-- Posted Thursday, 21 June 2007 | Digg This Article

GOLD	SILVER
COMEX GOLD AUGUST FUTURE -- $657.50	COMEX SILVER JULY FUTURE -- $1332.50
EXPECTED TRADING RANGE
GOLD AUGUST  -- $651.20 -- $664.20	SILVER  JULY  -- $1292.50 - $1344.00
GENERAL MARKET CONDITIONS
The current bull run in equities, treasury yields, commodities, real estate is mainly due to availability of virtually free money. In the first decade of the twenty first century, most of the global central bankers printed more money and distributed to the markets at nearly zero interest rates to stimulate growth in their own countries. The Greenspan, Duisenberg, Koizumi’s and Chinese central banks have followed high levels of liquidity and low interest rates for the past decade. This has created a “Paper Bubble” which should get busted over the next eighteen months. Whenever this gets busted real estate, stocks and base metals will take such a slide never seen and experienced in history. Now there are regular comments from Bernanke and Trichet that investor reduce their risk taking appetite.   Six decades ago, the U.S. Treasury wanted to shut down the Bank for International Settlements, saying it helped finance the Nazis. Today, Trichet and Bernanke are transforming the organization into one of the world's most powerful networking clubs. With hedge funds and private equity firms pumping record sums of money around the world economy, central bankers fret that investors are taking on too much risk. As a result, the bankers are increasingly turning to the Basel, Switzerland-based BIS, the oldest international financial institution, for research and advice, and to coordinate damage-control plans. Newton third low of motion is being experienced by the central bankers every action has an equal and opposite reaction. The action has been to print more notes, the reaction in the form of a bust will take greater time than the action but the reaction effect will be far more long lasting than the action. In my opinion this is something which the global central banks are experiencing for the first time in history and they are ill equipped to handle the current situation as the past tried and test methods such as raising interest rates are not working.   As a result the value of paper assets including currency, stocks is continuously falling.  The value of stocks are rising, you need more dollars the same stock a few years ago. The purchasing power of money is falling at the swiftest pace never seen in history. Take the case of India, suppose a persons income was INR 15,000/- six year ago. The same persons income has risen to INR 105,000/- currently. The income has risen seven fold over the past six years, but this persons savings rate will fall due to higher cost of living and increase in items which were a luxury six years back and has now become a necessity. What I am trying to emphasize is that the power of money is dwindling. Gold and other precious metals are the best form of long term investment under such a circumstance. Paper assets will die their own lives sooner than later.   I am not a great long term fan of paper assets under the current market circumstances. I may be wrong, but I will maintain my dislike for investment in paper assets at least for the next eighteen months. Short term paper is also good investment if one uses trailing stop losses. Meanwhile commodities fell on fall on treasury prices. Treasury price fall has been the main culprit for the fall in commodities as well as equities and their movement will dictate the same for the rest of the week.
COPPER -- JULY FUTURE
Copper is news driven and will be volatile for the day. It needs to break $344 and $347.40 for $351.55. $351.51 is the key resistance and only a break of the same will result in losses to $360.30. On the lower side $336.90 and $331.30 are supports.
Happy Profitable Trading
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-- Posted Thursday, 21 June 2007 | Digg This Article

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