Silver futures down on weak global cues

NEW DELHI:

Silver prices fell by 0.76 per cent to Rs 51,280 per kg in futures trade today as speculators offloaded their positions in tandem with a weak global trend.

At the Multi Commodity Exchange, silver for delivery in May month fell by Rs 394, or 0.76 per cent to Rs 51,280 per kg in business turnover of 18,304 lots.

Similarly, the white metal for delivery in July declined by Rs 397, or 0.75 per cent to Rs 52,285 per kg in 1,256 lots.

Market analysts said speculators offloaded their positions, tracking a weak global trend mainly pulled down silver prices at futures trade.

Meanwhile, silver lost one per cent to 27.37 an ounce in London.

Gold extends losses to a third day

SAN FRANCISCO (MarketWatch) — Gold prices traded lower Tuesday as global-growth concerns and nervousness ahead of the corporate-earnings season preoccupied traders, and as the dollar gathered steam.

Gold for December delivery GCZ2 -0.41%  declined $8.10, or 0.5%, to $1,767.50 an ounce on the Comex division of the New York Mercantile Exchange. It earlier traded as low as $1,762 an ounce, and prices had spent most of the session in and out of the red.

Gold was getting mixed messages on Tuesday, said Adam Klopfenstein, a senior marketing strategist with Archer Financial. Some inflationary forces were at play, but amid equity weakness and dollar strength it could not get much traction, he said.

Gold dropped $5.10, or 0.3%, on Monday to settle at $1,775.70 an ounce, after the World Bank downgraded its growth forecast for Chinese growth.

The International Monetary Fund on Tuesday cut its forecast for global growth yet again, to 3.3% this year from a forecast of 3.5% made in July. The bank predicted growth of 3.6% in 2013, from a prediction of 3.9% in July.

The bank also said France, Spain and other euro-zone governments won’t meet fiscal targets agreed upon. IMF: key euro-zone nations to miss deficit targets.

The downgrade and the worries made the dollar the safe-haven of choice, crimping gold and other dollar-denominated commodities.

The ICE dollar index DXY +0.54% , which measures the dollar against a basket of six currencies, rose to 79.981, compared with 79.595 in late North American trading on Monday. See: Dollar rises as IMF sounds warning.

Also on Tuesday, the People’s Bank of China injected a big dose of liquidity to help ease tight money conditions.

That move strengthened hopes for more policy easing from the central bank, providing some underlying support for commodities. See: PBOC’s Zhou pledges flexible, pre-emptive policy

Analysts at Commerzbank said in a research note that markets seem to be recognizing that chances of cheap central bank liquidity will improve if global growth continues to slow. Gold has gained this year largely due to central-bank efforts to keep monetary policy loose.

“The chance of unlimited, cheap central bank liquidity and strong exchange-traded-fund inflows suggest that the price might soon rise towards $1,800,” the analysts wrote. Continuing strikes in the South African gold sector are another supportive factor, they noted.

There are strikes at mines owned by AngloGold Ashanti Ltd. AU +0.07%   ZA:ANG +4.62% , Gold Fields Ltd. ZA:GFI +1.95% , and Harmony Gold Mining Co. ZA:HAR +1.91%   HMY -0.05% . Workers from other sectors have also joined the walkouts in recent days.

While South African gold production has been on the wane, the nation was still the fifth-largest gold producer last year, the Commerzbank analysts said.

“Every ounce which is lost to strikes exacerbates the supply bottlenecks, and since the beginning of September, (exchange-traded funds) have been absorbing virtually half of the global mine production during this period,” they said.

South Africa’s strikes are a strain but one that does not impact gold as much as it impacts platinum, Klopfenstein said.

Platinum, 80% of which is mined in South Africa, remains well supported by strikes that continue to spread, lately to Xstrata PLC’s UK:XTA +0.86%  Eland mine.

January platinum futures PLF3 -0.11%  turned lower, however, off $2.10, or 0.1%, to $1,696.70 an ounce, while palladium for December delivery PAZ2 +0.21%  rose $2.35, or 0.4%, to $659.30 an ounce.

Silver went back to the red, with the December contract SIZ2 -0.05%  down 8 cents, or 0.3%, to $33.93 an ounce.

December copper futures HGZ2 +0.01%  rose less than 1 cent, or 0.1%, to $3.72 a pound

Gold futures swing between gains and losses on USD strength

Gold futures swung between modest gains and losses in rangebound trade during U.S. morning hours on Tuesday, as ongoing concerns over Spain and Greece boosted demand for the U.S. dollar.

Lingering worries over the health of the global economy also weighed on sentiment.

On the Comex division of the New York Mercantile Exchange, gold futures for December delivery traded at USD1,775.55 a troy ounce during U.S. morning trade, easing down 0.02%.    

Prices were stuck in a narrow trading range of USD1,771.95 a troy ounce, the daily low and a session high of USD1,781.55 a troy ounce.

Gold prices were likely to find support at USD1,765.75 a troy ounce, the low from October 1 and near-term resistance at USD1,793.85, October 1’s high.

Market sentiment remained under pressure after the International Monetary Fund cut its global growth forecasts and warned of even slower expansion unless officials in the U.S. and Europe address threats to their economies.

The IMF said that the world economy will grow 3.3% this year, the slowest since the 2009 recession, and 3.6% next year, compared with July predictions of 3.5% in 2012 and 3.9% in 2013.

Investors also remained cautious amid uncertainty over how soon Spain may formally request a bailout lingered after euro zone finance ministers said Monday that Madrid did not need external financial aid yet.

Meanwhile, German Chancellor Angel Merkel said earlier that Greece was on a “tough path” following talks with Prime Minister Antonis Samaras in Athens, but one which she believed would pay off.

The talks came amid ongoing uncertainty over whether international creditors will extend loans to Greece, as the country struggles to meet deficit reduction targets.

The risk-off trade environment prompted investors to shun riskier assets, such as stocks and commodities and flock to traditional safe haven assets like the U.S. dollar and Treasuries.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.3% to trade at 79.92.

A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Elsewhere on the Comex, silver for December delivery was dipped 0.02% to trade at USD34.01 a troy ounce, while copper for December delivery added 0.25% to trade at USD3.728 a pound.

Copper prices found support after the People’s Bank of China injected CNY265 billion into the money market, in a bid to ease tight liquidity conditions.

The move raised optimism for further supportive policy measures out of China, the world’s largest consumer of the industrial metal.

recious metals beat gold as cyclical assets rally

Gold price falls, platinum price rallies as global growth confidence continues to improve. The gold price fell to its lowest level in two months last week as continued improvements in US economic data and an increase in the Fed’s assessment of the economic outlook cuased investors to reduce their expectations of further near-term monetary easing.

While the recent price correction has pushed gold down below its 200-day moving average, underlying structural fundamentals supporting the gold price such as low real interest rates, currency debasement concerns, sovereign debt risks, emerging market central bank diversification of reserve assets into gold, rising China consumer and investor demand, have not changed.

Perhaps not surprisingly, with confidence in a sustainable global growth rebound improving, cylically-sensitive precious metals such as platinum and palladium are benefitting, with the platinum price surging above the gold price last week for the first time in six months. As long as this growth optimism continues, the more cyclically sensitive precious metals will likely continue to outperform.

India doubles gold import duties in an attempt to slow rising current account deficit. India’s finance minister, in his budget speech, announced that the basic customs duty on standard gold coins and bars will be increased fom 2% to 4% in a bid to reduce the current account deficit.

Mr Muherjee noted that ‘one pf the primary drivers of the current account deficit has been the growth of almost 50% in imports of gold and precious metals’. The rise in duties is expected to be passed onto consumers by jewelers and likely to be another constraint on the world’s largest jewellery market at a time when the Indian rupee is hovering near 2-month lows against the US Dollar.

Zimbabwe pushes ahead with ‘indigenisation’ plans. Impala Platinum’s Zimbabwean subsidiary, Zimplats, has agreed to transfer a 51% stake to local indigenous groups and the government after a threat by the government to nationalise the company. Platinum Group metals prices have remained well supported despite the selloff in both gold and silver in recent weeks.

Global growth and US housing data likely to be main market focus this week. The release of US housing data is likely to be a key investors focus this week, with strong data expected to add to investors’ confidence in the US economic recovery and continue to support cyclical precious metals.

In Europe, investors’ will scrutinize Eurozone industrial new orders as well as advance Purchasing Manager Index (PMI) readings to gauge whether the US recovery is spilling over to Europe.

Courtesy: ETF Securities Research

Platinum could well be next gold for investors

By Daryl B ChapmanAre you worried about your future? Do you want to stay on top of your finances? With so many people losing their jobs because of economic downturn, people are becoming more realistic on how they are managing their finances. They are looking for secured alternatives to keep their money.

Financial experts believe that because of the unpredictability of the economy, people should learn how to budget their money wisely. The expenses should not be more than the actual earnings or else they will end up loaning in banks and debts may increase if people are not so careful. One way to protect wealth is to invest in a good investment vehicle. One of the best investment vehicles is venturing in rare collectibles like platinum.

Platinum is a popular choice among coin collectors and investors alike. It is very rare and its supply is limited. For this reasons, many are opting to obtain this metal as part of their portfolio. Platinum as investments can come in various forms from coins, bars, bullion to futures. Aside from the reasons mentioned above, why should people venture in platinum?

Currently, platinum is one of the most expensive metals in the global market. It is even more costly than Gold and silver. If you have the budget, then invest in platinum. However, if your budget is limited, you can start with coins because they are more convenient to have. The price of platinum is sometimes even double the price of gold. However, when the economy is down, the price can go down as well.

If you are going to conduct a study about platinum, you will find out that platinum can also be found on the moon and the meteorites in outer space. Only a small portion is found in the phase of the earth. Eighty percent of which are found in South Africa, eleven percent in Russia and the remaining six percent in North America.

As compared to the annual production of Gold which is 82 million troy announces,Platinum only has a yearly production of five million troy ounces. Given that information, the supply of platinum is considerably diminishing and with the high demand of platinum in the global market, the price of this rare commodity is estimated to rise significantly.

Based on statistics, China, India and other Asian countries are the biggest consumers of jewelries today. There are even reports that China's demand for platinum jewelry has doubled in just one year. These countries are very interested in acquiring platinum for their jewelry production because characteristically, platinum has Silver blue color making it ideal and very in demand in the jewelry industry.

As mentioned previously, platinum as investments come in different forms. If you are a first time investors, you may start with coins and bullion. Coins and bullion are easy to transport and if you are saving on storage you can just keep it at home, locked in a secured cabinet or safe. 

Once you feel the need to upgrade you can simply advance to more complex and sophisticated investment options in platinum like Platinum stocks, mutual funds, ETFs and futures. These investments can provide promising returns, however they are not recommended for beginners because these can investments are complicated and very risky.

If you are looking for an investment vehicle to venture on, why not invest in platinum? But before you do, analyze your budget and know everything about platinum by continuous research. Good luck!
Courtesy : EzineArticles.com

 

Why you must buy gold and silver in turbulent times

The current scenario in the global investment landscape can at best be summed up as ‘precarious’. Investors have a tough task laid out in front of them that calls for capital preservation as their primary goal, with capital appreciation as a secondary objective.

The modern portfolio theory has clearly proved through countless research papers that investors who manage to walk out of relentless bear markets with their capital (investment float) largely intact, have a sizable advantage over those whose portfolios suffer erosion and need to come back to ground zero (breakeven) before yielding alpha (profits) in following bull markets.

While equities, as an asset class, can undoubtedly be relied upon to beat inflation over the long term, they provide little protection during the actual bear market. My personal experience in equity markets since 1986-87 tells me that equity prices witness large-scale attrition in high inflation periods, like we are currently experiencing, and provide almost no place to hide.

In a punishing bear phase, you only have the option of deploying funds in stocks that will at best fall less than the benchmark indices. While this “relative out-performance” is fine for high net worth individuals (HNI) and “buy only” institutions, the retail investor undergoes the horror of absolute returns that are negative. Try paying your electricity and telephone bills with relative returns alone and you know what I am getting at!

Are gold and silver a ‘safe’ haven?
The answer is a confusing yes and no! Yes, because high inflationary periods imply that commodities are a lot more “honest” to an investor and actually appreciate in such turbulent times, and no because in the market place, the price rules supreme and your returns are dependent on the sole factor of buying at the right price. Many technical studies help us gauge the appropriate time to invest in bullion, equities, ETFs and currencies.

The primary yardstick is the age old system of “range expansion”. The technician relies on price charts to track periods when the prices of the underlying asset are moving in a quiet, measured and lower beta (volatility) calibration.

Any “breakout” of such a measure of routine acceleration (rate of change) should alert the trader / investor that the outlook for the underlying asset or the market as a whole is changing gears. It is then a matter of being nimble footed to latch on to the moving bandwagon of prices and riding the “waves” or bull / bear phases. 
In the current scenario, avid bullion investors will break apart the price volatility of gold and silver into two phases - pre -August 2010 and post -August 2010. While silver was trading at close to Rs30,000 / Kg, gold was trading steadily at Rs 18,000 / 10 gms before August 2010. The price acceleration in both these precious metals has been swift and parabolic at times. The sum and substance of the argument is that an investor should deploy money when sanity prevails in price patterns rather than chase uptrend for the fear of feeling “left out”. Case in point - any investor who bought silver in the latter half of April 2011 saw a price erosion of up to 30 % within a matter of three weeks.

Where are we now?Both silver and gold are consolidating after a period of high volatility and parabolic price rise. The probability of short -term weakness should not be ruled out. While the larger scheme of things indicate that the uptrend is by no means fractured, market mechanisms are attempting to “shakeout” the weaker hands by extreme price moves that result in decisions that are more emotional (fear / greed driven) than logical.

Typically, the leveraged players who participate in the action via futures will see maximum stress as mark-to-market payments and span margin commitments will require deep pockets to just fuel existing long positions with little / no scope for enhancing long positions on price declines. The age old adage that “money makes money” rules the roost here and nothing beats taking delivery of the precious metals in physical format or ETF and e-silver / e-gold. While the exposure levels maybe smaller as compared to futures markets, you manage to skirt emotional pitfalls arising out of funding an existing position when your broker demands fresh funds to keep your positions “alive”. Less is indeed more and small is of course beautiful, at least in the case of the bullion investment game.

Should you buy, and why?I think you can ignore bullion and depend on equities and / or fixed income investments alone, at your own financial peril. While equity prices are likely to remain under pressure and provide negative absolute returns for some more time, fixed income investments will mean negative real effective returns as your Bank FD interest rates are lower than your food inflation at the street level. Bullion will offer a store of value and also capital appreciation opportunities provided you think of timelines in multiples of 12 months and incremental in similar multiple periods thereafter.

Remember, barring ETF’s where long term capital gain protection is available after 12 months (only Gold ETF’s are on offer in India), all other modes of investment (physical bars, coins, e-silver etc) are required to be held for 36 months before gains are protected from taxes. If you attempt to speculate in bullion so you can throw a grand New Year party, chances are you may erode your capital base.

The “why” of investing in bullion is all too apparent to a seasoned investor - fiat currencies are likely to lose purchasing power in the coming few quarters / years.

Asian countries may prove to be a power house of economic revival in the coming years, but their population is rising much faster than their resources supply side economics. That spells high inflation - a highly conducive scenario for bullion investors willing to dig their heels in these assets, with a long term outlook.

The Tao of bullion investing Deploying all your money in one go is a loser’s game. Battle hardened investors seldom empty their bank balance in a single cheque. Periodic investments, especially at prices lower / equal to your last purchase is the way to go. Typically, buying progressively slightly larger quantities when the prices are on the way down south makes sense. That way, your average acquisition costs are relatively closer to the current ruling market prices, reducing your anxiety levels. Since currencies are likely to play a dominant part in domestic bullion prices, you need to monitor interest rates and fix markets to time your bullion buys.

As a contrarian player, I would buy gold / silver whenever banks raise interest rates and drive bullion prices lower in the short term, knowing that the prices would rally all over again, whenever economic pressure points re-emerge at a later date. Over the next 36 months, this strategy should navigate you towards above normal profits. Start nibbling at silver at sub Rs50,000 levels and gold below Rs25,500 levels. Remember, systematic investing at lower values (averaging) will be required, so plan your finances accordingly. Do not get rattled to see a 15 - 20 % dip in prices, especially if some highly leveraged hedge fund in the western markets decides to unwind positions due to financial/ regulatory constraints. History provides ample evidence that such events have occurred with unfailing regularity. LTCM, Amaranth Advisors, Bear Sterns are some examples. These are times when bullion baiters (and haters) have screamed “I told you so”, but bullion has prevailed, and will continue to prevail.

Silver on the upswing as gold-to-silver ratio moves down

The gold-to-silver ratio has reached its lowest level in five months and the downturn could “signal a reemergence of the long-term trend” of rising silver prices in relation to gold, said Matt Insley, editor of the Daily Resource Hunter.

The gold-to-silver ratio has reached its lowest level in five months and the downturn could “signal a reemergence of the long-term trend” of rising silver prices in relation to gold, said Matt Insley, editor of the Daily Resource Hunter.

The gold-to-silver ratio is close to 48, after hitting a high of over 80 in 2008, he said.

Silver futures posted a climb of 6.4% last week, outpacing gold’s GCJ2 2.9% week-on-week rise. Silver settled Tuesday at $37.14 an ounce in New York, while gold finished at $1,788.40 an ounce.

The metal has been “on the upswing” for the past couple of weeks, said Jeffrey Wright, senior analyst of metals and mining equity research at Global Hunter Securities.

The rise in partially related “to gold moving higher on U.S. fiscal deficits and the Obama administration’s refusal to address this mounting burden, Fed monetary policy, euro-debt crisis concerns, but also on signs of industrial demand for physical silver being strong in Q4 2011 and continuing into the present quarter.”

Silver prices could move higher in the weeks to come, he said, and won’t likely see any demand-side destruction until they reach the $45 range. So the the long-term trend for the metals points to return to the “naturally occurring” gold-to-silver ratio, said Insley.

“The naturally occurring ratio of gold to silver in the earth’s crust is 17:1, so there’s still plenty of room for silver to move higher. I believe that’s where we’re headed,” he said.

“For the price of silver to meet that naturally occurring ratio today, we’d be looking at silver over $100 an ounce. That’s a 170% increase from today’s price of $37 an ounce,” Insley said.