Gold & Platinum Shining In 2016!

Ladies and Gentlemen,

Gold has rallied almost 17% this year and most analysts are looking at the Metals markets heading higher, spear headed by the Yellow Metal.

So what has been the key driver of Gold this year? Well, Monetary Policy in US. If we look back at last year one of the reason Gold struggle to rally is because it was cautious about the rate hike.

This year, the drivers have changed. Looking at the Financial Market & Global Economy as a whole. After last months FED meeting we saw Gold getting a lift, upon the cautious dovish notes.  We also saw that China Gold imports were lower recently and heavy restocking, especially ahead of the New Year (Jan - heading into February).






 












So what is the cap then on the upside? Well, as Gold prices rally quickly the downside range can also be greater. Hence why if we saw a huge spike up to $1300 it could be bad for the market. However, if we see prices correcting at these levels (as well as the physical market adjusting) and the market coming into the right support - this could provide for a much more sustained move higher.

Another interesting market... Platinum. 

Platinum flirting with 1,000 per ounce, after a 5 year pressured market and that has not been enough to lift prices at all. The underlying stocks have also been quite high with supply growing also. However, 2016 looks like the year we will see XPTUSD start to base around the 1,000 per ounce mark and prices should be lifted from here.

There is also a strong fundamental reasoning for this sustained move higher. Firstly, South Africa (accounting for 80% of the World's Platinum) and their wage negotiations, which will be very significant. From this, we should see more producer discipline and cut backs in supply growth, this should lift in investor sentiment.   Most of the Rand volatility should also support this wage case.

Secondly, the Jewelry market - which was incredibly weak last year.. although the price elasticity has come back into play this year offering a greater floor for prices.

As always. Trade Smarter

Anish8FX@Atom8.com

CALLS FROM THE TRADING FLOOR - BUY GOLD!

Ladies & Gentlemen

After a four-year slide, the price of Gold has nowhere to go but higher and many investors are starting to agree. The case for the "safe-haven" was further assured today, as China's manufacturing data showed a contraction.

For the majority of the Commodity markets, January was another bad month in a long bear-market cycle - apart from Gold. Gold rallied 5% in Jan, the best monthly gain in a year.  

Turmoil in Chinese markets (with the view of a potential Global Sell-Off), Oil price uncertainties and a slowing US growth has tickled Investors demand for the traditional safe-haven asset. Again, their remains a high chance the FED will hold off on further interest rate rises this year adds to the attraction for the yellow metal. 

There is really no sign of a re-surge in inflation and this has also been a large factor to Golds rise and this relationship goes back to the 1980's. However, what is interesting is that through the last 12 month Gold slide, we have had China, Russia and India continuing to purchase Gold (about 55% more in 2015) - but then why did not this affect the Price? It seems investors are more focused on Financial Assets & The state of the US Economy rather than Countries Gold holdings. 

James Cordier, CEO of a US based Options firm said "With stock markets looking to crash all over the worlds and the US economy growing slowly, nothing is pointing to rate hikes and that is why Gold will continue to rally" . 

However, as mentioned in posts prior - it is important to note that Gold does not pay a coupon like other competing assets, although the price elasticity (over the last 5 years) seems to have drawn Investors (especially Central Banks, like China, Russia and India) towards the Bullion. 

For the coming weeks, months / Central bankers like Kuroda and Draghi have key speeches scheduled (as well as NFP this week) which could further spur the rally in Gold as the consensus is for further tightening and talks of Negative interest rates and more uncertainty.  

As always, Trade Smarter

Anish @Anish8Fx 

Oil Crisis? Should We Now Buy Gold?

Ladies and Gentlemen

With a 17% fall in Oil since the start of 2016, the possibility of $20 oil becomes a real target for Investors, as we see major Hedge Funds exit the commodity.

Gold since August has been swung around in a tug of war, with Chinese equities on one side and a strong USD on the other. This pendulum has been relentless in the recent months, however with new lows in Oil prices, Gold continues to hold well in retaining it's safe haven status.

Gold has climbed 3.4% already in 2016 and investors risk aversion does not seem to be letting up. Geopolitical tensions persist in the Middle East and North Korea, as well as concerns about China's growth forecasts.  However, with a persistent strength in the USD forecasted for 2016, some analysts still call for sub $1,000 (per oz) Gold... as a "Competition for Gold" increases.

With Oil prices reeling from oversupply and Gold getting a small boost, Brent crude is now at the cheapest relative price in almost a generation.

Gold Vs Oil

But what is a "Safe-Haven"?   By Economic definition (as pointed out by James Steel, of HSBC) The Safe-haven inspired demand for Gold (and other precious metals) rests on the interconnection between  the state of the Gold Market and the Financial Markets of countries with long-term structural arguments for Gold accumulation (i.e. China and India) - and with this being said, HSBC forecast average Gold prices of $1,205 this year.

Mr Steel is looking more with a long-term view, as accumulations continue to rise. We always tend to think about Gold being a hedge on safety, however recently Gold has been more about uncertainty and a reflection of anxiety. Gold in a deflationary environment, may actually be likely to continue it's slide down.  2016 could well be the story of Central Bank delivery, especially as we are now risk-off as we strength in the Yen for example... but we hear nothing about the BOJ pushing back.

So Is Gold still a mark of uncertainty? Well the recent shocks coming from China did Send Gold immediately higher, which is reassuring to see.

I personally am long Gold, as I think it's safe-haven status will be the trend for 2016 but in the short-term we may remain bearish. I wish you all the best of luck with your Metals trading and as we all stay tuned to this theater of events in the World markets, I wish you safer trading.

Anish8Fx @ Atom8.com

The Future Is Bright - The Future Is Silver!

Ladies & Gentlemen, 

As we tick closer to "Lift-Off" from the FED, the Precious Metals continue to remain cursed by the USD bulls. But what will happen after the initial FED fiasco? Will the Markets quickly learn to appreciate reality of US Debt? Will investors flock into the Metals?... I'm not too sure, but I do make a good case to stay long Silver (XAGUSD) for the next 5-10 years. 

Commissioned from Mr. Hague (SocGen), he has created a propriety model on measuring a move in the commodities in relation to Macro factors, the Strength of the USD, Interest Rates & Market Fundamental (Variables) & from his analysis, it is clear that Fundamentals have taken a back-seat over the past 12 months. The Macro variables are the driving force behind the Markets, covering the environment for Risk Attitude, the Volatility Index & Equities.... This is what (according to Mr. Hague) is moving Silver (chart below): 

Over the past 2-3 years, Silver has been trading more like Gold & recent moves have been primarily driven by the strong USD and all-round been a strong head-wind for the Metals.  With Silver being 60% Demand driven, more for Industrial uses (mainly Electronics).. we begin to see Silver evolve from a Precious Metal to a Base Metal. 

The long-term outlook for Silver is bright, and a big part could be due to the anticipated exponential use of Solar. According to the IEA's growth forecasts (on a mass scale) over the next 5-years, they would be using nearly 1 Billion ounces of Silver! 

This bodes very well for Investors looking at today's chart, as you finally have (after 12-13 years) Silver Supply declining, especially when you think about the 2011 peak. The longer term Demand sets to pick up and it looks to be setting itself up for a Constructive move. 

Silver is absolutely everywhere! In your computers, in your phones... & as Emerging Market demand picks up over the next 10 years for Electronics, only naturally should this Market increase in value. 

So Anish, how do you see the Market shaping for the end of the year?... Well there is not much left for this year as we remain merciful to the FED's hiking plans but I do expect Fundamentals adding more promise to the Metals market in the Longer term & hope to prove the doubters wrong, as I am personally a big fan of Silver. 

Best of Luck

Anish8FX @ Atom8.Com 

How To Make A Camel Vomit Gold

Ladies and Gentlemen, 

Has Gold lost it's shine? Gold traded near a 5-year low as investors continued to short bullion-backed equities pricing in expectations for the US to increase interest rates this year, further Rusting the Metals Market. 

Gold is heading for a thirds year on year decline as investors now brace themselves for a first interest rate increase since 2006 and according to the "theory" - Higher Rates = Less competitive metals. But Why? It is simple, as the Metals offer no dividend, hence investors naturally flock to other assets that pay interest or offer dividends.

Can we head below $1000?
(Figure Below) Source : CNBC

What is now known as the "Vomiting Camel" (from the formation of the two humps [yearly highs]) - we now have the camel resting on a rhombus, indicating that a break below current levels =  free-fall! 

The Splat Zone indicated on the char signals towards the $700-$800 for possible areas that Gold could fall into post December hikes. 

But what about Central Banks, The Russians & Chinese - are they still buying? - Yes! Gold purchasing (And Demand) is at record highs, as both Russia and China still maintain a policy to hedge against their currency & they will probably remain net buyers. China for example, added an extra 14 tons in October. 

So what happened to Economics? Well, we have to remember that XAU is backed by the USD and experts point to a "Bear-Market" cycle driven by the FED. But in my view, if we do see a hit of $700-$800 we could see a spark in the bulls.

Absolutely a fascinating time to be watching the markets. 

Trade Smarter,

Anish8FX@Atom8.com

Still Holding My Gold Shorts

Ladies and Gentlemen, 

The Gold Market has been subject to huge downward pressures amid the timing of the FED's rate hike decisions. Gold now again hovers at 1-month lows, coming of the back of the biggest 4-day losing streak since September 2013 - falling 5 consecutive quarters. 


But even with soaring demand from Asia, why are the Markets so reliant on the FED decision? Well if the FED do increase rates, nobody wants stock hold bonds, because they will pay lower coupons than newer bonds... and turning to Gold - that asset pays no Coupon at all! The more hawkish the FED remain, the worse the impact on the Gold price. Not forgetting that Gold is still priced against USD.  

This close relationship was marked again today by this mornings rally to $1120 and was completely sold off and there are even more headwinds/failures in recent breaks to the upside. $1075 was the recent bottom and this is not far our of reach. I don't think we will see a reversal anytime soon to the upside. 

Figure below from Atom8's MT4 Terminal (XAUUSD.v) - Gold Staying Down 

When will we see a reveral? Here's hoping Ms Yellen gives some more indication tonight about future direction of the Hiking Cycle. Perhaps all that is needed for the Metals is some clarity, then we can move on & up! Theoretically, the FED could continue to hike rates up to infinity and that would cause USD weakness. Given historical trends, Gold could remain the preferred safe-haven asset & may well return back to $1400-1500 in the next few years. 

Best of Luck
Anish8FX @ Atom8.com 

Gold : A Mastermind of the "Break-Out" - $1300 by 2016?

Ladies and Gentlemen

The precious yellow metal is back in the spot light after forming a pretty dull range so far this year between $1200.00 / $1100.00 and the outlook has remained bearish. However, this has all changed in the past few days as the October Bull awakens to the more uncertain Economic landscape, especially breathing from the US & from increased Geo-political action (The Ruski's in particular)!

Gold (XAUUSD.v) is showing strength above 1170 (formed yesterday) and all my indicators are pointing towards a further bull offensive. The commodity must continue to trade & hold above it's broker resistance (turned support) at 1170 to really create more scope for strength heading into the final months of 2016.  On the other click, if you remain a bear in this market - support comes in more at the 1165 level, where a break down to 1150.00 will really slam the brakes again on the metal. Me personally, I am hoping for a break of 1200 as I really do miss the days of huge Gold daily volume.

fig: Atom8 MT4 Terminal

How high could we go?  After breaking a "key resistance" level, the investor sentiment is more positive and will probably attempt to push it to a high for year-end. Gold is now trading above it's 200-day MA for the first time since May & prices could be further buoyed by (what is now expected to be) weaker US data & that the FED are now looking to raise rates next year.

A call for above 1200.00 could be realistic by December and I would not be surprised if we even saw a move to the $1,300 mark - as volume for Metals expect to be double by next year (source : mining.com).

Best of luck Traders,

Anish @ Atom8.com

Can I double my money by buying Silver now?

Dear Those who dare to ponder

We analyse here, the case for a long position in my favorite (sometimes overshadowed) Precious Metal - Silver (XAGUSD) 

It is first important to understand the history & Economics of Silver trading. As traditionally, Silver was commonly accepted as a monetary metal, but more nowadays its principal uses are for industrial purposes & derivatives trading. 

Isaac Newton set the monetary relationship between XAU & XAG at 15.5 times when he was the master of the Royal Mint (nearly 300 years ago). However, today the ratio is more about 75 times. 

Key Fact

Supply of mined Silver & scrap recycling materials total 980 million Oz. 

Vs

Demand of Silver is currently around 1,080 million Oz. (About 25% being bars & coins)

Silver Institute study. circa 2014. 

It is clear that the characteristic of this white metal is hard to substitute with others. So.... the price can increase somewhat without actually reducing the industrial demand. 

What contributes to a rise in the metals?

The notional thoughts of growing uncertainties among the major currencies economically are priced in a rise of Gold. The yellow metals seen traditionally as a hedge against uncertainty, as from the (almost) 2,000 oz high at the peak of the recession. 

Will the ongoing EU Crisis & a USD reversal warrant this long position? 

It stands to reason that Silver will also rise, according to the Newton based relationship and Silver's price volatility relative to Gold is about 2 times higher... So in a rising market... a good idea would be to get a leverage buy on Silver. As the ongoing uncertainties within the EU & fears of a USD (bull-run) end... Is beginning to interest buyers who are chasing a bottom of both Gold & Silver markets.... Of course, however is the price of Gold falls, the losses of Silver can be expected to correspond greater.  

Following the end of the gold standard and its replacement with government currencies, there have been many occasions when gold ownership has been banned. Today this may seem unlikely, but confiscation may become increasingly possible if monetary conditions deteriorate in the future. As silver is predominantly an industrial metal, it should offer protection against this possibility.

Silver trading at 5 year lows... 

Dynamics of the W,X,Y Elliot Wave Structure : 

In 2014... Investor demand outweighed supply by $113M. With Silver ETF trust fund holdings holding now record level highs in supply... However, some analysts think such a robust & consistent demand for Silver is crazy... As you can see from the chart above "retail investors" kept buying silver as it kept falling.... 

From $49.50 in 2011 to $12.40 in the spot market... A new, sudden & brief 5 year low!

Metally speaking... Technologies are now replacing the demand lost from smart phones... & the industrial uses of Silver is now once more questioned... However, many people look at Silver as an "indispensable metal" from solar panels to "Silver" touch screens... 

Furthermore, if you look at this market from an "Eagles eye"... the fact is that it looks historically cheap in terms of Gold. Being a noble metal, Silver does not rust or corrode... it is the most conductive of all materials for electricity...  

With Global growth... you can build a solid case for Silver's long-term value... But as short-term traders now... When Silver moves... It really moves as the 19% day rally proved back in December 14. 

Sane investors can fast track their Silver buying spree & check out www.atom8.com for the lowest possible costs. 

Peace & Love Guys 

-Anish 

Any questions, let me know & your feedback is most appreciated...