-- Posted Monday, 25 October 2010 | Digg This Article
| | Source: GoldSeek.com
GENERAL MARKET CONDITIONS/FUNDAMENTAL FACTOR
The G20 meeting
The group of 20 nations agreed on an overhaul of the International Monetary Fund that gives a larger voice to emerging market nations. More than 6 percent of voting rights will be reallocated to underrepresented emerging-market nations and Europe will give up two board seats in the “biggest reform ever in the governance of the institution. The G-20 also agreed on the structure for a “financial safety net” to stop nascent financial crises before they speed out of control, he said.
The IMF’s board may approve the package in the first week in November, and it will probably take a year for the changes to be put in place. The package includes a shift in the composition of the IMF’s executive board and the fund’s 10 biggest shareholders.
Strauss-Kahn called the deal a “historical agreement” as the Washington-based lender takes on a larger role in monitoring the world’s economies, currencies and capital flows. South Korea, the host of this weekend’s meeting of G-20 financial chiefs, proposed the safety net.
G-20 officials also prepared an agreement to avoid competitive devaluations and give the IMF greater sway in assessing economic imbalances among nations.
Our view: The USA is loosing its clout in the world. There are many emerging nations which can challenge it and its economy. The international monetary fund (IMF) is still controlled by the USA and Western European nations. The changes in the G20 meeting is a way to ensure that the USA and Western European nations still try and influence emerging market policies and that they continue to depend on western world. These will not last long, there will be conflicting financial policies and political moves between west and east which will result in gold and other safe havens continuing to rise and the speed of breakdown of currency markets will rise in a big way.
Ask yourself who runs the IMF? Which currency do they lend and borrow. The answer is simple, the IMF is run by the USA and western European nations and their currency is the US dollar. By enlarging the role of IMF, the USA wants to ensure that the supremacy of the US dollar in global trade remains and the USA continues to interfere with every country policies in its own interest. Earlier the USA was the world’s biggest consumer and therefore nations had to bend before it. Now there are other countries which match the USA on demand and therefore dependence on exports to USA has been reduced and post World War II dictatorship of USA could come to and end soon. The world is experiencing a transition phase of it and as long as it continues gold will also continue to rise.
It’s the same old thing. When a man is poor his first needs are food, shelter, and clothing. Later to increase his income he takes debt from banks and financial institutions for his business/profession for growth. He also sells goods at a cheaper rate for bulk orders and “high end/big customers”. This big customer also dictates/influences the expansion policy of the person. But demand from this big customer cannot last endlessly. There will be a time when demand falls from the big customer and the person looks somewhere else for growth and his influence over the person also reduces. Now substitute this with nations and you get is “person is India, China and other emerging economies”, “big customers are the USA, Europe and other nations” and “banks and financial institutions are the IMF, Federal Reserve, bank of Japan etc”. I need not write the rest of the story; I hope you have understood it. Gold has to rise. There will be wild fluctuations due to the fast pace of the rise.
For the week the US dollar and stock markets will be the key.
COMEX COPPER DECEMBER
Copper needs to break $392 this week or else it will fall to $362.80. In the short term as long as copper trades over $362 it will rise to $403.
NYMEX CRUDE OIL (1ST CONTRACT)
Crude oil has been consolidating in a $79-$84 range and this range will be broken soon. We prefer a buy on dips strategy as long as crude oil trades over $78.
MCX COPPER NOVEMBER
Double bottom around Rs.368 which suggests that copper can rise to Rs.380 and Rs.386 as long as it trades over Rs.366-Rs.368 zone.
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
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-- Posted Monday, 25 October 2010 | Digg This Article | Source: GoldSeek.com
