Where is the GOLD's minimum?

After NonFarmPayrollEverybody talks about the price of gold and wonder where it will be minimal. The yellow metal had the worst quarter in the last 45 years, going back to mid-2010 quotations. ounce price will collapse or will be an opportunity "Gold" for buyers?Almost 25% of the yellow metal lost in the quarter and 60% of the advance made in the heyday, 2009-2011, when the price ounce increased from 700 to over $ 1900. Without doubt, it is one of the darkest periods in history for gold.Major banks accuse eachother for creating this chaos. Goldman Sachs, Morgan Stanley, Deutsche Bank and Credit Suisee have negatively revised their forecasts for 2013. The market realised for the first time in recent years that the Federal Reserve will print to infinity, real interest rates will rise, and gold will be less attractive.There are rumours that is less gold in the bank than the amount that they have sold it. If true, that means for the future of gold?Normally these  stories about gold should be ignored, because it comes from those who have an interest in the market. However, if banks had the opportunity to sell gold to other people would do it without hesitation. Can anyone believe that a bank would sell something that does not belong or is there? It would use the money to somewhere in the future and would not be punished, because it is prohibited by law. Some banks now pay cash or deferred delivery. We do not know whether it is true or not, perhaps we'll never know, but recent events support this scenario.On the other hand, investment funds are expected to increase demand globally and especially from China, which would purchase at this price up to 4,000 tons. People will say "why China buy so much Gold if the value will fall" and big players in the market will attract the audience, because in reality, the positions of hedge funds are selling at an unprecedented 240 tons or 80,000 contracts. In recent months, they say the big banks have made huge profits from selling speculative positions on gold futures market.Who is wrong? Who is right? It is the beginning of the end for gold or the beginning of a new "golden period"?
After the Fed chairman threw "Taper bomb" and after the data from the labor market shows a recovery of U.S. economy, gold could lead to $ 1,000 per ounce. It is an opportunity for buyers just under $ 1,000, the probability to be a minimum is higher.WHY? Sometimes, risk sentiment is the main factor of influence (global), other times, such as now, monetary policy (domestic). 

EURO and GBP vs. DOLLAR

The largest and most influential central banks in Europe tomorow will face market pressure for additional support: QE made in Europe. Bluff Draghi has done whatever possible and succed toinverse, temporarily, the downward trend of the European currency against the dollar to 1.20 to 1.40.

ECB will not move in this session, but it may surprise the market and would be a favorable time. The main weapon is not a central bank interest rate cut, but the ability to change the vision and future market expectations. Draghi may be neutral repeating the words in previous meetings, posponing the payday which would be good for  Euro on the short-term, but the economy, despite optimistic Retail Sales, continues to struggle in recession with unemployment rate setting negative records.

Euro decline indicates a dovish Draghi, an advocate of continued policy of relaxation in an attempt to lower long-term interest. Euro could breake decisive minimum of 1.30. However,  meeting could not change direction or medium term, but short term. So, the outlook remains bearish with minor correction options. Tomorrow's NFP may have a greater influence.

BOE meeting today is likely more interesting than  Draghi's, being the first for the new Governor Carney (eg BOC - Bank of Canada), who takes over from M.King. They will announce their intention to revive the British economy, but more QE may face opposition from the members. It remains to be seen whether President BOE will resist the temptation to add support for the economy in the first session (positive for pound) or play aggressively from the start (negative for pound). Like the EURUSD, GBPUSD is in a downtrend that can not be changed regardless the monetary policy meeting decisions. The only question is whether it will continue counter-trend started yesterday or ending it, leaving space between its maximum and the preceding minimum of 24 June (signal rapid decline).

Top FOREX trading centers

I want to present you the biggest financial Forex trading centers. In spite of the fact that FOREX traders are all over the word, majority of FOREX brokers, banks and funds have centers situated in just some locations.

WHY IS SO IMPORTANT TO KNOW WITCH MARKET IS OPEN?

The biggest volumes determine oftenly strong trends for local currencies. Best example is AUD/USD: it is very active on London sesion, but the major moves it makes on Australian time.

Why is that? During the open hours economic local news is published, price is very sensitive to it because australian financial institutions trade local currency.

This way we could know what are the  moments  for important trends to develope.

TOP 4 FOREX CENTERS

I. Great Britain

Daily volume: 1854 bd $

Market share: 32%

Biggest financial center. England banks trade twice the volume of the one traded by the US financial institutions.

Active currencies: EUR/USD, GBP/USD si USD/CHF. De asemenea, perechi care se misca mult in aceasta perioada sunt AUD/USD, NZD/USD, USD/JPY si USD/CAD.

II. United States of America

Daily volume: 904 bd $

Market share: 16%

On the first 3-4 US trading hours , London banks are still open and that is why we can see the biggest volume and trends.

Active currencies: The main traded currencies are the same as on London session, but USD/CAD and USD/JPY accelerate after New York opens.

III. Japan

Daily volume: 312 bd $

Market share: 9%

While japanese banks are open on forex market two important things are happening:

- EUR/USD and GBP/USD are moving slower because Europe and US are already closed

- asian currencies have a incresing movement, we include here USD/JPY, AUD/USD si NZD/USD.

IV. Singapore

Daily volume: 266 bd $

Market share: 6%

The banks of Singapore are open on the asian session, that is why big trends are developed by the same currencies as the Japanese market, you can also try to trade an exotic pair (USD/SGD), but the spread is wide. 

For the final

You can trade any currency pair you like and feel confortable with, but choose wisely the one that is chepest (low spread and commisions), most active (high volume, safe trend) and take action on your highest efficient time (do not trade when you are enthusiastic or nervous, tired or sleepy)

for suggestions, critics or whatever, I invite you to leave a comment below

Analise today...take action yesterday

In order for an economy to grow, one or more of the following things must happen: the workforce must expand, earnings must increase or credit must grow. That is because, ultimately, the size of every economy is determined by the size of the population and by how much the people spend. The problem with the US economy is that none of these things is increasing enough to generate a satisfactory rate of growth. Worse still, there is little reason to believe this is going to change within the foreseeable future.

The growth rate of the US workforce has slowed sharply in recent decades and is now barely growing at all.

Meanwhile, globalization has put extreme downward pressure on US wages. Real median income was the same in 2010 as it was in 1989. With the size of the workforce slowing and median income not growing at all, the rate of growth in real disposable income has naturally been slowing as well.

From 1980 to 2007, total credit as a percentage of GDP expanded sharply. The rapid expansion of credit contributed enormously to the economic growth during recent decades. In fact, credit growth was the driver of economic growth. Even still, the credit boom was not enough to sustain the rate of economic growth. Then, in 2008, even credit ceased to expand. That occurred because the private sector simply could not bear any more debt and began to default on the debts already incurred, median income is actually falling. 

The Fed is desperately trying to make credit expand again by printing money and pushing up the value of property and stocks. Higher asset values create more collateral, which should allow more borrowing.

Asset prices have indeed begun to rise. Credit, however, is still not expanding enough to make the economy pick up. Household sector debt is still contracting and now the rate of growth of government debt is set to slow sharply due to sequestration and the recent tax increases.

Looking ahead, with almost all the recent economic data coming in weak, the Fed must feel that it has little choice but to continue printing money in order to drive property and stock prices higher, in the hope of causing credit growth to revive. Recently, the market has begun to speculate about when the Fed will begin to “taper off” the amount of money it prints each month. That speculation looks premature. 

QUANTITATIVE EASING IS THE ONLY THING KEEPING THE ECONOMY AFLOAT.

P.S. If the Fed does significantly reduce QE any time soon, a new recession would almost inevitably result. In fact, we may soon once again be in recession even if QE continues.

DOLLAR - TO BE OR NOT TO BE!

FED -  TO TAPER OR NOT TO TAPER?

FED policy is a critical part of the market at the moment. Without QE, indices have not reach these levels, financial actives have not rise at hystorical highs, but what will happen without artificial support of central bank? Could economy miraculously recover, would prices of financial actives keep the maximum levels? VERY LESS PROBABLE!
Dollar was smashed recently and the trend reversal could occur after one single event: Federal Reserve meeting

Why Federal Reserve meeting is crucial?
Ben Bernanke could announce the end of Quantitative Easing. Are just sepeculations? What indicates there is more than a fragile recover of american economy on the global recesion context? Recent market evolution show that any news about QE determines extreme volatility!
IT WIIL BE A DRAMATIC SEMNTIMENT CHANGE,when markets will find out that FED will not stop QE?

To Taper or not to Taper, this is the question Bernanke & Co. have to answer. In 2008 FED reduced interest rate to zero and adopted aditional measures like QE in order to stimulate investments and consume. Normalisation presumes three steps: taper QE, quit QE and incresase interest rate. Tapering QE is just one element.

What are the chances FED announce the begining of the first phase? Obiously, we must observe the last markets evolution and reactions to the important news. We see a light recover of the economy, but bad enough to eliminate speculations about a QE tampering. 

What are the scenarios? Knowing the conditions above, a step to normalisation will be a little surprising and could generate risk aversion, consolidating dollar. Less QE means less delution and improve growth perspectives. The key is the value: 5 billions is unimportant, over 10 billions would generate volatility, concluding the most expected scenario is that 

FED WILL NOT MOVE THIS TIME

THE EVENT WILL PROBABLY GENERATE A RISING RISK APPETITE AGAINST DOLLAR JUST FOR SHORT TERM

Biggest financial bubble is about to blow

It must have happened and now it is starting. The biggest speculative bubble in history is starting to deflate, and the next months the trend could accelerate and a collapse would occur. Any financial active on planet will be affected. 

The monetary policy adopted by the Federal Reserve, European Central Bank and other powerful central banks (Japan, Switzerland) pushed prices of financial active to a historical highs…this will end up bad.

Results: hyperinflation and collapse of some economic sectors
Stockmarket – trend inversal

United States Utility index…12% down on the last two weeks, biggest decline of last four year

Japanese Stock Market…18% down on the last two weeks,

Worldwide Stock Exchange…negative trend

Bond market – higher interest

Most liquid bonds (Japanese and American) biggest decline of the last years

Lower the bond, bigger the interest;

Credit very expensive or inaccessible

Forex market – illiquidity

AUD… 10% down…lower demand of commodities and row materials

JPY... decline … investors running

USD… three years top… dollar safe heaven, global panic

.

There are powerful signals that stock and bond markets ignore risk. Investors are looking for higher return rate on extreme levels. Putting all together, we see a big bubble and as always it separate the rich from the ordinary people, money do not disappear, money run away from the last buyers to the last sellers

Crazy trader

a very funny clip...

How to exchange an old car of 10.000$ to new one valuing 25.000$

        The automobile producers and dealers were affected by the last world crisis and I considered it was a good opportunity to buy a car. I sell my old BMW on a discounted price (from 11.000$ to 10.000$, loosing 1.000$) and I bought a new one at 20.0000$ discounted from 25.000$ (high supply). Also on the lack of demand on credit, the bank lend me 20.000$ at a very low cost (about 1% per year), the circle was completed by a low risk investment with just a 2% interest per year.

cash flow looks like:

ASSETS: 10.000$ (investments)                    INCOME: 2.000$ (return on investment - 2%)

LIABILITIES: 20.000$                                      EXPENSES: 2.000$ (car payment - 1%)

                        ---------------------------                              -------------------------------------

                                                                                        zero dollar to pay

It is like magic how to exchange for free an old car to a new one

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Financial markets

What you have to learn is TO NOT FALL IN LOVE WITH THE MARKET. The market is an easy woman who doesn't sleep in the same bed every night... the market doesn't sleep at all.