iCharts Discussions

[Padkondu]

[ajayhkaul]

padkondu... since you already know the cause it should be simple to fix. Failure is just a step towards success.

We have the Market Mastermind ! thread also where we intend to discuss ways of reading the 'mind of the market'.

See you there too....

[rk_a2003]

As per recent data…. More Americans have been buying “Guns” in December. Why? Are they expecting anything – (They must have read Ajayhkaul Blog and his recommendation ) we do not know. Buying of guns is legal in US.... means that more Americans are insecure of their future. Still the market (Dow) continues to go up.

This is for you Ajay

[ajayhkaul]

The blog post was based on USdollar being essentially a fiat currency ie paper and that they will be heading towards a collapse on April 13,2012(Friday the 13th) - on that day China /Russia may step away from USdollar.

You know how it is with predictions ! But as blogged , it will be a dog eat dog situation and people will revolt .

So thats why the guns , gold , water and move into a farm where one can grow your own things .....! They will need to pull out from the banks and hide the gold !!! and protect themselves and their gold with guns.

Back to the western movie style !

[ajayhkaul]

It’s payback time…

In 2008, the now infamous bust of the U.S. housing market placed extreme pressure on U.S. banks and it created a credit crisis in America. A homegrown U.S. recession was then quickly exported to Europe.

Now it’s Europe’s turn to return the favor.

The debt crisis in the eurozone is causing European banks to quickly lose confidence in each another. Should one eurozone bank need to be restructured (or even go bankrupt), the repercussions would be felt by large U.S. banks, as U.S. banks hold many shares, derivatives and sovereign bonds from across the pond.

Take a Lehman moment. Remember how that went down?

Of concern today…there is one indicator flashing red…saying that the situation is extreme with eurozone banks.

Banks perform a common operation amongst each other of overnight lending and deposits. If one eurozone bank has requests for withdrawals by its clients along with other short-term obligations for cash, they traditionally borrow the money from other eurozone banks for 24 hours and promise to pay it back. (It’s like asking a family member for money for pressing bills that are due, with the promise to pay him/her back upon receiving your next paycheck.)

When the system functions normally, eurozone banks do lots business with one another, with only a few overnight operations taking place at the European Central Bank (ECB). The ECB is equivalent to the Fed in the U.S. It is the backstop for the banking system in Europe.

To put some perspective on this, throughout most of the first half of 2011, the ECB received between €30 billion and €100 billion in overnight deposits from eurozone banks. In August of 2011, as the eurozone crisis worsened, banks erred on the side of caution and funneled more of their overnight operations through to the ECB.

The overnight money deposits at the ECB jumped to €150 billion in August, and continued to soar to €340 billion in December. The overnight money deposited with the ECB by eurozone banks has now reached a record €482 billion and counting.

Not even during the crisis of 2008 did eurozone banks feel the need to deposit this much money with the ECB. What this means is that the European crisis is turning into a eurozone banking crisis. The banks don’t trust each other to be around the next day and so they are parking their money with the sure thing, the ECB, instead of lending the money out.

In the U.S., the Fed recapitalized—or pumped money into—the U.S. banks to prevent them from collapsing during the credit crisis of 2008. That has not happened with the eurozone banks because of Germany’s unwillingness to let the eurozone print money (i.e. expand the money supply).

If a single eurozone bank fails, and I believe one will, the repercussions will be felt here in the U.S. just like US credit crisis of 2008 impacted the European stock and bond markets and the European banking system.

Payback time.

That's the way the cookie crumbles.

So will Germany get the printing press running? Are the markets up in anticipation?

Gun sales are up in the US....insecurity
High-end Jewelry sales are falling - even the rich are cautious.

Doomsday is Friday the 13th April ,2012 ?

[ajayhkaul]

Gold futures rose to a four-week high as China's physical demand surged to a record and Europe's debt woes spurred demand for a haven.

Buy on Dip?

Mainland China bought 102,779 kilograms, an all-time high, from Hong Kong in November, up from 86,299 kilograms in October, according to the Hong Kong government. Fitch Ratings said yesterday that Italy faces a "significant chance" of a credit downgrade. The European Central Bank should boost bond purchases to stem the debt crisis, Fitch said. Gold prices declined 10 percent last month.

"The dip in prices could not have come at a better time for the Chinese buyers," James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. "Gold is regaining its safe-haven qualities."

Gold futures for February delivery advanced 0.5 percent to $1,639.70 an ounce at 9:58 a.m. on the Comex in New York. Earlier, the metal reached $1,648, the highest for a most-active contract since Dec. 13.

[ajayhkaul]

Gong hee fot choy!

According to the Wall Street Journal:

The year of the dragon is breathing new life into gold prices.

The Chinese have been loading up like never before on gold ahead of the Lunar New Year, which falls on Jan. 23 this year. It is a time of gift-giving that takes place during family dinners, with the older generation giving money to younger members. And as the Chinese have gotten richer, gold—in the form of jewelry, coins and even bars—is becoming the gift of choice.

In preparation for the festivities, China imported a record amount of gold in November…

In fact, recent reports suggest the Chinese have become gold bugs.

Hindi-chini bhai bhai ? Read on....

According to a January 19th Reuters article:

The explosive growth in the number of investors that have signed up is a symptom of the wider demand for the precious metal.

For Chinese shipping executive Ping buying gold is the best way to protect his family's wealth and give his 10-year-old son a head start into adulthood.

"For my son, the idea is that he will get a nice stash of gold that he can cash out when he turns 21 or when he gets married," said Ping, one of over 2 million people that have opened accounts in the past two years to accumulate gold at the Industrial and Commercial Bank of China (ICBC).

As a sign of surging demand for bullion, China's gold imports from Hong Kong in the first 11 months of 2011 more than tripled on the year.

China has one of the world's highest saving rates, and the public faces few investment options. A volatile stock market and a property market under government crackdown are driving investors to seek alternative investment choices.

"Chinese investors are looking for ways to protect their savings from negative real interest rates," said Nick Trevethan, Senior Commodity Strategist at ANZ in Singapore.

Double bottom , again..... now versus 2008-2009

But , it seems the best is yet to come ...

Despite the September 5, 2011 historic-high gold price of $1,895 an ounce, and despite the multi-decade-high silver price of $48.70 an ounce, gold and silver prices have yet to take out their 1980 historic levels, adjusted for inflation.

The earlier all-time high of $850.00 would be $2,466 an ounce, based on December 2011 CPI-U-adjusted dollars.

In like manner, the all-time high price for silver in January 1980 of $49.45 an ounce still has not been hit since 1980, including in terms of inflation-adjusted dollars.

Based on December 2011 CPI-U inflation, the 1980 silver price peak would be $144 an ounce.

With demand still high for gold and silver — particularly in Asia — these two precious metals could hit those highs in the next 12 to 24 months.

[vinay28]

gold is at 6 week low

[ajayhkaul]

EOD 23/1/12 charts .... though still in a downtrend , all the fiat currency (QE) this time from ECB could lead to the stated

[ajayhkaul]

WAR time ?


The latest news reports from the Middle East have a familiar ring to them, don’t they?

As Iran gets closer to their goal of becoming a nuclear power…

They threaten to close the Straits of Hormuz…

Through which flows up to 40% of the world’s seaborne oil supply.

That’s a lot of oil.

And a closure or even a threat to that oil supply should make oil prices spike.

But today, Europe announced an oil embargo against Iran, which represents about a fifth of Iran’s oil exports...In order to deflect Iran from its atomic ambitions...

The embargo will hurt Iran, as the European Union is Iran’s 2nd largest oil client.

But Iran continues to go forward with both its nuclear program and its posturing over the Straits of Hormuz…

And has said that a European embargo would be considered “an act of war.”

And, one could argue that it is indeed, just that.

But how will the US--that is, NATO--respond?

Send a battle group to the area…(along with France and the UK)...

And consult with Israel...And then cancel joint military exercises.

In the midst of all of this…

Oil for Gold

India continues to buy oil from Iran.

This isn’t that big of a deal in and of itself…India isn’t threatened by Iran and relies upon it for 13% of their oil.

Iran becoming an overnight superpower? A nuclearized Iran would seek to control the Strait of Hormuz…

And control much of the world’s oil supply.In an effort to break the dollar’s hold over the global economy…..Iran would accept or even demand payments in euros, Swiss Francs, or…gold…

But not dollars.

And what is happening today?

Iran is preparing to close the strait…

Or at least threatening the same.

And in its oil deals with India, Iran is accepting payments in…gold.

And China is expected to also begin paying for Iranian oil in gold.

This allows country’s to avoid the financial sanctions in place.

Iran’s Great Depression

And because Iran’s economy is in deep recession--you could even call it a Great Depression--it desperately needs the gold…and for oil prices to rise.

In fact, Iran’s economy is on the edge of collapse...and political instability is just under the surface among the younger generation in Iran.

Some reports say that 10 of the 31 provinces in Iran have over 30% unemployment…

The "official" national rate is over 11%...but is likely much higher.

For those under 24 years of age, it is above 24%.

Thus, an oil crisis of whatever stripe is in Iran’s immediate interests.

With oil making up four fifths of their exports, Iran would greatly benefit by rising oil prices.

Iran supplies China, Japan, and South Korea with about 10% of their oil…

Should trading oil for gold surprise anyone?

Or Iran’s threat to control the Strait or Hormuz?

Challenging the Status Quo

The geopolitical play for the Iranians is obvious…

They know that with the US withdrawing from a long war in Iraq, that there would be little US domestic support for a war with Iran…

Even as a liberated Iraq descends into chaos.

Iran, therefore, is playing a game of chicken with the US…

They need the price of oil to rise in response to sanctions and a stagnant economy…

But, containing the price of oil may be why the US and Israel cancelled their planned military exercises…

The idea being that the very fact of US/Israeli military operations themselves would cause prices to spike.

Higher oil prices, which is Iran’s short term goal…Would blunt the effect of US economic sanctions and the European embargo…

And, by the way, higher oil prices would also hurt Obama’s re-election chances later this year.

But, just to keep things interesting…There are at least two other “wild cards” in this hand…

How will China and Russia respond?

Both powers seek to repel US and NATO power in their own spheres of influence…

As Iran’s biggest trading partner, China seeks to expand its influence in the Middle East and the Far East, at the expense of the US…

This is an opportunity to do so.

A China-sponsored US setback with Iran would damage US credibility around the world…What would Japan, Taiwan, and the Philippines think about the US as an ally?

The Russians also see it as an opportunity to blunt American power in the region, and to raise their profile…And have repeatedly warned the US against attacking Iran and have recently put their advanced air defenses on alert.

Posturing?

Maybe.

But both nations see a geopolitical advantage in the situation, and have large Muslim populations…and will support Tehran.

The joker in this dangerous deck is the fact that China will transfer power from the current aging leaders, to young vigorous ones…

With nationalistic visions…And no memory of war or its costs.

While Russia returns to the strong arms of Vladimir Putin.

The overall goal from Beijing, to Moscow, to Tehran is to kick the US out of the Middle East and build a new order there…

And deconstruct the world order as we have known it the past 6 decades.

While we are starting to get antsy with the nifty , just to let you know what else is happening...

[ajayhkaul]

Also for Europe /UK :

There are big changes ahead for the global energy markets. Something happened yesterday that will kick off an avalanche of change.

England's largest gasoline supplier went bust. Belly-up.

With one flick of a switch, the continent's largest independent refiner cut its flow to the market. The focus is on Petroplus' Coryton plant -- it supplies about 10% of the United Kingdom's fuel and is the key source of gasoline in London.

As the refinery's Swiss owner prepares for bankruptcy, the market is scrambling for a replacement.

"There may be severe problems of supply across the whole of London and the southeast to petrol [gas stations]," said British politician Richard Howitt, "with a refinery stopping deliveries which supplies one sixth of the market."

The big problem here is not Petroplus' bankruptcy. Its failure is merely a symptom of the disease

The real issue is the frightening pace our manipulated energy market is melting down.

The crude market is anything but free. It is run by a government-led oil cartel that controls daily production limits. If prices get too high or too low... the cartel fixes it.

The problem is supply and demand don't dictate why prices move. These days, oil prices are slave to political risk. If Egypt erupts... prices rise. If Sudan cuts a pipeline... prices rise. If Iran curls its bicep... prices rise.

But fortunately consumers operate in a free market. When prices rise, we cut back. And when alternatives are available, we take them.

This chart shows what's wrong with the crude market. Demand is down... but prices are up.

Over the past six years, crude demand has plunged. We are back to where we were over a decade ago... and yet prices remain very close to their peak-demand levels.

Something is broke.

Again, it is a function of a market dominated by politics versus reality. Right now, crude prices should be dramatically lower. Just ask the newly unemployed folks at Petroplus.

The refiner was forced to buy crude (with its political premium) inside a manipulated market. But it was forced to sell its final product on the open market.

On one end of the spectrum ... it's bullish.

On the other ... the bears rule.

For the refiners in the middle... it's hell. When they are forced to buy overpriced raw goods and sell the finished product in a recessionary market, the margins are near zero. Petroplus is bankrupt because it cannot survive in an industry where demand is falling and input prices are rising.

Nobody can.

Sadly, there is plenty of evidence this is just the way our political leaders want it. If their grand energy schemes won't work in a free market, they'll rig the market in their favor.

Solyndra comes to mind...

So does the Keystone pipeline...

And "Cash for Clunkers"...

Note that natural gas has been virtually shunned by national leaders. Like a bastard child, they know it's there... recently Obama talked about it ...

Time for Gas?

[vinay28]

Demand is down... but prices are up.

Is the price up after adjusting for inflation? At the same time, demand is a function of population, efficiency of usage and alternate sources of energy. If net demand is down, it is a very bad sign for quality of life in developed countries since we know where demand is actually increasing!

[ajayhkaul]

You said it Vinay ..... quality of life in 'developed' countries is rapidly on the decline. Will those people accept it or are they going to revolt ? They are not the Japanese culture or patience and discipline.....barbarians at the gate ...dog eat dog ....guns and ammo ......whats next ?

[rk_a2003]

[ajayhkaul]

Easy Money Until 2014Bottle feeding the US economy:

The Federal Reserve that it's going to be easy money at least until the end of 2014. The Fed flat-out stated that it isn't likely to raise interest rates for about three years, and that's much later than the central bank's previous call for rates to remain at rock-bottom levels until mid-2013.

The move clearly is an attempt to continue bottle-feeding an ailing economy back to health. While this coddling might be good for the equity markets, so far, access to easy money hasn't been able to right the US economic ship.

In the Fed's statement, it repeated its view that the economy faces "significant downside risks." However, the central bank offered little to suggest it was close to launching another round of bond-buying, or what's now commonly known as quantitative easing.

Bill Gross, co-chief investment officer the PIMCO funds, called what the Fed was doing, "QE 2.5." I think this is an apt description, as the Fed's actions fall short of actual quantitative easing, but the accommodative stance for several years certainly is designed to stimulate the economy by keeping the money spigot wide open.

Stocks had a positive reaction to the Fed announcement, as it means there is plenty of capital for the big guys to borrow at very attractive rates and to put to work in stocks and other securities.

As for the economy, it remains to be seen what real impact the Fed's announcement will have.

One thing for certain is that the value of the U.S. dollar will continue coming under pressure, and that means we could see commodities, such as oil and gold, keep rising. It also means multi-national companies that rely on a weak dollar to sell their products overseas will continue benefitting. For savers, it just means more pitiful returns, and not much in the way of a reward for hanging onto wealth.

And speaking of quality of life , this is what the Americans are being advised: note , they need to give up their toys ....

personal finance exercises to undertake for 2012. When it comes to expenses, many of us act like an ostrich and put our heads in the sand. That's because tallying up your expenses can be both disconcerting and quite revealing. ..... just a few short years ago, many friends, acquaintances and colleagues were on spending binges like you couldn't believe.

... many upper-middle class people behaving like they were Arab sheiks, throwing money around lavishly ( frivolously) on cars, boats, vacations, home improvements and other goodies. A few years ago, expenses didn't really matter, because the economy was booming and home values and stock portfolios were sky high.

As we all know, times have changed. And even though the economy and the markets have made headway during the past year, the lesson most of us learned is to not overextend ourselves, and to keep expenses down.
The first step in getting a handle on expenses is to do a simple list of what you owe, to whom, and at what interest rates you're paying. Doing so allows you to identify where you can make adjustments, and making the right adjustments can help you increase your wealth.
For example, if you have toys like a boat, a sports car or a motorcycle that you aren't using very much, why not consider selling them and shedding those payments? Also, if your home mortgage is north of 6%, then you need to consider refinancing. I know it's almost impossible to refinance if you're underwater in your home, but if you do qualify, you can save thousands and thousands of dollars during the life of the loan by getting that rate lowered.
If you have high-interest credit cards, then consider putting a plan in place to pay that debt down to manageable levels. There's nothing worse than constantly paying each month on purchases with high interest, because you end up increasing the overall cost of those purchases. The longer it takes to pay them off, the more money you're losing.
When it comes to protecting your net worth, think about how you can keep more of what you make by reducing expenses......

Are we Indians going to learn from this ? Do we notice that we are on such spending binges like there was no tomorrow ....? Are we serious about corruption and about getting the black money back ....???