China Gold Demand
August 31, 2009 by Trace
Filed under Currencies and Gold
In as little as seven years, some estimate that China will overtake the United States in terms of nominal GDP. Others say this will happen in less time.
During the first two quarters of 2009, consumer demand for gold in China totaled 194.8 tonnes, equivalent to 18.7% of world total demand. In the same period, Indian demand for gold totaled 126.7 tonnes, equivalent to 12.1% of the world’s total demand. Take a look:
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While it may be a bit premature to expect Chinese gold demand to outpace Indian demand for the entire year, the gap between the two countries is narrowing. And one could easily see China overtake India in gold demand on a sustained basis within the next 10 years, perhaps even within the next five years.
Although this trend may have little overall impact on gold prices in the near future — due mainly to China’s own domestic gold production satisfying most of its internal demand — there may be implications in the not-too-distant future.
With the Chinese juggernaut continuing its rampage, even through the darkest moments of one of the toughest recessions in history, it is only a matter of time before Chinese gold production simply cannot keep up with the country’s own demand, despite accelerated output.
This imbalance, coupled with the more abstract element of speculation, should have a magnified effect on the gold market across both hemispheres.
Expect to see a strong correlation between overall growth in the Chinese economy and gold prices in the years to come.
Good Investing,
Greg McCoach
Editor, Gold World
Investment Director, Mining Speculator, and the Insider Alert
P.S. I haven’t been this excited in a long time. You see, in three weeks, we’re going to find out if one tiny mining outfit in Canada struck THE JACKPOT! Judging from the rich formations surrounding the area, dozens of geologists already agree that this find could be the best thing to happen in the gold exploration business in 50 years! I’m rapidly putting together a full report on the entire development, and it should be arriving in your email inbox early next week. You don’t want to miss this one.
Will PMI Break 50? Traders Waiting to See
August 31, 2009 by Trace
Filed under Trading in the Market
In the currency market, last on the Euro $1.4274 down 76/100ths of a U.S cent. The Dollar is trading on a firm note with Wall Street expecting to see further improvement in the manufacturing sector this morning. The Chicago Purchasing Manager’s Index of Manufacturing (PMI) is expected to clock in with a reading of 47.2, up again from the prior month’s 43.4. Some traders think we might actually break the 50 level. A reading of 50 or higher represents expansion in manufacturing sector. This would be a very positive economic signal.
Metals are trading flat to lower this morning after last Friday’s sharp gains. Traders are pointing to a 6% decline in Chinese stocks; and a bounce in the U.S Dollar for this morning’s lower levels. Silver is down 10 cents at $14.65. Gold is $3.00 lower and trading at $954.00. Palladium remains $1.00 higher with the last trade at $287.00. Platinum is $1234.00 down $11.00.
Over in the energy markets the price of Crude is down $1.66 per barrel on nervousness surrounding severe Chinese stock market losses. Last on Oil $71.08. U.S stocks finished last Friday with a 36 point loss snapping an 8 or 9 day run of positive closes. On an overall basis the Dow gained 38 points for the whole of last week. This morning the index is being called to open 62 points lower in sympathy with Asian and European markets.
On the geo-political front; Japanese voters ushered in a new era in Japanese politics with a sound thrashing of it’s Liberal Democratic Party at the polls. Voters have decided to turn to new leadership after 50 years of business as usual.
Today’s economic calendar:
U.S. Chicago PMI
U.K. Markets Closed
What is Your Currency Trading Strategy?
August 29, 2009 by Trace
Filed under Forex for Beginners
Every new forex trader hopes they will quickly find the magic currency trading strategy that will make them rich overnight. In their desperate search to make money fast, newbies tend to believe that every new strategy they encounter is the one that will make them a millionaire, so they immediately ditch whatever they were doing to follow the next new system. They never learn to apply any system profitably or even sort out the good systems from the bad. Inevitably they finish up by taking a loss.
Skipping around from course to course without delving deeply into any of them is, of course, is a surefire recipe for failure. So let’s take another look and see if we can construct a recipe for success.
Brace yourself for a reality check: there is no perfect forex system – gasp! No set of instructions to follow that will guarantee you make millions. What works in practice is sound analysis that enables you to spot a trend and then open an order to back it.
This is very different from trying to predict the market. If you trade on predictions you are effectively gambling on which way the market will jump. If you follow trends, you are waiting until a movement is clearly established before opening an order.
Of course you need to be sure that it is a solid trend and not just a momentary fluctuation that will soon go the other way. That is where the analysis comes in. Use indicators to give you a clear idea of whether the market is oversold or overbought so that when you see a movement in the right direction you can be fairly sure it will continue that way for long enough for you to profit from it.
This is the first step in setting up your successful currency trading strategy – identifying the emerging trend. It is something that will become easier with experience. In order to minimize your losses, you probably want to gain that experience in a demo account.
The next step needs to be taken as soon as you have entered the market, and it involves setting up a stop order. This is an order that will be triggered if the price goes against you and it prevents you taking a large loss. Never hang on to a losing order hoping that the movement will reverse. It probably will not, and you could be wiped out waiting. So get out, then take a good look at what went wrong. You should be glad to have losses like this in the beginning because you can learn a lot more from a mistake than from a winning trade.
Where to set your stop can vary according to your system and the risk that you are prepared to take, but 10% is a good working figure to start with. If you find that your stop is being triggered too often, move it out. Equally if you find that a shorter stop would have saved you money almost every time without being triggered by random fluctuations, you can move it in a little.
Does that sound too simple? Remember, the secret is not in the strategy itself but in how you implement it. That’s why it is pointless to hop from system to system. Develop your trading techniques and discipline, and you will soon be in a position to see that a successful currency trading strategy is very simple indeed.
When you know WHEN and WHERE the best times and places are to place your forex trades, there’s no need to waste your day (and your life) fumbling around with chart after chart.
What is Online Currency Trading?
August 28, 2009 by Trace
Filed under Featured, Forex for Beginners
Online currency trading or forex trading can be a lucrative source of income for those who can do it successfully. It is a speculative form of investment a little like stock trading. As with most speculative investment, it is risky and you can lose money, but there is the potential to make a lot of money if things go your way. The skill, of course, is in knowing how to trade so that things go your way more often than not.
The word Forex is simply made up of the first letters from the words Foreign Exchange so it is a short way of saying foreign exchange trading. It may also be written as FX, and it is often called currency trading. It involves buying and selling different world currencies according to whether you think they will rise or fall in value.
This may sound like it would be a difficult thing to do, but there are many systems available that can help you to identify signals and trends indicating that the price of a currency pair is likely to move in one direction or another. There are even automated forex trading systems, otherwise known as forex robots, that will identify the signals for you and even open and close your trades automatically so that you are trading the forex market on autopilot.
Unlike most financial markets, the forex market is active 24 hours a day during the business week. This is because of its global nature. The major financial centers of the world operate in different time zones and you can trade whenever any one of them is open. Between them they cover the whole 24 hours.
It is a very high liquidity market with an average daily turnover that is now estimated to be close to $4 trillion a day. This is more than the combined turnover of all the stock markets in the world. This makes it a very attractive market to trade because if you pick a popular currency pair you can be almost sure of getting all of your trades matched.
Of course there are some businesses and individuals who are exchanging currencies for the purpose of trade or travel to foreign countries, but an estimated 70% to 90% of foreign exchange transactions are speculative. That means that the person ordering a currency purchase or sale will never take delivery of that currency, but will trade it back with the aim of making a profit.
There is no fixed exchange location although people talk about the dealing floors in the various financial capitals like New York and London. In reality the forex market is simply the communication between all of the large banks and institutions that have dealing desks. They deal directly with each other and the smaller investors get involved through a broker who can enter this market.
Trading can take place by phone but these days, more and more is done on the internet. This has allowed many private individuals to begin online forex trading and you do not even need a lot of capital to get started.
Personal Income Data Expected to Show Rise of .1%
August 28, 2009 by Trace
Filed under Trading in the Market
Metals rose in the overnight trading sessions bolstered by further gains in the price of Oil and a 1 cent rise in the Euro. Silver jumped 29 cents to $14.50. Gold gained $6.00 to $952.00. Palladium edged up by $1.00 to$284.00. Platinum is $1242 up $5.00.
Crude gained another 76 cents with the last trade at $73.24. Most traders agree the gains of the past few days are being driven by the decline of the Dollar. Oil, just like Gold is traded in U.S Dollars. Last on the Euro $1.4367 up 1 cent versus or Dollar.
Over in the stock market traders staged a final hour rally lifting the Dow to a closing gain of 37 points with early indications calling for a another 37 point this morning. We find it amazing that the stock market ignores our Dollar.
As for today’s economic data Personal Income is expected to show a rise of .1%; up from last month’s decline of 1.3%. That helps. Spending on the other hand is expected to show a rise of .2%; less than last month’s gain of .4%. Spending is key to growing the economy. What drives spending?; confidence.
Today’s final report will be the revised and final University of Michigan Sentiment index of Consumer Confidence. Look for a reading of 64 compared to the preliminary reading of 63.2. Bad but better. On the geo-political front; Japan is poised for major political changes when their national elections take place this Sunday.
Today’s economic calendar:
U.S. Personal Income
U.S. Consumer Sentiment
Canadian GDP
German Employment
