Posts by "stationdealer"

Good Morning,

Well, nobody expected an inquisition in...Spain, again. Yet, that is exactly what throngs of financial media reporters did following rumours of a Greek-style bailout package being prepared on behalf of the country by the IMF/EU teams. The media's chief weapons; persistent questioning of the authorities, as seen for example, in the El Economista. Will Spain cave in? Will it be able to outline budget trimming measures that satisfy targets? Will the euro be subjected to more torture? Whither Gallegolandia? As they say: "Quin Sabe?"

And then, there is the upcoming Friday meeting between Spanish PM Zapatero and IMF chief Strauss-Khan... A tete a tete that is sure to have the paparazzi in tow. Denials ensued, both from the Spanish finance ministry as well as the IMF. However, the bond end euro vigilantes tried to equate rumour smoke with actual debt problem fire and brought out...the rack, interrupting the rally in the euro which had blossomed over the past few days. The common currency retreated to under 1.23 and eurozone bonds exhibited beads of sweat in the wake of the speculations on Spain. The jitters are as palpable as any being felt at a dramatic corrida.

In other news from the Old World, inflation gained traction in the eurozone last month (to 1.6%), mainly in the wake of the declines suffered by the currency of the realm. Meanwhile, unemployment claims fell in the UK and job creation showed 5,000 positions being added as the British economy appears to be weathering the recession and working through its own recovery process.

Gold prices held steady overnight against such a background of uncertainty. US inflation-tracking figures as will be revealed in today's PPI and tomorrow's CPI data are not expected to provide much in the way of enthusiasm for gold bulls, according to Kitco News' own Debbie Carlson.

Ms. Carlson quotes Mr. Jim Smitherman, a commodities broker at Coquest Inc., as having said that "the attitude in the markets concerning inflation is "steady as she goes. Inflation data is tame and should remain so for the remainder of the year. I think the Fed will maintain its current policy for the foreseeable future. Commodity prices in general are lower over the last six months and barring a collapse in the dollar I would expect them to remain that way. Those calling for inflation right around the corner have been doing so for 2 years now. How far away is this corner? I think it is a long ways away."

As regards the gold/euro play these days, it is becoming apparent that at least some aggressiveness among speculators as regards pouncing upon the euro and piling further into bullion is still on the decline. Call it habituation. It may provide a cushion under current prices as few dare exit positions just yet, however it also limits fresh safe-haven shopping sprees as upside potential is being questioned following the possible pivot point that 1.20 on the euro has thus far shown to be. Thus, yesterday's gains in bullion remained in the price equation this morning and only small-scale selling was manifest early on Wednesday.

Spot metals dealing in New York opened with a $0.50 gain in gold which was quoted at $1234.90 the ounce. The action was rather subdued but players were keeping an eye on the Spanish rumour-mill nevertheless. Apprehensions that the EU debt issues could translate into difficulties for the US economic recovery are still preoccupying the trade.

Physical gold offtake continues on the lackluster side of things, with Indian buyers having crossed their arms for a third day this week and manifesting a predilection to buying the yellow metal at under $1220.00 the ounce. Meanwhile, flows of scrap bullion have shown signs of gaining traction in the wake of last week's foray above the $1250 mark once again. While we may not get the traditional summer doldrums following next week's solstice, any lull in the European theatre may possibly provide profit-takers with an opportunity to do just that.

Meanwhile, what is Russia -whose international reserves are the world's third largest- buying in order to reduce its US dollar and euro exposure? Not that certain asset that some folks expected, to be sure. According to Bloomberg News, "Russia may add the Australian and Canadian dollars to its international reserves for the first time after fluctuations in the U.S. dollar and euro." Bloomberg also reports that "U.S. dollars account for 47 percent of Russia's reserves, while euros make up 41 percent, British pounds 10 percent and Japanese yen 2 percent, Ulyukyaev said in November. The central bank has reduced dollars from 50 percent in 2006, when euros accounted for 40 percent and the remaining 10 percent was in yen and pounds. Russia's international reserves, the world's third biggest, reached $458.2 billion on June 4."

Nearly one year ago, Russian PM Medvedev regal

As long as oil, Euro, Aussie show signs of going down and CHF & yen still showing strength Gold is likely to stay up. Plus us housing like i mention two months back is back on a roll down the hills of weaker demand. The most favoured asset class naturally is prefer as precious metals or currencies and bonds. As far currencies are concerned all are in shambles or weathered.

Some people are calling this gold rush as a precious metal asset bubble. But increase in price of gold wont be consider as an bubble till we have individuals running for it as a safety or value vested stock. Fortunately most common people are still not seen buying gold even after 3 years of new highs in gold and gold stock. For which reason i still think the price in gold is to rise 1300-1350 is totally achievable.

What could tip it, believe it or not the BRICs

man this Euro is depressing Xaron kick it.......

I did hear something over squawk Fed Fund rate could be cut to 0.29%

BOE Minutes Boost Pound as 1 Member Votes for Rate Increase




The Bank of England minutes surprised in that one policy maker, Andrew Sentence, voted to raise the benchmark interest rate to 0.75%, while the other 7 members voted to hold the rate at 0.5%. Sentence favored an increase as he argued that inflation poses a problem due to its resilience. It's the first call for an interest rate increase in almost two years.

Last week, BOE Governor Mervyn King stressed that the UK economy does not show the traits associated with continuously rising prices and that policy must be set in light of fiscal tightening and financial market fragility. "A continuous rise in prices would ordinarily be associated with strong money growth, wage inflation, rapid increases in money spending and an excess of demand over the supply capacity of the economy. The UK economy exhibits none of these traits," King said.

Prices had hit a 17-month high in April with the annual rate at 3.7%, above the BOE target of 2% and the upper limit of 3%. In May the annual rate came down to 3.4%. King would argue that the current inflation is being unduly affected by energy-costs and exchange rate fluctuations.


The debate now is whether the threat of inflation continuing to overshoot the 2% target outweighs the risks to the downside brought about by the Euro-zone sovereign debt crisis which has caused financial market disruptions. There are also dangers to the economy from the new budget unveiled this week, as well as the downward revision to growth forecasts for this year and news.

The BOE has purchased 200 billion of bonds between March 2009 and this January, and there is some debate about whether to sell these bond holdings or to raise rates, and which would be the proper way to move away from ultra-loose monetary policy.

Overall, the minutes today showed that at least one member is ready to begin hiking rates, a move that would be beneficial to the Pound. In response, the GBP/USD pair rose in today's trading from the 1.48 level to 1.4940 as of 9:30AM, retesting the highs seen on Monday.

The EUR/GBP pair saw a sharp move in favor of the Pound today, following up strong gains seen yesterday following the unveiling of the UK budget.

In this pair we come close to testing our support from June 6th and 11th at the 0.8210 level. That is the bottom boundary of the sideways channel we have seen over the past few weeks with resistance at the 0.8380 area. A break of that support would open up the pair to further declines, while a bounce off support could mean further sideways action.