniper Networks preannounced quarterly results that were inline with expectations and the company’s prior forecasts.

The market is up 22. The SFE Futures suggested a 45 point rise this morning. All sectors bar telecom and healthcare up. Property leading the way – up 2.9%. Banks mixed – NAB down 1.4% and CBA up 1.4%. BOQ down 4% on 1H results. Resources up – BHP and RIO up 1.3% and 1.5%. Major gold stocks down despite the $2 rise in the gold price.

Tricom Trader Australian Stock Market Report 6-4-09

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The SFE Futures suggested a 33 point rise in the market. BHP and RIO both up in ADR form Friday – 0.20% and 1.76% respectively. (BHP closed at the equivalent of 3447c, down 13c on Friday’s close.) Metals all up Friday – Copper up 3.64%, Zinc 2.85% and Aluminium 3.57%. Nickel up 3.31%. Oil price down 0.2% to $52.52. Gold down $11.60 to $897.30. Bonds flat with the 10 year yield at 2.8917%. A$/US$ down 0.02% to 71.57c.

Treasury’s Geithner said he’s prepared to change the directors and senior management of banks that are receiving considerable financial support from the government. He noted, by way of example, the change of CEO’s at AIG, Fannie Mae and Freddie Mac when they avoided failure through government intervention. Healthcare stocks down 1.6% – Congress intends to overhaul the healthcare sector. Research in Motion (RIMM) gave upside guidance and better-than-expected results at their quarterlies – Deutsche Bank upgraded RIMM. IBM’s acquisition talks with Sun Microsystems have stalled – the pending deal is unlikely to proceed tomorrow as was previously expected.
Europe’s biggest bank – HSBC Holdings – raised $17.7bn as the British bought shares in the largest ever rights issue.

The market is up 15 – was up 26 earlier. Financials up 1% after a strong session in US financials Friday. Industrials up 1.2%. Major miners down – BHP down 1.4% and Rio down 1.9%. The zinc and nickel sectors are flying on higher metal prices. Major energy stocks mixed. Gold stocks all down on the falling gold price. BEN struggling after its trading update – down over 8.6%.

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.”

Gold Price Chart

While the outlook for Federal debt and spending continues to rise, the price of gold has actually declined by more than 5% since closing above $1,000 on Friday (2/20). A look at that chart, however, shows that the price of gold remains comfortably above its 50-day moving average (889) and the one-year downtrend line that was in place since last Spring. As long as the price stays above these two price points, this week’s sell-off is nothing more than a pullback from overbought levels.

Tricom Today ASX Stock Market Report 2-3-09

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The SFE Futures suggested a 40 point fall in the market. BHP and RIO both down in ADR form overnight BHP down 1.94% and RIO down 2.76%. Metals down overnight – Copper down 0.03%, Zinc down 0.88% and Aluminium down 1.61%. Nickel down 0.55%. Oil price up 2.3% to $0.97. Gold unchanged $942.50. Bonds down with the 10 year yield up to 3.01775%. A$/US$ down 1.75% to 63.64c. 4Q GDP down to an annualized rate of -6.2% from the estimated -3.8%. Exports down, personal consumption down, equipment and software down, and investment in the residential sector was down. Government spending helped to buoy the numbers. Citigroup will swap common stock for preference shares from the government giving them a 36% stake in the bank. Standard & Poor’s moves Citigroup to Negative. Moody’s also lowered their long term rating on the bank. Industrials down 2.7% and down 18% for the month- GE slashes its dividend to $0.10 from $0.31. The cut will protect its AAA credit rating. Merkel and other EU leaders rejected a massive bailout for eastern Europe Germany said eastern European states should be granted cash injections via a case by case scenario not wholesale as many in the EU were pushing for. Earnings reports were dour GAP, Kohl’s and Dell all missed 4Q expectations. Bad start to the week – we are down 84 having been down 111. Worse than the 40 point fall predicted by the futures this morning. Financials and Industrials down 4.3% and 4.8% respectively following Wall Street’s poor session on Friday. BHP knocking 19 points off the index on its own by midday. The RBA decide on interest rates tomorrow – the bond market has factored in a 75% chance of a 50bp cut – if they cut rates it will be the sixth time in a row.

Tricom Today ASX Stock Market Report 24-2-09

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The market is down 40 doing a bit better than the 78 point fall predicted by the SFE Futures this morning post the significant 3% plus falls in the US overnight. Property down the most again down 3.2% – Goodman Group down 12% early – had its recommendation cut by Macquarie Group yesterday after a recent profit warning. Results tomorrow. BHP and RIO down 1.6% and 1.8%. Industrials down 2.3% – Wesfarmers and Fosters down having gone ex dividend this morning. AMC and ASX also Ex dividend. Sonic Healthcare down 1.5% early on posting 1H NPAT up 21% to $136.5m. Aristocrat Leisure up 2.0% on the open posting FY NPAT of $101.2m down 59.1%, with final dividend to be 10c (already had a profit warning). Spark Infrastructure Ltd down 1.19% after posting a large fall in FY profit. Financials down 1.9% – Suncorp-Metway down 6% early on posting 1H NPAT of $258m, down 33% on-year with the CEO leaving next week. Macquarie Countrywide posted an in-line 1H NPAT loss of $714.1m with an interim distribution of 4c down 12% on the open. Macquarie Media booked a 1H net loss of $127.3m down 2.7% early. CBA is down 2.5% and underperforming the other banks today having announced they’d buy $2.25bn of Wizard Home Loan’s portfolio from GE, less than the $4bn worth previously suggested. Resources down 1.5% – Energy stocks
generally down on the lower oil price – Origin Energy up 0.3% as their 50.4% owned Contact Energy (NZ) posted in-line 1H NPAT down to NZ$25.1m. Oil Search Ltd posted FY NPAT up 128% to US$313.4m down 0.2%. Australian Worldwide Exploration Ltd posted a 15% rise in 1H NPAT up 1.8%. Gold stocks mixed despite lower gold price – Sino Gold Mining posted net loss of $101.4m for the half up 1.6% early. St Barbara down 1.2% as it completes its share placement of $75m at 41c/share and posts 1H NPAT loss of 41.2m.

Tricom Today ASX Stock Market Report 23-2-09

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The market is down 46 after being down 90 earlier poor performance today underperforming the 3 point rise predicted by the SFE Futures this morning. Property down 2.3% – all the big names down Westfield Group down 3.6% at midday. They have results this week. Caltex down 6.1% on broker downgrades this morning after results down 95% on Friday. All other energy stocks down on the lower oil price Friday. Gold stocks all up on the gold price breaking through the $1000 barrier Friday. Small miners mostly down on lower metal prices. Industrials down 4.6% – Fairfax down, Virgin Blue down, and Transfield Services down on results. Cochlear down nearly 4.4% at midday having gone ex dividend 80c. Macquarie Infrastructure down 7% and Macquarie Airports down 5.3% on suggestions that the Macquarie stable is being shorted whilst Macquarie Group remains protected by the shorting ban on financials  which comes off on Friday week. MQG still fell 14% last week. Financials down 1.3% following a turbulent session in the sector in the US Friday where financials were down 9% at one stage on concerns over the need for Citigroup and the Bank of America to be nationalised. Our Banks all down 1-2% around midday. ANZ down 2.5%.

Tricom Today ASX Market Report 20-02-09

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The market is down 65 underperforming the 13 point fall predicted by the SFE Futures this morning. Industrials down 3.8%. Financials down 2.7% – banks all down following the grim lead in US financials. US Banks hit 17 year low. The NAB’s Ahmed Fahour will quit the board as director. NAB down 3.0%. Gold stocks well down as the gold price falls $1.70 but US gold stocks fall around5%. Newcrest down 6.4% and Lihir down 2.6%. We are still waiting for St Barbara
Limited to come out of its trading halt having done an institutional placement. Fairfax is falling over still, down 2c to 97c. They have results on Monday. This is an all time low. Property down another 1.3% – Goodman Group up 9.7% early on 1H operating income after tax of $215m.Coal stocks doing well with some corporate action between Whitehaven (WHC) and Gloucester Coal (GCL) who are planning a merger to create a $900m coal miner. 1 GCL share for every 2.45 WHC shares.

Tricom Today Stock Market Report 16-2-09

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The market is down 36, down 59 at worst in-line now with the 22 point fall predicted by the SFE Futures this morning. Most sectors down. BHP and RIO down 1.4% and 1.8%. Only energy, consumer staples and healthcare up slightly. Industrials down 3.0% with Brambles down 7% early on posting 1H NPAT of US$195.3m. Challenger up 6.4% on normalised net profit up 3.9% to $105.9m. Gold stocks mixed on the lower gold price. Energy stocks mostly
down despite the 10% jump in the oil price on March contract short covering. PanAust up 8% early on announcing production costs. Financials down 1.1%. Banks mixed. CBA down 4.1% after going ex dividend 113c.

Tricom Today 12-2-09

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The market is up 62 outperforming the 13 point rise predicted by the SFE Futures this morning. Having a strong day after showing great resilience yesterday following a terrible night on Wall Street Tuesday. All sectors bar property up on the open. The resources sector isleading the way BHP up 1.9% and RIO in a trading halt pending results this afternoon and a deal with Chinas Chinalco buying US$12bn worth of assets and making a US$7bn investment in equity. Fortescue Metals up over 6% early on. Energy stocks up despite the fall in the oil price and the decline in US energy stocks overnight. Gold stocks continuing their rally Newcrest and Lihir up 4.1% and 5.7% on another $22 jump in the gold price. Smaller gold stocks doing better than that. Industrials up 2.1% – Coca-Cola posted solid results up 3.5% early on. Fosters pumpingup over 5% at 11am on no news. Other risers include Orica,United Group, Toll, Macquarie Airports on no obvious news. CBA up another 3.0% afterresults yesterday. NAB down again. Seems the switch out of ANZ and NAB into CBA continues with NAB and ANZ seen as most likely to cut dividends. Mining Services sector having a moment as well with Macmahon up 9.5% and Monadelphous up 4.6%. Bradken down 7.5% on results yesterday Goldman Sachs JB Were have cut their earnings numbers by 12% and 35% quoting debt concerns and an uncertain outlook.

Tricom Today 10-02-09

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The market is down 37 underperforming the 27 point rise predicted by the SFE Futures this morning. Property down 0.6% with Westfield and Stockland down 1.3% and 5.0% . one broker cut their recommendation on SGP to NEUTRAL from Buy this morning and price target from 400c to 300c ahead of tomorrow.s results. ING Industrial Fund up 9.1% on asset sales. Financials down 1% with the banks all down . ANZ down 2.3%. Diversified financials down . Australian Wealth Management down 7% after it posted a 1H loss of $131m and declared no interim dividend. IOOF Holdings down 4.5% on their half year results. Henderson Group down 2.4%. Industrials up 0.2%. Tabcorp Holdings down 7% as it goes ex dividend. Cochlear up 3% after reporting 1H net profit up 22% and forecasting 20% growth for the FY. JB Hi-Fi up 13% on their 41% increase in 1H profit and 50% interim dividend hike to 15c. Resources down 1.0% – BHP and RIO both down 0.3% and 3.5% with RIO.s chairman elect resigning over a dispute on how to manage their debt issue. Gold stocks all down on the lower gold price . Sino Gold down 5.2%. Small miners mixed on mixed metal prices. Oil stocks mixed on the lower oil price . waiting in anticipation on the stimulus package being pushing through the Senate in the next day or two.

Tricom Today 6-2-09

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The market is up 28 slightly underperforming the 56 point rise predicted by the SFE Futures this morning. All sectors up. Property leading the way up 3.2% with Stockland Group up 5.8% after recent savage falls. Banks all up between 1-2% responding to a solid rise in the US banks overnight. NAB gave a trading update with no disasters. News Corp down 5% as they slash their earnings guidance and report a shabby set of interim results. Resources up over 1% as BHP and FMG keep rising on the theme of higher shipping rates and iron ore volumes and prices. Iron ore stocks having a moment in the sun. Small resources stocks up despite the fall in metals overnight Kagara Limited up nearly 11% early on. Nickel stocks strong on the China theme.Gold doing well on the higher gold price. Newcrest and Lihir up 3.5% on the open. Oil stocks mostly up on the slightly higher oil price.

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.

Tricom Today 5-2-09

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The market is down 14, dropping off as the morning progresses – underperforming the 14 point rise predicted by the SFE Futures this morning. Resources up 4.6% – most other sectors down. BHP and RIO up 5.2% and 7.6% early on. Fortescue Metals up 9% on the open. Most the miners up on the strong base metal prices and research from one broker suggesting the iron ore market is improving with BHP saying Chinese dstocking of iron ore had run its course. Gold stocks strong on the higher gold price. Industrials down 4.1% . Lend Lease has placed $302m of shares overnight at 605c and fallen 17.2% to 560c putting the placees over $20m underwater. Qantas. capital raising went through near the bottom end of the placement range at 185c and the price is down 17% to 190c this morning. Placees are just above water. Leighton Holdings up 2.7% on the back of winning a $475m contract in Abu-Dhabi. Banks down between 2-4%. UK banks had a bad night and there are concerns over Obama.s plans for financial resurrection.

Tricom Today 3-2-09

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The market is up 52 well ahead of the 7 point rise predicted by the SFE Futures this morning. Financials are up 3.7% – all the banks flying on a CBA guidance upgrade . CBA up 9% and pulling the whole sector up. Westpac up 7.1%. Resources up 0.2% – BHP and RIO up 1.5% and 33%. Gold stocks down on the lower gold price. Newcrest
down 4.5% after completing their $750m institutional placement. Property tanking . down 4.7%. Stockland Group, CFS Retail Group, Dexus, GPT and Goodman Group all big fallers . all down 9-13%. Lend Lease (LLC) up 4.5% on being selected as the preferred partner to build GBP1.2bn in Birmingham schools. Incitec Pivot had a profits warning and fell 30%.