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-- Posted Monday, 8 May 2006 | Digg This Article
GOLD | SILVER | COMEX GOLD JUNE FUTURE -- $683.70 | COMEX SILVER JULY FUTURE -- $1399.50 | | Lower | Expected | Higher | | Lower | Expected | Higher | SELL | 658.20 | 690.00 | 735.00 | SELL | 1348.00 | 1452.00 | 1530.00 | EXPECTED TRADING RANGE | GOLD -- $652.50 -- $702.30 | SILVER -- $1275.50 - $1492.50 | COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE | COPPER JULY -- $322.80 - $382.40 | NYMEX CRUDE OIL JUNE - $71.40 - $77.20 | MULTI COMMODITY EXCHANGE OF INDIA (MCX) | GOLD JUNE FUTURE/10 GRAMS | SILVER JULY FUTURE/KG | Rs.9,650- Rs.10,225 | Rs.18,600 - Rs.24,200 | COPPER JULY FUTURE | CRUDE OIL MAY FUTURE | Rs.316.90 - Rs.382.20 | Rs.3,008 - Rs.3,410 | GENERAL MARKET CONDITIONS | Bears Beware! Call it the parabolic bull run, second phase of a long term bull rally or by any other name, gold and silver are virtually unstoppable in 2006. The rally in gold and silver has exceeded most of projections made on late 2005. The reasons are from higher investment demand and physical demand to geopolitical factors to central banks diversification of their foreign exchange reserves and other reasons. I can mention a thousand reasons why the long term bull run in commodities is here to here to stay. The earlier apprehensions of busting of the Chinese economy has been laid to rest as the Chinese economy may grow at 9.50% in 2006 and that the measures to cool its economy by the Chinese government has been rendered so far effective. The Chinese government has been trying to stimulate domestic demand and trying to ensure that its imports rise and also make a hard attempt to balance the export –import imbalance. This is another stimulus to global growth. If Chinese domestic demand rises, then the global manufacturing village, including US will benefit. The current weakening of US manufacturing sector has resulted in the US companies to restructure and trim their balance sheets. The fall out has been loss of manufacturing jobs to other nations. But in our view, if Chinese domestic demand picks up, then it the US economy and Japan that will benefit the maximum as some of the lost jobs will be restored. Record gasoline prices will not affect the developing nations like India, China, Russia in the medium term as the government will not pass the higher cost to the end consumer. The end result is higher gold, silver and other precious metals prices. Base metals such as copper, zinc aluminum, nickel, steel, molybdenum prices are expected to gains further. Global economic growth has been never exceeded more than 4% for a period of than four years and is being experienced currently. This growth is here to stay courtesy China, India, rest of Asia and commodity producing nations. Commodity producing nations such as Middle East, Chile, Russia etc are socialist nations and higher commodity prices are having a trickle down on the growth of these nations. The per capita income and spending power of the people nations are on the rise. As savings in these nations rise, demand for gold and silver are also on rise in these nations. The rise in gold and silver is here to stay. But volatility will increase and there will be very sharp corrections in store, without altering the long term bull rally. Every day, there are more mouths to feed than the previous day. Global population is on the rise. Forest cover is reducing. Forests are converted to agricultural land. Agricultural land into Urban village. This is happening not just in India but everywhere. The materials used to construct a new residential complex, power plants, bitumen roads, new automobiles, computers comes from mother earth. With no end to rising population, there will be continuous supply squeeze in commodities. Another reason why the bull rally in gold, silver and other precious metals and base metals are here to stay. I even expect most of agricultural commodities to rise be it soyabean, sugar, wheat etc to follow gold and silver over the coming years. Barclays silver has around 41,998,083 ounces of silver were in its trust. This is roughly double from 20,999,769 ounces on its launch on April 28 launch day. Silver will rise but volatility will increase over the coming weeks. The only risk to correction in gold and silver prices are higher interest rates leading to reduction in global liquidity and reduction in geopolitical tensions. We have the Fed meeting this week which could will add volatility to gold and silver. We expect a small correction in gold and silver prices this week. Momentum is certainly bullish, but technical factors may overcome the momentum traders. | GOLD | Gold targets $702.40 if it breaks $690.00. On the lower side $773.50 and $668.70 are the initial support levels with $652.10 as the key short term support. Only a weekly close below $652.10 will result in further losses to $633.50 which is the key medium term support. Our view is that gold may target $702.40 and $735.00 but can still fall to $652.10. | SILVER | Silver needs to break $1452 for $1484 and $1551. On the lower side there is an initial support at $1351 and $1313 with $1220 as the key short term support. | | For SMS service on MCX & NCDEX trading strategies, please mail sms@insigniaindia.com | | For Multi Commodity Exchange of India (MCX) reports as well as NCDEX reports on | metals as well as agri commodities please register at www.insigniaindia.com/register.asp | | Happy Profitable Trading | | Disclaimer : Any opinions as to the commentary, market information, and future direction of | prices of specific currencies, precious metals, base metals, or equity indices reflect the views | of the individual analyst, In no event shall Insignia Consultants or its employees have any liability | for any losses incurred in connection with any decision made, action or inaction taken by any | party in reliance upon the information provided in this material; or in any delays, inaccuracies, | errors in, or omissions of Information. | Prepared By Chintan Karnani. Web Site:www.insigniaindia.com |
-- Posted Monday, 8 May 2006 | Digg This Article
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