Gold and the 34-Month Moving Average

Gold gave up $8.70 last week (after the previous week's gain of $81.30/oz.) to close at 1,230 and printed a bearish harami candlestick on the weekly chart. Friday's close was on resistance at 1,230. Look for support at 1,190.

A breakout from the 34-month exponential moving average (chart) would be very bullish. Assuming a breakout, our price target is 1,370.

Cycles

A 4yr cycle low is due in the first half of 2016 possibly as early as Feb/March but It looks increasingly as if it may have arrived last December. Wait for a breakout from the 34-month moving average to make that decision. Weekly cycles point to a high in late March.

By: Ed Carlson

Visualizing The World's Stock Exchanges

There are 60 major stock exchanges throughout the world, and their range of sizes is quite surprising.

As Visual Capitalist's Jeff Desjardin notes, at the high end of the spectrum is the mighty NYSE,representing $18.5 trillion in market capitalization, or about 27% of the total market for global equities.

At the lower end? Stock exchanges on the tiny islands of Malta, Cyprus, and Bermuda all range from just $1 billion to $4 billion in value. Even added together, these three exchanges make up just 0.01% of total market capitalization.

Courtesy of: The Money Project

The Trillion Dollar Club

There are 16 exchanges that are a part of the “$1 Trillion Dollar Club” with more than $1 trillion in market capitalization. This elite group, with familiar names such as the NYSE, Nasdaq, LSE, Deutsche Borse, TMX Group, and Japan Exchange Group, comprise 87% of the world’s total value of equities.

Added together, the 44 names outside of this aforementioned group combine for just $9 trillion, or 13%, of the world’s total market capitalization.

Northern Dominance

From a geographical perspective, it is the Northern Hemisphere that is dominant. North America and Europe both hold 40.6% and 19.5% respectively of the world’s markets, and the vast majority of Asia’s 33.3% lies north of the equator in places like Shenzhen, Hong Kong, Tokyo, and Shanghai.

Notable exchanges that are south of the equator include the Australian Securities Exchange, the Indonesia Stock Exchange, the Johannesburg Stock Exchange and the Brazilian BM&F Bovespa.

S&P and Distressed Debt Issuers

It's definitely different this time...

The 2008 analog lines the current trajectory up with August 2008 right after Treasury Secretary Paulson told the world reassuringly that:

"Our economy has got very strong long-term fundamentals. And you know, your policy-makers and regulators here - we're very vigilant."

And we all know what happened next...

Could never happen again?

Yeah you're probably right...

If "everything's fixed," then why is the number of distressed debt issuers still the highest "since Lehman."

And the answer is not - it's just energy and it's different this time.

Source: zerohedge

Global Primary Aluminum market ends in deficit in 2015

The latest report published by the World Bureau of Metal Statistics (WBMS) indicates that global primary aluminum market has recorded a deficit during the year 2015. As per the report, the market reported a deficit of 356,000 tons when matched with the deficit of 589,000 reported during entire year 2014.

The production of primary aluminum was up by 8% during the entire year when matched with the previous year. The global production rose by 4,103 kt during this period, when compared with a year ago. The total reported stock of metal has declined further by 6,000 tonnes during the month of December 2015. The stocks at the end of the year stood at 3,783 kt, which is sufficient to meet 24 days demand. It must be noted that the stock levels at the end of 2014 had stood at 5,020 kt. The combined stocks held in London, Shanghai, USA and Tokyo exchanges totaled 3,228 kt at the end of 2015, down by 1,217 kt when matched with end-2014 levels.

Global production increased by 8% during the year 2015. China, with estimated production of 31,410 kt, accounted for more than 55% of the world production. Production in the EU-28 region rose by 9.3% whereas the output by NAFTA region fell by 2.2% year-on-year. The primary aluminum production for the month of December 2015 alone was 4,502.80 kt, whereas the consumption totaled 4,441.30 kt.

The Chinese net exports of aluminum semis totaled 4,227 kt during 2015, significantly higher when matched with the exports of 3,652 kt during the year before that. The Chinese net exports totaled 342 kt during the whole of 2015 as against the exports of 313 kt in 2014.

The WBMS report also states that the global aluminum demand rose by 7.19% during 2015 to total 57.71 million tonnes, when compared with 2014. The Chinese apparent demand went higher by almost 14.2% when compared with 2014. Also, EU-28 demand ended slightly higher during January to December 2015 by 25 kt when compared with 2014.

WBMS: Copper market records marginal surplus in 2015

The global copper market has recorded a surplus of 146,000 tonnes during the whole year 2015, as per the latest metals balances report published by the World Bureau of Metal Statistics (WBMS). It must be noted that the worldwide copper market had reported a surplus of 116,000 tonnes for the entire year 2014.

The global mine production during 2015 totaled 19.28 million tonnes. The mine production has grown by 4.3% when matched with 2014. Meantime, global refined copper output jumped higher by 0.7% over the previous year to 23.08 million tonnes. Refined copper output by NAFTA region countries reported significant increase of 85,000 tonnes during the year. Also, refined copper production was up sharply by 27,000 tonnes in India during 2015.

The global copper demand during 2015 stood at 22.931 million tonnes, essentially flat when compared with 22.811 million tonnes during 2014. The Chinese apparent consumption increased marginally by 148,000 tonnes during the year to total 11.451 million tonnes. The Chinese demand accounted for nearly 50% of the global demand. Also, EU-28 apparent consumption reported marginal decline of 2.4% from 2014 levels to 3.311 million tonnes.

According to the report, reported stocks of the metal stood higher by 143,000 tonnes during the entire year 2015 when compared with 2014 closing. However, stocks fell during the month of December last year.

The refined copper output during the month of December 2015 alone was 2,000.60 kt, whereas consumption during the month totaled 2,046.10 kt.

Taking stock of commodity trading

Better liquidity makes non-agri contracts less risky than agri commodity contracts

The recent rout in commodity prices has sent global markets into a tizzy. But the ongoing volatility could be a friend of a commodity trader. For traders in India, there are two categories of commodities available for trading.

The first is agri-commodities, such as cotton, cardamom, soybean and castor seed that are traded on the National Commodity and Derivatives Exchange (NCDEX) and the Multi Commodity Exchange (MCX).

The second is non-agri commodities, such as base metals, precious metals and energy commodities that are more actively traded on the MCX. Now, unless you know what really moves agri-commodity prices, the risk of burning your fingers is quite high. Also, the market depth is low.

Nithin Kamath, founder and CEO of discount brokerage firm Zerodha, says “agri commodities are riskier to trade and it is better to avoid trading them unless you know the factors that drive their prices”.

The risk is lesser with non-agri commodities.

There is better liquidity and the prices move in sync with global rates; so, the scope for market manipulation is low. Here’s a quick reckoner for trading in non-agri commodities on the MCX.

Trading features

Gold, silver, aluminium, nickel, lead, zinc, copper, crude oil and natural gas can be traded on the MCX. You can take bets on the price movements of these commodities by buying or selling futures contracts, the prices of which move in sync with the global prices of the commodities and the local currency movements.

The futures contracts on the commodities are available for trading on the MCX between 10 am to 11:30/11:55 pm on weekdays, much longer than the trading window for equity futures contracts.

The sizes of these contracts are generally huge, for instance, five tonnes of aluminium and 100 barrels of crude oil — that’s to suit the requirements of those who physically deal in these commodities.

But traders who seek smaller bets can make use of the mini contracts that come with smaller lot sizes of, say, one tonne of aluminium and 10 barrels of crude oil. So, a 10 barrel crude oil mini contract will currently have a notional value of about ₹21,500 against ₹2,15,000 for a normal 100 barrel contract.

Also, you don’t have to put up the ₹21,500 upfront. Futures contracts allow you to take bets by placing margin money — a portion of the notional value of the contracts.

For instance, by putting up ₹1,075 (5 per cent of ₹21,500), you can buy or sell one lot of the crude oil mini contract.

But note that you have to keep adequate money in your trading account to make up for the day-to-day price fluctuations in the contract until you exit your position — this is called mark-to-market provisioning.

So, if the contract price moves against your bet, your account will be debited and if it moves in your favour, you will get money in your kitty.

From a time perspective, you can trade either in short-term contracts or those with longer tenures.

Liquidity and price discovery may not be good in long-term contracts; so, it may be better to trade in those with shorter tenures.

Settlement modes

The trade position, whether buy or sell, automatically gets settled on the expiry date of the contract or it can be squared-off and closed even before by taking an opposite position.

As a seller, if you intend to settle on expiry instead of squaring-off before, take note of the dates and timeline by when you need to inform the exchange about specific settlement modes — whether physical or in cash.

Gold and silver are the only commodities that have to be compulsorily settled in physical form if the seller holds on till contract expiry.

In other commodity contracts, intimation to the exchange on or before the cut-off date will enable a seller to settle in cash on the contract expiry date.

What to factor in

Whether you profit or lose on a trade, the broker, exchange and the government must be paid their due.

So, factor in costs such as brokerage, commodity transaction tax (CTT), service tax and SEBI charges that add to the cost of your bet.

If you think silver price will go up over the next month, you could buy a silver mini contract with a lot size of 5 kg currently trading at around ₹34,000 per kg. The margin money will be ₹8,500 and you also have to account for brokerage and other charges.

If the contract moves up to ₹35,500 and you close the trade by taking a reverse position, that is selling the contract, you earn a profit of ₹7,500 (₹1,500 per kg) less brokerage and other charges, which will be credited to your account.

But if the contract falls to ₹32,500, you will have to pay up ₹7,500 plus brokerage and other charges.

Source: thehindubusinessline

Lack of Asian buyers may keep a lid on gold price

The surge in the gold price last week has not resulted in increased buying of the precious metal by the world's two biggest gold clients: China and India.

According to the Times of India, buyers have so far shown little interest in hitching their wagons to the gold rally.

On Thursday, the price of gold climbed nearly $70 an ounce as turmoil on world financial markets and global economic fears sparked a return to safe-haven buying.

Futures contracts in New York with April delivery dates jumped 5.8% to a high of $1,263.90 an ounce in massive volumes of nearly three times usual volumes. That moved gold into a bull market with gains topping 20% from the near six-year low struck mid-December. However by Friday, some of the rally had diminished, with gold futures slipping $7.10 to $1.240.60 an ounce.

While Australia's Perth Mint had one investor order a million dollars worth of gold, it noted most of the interest is from Western clients. That is perhaps surprising given that Indian and Chinese buyers often swoop in to buy gold bars, coins and jewelry if they are confident of a sustained rally. On the contrary, despite offering a record discount of $40 to the global benchmark price, retail demand has "almost vanished" Times of India quotes one Mumbai-based jeweller. Discounts were also being offered in Japan, Hong Kong and Singapore.

Between them, China and India account for around 45 percent of world gold demand.

Meanwhile Dennis Gartman of The Gartman Letter was quoted on CNBC on Friday as saying that it might be a good idea to wait on gold.

Gartman told CNBC's Squawk Box that gold is likely to correct before the Presidents' Day holiday on Monday, on the back of rising U.S. equities, and could slide to between $1,215 and $1,225, at which point he might buy in.

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Support $ 1183 or $ 1191.70 last top in October 2015. Next Target $ 1308.