Monday, July 22, 2013
GOLD WILL RALLY SOON------------By Shan Saeed Gold have finally emerged from the losing break and showing its head above $1300/oz. Last week, I told my friend Rola Ezzedine that Gold was going to rally due to an oversold position and a fat doji formation on the chart...I got it right. A doji is a candlestick formation that looks like a cross. If it shows up at the end of a long up (or down) trend, it is a turnaround signal. It is the visual representation of the bear and bulls fighting it out gladiator style... When they fight themselves to a standstill, the momentum is exhausted and the change in direction is almost certain. Gold in a Key Reversal Trend In the last week gold jumped from $1270 to to $1293. The next trigger will be $1,300. If the yellow metal can break $1,300 an ounce, look for a move up to $1,450... If not, look for it to go back and test $1,200 again. Above is how it looks on the Gold ETF GLD. The probability is that this recent rally is a dead cat bounce. So if you're trading options, it is time to sell and buy back when it retests the low. You can trade this chart, but don't count on it going straight up from here; “V”-shaped recoveries are rare. My prediction is consolidation throughout the summer. Long-Term Bullish for GOLD. DON’T SELL YOUR GOLD: Even though Rogers has evidence that gold could drop down to $900 an ounce, he says to hang on to it . . . and start buying more. Soon, he says, it will start an unprecedented move to $2,000 an ounce. In the long term, the prospects for gold look good simply because the prospects for currency look poor. Gold climbed last week after Helicopter Ben Bernanke said he was just kidding about “tapering” his bond buying. What he meant to say was that he was going to keep printing money as long as Wall Street and Washington wanted him to. And they do. Bernanke's proposal to reduce spending $85 billion a month on debt was met with such abhorrence and fear-induced selling that he quickly recanted. And the market rejoiced. I don't know what I'm doing!” Ben exclaimed. “There is no exit plan! “Alright!” cheered the bankers. Gold loves money created out of thin air because gold bugs still believe you can't just print money forever without consequences, that you can't get something for nothing; that there is no free lunch. We all know that money printing destroys money. History is replete with examples: Zimbabwe, Argentina, the United Kingdom. But who knows, maybe the world GDP can grow its way out this hole like the Keynesians talk about... Maybe it can't. No one knows for sure. But buying gold after a 40% sell-off seems like a wise idea either way. Buy low, sell high is what Grandma used to mumble. ________________________________________ Gold Up Again The numbers tell us that the world isn't growing very fast...The consumer has traditionally been two-thirds of the economy. The economy can't expand unless people buy stuff. People are up to their eyebrows in debt, and two-thirds of the new jobs are all part time positions. Gold loved the bad retail number globally and opened up again yesterday. Bad news is good. Poor retail sales mean Bernanke can keep printing, which drives down the dollar and pushes the malleable metal to a three-week high. Stocks go up and stocks go down, but the dollar has been falling since they invented the Federal Reserve in 1913... The 1913 dollar is now worth four cents. Gold was worth $20.67 an ounce a hundred years ago. It is worth $1,293 now. Disclaimer: This is just s research and not an investment advice. All financial transactions carry a RISK.
Posted by Shan Saeed at 11:17 PM
Monday, May 20, 2013
Saudi Arabia is running out of oil------By Shan Saeed, Riyadh's Hidden Energy Crisis: While the world wasn't watching, the Saudis have been covering up a huge secret...A secret so big and game-changing, they've gone to great lengths to keep it hidden. A secret that, when the rest of the world wakes up to its implications, will send massive ripples through the energy markets. For those bold enough to see the truth and act quickly, the opportunity it presents is immense. Saudi Arabia is running out of oil. You didn't read that wrong. It's not a joke, nor is it just my opinion. And I'm most certainly not crazy. It's a stone-cold fact. The report I'm talking about is from the world-renowned think tank Chatham House. I'm sure you didn't see anything in the media touting this report or anything about the Saudis running out of oil on the evening news.Don't take my word for it... Here's an excerpt of the report from Chatham House: " Saudi Arabia's energy consumption pattern is unsustainable...That means on a 'business as usual' trajectory, it would become a net oil importer in 2038." That's right. If the Saudis continue at their current rate of oil consumption, they will become net oil importers even sooner than they want to admit. And truthfully, I think we're looking at much sooner than 2030. Because it seems Saudi Arabia has developed quite a penchant for wasting the one thing the world covets most... How much do they waste? To be blunt, too much. We're talking about nearly three MILLION barrels PER DAY. That's a staggering number, for sure. But get this: That's more than 25% of their oil production. According to the International Energy Agency, the Saudis consume more oil than Germany, a country with 3x the population. Talk about waste! The Saudis use as much oil per person as people in USA do and it has a far higher car-to-person ratio. This is a great opportunity for smart and savvy investors to take position in the global energy market. USA will dictate the global energy market by producing more and more Oil and Natural gas and becoming the net exporter globally. Disclaimer: This is just a research piece and financial market insight. All financial transactions carry a RISK
Posted by Shan Saeed at 4:35 AM
Friday, February 8, 2013
Friday, February 1, 2013
ECONOMIC OUTLOOK FOR UNITED KINGDOM---By Shan Saeed Bank of England--Main task The new Governor of the Bank will have unprecedented powers to direct and regulate the UK banking and monetary system. He will need to work closely with the government of the day, so that Bank policy is complementary to fiscal policy and to the government’s legislative priorities. He will need to shape and lead the team at the Bank to use the new powers wisely, in the national interest. He will need to decide what to do with the large QE program he inherits, and what to do about the malfunctioning banks still with large state shareholdings. Let see and hope the new Governor is someone with good judgement about the state of the UK economy and its position in the world. I suggest there are two crucial tests of an individual’s past judgement. Did they realise the Exchange Rate Mechanism would be damaging to the UK? Did they understand how tying the pound to the DM in the early days would lead to faster inflation, and then the opposite once the inflationary effects undermined confidence in sterling? And did they read the 2005-10 cycle correctly? Did they understand that credit and money was too loose in the period up to 2007, and did they understand that this was corrected too abruptly in 2007-8, jeopardising the liquidity and even the solvency of some banks? Did Mr Carney see the problems with ERM membership prior to the entry, and the dangers of DM shadowing. Did he think the previous policy of money targeting , as the German Central Bank did, was a safer way of controlling events? Did he argue for tighter monetary control with higher interest rates in the boom phase prior to 2007, and argue for a more rapid injection of liquidity in 2007-8? This approach should be allied to controlled administration for any bank that could not meet its obligations, is something that has now been adopted as policy for future crises. Clearly when he took over as Canada’s Central Bank Governor he did understand the need for easier money. Lets see what he has studied the unhappy monetary history of the UK and formed the right conclusions from the torrid and bumpy ride the Establishment gives UK, both through its espousal of the ERM and its encouragement of Boom/Bust in the noughties. Today the priority is to assist the government in its wish to promote faster growth. This in turn will help bring the budget deficit down. The Bank needs to relax immediate controls over bank capital and cash, whilst maintaining a more prudent level than in the period prior to 2007 to assist the recovery. There will be time to demand higher levels of cash and capital once the recovery is under way and as banks generate better profits. The Bank also needs to ensure its current policies of QE and Funding for lending are well designed to maximise the beneficial impact of these extraordinary interventions. The US and the UK – different approaches to fiscal stimulus RBS published some interesting figures on the US. Over the last twelve quarters US public spending has fallen in ten of them, making a total decline of 6% over the period. Despite or because of this tightening of the spending stance, the US economy has grown overall by 4.8%. In the UK the last eleven quarters (since the Coalition arrived) have seen a significant rise in real public spending but only a 0.4% increase in output. In most quarters in the UK the public sector has made a positive contribution to output growth. Those who argue the US has grown faster because Mr Obama has avoided austerity whilst the Coalition has gone for it should look again at the figures. Mr Obama has not increased Federal spending by sufficient to offset state spending declines, so the US has been much tougher on public spending overall than has the UK. Why haven’t the US cuts in spending led to economic decline, as some argue here. Some points to ponder upon.
Posted by Shan Saeed at 6:43 AM