-- Posted Thursday, 26 March 2009 | Digg This Article
| Source: GoldSeek.com
Thursday, March 26, 2009
DAILY COMEX REPORT
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
U.K. gilts slumped after demand at an auction of bonds fell short of the amount offered, the first time the Treasury failed to attract enough bids at a sale of nominal debt in 14 years. Investors bid for 1.63 billion pounds ($2.4 billion) of the 40-year securities, less than the 1.75 billion pounds of 4.25 percent notes slated for sale, the U.K. Debt Management Office said today in a statement from London.
Our view
Investors are not confident on investing in treasuries. If investors do not invest then these central banks will buy their own treasuries by printing more notes which if it continues could be catastrophic for global economy. How? Basically it will be like printing notes to run the economy which will create asset bubbles of various assets, a whirlpool of asset bubbles will be created over the coming years. This will uncontrollable by the central banks. The end result global economies getting busted one after another and gold and other precious metals will be the real asset.
This could be the scenario in the next ten to fifteen years. However in the short term one needs to be cautious while investing at the current prices in gold and silver.
US Treasury Secretary Geithner's comments that he is open to considering expansion of the SDR currency system.
The U.S. dollar will remain the world's dominant reserve currency and U.S. government actions will ensure that this is the case, U.S. Treasury Secretary Timothy Geithner said Wednesday. Still, Geithner also said the dollar's future "depends primarily on how effective we are" at affecting an economic recovery and return the government toward a more sustainable fiscal path, Geithner said. He added "the politics are in a better place" to achieve those two necessary factors. Crucially, Geithner also said he was "open" to talking about China's proposed expansion of the International Monetary Fund's special drawing rights program.
Our View
This is an indirect acceptance that US dollar is loosing its status as the world’s reserve currency. The damage has been done. We are still in a long term US dollar bear rally. However the US dollar is gaining as their will be a cat fight between China, Russia and other nations to be the reserve currency. The US dollars is the beneficiary cat fight. All the commodity prices are quoted in US dollars world wide. The long term collapse of the US dollar means sharp rise in commodity prices (which includes agro commodities).
US retail investors flee to savings
US retail investors poured close to $250bn (€184bn) into bank accounts in the first months of this year, sharply accelerating a flight to safety as they continued to flee volatile stock markets.
Bank savings deposits rose by $246bn to a record $4,343bn in the nine weeks to March 9, according to data from the Federal Reserve. This is more than the whole of 2008, in which savings deposits rose by $229bn.
Our view
The US economy consumer could be slowly switching away from credit based expenditure to a debit based expenditure system. The current phase is just a transition phase for the same. They (US consumer) have understood that spending by taking loans through credit cards will ultimately result in a doom scenario for them. We expect the US savings rate to rise over the coming years.
A bit on gold prices
If you search the internet on gold prices most of the analysts have been saying that gold prices will rise to $1200 - $1500 either in 2009 or early 2010. I do support their views as I myself am bullish on gold prices in the long term. However history has suggested that when there are too much bullish news on any financial instrument initially they have risen only to fall to new lows. For example in 2008 crude oil prices were trading at $120 a barrel. The one of the hedge funds said that crude oil prices will rise to $250 by 2009. On the same day crude oil prices rose from $120 to $140. But what happened thereafter crude oil prices fell from $147 a barrel to $30 a barrel.
The lesson which I got from there was that following the market is fine but one should be flexible in his trades. What goes up has to come down. Only thing which is a suspense is the timing. Use of higher trailing stop losses better way to guard against such times. I am trying you to scare you from investing in gold and silver. But just cautioning you against investing at higher prices.
TECHNICAL VIEW
COMEX GOLD APRIL
A close over $943 and on 31sT March tomorrow will be very positive for gold. On the lower side there will be sellers only if gold falls below $920.
DISCLOSURE: NO POSITIONS
Disclaimer: Any opinions as to the commentary, market information, and future direction of prices of specific currencies, metals and commodities 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. Nothing in this article is, or should be construed as, investment advice. Prepared By Chintan Karnani. Website www.insigniaconsultants.in
-- Posted Thursday, 26 March 2009 | Digg This Article | Source: GoldSeek.com
