Carry traders turned the tables in their favor as global equity markets roared back with vengeance. Yesterday I wrote about liquidity providers versus liquidity squeezers. Another factor which the investors will be watching is the relative growth differential between US, UK, Eurozone, Japan, Australia and New Zealand. Japanese growth is matching eurozone and Japanese dependence on exports to US has been showing a steady decline. If this phenomenon continues for another six to eight months, Japanese investors will have more investment opportunities in their homeland which will reduce yen based carry trade. The current rise in equity markets is all about carry trades and as and when there is unwinding of carry trades they fall. It’s the carry trades which is preventing gold, silver and other precious metals and base metals from a short term correction.
Investor dilemma between equity markets and treasury markets will continue for the rest of the month. It’s a question of risk, returns and capital. Treasuries at the current prices do provide long term investment opportunity but returns do not even cover real inflation (not headline inflation). Equities provide returns higher than treasuries but at the current levels, risk is very high. I would rather wait and watch for another week before making a decision. Base metals one should rather wait till end of the month before deciding. Energies, I find natural gas a better investment than crude oil. Better to buy some short term call options in natural gas than buying future. Amaranth has scared natural gas traders. The best medium to long term investment is gold and silver. However even in gold and silver one should invest in small quantities as there could be further correction if there is a technical correction. This is just a comparative analysis of different investment avenues. Please that there is difference between day trading and investment. One can do day trading in any instrument.
Gold and silver are in an neutral zone but not out of the woods, Expect higher volatility top continue for the rest of the day. Gold, silver and copper managed to hold to their key technical supports and as long as they hold the same on closing basis, downside will be limited.
GOLD -- AUGUST FUTURE
Gold needs to hold $646.50 to prevent further losses to $641 and $633. On the higher side $659.10 and $663.50 are the key resistances.
SILVER -- JULYFUTURE
Silver needs to hold $1292 to prevent further losses to $1277 and $1254. On the higher side $1324 is the initial resistance with $1339 and $1354 as the key resistances.
Happy Profitable Trading
FOR ACTUAL AND FULL REPORTSplease register on our new website www.insigniaconsultants.in for a freetrial service for an indepth analysis on metals and energies along with intra day and positional trading calls on MCX. NCDEX and COMEX and other INTERNATIONAL markets. SMS on Mobiles, FAX and MESSENGER service also available.
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 employeeshave any liability
for any losses incurred in connection with any decision made, action or inaction taken by any
partyin reliance upon the information provided in this material; or in any delays, inaccuracies,
The content on this site is protected
by U.S. and international copyright laws and is the property of GoldSeek.com
and/or the providers of the content under license. By "content" we mean any
information, mode of expression, or other materials and services found on GoldSeek.com.
This includes editorials, news, our writings, graphics, and any and all other
features found on the site. Please contact
us for any further information.
Live GoldSeek Visitor Map | Disclaimer
The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy
or completeness of the information (including news, editorials, prices, statistics,
analyses and the like) provided through its service. Any copying, reproduction
and/or redistribution of any of the documents, data, content or materials contained
on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC,
is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be
liable to any person for any decision made or action taken in reliance upon
the information provided herein.