Gold, Rupee indications ask: Is market insanity the new normal?

Last Updated : 10 October 2012 at 13:10 IST

AHMEDABAD (Commodity Online): With rupee rates swinging back and forth, the bullion commodities are also exhibiting volatility to a large extent. While the appreciation in rupee helps gold prices on the upside, the depreciation of the same, or in other words, the strengthening of dollar arrests the upside and drags gold prices down.

“Bullion prices have been trading in a very volatile range as rupee depreciation-appreciation cycle continues. It is limiting the downside momentum in our market but also fuelling uptrends.” noted Ankush Jain, Manager-Research(metals-energy), Commodity Online.

Technically Silver December contract is having good support at Rs.61000 and resistance at Rs.61800, even as in gold, December contract support is expected at Rs 31330 and resistance at Rs 31500 for an intra-day session.” he added.

Trade strategy

He has advised intra-day traders to buy MCX Silver December contract above Rs.61800 with stop loss of Rs.61500 for target near Rs.62100 and Rs.62400. For gold, it is advised that traders take a long position around Rs.31390 with stop loss of Rs.31330 for target near Rs.31460 and Rs.31530. Meanwhile, short sellers are advised to take a new short selling position in gold only below Rs.31330 and in silver only below Rs.61000.

State of the Rupee and a host of indications

Rupee has touched 53 mark against greenback as investors around the globe are trying hard to be agile and applying staying-ahead-of-the-curve strategies to curtail loss of asset values and register gains.

They are responding to periodic data releases in a big way and given the sorry state of the global economy, the community is often bewildered as what to do next.

A positive employment market report last week strengthened the greenback and rendered gold prices and crude oil prices dull. But in a trice, the community felt insecurity at the state of European economy and reverted back their stand sending bullion and crude oil prices up.

Certain media reports quoted analysts as saying that the psychological factor significantly weighed on the markets.

But an overdose of this element does not smack of grey-cells and often borders on market insanity. Ultimately, the smartest of the lot makes money and being smart is not being insane.

One would say this is something of an everyday tale and a cliché. It is not the case as per certain observers the happenings as currently being staged in the global economy has never been enacted before and is sort of unprecedented.

One may often wonder if insanity is getting to be the new normal. Answer is that fundamentals remain the same. 

As published in: http://www.commodityonline.com/news/gold-rupee-indications-ask-is-market-insanity-the-new-normal-50798-3-50799.html

Silver: Complicated; who would clear the air and how?

Last Updated : 27 August 2012 at 11:40 IST
April 25, 2011: 73600/kg for Silver
May 12, 2011: Rs 49,775
September 6, 2011: Rs,66898
December 25, 2011: Rs.48700
February 2, 2012: Rs 61,387
May 16, 2012: Rs.51259

Since then silver has again climbed 15% to touch Rs 56,700.

So what accounts for the volatility of silver when traders say that silver is the most dangerous commodity to hold matched only by crude oil?

The point is silver is having an identity crisis.

Silver is primarily an industrial commodity. About 50% of silver demand comes from industrial or manufacturing sector ranging from sweets to photovoltaics. So when industrial demand picks up silver demand too picks up. But when growth slows, silver too would plummet; or at least that is what people think about it.

In contrast, silver is also an investment commodity. Investor demand too can take silver to dizzying heights and given that one can buy almost 50 times of silver with same money as that of gold, silver prices shoot up when global growth slows.

So slow down is good for investment silver even as it is bad for industrial silver. Bullish by half and bearish by the same measure.

Now take a look at certain research reports:

Barclays predicts that global silver supply is expected to be in a surplus of 4000 tons for the current year. Meanwhile, market honchos like Theodore Butler and others think that silver is terribly shorted. Gurus like Jeffrey Lewis think that there is a pent up silver demand as silver is mostly on paper only and not in a physical dimension.

Clearly these conflicting reports that reach the lay man investors account for some amount of volatility in silver.

Ultimately fundamentals decide the movement in any commodity. But when obscurity veils the fundamentals; the same gets covered in mystery and add to volatility.

Now, who would clear the air and importantly, how? Are the regulators listening?

As published in: http://www.commodityonline.com/news/silver-complicated;-who-would-clear-the-air-and-how-49935-3-49936.html

Is the golden era of Silver about to dawn?

Last Updated : 23 August 2012 at 12:10 IST
The time before monetary easing contributes to a period of uneasiness. Time after easing contributes to a binge.

It is because Quantitative Easings, wherever they are carried out ultimately find their way to commodities and equities. Now China, in an anticipated phase of deceleration predicted for August is expected to announce stimulus measures. US Federal Reserve minutes from the latest meeting of policy honchos is indicative of a round of QE 3 for many.

So, what is the outcome of these measures as and when they happen?

One word: inflation!

When printed money without sufficient asset backing finds its way to markets, it behaves like a tide and in a deluge kills the value of money. Hence you may have to pay that piece of burger or this piece of jewellery, a little more than what you had paid a few months ago.

The next question is how to safeguard your investments and assets from this deteriorating trend.

Investing in precious metals is the best option and investing in silver the bettter-than-best option!

“It does just have to be silver. Consider this: silver is the only major commodity not to have reached a new all-time high in this bull market; silver is still cheaper than it was 32 years ago, prices are astonishingly depressed. Then you can consider the impact of an economic slowdown on silver. Yes its industrial use will go down but so will its production because that is linked to the output of copper and zinc mines.” said Peter Cooper in an article.

[Pure-play silver mines are rare and silver is often obtained from zinc and copper mines in an also-mined fashion.]

“Investment demand for precious metals will take over in any case from industrial demand. And once the gold price heads up then silver will follow. You get 50 times more silver for your money than gold. Historically it was 12 to 15 times the amount of silver for gold, so that also looks like a correction just waiting to happen.” he added.

Nowadays there are talks of a global slowdown about to happen in lines of the 1930s depression. If that turns out to be true, those who possesses nuggets of gold and silver would rule the world.

Now, if the silver prices are being kept low as Theodore Butler has argued, and pent up demand in silver and a mismatch in paper silver and actual silver occurs, God save all those who have not invested in silver.

As published in: http://www.commodityonline.com/news/is-the-golden-era-of-silver-about-to-dawn-49876-3-49877.html