Make it your homepage |   E-mail: Subscribe Unsubscribe

IBM technology underpins project to make British Columbia’s the “smartest coast on the planet”


Friday, April 18, 2014
News Making Money

Bernanke Slams Gold: Why The Smart Money Is Bullish

20/06/2013 07:27 (302 Day 10:41 minutes ago)

The FINANCIAL -- Precious metals prices dived as the dollar rallied and bond yields soared to a 15-month high as Bernanke said the Fed plans to start weaning the economy off of stimulus drugs, or quantitative easing, starting in the fall, with a mid-2014 end to bond buying. But commercial traders are still bullish on gold, silver and precious metals exchange traded funds, according to the NASDAQ OMX Group, Inc.

ADVERTISEMENT

 

"Gold rallied because of QE so it stands to reason that it would decline on the prospect of less, or no QE," Paul van Eeden, president of private Canadian holding firm Cranberry Capital, says.

Gold is resuming a downtrend after making a short-term bounce from oversold conditions following a massive mid-April sell-off, says David Hunter, chief market strategist at KCCI Ltd. a brokerage firm in Jersey City, N.J. He projects gold will fall to $1,000 an ounce, down 30% from current levels.

"Gold's weakness is a leading indicator that a deflationary contraction is coming," Hunter said in an email. "I know everyone is focused on taper(ing) but regardless of whether the Fed does indeed taper before year end or not, we are approaching a global deflationary contraction...that will send all commodities along with the equity markets to much lower levels," Hunter added.

"The U.S. dollar and Treasuries will be among the very few places to hide," he added.

Bernanke said the Fed's tapering depends entirely on how the economy performs, leaving the door open for QE infinity. The gold bulls believe the economic recovery is still too weak for the Fed to step on the brakes.

"The recovery will stall without the $85 billion per month that the Fed is currently pumping into the economy," Peter Schiff, CEO of brokerage firm Euro Pacific Capital in Westport, Conn. wrote in a statement. "The Fed is likely to keep its foot firmly on the accelerator, regardless of the data," he added.

 

"Any significant withdrawal of support will cause a steep sell off on Wall Street, a spike in interest rates, and an end to the reflating housing bubble," he added. "They are not prepared to tolerate any of these outcomes," he added.

Gold has been down trending since September 2011 and trades deep below both its 50- and 200-day moving averages, indicative of severe weakness. Technical traders believe gold is oversold and likely to find buying support at $1,300 an ounce, according to the NASDAQ OMX Group, Inc.


"This is a huge support level as it's a 38.2 Fibonacci retracement from the double bottom (chart pattern) in 1999 and 2001, which essentially started this run up we've had until the September 2011 top," Wojtek Zarzycki, chief investing officer at Optimal Investing, a trading advisory, in New York.

Commercial traders, the so-called "smart money" have twice as many long positions as they do short, shows the latest Commitments of Traders ( COT ) report. Meanwhile, the speculators, the so-called "dumb money" have slightly more short positions than short.

Considering that the commercial traders tend to be biased to the short side, this indicates they're making big bets on rising prices, says Tom McClellan, founder of "The McClellan Market Report."

Jeff Sica, president of Sica wealth Management in Morristown, N.J., recommends investors buy physical gold, such as bars and coins, and hedging it with a put option while avoiding the futures markets and ETFs , known as the paper gold market.

"Paper gold is still heavily owned by momentum investors and hedge funds. I anticipate interim heavy selling as the volatility of both the precious metals market and the stock market cause hedge funds to liquidate to cover redemptions," Sica said.

 

 

Make Your Comment

Add NewSearchRSS
Only registered users and facebook social network members can write comments!

This text is replaced by the Flash movie.
This text is replaced by the Flash movie.
Politics
Parliament issues strong call for EU lobby transparency register to become mandatory

16/04/2014 16:53 (2 Day 01:15 minutes ago)

The FINANCIAL -- The report approved by MEPs gives an important signal to the European Commission that a far more ambitious approach is needed to secure genuine lobby transparency in the EU, according to EUbusiness Ltd.

Read more...



TRAVEL BIZ »
PRESS RELEASES »
FINANCIAL »
UKRAINE »
GEORGIA »
WORLD »
BANKS »
BUSINESS »
TECH »
MARKETS »
B SCHOOLS »
SPECIAL REPORTS »

Markets
Private Sector Driving U.S. Wind Market Forward

18/04/2014 16:46 (01:22 minutes ago)

The FINANCIAL -- The onshore wind energy sector is booming in the United States, where there's enough of the renewable resource on hand to meet the annual demands for 15 million homes. It may take one of the biggest retailers in the world, however, to usher in the necessary change in energy consumption, according to The NASDAQ OMX Group, Inc., exchange company.

INSURANCE
M&A insurance grows as confidence increases

18/04/2014 16:18 (01:50 minutes ago)

The FINANCIAL -- As the green shoots of economic recovery have started to show in key markets like the UK and US, demand for mergers and acquisitions (M&A) insurance has been rising, according to Lloyd's, the world's specialist insurance market.

Read more...






Developed by Aleksandre Chiabrishvili

Design built by Creo Group