Its like a train coming at you and you are not going to stop it by standing in its way....Commodities BULL run will continue...I have coined COGS....i.e. Copper, Oil, Gold and Silver.....Lets talk about Silver. The caveat is very simple.Its industrial utilization is much higher than Gold......
The interesting thing about silver is the metal is starting to trade a lot like "real money" in the past month. Since much of silver is consumed in industry, it often trades like an industrial metal... like copper or zinc. Investors and traders usually buy and sell it based on their expectations of global economic growth. Most people don't know this, but silver traded almost in lockstep with both oil and the S&P 500 this year.
In the past few months however, silver has soared, while the stock market and oil have languished. The S&P is barely up in the past two months, while silver has climbed 9% to reach its highest level since March 2008. Silver will touch $23/ ounce in 2010. Gold is near an all-time (non-inflation adjusted) high. What's going on here?
My guess is that silver has again become chiefly viewed as a "hard money" safe haven, like gold. Despite the lull of bad news regarding U.S. deficits and a euro meltdown, these problems are still gurgling under the surface of the markets... and seasoned investors are accumulating more gold and more silver in anticipation of a potential crisis.
This is also driving the extraordinary move in junior gold and silver stocks. In a primary bull market for gold and silver, these stocks absolutely skyrocket. It's not uncommon to see these companies rise 100% in a month... or 1,000% in a year. As per guru's and master speculator Doug Casey says, "you only need one" of these little moonshots to make an investment fortune.
For example, had an investor placed $25,000 into Phase 1 recommendation ATAC Resources when Matt Badiali recommended it in October 2009, he would now be sitting on a position worth more than $190,000.
Whats happening to the US DOLLAR? I will share the inside story with you...China and Russia have formed strategic alliance and developed that partnership to counter Dollar.
China and Russia are planning to start trading in each other's currencies as the world's second-biggest energy consumer and the largest energy supplier seek to diminish the dollar's role in global trade.
China may start trading its currency against the ruble within weeks, three bankers with knowledge of the matter as per Bloomberg, and sent out a document last week allowing lenders to apply for ruble trading licenses, one of them said. Russia's Micex Stock Exchange is making preparations to trade the ruble against the yuan in an initiative that has the backing of the country's central bank.
"Given the risk to the dollar and U.S. assets from their fiscal position they want to reduce their dependence on the dollar as an invoicing currency. It makes strategic sense for two large economies to exclude a third, overly dominant economy from their trading equation."
In the wake of the global financial crisis, which forced the U.S. economy into recession some people call it depression, both China and Russia have called for the dollar's role in the financial system to be diluted. Volatility in major currencies is putting the global recovery at risk. Russia, is the holder of the world's third-largest foreign-currency reserves, reduce its holdings of dollar.
The yuan slid 0.06 percent to 6.7953 per dollar paring its gains since the central bank ended a two-year dollar peg on June 19 to 0.4 percent. Russia's ruble weakened 0.3 percent to 30.9225 per dollar and has fallen 2.1 percent versus the greenback so far this year. Yuan and rubble would depreciate and wont appreciate as per US aspiration.....
The euro gained 0.2 percent to 1.2712 per dollar and jumped 2.5 percent against the U.S. currency last year.
The People's Bank of China started yuan trading against the Malaysian ringgit between banks on Aug. 19. Very few people know about it. Yuan, capital controls would be removed in 3-years time and It already allows trading of the renminbi versus the dollar, the Hong Kong dollar, Japanese yen and the euro on its interbank market and China's Foreign Exchange Trading Center provides daily reference rates for these currencies. The yuan is a non-deliverable currency that is managed by the central bank to prevent volatility.
The ruble is a "fully convertible" currency and some Chinese banks have already been allowed to open ruble trading accounts. The opening of cross-currency trade between the yuan and the ruble is more important for China. They are gradually allowing more currency operations with yuan.
China overtook Germany as Russia's second-largest trading partner in the first six months of the year, helped by exports of Russian commodities such as aluminum, nickel and oil and gas. Trade between China and Russia jumped 50 percent to $30.7 billion in the first seven months of this year, compared with the same period in 2009,
Sources: China's Ministry of Commerce said in a statement on Aug. 21.
The world's fastest-growing economy is seeking to eliminate the need to convert yuan holdings in to dollars before converting in to rubles to pay for Russian commodities.
"China wants to reduce the volatility in its access to primary goods. They want to reduce their dependence on the dollar in trade transactions.
HSBC Bank (China) Co. and Bank of Communications Co. completed the first yuan-ringgit transactions, according to the Foreign Exchange Trading Center, which is affiliated with the central bank. The central bank was investigating the possibility of offering new currency pairs on the interbank market, including ruble, won and ringgit. "Gradually the dollar is being eliminated from the foreign-trade settlement flows. People are beginning to trade Asian currencies without intermediation via the dollar."
This research report is not an investment advice to the investors..Please execute your own due diligence and discount this research report by using your judgment call.