Canada signals it will sell oil to China as US continues to delay Keystone issue

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ONTARIO : Disappointed by the lack of decision making by the US authorities, Canada may infact sell off their oil to the energy hungry Chinese.

In an interview with CTV News, Prime Minister Stephen Harper says- "I am very serious about selling our oil off this continent, selling our energy products off to China”

The US government had put on hold its decision on the Keystone pipeline until after the 2012 elections. And even though the US senate passed a bill that required president Obama to take a decision on the matter within 60 days, the House had rejected it on Dec 20, thus putting a cloak on uncertainty over the energy project.

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The U.S. Chamber of Commerce President Thomas Donohue has expressed support for the pipeline project an urged Obama to take a quick decision. “If the president is serious about job creation and energy security, now it the time to act on the Keystone XL pipeline. This is the perfect example of a shovel-ready project that makes sense for our economy”, he said on Tuesday.

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The project has however found staunch resistance from environmentalists arguing that the project will harm the environment.

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The proposed Keystone XL pipeline between Alberta and Texas was expected to pump 830,000 barrels of oil every day.

Why silver is poised for a big crash into the teens

By Clive Maund
Some weeks ago in a Silver Market update we had noted that a large potential Head-and-Shoulders top area was completing in silver, but we got "thrown off the scent" by the positive Accum-Distrib line (now rapidly reversing) and the seemingly strongly bullish COT structure.

In the light of the severe bearish breakdown by stocks indices last week this potential H&S top is now viewed as legitimate.

Silver held up remarkably well last week considering what happened to gold, which is a straw that silver bulls are now clutching on to as evidence that silver is still in a bullmarket, but the reason that it held up so well is that it is close to a zone of strong support towards the lower boundary of the H&S top area.

Once this support fails it's "curtains" for silver which can be expected to plunge into the high teens.

The Head-and-Shoulders top is shown on the 3-year chart for silver shown below. On this chart we can also observe various other bearish factors that are now coming into play.

-One is that silver has been trading way below its 200-day moving average since the September plunge, and this indicator is now rolling over and about to turn down, which will put the price and its moving averages in nearish alignment for the first time since 2008.

-Another important bearish factor is that that the MACD momentum indicator shown at the bottom of the chart is now in an established downtrend, and with it now showing an only moderately oversold reading there is plenty of scope for further heavy losses going forward.

The 6-month chart for Silver shows recent action in more detail, in particular last week's breakdown from what we can now see was a Head-and-Shoulders continuation pattern, which interestingly forms the Right Shoulder of the much larger Head-and-Shoulders top shown on the 3-year chart above. Some eagle-eyed subscribers pointed this out to me ahead of the breakdown, but fooled by the COT, I did not take it seriously enough.

With regards to the COT, if it is not at historically bullish readings, how can silver drop? The answer to that is simple - the further it drops the more bullish the COTs are likely to become, and there is no law against the Commercials going net long one day - now that would be a sight to see.

Source: clivemaund

Beware of big moves in gold, silver

 With the holiday season nearing, hedge fund managers sitting on the sidelines just waiting for their yearend performance bonuses, I cannot see any large selloff start until January. Selloffs in the market require strong volume and the second half of December is not a time of heavy trading volume.



By Chris Vermeulen 
The past few months have been tough for those holding precious metals stocks, PM futures contracts or physical bullion. With silver is trading down 41%, precious metals stocks down 30% and gold 15%. It has people scratching their head.
The question everyone keeps asking is when can I buy gold and silver? Unfortunately that is not a simple answer. With what is unfolding across the pond and the bullish outlook for the US Dollar index the next move is a coin toss.
That being said, I do feel a large move brewing in the market place so I am preparing for fireworks in the first quarter of 2012. If you step back and look at the weekly trend charts of the dollar index and the SP500 index you will see the strength in the dollar along with a possible stop in equities forming.
What these charts are telling is that in the next 3 months we should know if stocks and commodities are going to start another multi month rally or roll over and start a bear market selloff. With the holiday season nearing, hedge fund managers sitting on the sidelines just waiting for their yearend performance bonuses, I cannot see any large selloff start until January.
Selloffs in the market require strong volume and the second half of December is not a time of heavy trading volume. This leaves us with a light volume holiday season, major issues overseas and no big money players willing to cause waves.
In short, I think the best thing to do is enjoy the holiday season with family and friends. Trading right now is not that great and with the market giving mixed signals. I am keeping my eyes on the market in case it flashes a low risk setup and I will keep you informed if we get one.
I am still bearish on gold and silver longer term but the next week or so its likely we see higher prices. courtesy : TheGoldandOilGuy.com

Strong dollar rally will crush gold and stocks in 2012 amidst severe deflation

By Clive Maund
Last week saw a severe breakdown in the Precious Metals sector that is now viewed as marking the start of a bearmarket, and that means the onset of a deflationary episode that is likely to prove more serious than that we witnessed in 2008, because it will involve countries going bust rather than "just" banks and large corporations as was the case in 2008.

At first glance gold's 3-year chart still doesn't look too bad, with its price in the vicinity of a still rising 200-day moving average, but last week it broke below this average for the first time since 2008, which is in itself a serious warning, and ominous developments on the charts for Silver and the Precious Metals stocks indices, strongly suggest that gold is in the process of completing an important top area, which looks like it is taking the form of a bearish Descending Triangle.

Momentum as shown by the MACD indicator, is now firmly in negative territory, and failure of the important support level at the lower boundary of the suspected Descending Triangle will Lead to a severe decline as shown.

The dollar broke out above an important resistance level, negating a potential Double Top, as we can see on its 6-month chart below, although the breakout is not as yet by a decisive margin. This has opened up the possibility of another strong upleg by the dollar, which is of course what we would expect to see if deflation strikes.

 How far could the dollar rally? The 5-year chart gives us a good idea - it could run swiftly to the 88 - 89 area during a major deflationary episode.

 If the PM sector is signalling a major deflationary episode, then we should see signs of topping action in the broad stockmarket, and we do. A large Head-and-Shoulders top is completing in the S&P500 index, and with the index high in the Right Shoulder we are believed to be at an excellent point go short, buy bear ETFs etc

Let's stand back a moment now to consider the larger implications of all these developments on the charts. The breakdowns now occurring across the PM sector are an indication that the forces of deflation are set to assert themselves and come to the fore. These forces have always been there, lurking in the background since the first major deflationary convulsion back in 2008, and their intent is to cleanse the world economic system of the dross of the gargantuan debt and derivatives overhang that is bringing the world economy to a dead stop.

The key point to understand here is that these forces may be kept at bay for a while but they cannot be stopped - and creating even more debt and derivatives in an effort to stave off their impact, which is what central banks and governments have been doing since 2008, simply creates a more disastrous situation later on. Thus the accelerated ramping of the money supply and the maintenance of "zombie banks" and the propping up of bond and stockmarkets is an open invitation to disaster on a massive scale.

There is also a widespread assumption that that the entrenched powers that be, Goldman Sachs, the Republican Party etc are unassailable and immortal - that's what the Tsar of Russia and his family thought before they were summarily shot by the Bolsheviks in 1918. Nothing is forever.

2012 is going to suck - it probably won't be as bad as the movie "2012", but it's going to suck. Prepare yourselves as best you can

Source: clivemaund

Asian gold buyers thrilled at price fall, UBS says buy Gold Asian gold buyers thrilled at price fall, UBS says buy Gold

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Gold prices dropped more than 7% last week – the biggest weekly loss since September. Liquidity squeezed speculators and banks have been closing long positions and selling Gold this past week but global physical demand remains robust.

Bullion buying in much of Asia has picked up. Reuters reports that there has been a jump in buying in most Asian countries and that demand for gold in India, still the world's top buyer, rose slightly for the first time in almost a week on Friday.

Bullion dealers in India told Reuters that the price drop “enthused buyers.”

"We saw huge physical demand from Thailand and Indonesia," a Singapore based dealer told Reuters. Gold bar premiums were steady at $1.00 an ounce over spot prices in Singapore. Prices may edge up this week as supply reduces around Christmas holidays according to a dealer.

Opinion has been divided about the outlook for gold. Most analysts of the gold market remain positive about the outlook for gold in the medium and long term. Some are cautiously suggesting that the worst of the sell off may be over as gold looks very oversold technically and the fundamentals remain sound.

Bearish sentiment in the gold market is very high which may be indicative of a market bottom.

Some economists continue to confuse gold’s frequent short term correlation with risk assets with its proven hedging and safe haven properties in the long term.

Nouriel Roubini has declined to elaborate and clarify regarding his suggestions that gold is a bubble. Roubini Global Economics has said that the breach of gold’s 200 day moving average is “signaling that prices may drop to US $1400/oz.”

Denis Gartman whose pronouncements of the death of the Gold bull market were widely publicized this week has said that he may buy gold soon if it falls sharply again. Gartman said that gold was poised to enter a bear market and would hit $1,450/oz before it breached $1,800/oz.

A more nuanced view is that of UBS’ Chief Investment Officer who said that “as we enter 2012”, gold no longer retains “a safe haven status.”

However, “investment in bullion makes sense as a protection against currency debasement and as negative real interest rates reduce the opportunity cost of owning gold”, UBS CIO Alexander Friedman of UBS said.

“Investors should not, however, buy gold expecting it to act as a safe haven during severe, liquidity-driven market sell- offs,” Friedman said.

Last week’s washout in gold is “overdone” according to respected UBS precious metals analyst Edel Tully. Edel said that “we think gold at these levels” presents a “buying opportunity.”

Buyers with a long term view might be prudent to dollar cost average into positions in the coming days and weeks.

The old adage to never “catch a falling knife” is worth remembering and it is still too early to say that this correction is over. A higher weekly close next week and weekly or monthly close above the 200 day moving average at $1,620.60/oz would likely see more speculative players come into the market again leading to gold regaining its footing and the technicals again aligning with the fundamentals.

Source: goldcore

Why gold seen extremely bullish in 2012: Twelve factors

By Commodity Online
Investors who bought Gold as a hedge against the crisis in Europe may be surprised that prices crashed on Wednesday. Is it just a beginning of price fall, or a repeat of 2008? Some people believe that gold's count down has begun. But Jeff Nichols still believes that gold prices will go above $2000/oz in 2012. He forecasts $2000 levels in the first half of 2012 and in the longer term, the yellow metal is expected to ride higher to $3000, $4000, $5000. Because of the following twelve factors, he still believes in a yellow metal rally in 2012.

Twelve bullish factors for gold in 2012
--Past and prospective U.S. Federal Reserve monetary policy, characterized by low or negative real rates of interest and unprecedented central bank monetary creation.

--The U.S. federal government budget impasse, rising U.S. sovereign debt, and eroding U.S. creditworthiness.

--The expected future depreciation of the U.S. dollar in world currency markets . . . and the continuing decline in the dollar’s purchasing power for American consumers.

--The growing insolvency of some European nations - leading to the disintegration of Europe’s Monetary Union and the eventual abandonment of Europe’s common currency, the euro, by at least some of the EU member countries.

--The expected acceleration of global inflation - fueled by excessive monetary creation, world population growth, and changing diets in favor of more meat and protein . . . and led by persistently high and rising agricultural and industrial commodity prices from one country to the next.

--The increasing political instability in the Middle East and North Africa . . . as authoritarian regimes are overthrown . . . but sectarian divisions in some countries prevent orderly transitions to democracy . . . with implications for world oil supplies and prices. And then, of course, there is Iran - which remains an unpredictable “wild card.”

--The growing affluence of the “emerging-economy nations” and the associated growth in both jewelry and private investment and savings demand for gold - especially here in China - as well as India and other gold-friendly countries.

--The development and popularity of new Gold investment vehicles and channels of distribution - especially gold exchange-traded funds - that facilitate physical gold investment by both retail and institutional investors.

--The legitimization of gold as an investment class and rising investor participation . . . together reflecting a growing appreciation of the benefits of including physical gold in a well-diversified portfolio . . . and the entry of new, large-scale, professional investors - including pensions, endowments, insurance companies, sovereign-wealth funds, and especially hedge funds.

--The “stickiness” of much of the recent private sector and central bank gold demand. This is shrinking the available “free float” in the world gold market . . . and it means that less metal will be available to gold-hungry buyers, except at increasingly higher prices. Indeed, many of today’s new investors have no intention of ever selling, even at much higher prices.

--- Eleventh bullish factor, one that I believe is especially important to the long-term development of the gold market - is the affect this rising wealth is having on emerging-economy central banks . . . prompting some countries that are over-weighted in U.S. dollars and underweighted in gold to diversify their official reserves through the prudent acquisition of the yellow metal.

--And, twelfth in my catalog of bullish factors supporting a continuing long-term rise in the price of gold is the fact that world gold-mine production, although growing, will not keep pace with the expected growth in global gold demand. Even a rash of new mine discoveries would take five to 10 years - or more - to contribute significantly to supply . . . and, meanwhile, existing resources are being depleted, nationalized by unfriendly governments who tend not to be good mine operators, or are simply mined out.

(Courtesy: Jeffrey Nichols is Senior Economic Advisor to Rosland Capital and Managing Director of American Precious Metals Advisors.

Commodity Outlook for early 2012: Base metals sluggish, Silver, Oil moderately bullish

Volatility will continue in commodities and equities but commodities will continue to outperform other asset classes.  The markets will be impacted by the Eurozone crisis, US financial crisis, already the United Nations has signaled a global recessionary threat in 2012-13.

Recently, central banks in China and some European countries have lowered their interest rates, focusing on growth, which augurs well for commodities.

Commodities witnessed  $10 bn outflow of fund money in September but rebounded with $2.1 bn inflows in October. The outlook is still mixed for most commodities although precious metals may perform better in 2012.  Commodities witnessed in January to April – net inflows of $24 bn (Compared to January –April 2010 inflows of $16 bn)
May to October 2011- Net outflow of $8.5 bn. May saw acute market volatility due to strengthening of Eurozone debt worries, US financial crisis.

Rupee depreciated 17.4% in 2011 against US Dollar , Euro, GBP fell by 5.3%-- to impact India’s imports, inflation and commodity markets. Domestic inflation may sustain on higher imported cost of oil, coal, metals, minerals. Export oriented IT, textiles to benefit.

Indian commodities
Falling financial institutional infows (FII) inflows suggest weak outlook on Indian economy, Foreign Direct Investment (FDI) inflows less volatile to Eurozone worries.

Key points: Rs 115 lakh crore turnover in commodity futures trading in 2010-11 representing 50 % growth  The cumulative value of trade from 1st April, 2011 upto 31 st  October, 2011 for the financial year 2011-12 was ` 106, 36,960.76 crore.  Commodity trading volumes in India have risen close to 70% in April to November 15, 2011 at  Rs 113 lakh crore compared to Rs 67.11 lakh cr in corresponding period last year.

It is observed that at least 20 per cent of capital market traders have added commodity to their trading pattern and out of them at least 7 per cent have shifted completely to commodities from equities. (based on three years of data collection by Commodity Online)

Gold Outlook: To touch 28700 by the end of  2011, 32500 by 2012
Gold will trade positive in 2012 driven by central bank buying, India China consumption, global macro-uncertainties and higher investment demand especially through exchange traded funds (ETFs).

Gold prices surged 28% to $1923.70 in September in 11th year of bull run and with US interest rates close to zero and continuing Eurozone debt crisis  that adds to the safe haven appeal of gold.  Gold has surged 38 percent this year, touching a record 29300 rupees per 10 grams in Indian market.  Weak rupee may provide further support for prices. Commodity Online Research expects gold to touch Rs 28700 per 10 gms by end of this month and Rs 32,500 by 2012.

Gold  held in ETFs globally has climbed to a record 2,358.206 metric tons on December 6.

Global gold demand in third quarter of 2011 was strong at 1,053.9 tonnes, an increase of 6% compared to the same period last year. This equates to US$57.7bn, an all-time high in value terms. This increase was driven by investment demand which rose by 33% year-on-year to 468.1 tonnes, generating record quarterly demand of US$25.6 bn. Healthy growth in jewellery demand and modest gains in demand from the technology sector were offset by a year-on-year decline in investment, principally from ETFs and similar products.

In India, latest industry report indicates that the average assets under management for Gold ETFs is more than Rs. 9000 Crores which indicates that Gold is emerging from the shadows of equity and debt with an identity of its own as a preferred investment opportunity.

Gold has risen 20 percent annually in the past four years. In 2011, Gold has given highest return of more than 35 percent in last 10 years. This year closing prices are expected in range of 28700-900 rupees. In 2012, first quarter, gold to touch Rs 31,600 per 10 gms.

Downside momentum is expected till 28200.  Support – 26500, 27300, 28500 .Resistance – 30200, 31500, 32600.Recommendations : Buy Gold in range of 28500-28600 SL 27200. Target 31300, 32700

Silver to be moderately bullish
Silver prices may witness moderately bullish trends in 2012 on global macro-economic uncertainties and possible fall in industrial demand for the commodity. Investment demand may gain especially in India where the demand usually comes from farmers and rural households who store their savings in Silver bangles and coins. Depreciating rupee may weaken demand for precious metals as import costs rise. Higher prices may act as deterrent for buying in India.

In 2010, silver futures have outperformed all base metals and bullion commodities giving a return of 73%.  Current market prices are trading in range of 55000-57000 rupees per kilogram in India.

Silver is also having direct relationship with Euro and inverse relationship with US dollar, as the movement of EURO is generally moving in negative direction with US dollar and most of the other currencies, we may face zig zag movement in the prices of silver.

MCX Silver will trade positive at 58526 levels in the coming weeks could rise to Rs 64000 per kg by February if it breaks Rs 60,000 levels or else it could fall to Rs 46000.

Silver futures climb to more than 56 percent to 73600 rupees per kilogram. After touching all time high levels, Silver dips to 46000 rupees as Euro zone debt crisis fear market condition. Silver move downside along with base metal complex.

Overall view for Silver is moderately bullish for coming year. Short term bearishness can be considered as buying opportunity to buy this white metal at dip. As the world economy worsens, its affects Industry demand for Silver. In case, down-trend continus,  then Silver may touch bottom levels of 48000 and 42000 rupees in coming months. Supportive micro economical data will help Silver to move higher till 62000. Looking at the current market, we don’t expected much space in upper range for now.

Support : 48500, 52000, 55000
Resistance : 58000, 60000, 62500
Recommendations : Buy Silver in range of 51000-52000 SL 47000 Target 58000, 61500

Crude Oil
Crude oil prices may continue to remain bullish at the start of 2012 on geo-political tensions and possible production cuts by OPEC to be announced on December 14, 2011.  Libyan production has resumed and is expected to come back to 1.6 mn barrels per day by end of 2012, but is still lags behind pre-civil war levels.  Global oil demand is expected to decline on Eurozone debt crisis, US financial crisis and weakening of growth in emerging economies.

Hence, Crude Oil prices will trade in positive territory. MCX Crude Oil futures outlook is positive and may climb to Rs 5360 to Rs 5500 per barrel.

Base Metals to remain sluggish in 2012
Base metals will remain sluggish on slower rate of growth reported in China and Japan, the leading consumers of metals.  In India, higher inflation rates, lower IIP data and lower GDP growth is dampening the base metals market.

The ongoing Eurozone sovereign debt crisis and tighter Chinese monetary policy appear to have also had an impact on demand and confidence.

LME Copper is down 18 percent this year, and is headed for its first annual decline since 2008 when a financial crisis tripped the global economy, with demand from top copper consumer China also far from aggressive. Aluminium capacity is being idled on lack of demand and higher energy curbs in China.  Nickel   has fallen significantly in 2011 among the all base metals from its high due to increasing concerns of global economy,low demand and increasing LME stocks.

Nickel will remain bullish for coming sessions and its expected to touch the level of Rs. 1006 which is expected to touch within couple of months.

Lead market is balanced in demand and supply scenario but goiing ahead into 2012 it we believe that supply side would be steadily increasing yet structural change announced by Chinese government should be watched properly as mojor Lead producers are being stopped.

Agriculture
In the agri front, some commodities have shown immense potential in its movement in Futures market while it has also given marginal profit to producers and farmers as well. Take for instance Guar Seed, the prices of which may extend the gains in near term on expectation of lower output in 2011-12 and lower carryover stocks along with robust export demand.

At the same time a commodity like Cardamom has prices have falling by Rs.670 per k.g – from 1580 to 609 -almost 170% down from last year closing. Higher production, and some carryover stocks are some of the reasons for downside in Cardamom.

Rubber prices have shown a firm trend in recent times and rising Crude Oil prices and adverse weather in Thailand had given support for prices. The Indian tyre industry demand for further import at concessional or zero duty has been ruled out by Finance Ministry which allowed 40,000 tonnes at concessional rate of 7.5%. China buying in January may push prices. Indian prices are consolidating at 20,000 levels and is looking for fresh triggers for upside gains.  With a deficit of 75,000 metric tonnes forecast and growth in production of 2.5%, consumption by 2.5%, Rubber prices seem well supported at current levels.

In Pepper, domestic demand is moderate to strong and arrivals are weak these days. In long term, technically the break out of 37300 will take price higher to 39600 if volume supports. While in short-term the prices of future are expected to trade positive. Futures traders can enter into buying positions.

Strategic decisions in moving commodities can bring gains to Futures traders while in the case of physical traders, lack of storage facilities have put them in a dock to store agri commodities. Most traders in north are buying agri commodities and is taking advantage of the mushrooming cold storage facilities from Jaipur to Delhi corridor to store them for two to three years.

According to Futures Industry Association (FIA), number of contracts traded globally in futures and options is higher in agri-commodities compared to metals, energy and other categories.

curtsey  www.commodityonline.com