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Asian Metals Market Update

By: Chintan Karnani, Insignia Consultants

 -- Published: Monday, 21 July 2014 | Print  | Disqus 

Gold and geopolitical risk

The propaganda war over the Malaysian airline will continue. I personally believe that we will never get to know the real culprits as the chances of someone from NATO getting involved is very high. Ukraine will be a game changer between the USA and Russia. The USA we all know is the almighty. The world will be closely watching Russian moves. Over the weekend I was watching the news channel “RT”. One thing which has been confirmed in Ukraine is that the NATO supported Ukrainian armed forces is on a killing spree. The number of civilian casualties has been far under reported by the media. The western media has turned a deaf ear to Ukraine people and is only supporting the propaganda war of NATO.  The Ukrainian people want Ukraine to be a part of Russia which they have been denied.

China is using the trade sanctions against Russia to “hard bargain”. Russia knows that it needs Chinese help to counter the trade sanctions. China is using this to get access to certain key Russian weapons technology which generally it would not have normally got. This will be a big cause of concern to India and other nations with which they have territorial disputes. China is increasing its global clout at the cost of Russians. The Americans or NATO are at a loss as the suppression of Russia will aid Chinese dreams of becoming the next super power. I personally believe that Russia as a super power will result in more peace globally than the USA or China.

In Mosul Iraq, Christians have been given the option to pay higher taxes or convert to Islam. The Christian Church is getting back their own medicine. In India and globally wherever these Americans and European foot landed there has been forced conversion to Christianity for centuries all over world. The Churches all over the world are flush with European and American money. They use this money to lure people to convert to Christianity. Having lived my childhood in Calcutta, which has a huge Christian population, I have seen the Church luring people to convert to Christianity. The Mosul trend will increase in the Middle East and most parts of Africa. (I am not against any religion, caste or creed. I am only against religious extremism, religious fanaticism by all religions. Religion and religious places now a days are being used globally to promote anti national activities, brain wash the youth and create hatred towards people following different faiths. I am against such things. The above paragraph is not meant to hurt any religion. If anyone is hurt. Please excuse me in advance).

There are two sides of the coin as far as the war between Israel and Hamas are concerned. The first side is that innocents killing and more so children killing should be stopped. The people of Gaza strip are opposed to Hamas using its land for rocket attacks on Israel. (b) Israel is trying to tear apart Hamas infrastructure so that they are unable to attack Israel for quite a long time. To a certain extent Israel is right. (I just hope someday India will do an Israel on Pakistan’s terror network in the Pakistan occupied Kashmir). Higher civilian causalities in the Gaza strip will be used by Hamas to lure more and more people to take revenge against Israel and expand its terror network. The Israel-Hamas war is a dead end. However its repercussion will be felt all over Asia (including China). 

Israel can never win the war against Hamas. The reason is crude oil profits by the Arab nations and Iran supports the Hamas movement and other pro-Islamic terror groups. The fair value of Nymex crude oil should not be more than $70 a barrel. Basically the world is paying over thirty percent premium (than the fair value) as profits to the crude oil producers. A lot of these profits are used to fund Hamas and other Islamic terror groups. The network and financial reach of Hamas is something I cannot write in a few words. Israel can never win the war against Hamas. Breaking the back of Hamas infrastructure will only result in a few years of peace. 

The developments in the Middle East, North Africa, eastern Ukraine and Eastern Europe have the potential to change global political scenario in the long term. The only looser will be the innocent people and the common man. Thousands of under reported deaths are there globally as a result of faulty US polices. The US dollar will no longer be the safe haven. Gold, in spite and despite all the suppression by NATO will be the winner. However the so called bear trend could continue for another two years (under the worst case scenario). I do not believe that gold is in a long term bear trend. Water will act as replacement to gold in the next two decades.


There are no major US economic data releases this week. There will be big one way moves followed by a large period of consolidation.

Spot gold needs to break and trade over $1367 over the next two weeks another set of rise to $1392 and $1467. In case gold does not break and trade over $1367 over the next two weeks, then chances of a fall to $1267 and $1220 will be very high. Indian gold demand will zoom if the price falls below $1280.

At lower prices Indian demand for gold and silver will be very high. This should limit the fall in gold and silver.



100 day moving average at 28290 is the key resistance. As long as gold does not break and trade over 28290 the chances of a fall to 27682 and 27380 will be very high. Jobbers watch 27991 all the time.

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

Disclosure: Insignia consultants or it employees do not have any trading positions on the trading strategies mentioned above. Our clients do have positions on the trading strategies mentioned in the above report.

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UK session starts around 1:30 pm Indian Standard Time (+5:30 GMT) -- after the release of LME daily inventories

US session starts at 6pm pm Indian Standard Time (+5:30 GMT)




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