Friday, September 12, 2014 12:37:51 PM America/Toronto
Friday, November 1, 2013 12:26:29 PM America/Toronto
This is the final installment of the 15 week series of commentary on the pros and cons of having exposure to gold and silver in different ways.
This week, we will discuss the advantages and disadvantages of scrap metal.
Monday, January 28, 2013 1:04:35 PM America/Toronto
Dubai Chronicle By Editor
Recent talks between silver traders suggest renewed interest towards silver, and in particular towards silver demand compared to silver production and availability. Such discussions are nothing new to people who follow the extremely volatile commodity on daily basis since long time. As a matter of fact, we are expecting the white metal’s price to rise by 10% to 25% since some time now.
At present, however, silver trades remain range bound. The price is slightly moving up and down around the mid level of its 52 week range, currently at around $31.26 per ounce. The 52 week low was $26.40, while the 52 week high was $37.43 per ounce.
So far, at 8.30am Dubai time, it doesn’t really seem anyone with a capability to buy large quantities of physical silver is actually panicking.
However, later in the day it is likely the price to advance triggered by newly released optimistic economic data. China’s economy is forecast to grow at around 8.4% this year, the Shanghai Securities News reported earlier on Monday, citing a report from a government think tank. This is a positive perspective as the country’s economy grew 7.8% in 2012, while the inflation rate was at 2.6% for the full year. However, this is a rather long term outlook.
Overall trade in China is expected to grow 8.5% this year, while exports are expected to grow 8.3%. Improving economic environment and rising demand for merchandise actually supports silver usage as industrial material. In addition, better earning opportunities predict higher consumer spending.
Most Asian markets advanced Monday amid a positive earnings outlook for Chinese firms. Japanese stocks fell from near three-year highs as investors took profit.
The US dollar regained some lost ground Monday along other major currencies as the Euro and the British pound. Japanese yen fell further amid a pushback from Tokyo over forex-related criticism. Later in the week, key events for the US currency such as fourth-quarter economic growth data, a Federal Reserve policy decision and Friday’s monthly jobs report may further support the greenback strength.
In general, the interest in precious metals as store of value is weakening in favor of riskier assets that generate faster profits such as equities.
However, silver is different than gold as its use as industrial metal is predicted to grow with the revival of the global economy. Gold depends largely on central banks buying and when currencies strengthen, the yellow metal’s value will not be really sought after.
Tuesday, November 20, 2012 1:50:17 PM America/Toronto
As the Thanksgiving holiday in the US approaches, the precious metals, as well as most other markets, are understandably seeing volumes and ranges decrease. Yesterday, Moody’s downgraded France’s bond rating from AAA to Aa1 which caused the euro to briefly collapse before it swiftly recovered from its lows. The euro’s push upwards accompanied rallying equity and crude markets which in turn encouraged buyers to come in and lift precious metals offers. Gold managed to achieve an important close above $1,730, an area which it has pressured steadily over the past three weeks but has not convincingly broken.
If today’s $6 range in gold is any indication, the rest of the week should be similarly quiet for the precious metals. Gold’s range remains defined between support at the psychological figure of $1,700 and resistance at the 50 day moving average of $1,741.70. Silver rallied even more impressively than gold yesterday but stopped in its tracks at the 50 day moving average of $33.18. This has now formed a double top from yesterday to today and is fairly strong short term resistance.
As for economic news, Fed Chairman Ben Bernanke speaks at 12:15 AM EST which should be closely monitored.
Thursday, September 13, 2012 3:10:07 PM America/Toronto
Even with unrest rippling through the Middle East in relation to the US, the precious metals are markedly quiet so far today as traders wait on the sidelines ahead of the FOMC statement. Protesters, allegedly reacting to an obscure, amateur film critical of the Muslim Prophet Muhammad (although others allege it was an attack planned by Al Qaeda to coincide with 9/11), stormed the US embassy in Libya killing the US ambassador and three other American state department employees. This event has subsequently caused a contagion in the broader region as protesters have gathered in droves around US embassies in Yemen and Cairo, Egypt. Developments should be closely watched in regards to this story as political turmoil in the Middle East has traditionally been bullish for gold.
While political turmoil has kept gold trending around unchanged, it will be the FOMC statement out at 12:30 PM EST that really has the potential to rattle the markets. Given that the market is already expecting dramatic remarks in regards to QE3 in the wake of last Friday’s job data, traders should be wary that anything less than a full-on commitment to quantitative easing has the capability to cause a short term sell off.
Tuesday, September 4, 2012 3:20:23 PM America/Toronto
After the long holiday weekend in the US, the precious metals have returned from the official end of summer to strong bids pushing the market higher. Volume is surging once again indicating that investors have returned in force and are ready to reallocate funds after a typically lackluster summer of trading. In the US this morning, the ISM’s (Institute for Supply Management) factory gauge declined to 49.6 in August from 49.8 the month before. Economists had expected an August reading of 50, generally considered the fine line between expansion and contraction. US equities sold off on this news and in a positive sign for the precious metals, they are distancing themselves from the broader market liquidation and are attracting investors in the wake of Bernanke’s hints at QE3 last week.
Gold is currently up $8 on the day but has found resistance so far at the psychological level of $1,700. In the past three trading days, it has begun to form a base at the previous Fibonacci resistance of $1,689.75 which is a positive sign. It seems that it is only a matter of time, and a short one at that, until $1,700 is decisively broken. Silver has continued its ascent as well and in the last two days has formed a double top at $32.30.
Tuesday, August 28, 2012 3:27:52 PM America/Toronto
After a very impressive rally in the precious metals over the last week, all four are taking a breather today as they consolidate and become accustomed to these higher trading ranges. It would not be surprising to see a bit more of a sell off ahead of the Labour Day holiday in the US and then a push higher in the typically bullish month of September. In news this morning, US home prices bounced up in June for the second month in a row by 2.3%. This was the strongest back-to-back monthly advance in the more than decade long history of the price gauge. With this news, the USD was able to take back some gains against the euro after trending lower since mid-July.
Support for gold is coming in at the 200 day moving average of $1,640 while the market is likely to find offers waiting ahead of $1,700. The PGMs (platinum group metals including palladium) have been the real stealers of the show though recently and given their fundamental picture, might be the best buy here of the precious metals. Market participants are still closely watching developments in South Africa in relation to Lonmin and the broader mining situation. Despite initial reports of Lonmin furthering talks with their mine workers, attendance at the mines was lower again this morning. Support for platinum is at the 200 day moving average of $1,515.
Thursday, August 23, 2012 4:07:33 PM America/Toronto
What a recent ride it has been for the precious metals! Since last Wednesday, gold is up 5.35%, silver is up 11.80%, platinum is up 12.60%, and palladium is up nearly 15%. The summer doldrums for the precious metals seem to have ended a few weeks early as our markets are once again exciting participants. The precious metals are in the midst of a perfect storm from a technical, geopolitical, and fundamental perspective which has allowed them to explode higher over the last week.
Platinum and palladium caught initial bids last week on headlines of South African mining unrest. Their moves upwards became more exaggerated once news was released of the deaths of 44 people (34 were shot dead by police) in relation to strikes at Lonmin’s Marikana mine. Now there is fear in South Africa that the turmoil will spread to other mines. Considering that about 80% of the world’s platinum is mined in South Africa, even temporary strikes and mine shutdowns have a very real impact on the price action of the white metal.
While platinum and palladium have influenced the overall precious metals complex over the last week, gold and silver have been given further legs by the latest FOMC meeting and renewed anticipation of quantitative easing. At yesterday’s meeting, the FOMC made the strongest hints in quite some time at the prospects of QE3. Given the committee’s belief that inflation is likely to remain low while unemployment higher than desired, they are more willing to consider unconventional policies to rectify the economy. Gold has now steamrolled through the 200 day moving average of $1,642.50 and the next major target is $1,700
Tuesday, August 14, 2012 10:47:40 AM America/Toronto
You know you’re in the midst of the summer doldrums when after being gone for a week on vacation, you come back, and all four precious metals are trading at the same exact price… On increasingly thin volume, gold continues its consolidation with August’s range now inside of July’s which was inside June’s which was inside May’s. The $1,628 – $1,630 area remains significant resistance which was failed at yet again in the last two trading days. Since the beginning of June, $1,630 has been approached, but never closed above, a whopping 15 times. With September just around the corner and considering that it is normally a bullish month for precious metals as investors return from summer keen on allocating funds, this $1,630 area in gold will almost assuredly be tested yet again in the early fall. To the downside, support is coming in at a trendline at $1,572 and then below there at the low from 2012 of $1,527. Despite the immediate risk and momentum seeming to be for lower gold prices in the next two weeks, traders should be wary about being short any of the precious metals as September arrives.
While news was fairly subdued overnight, participants who focus on the platinum group metals are closely monitoring developing headlines in South Africa. In the past few days, nine people have been killed in violence related to Lonmin’s Western South African mining operation. The situation seems to be a result of two rival unions, the established NUM and the newer AMCU, competing to attract members in order to more effectively negotiate with Lonmin. Further escalation of this story will certainly compromise Lonmin’s mining operation and therefore could potentially cause a squeeze in platinum in the short term.
Tuesday, July 31, 2012 11:02:54 AM America/Toronto
Overnight news was fairly sparse and as a result, the precious metals traded in tight ranges. As the debt crisis deepens in Europe, the broader euro-area unemployment rate has now reached 11.2%. This is a record high dating back to the inception of the recording of the data in 1995. There is also increased chatter surrounding the European Central Bank and it resuming its controversial bond-buying program and perhaps even pursuing quantitative easing.
Gold continues to pressure the pivotal resistance area of $1,628 – $1,630. Since the beginning of June, this area has been approached and / or touched thirteen times without decisively closing above it. It has also touched it in the last three trading days. With rumors last week of QE3 in the US that lent legs to gold, all eyes will be eagerly awaiting further commentary or allusions to it at the FOMC statement tomorrow at 2:15 AM EST. Until a bullish statement is released, market participants are understandably wary about putting on new positions around gold’s precarious area here. A failure to finally break this $1,628 figure on the heels of a less than bullish FOMC meeting will not bode well for gold heading into August.