Comment by UmairButt on February 29, 2012 at 4:00am

sir i have a general question as according to current situation they are showing that crises are getting over and stability is coming in europe..so sir can we say that 1.27.. was the low for this year? if not hen what reason will again cause euro to drop?as i read that sellers are too much then buyers..what u say sir?

 

Comment by UmairButt on February 29, 2012 at 4:01am

to drop?

Comment by UmairButt on February 29, 2012 at 4:02am

and one more thing is if euro drops gold wil not because traders will invest in it as safe haven what u saqy about this?

Comment by asad rizvi on February 29, 2012 at 7:38am

Umair, this is very long debate and cannot be answered at one go. One thing is for sure that Europe has learned the trick from USA that printing could get them back to minting. No qualified economist is talking that how damaging is managing debt by with another debt. No one is talking of the repercussions for the future generation. It will certainly lead all the effected economies to social unrest to the extreme.

Basic principle is that if spending exceeds revenue a debt is created. So the question is that how can another debt reduce the debt? Yes, it t can be done through introducing mores taxes or by exporting goods to such an extent that the country is blessed with enough current account surplus. Especially, rich should pay more taxes.

Increase in Tax is the most difficult political decision because in most of the countries businesses are owned by law makers or parliamentarians and they certainly have their own business interest.

Interestingly the biggest joke of the century is that if you compare the commodity or asset prices of past 10-years, today it is more than double and yet inflation is very low. Today oil is $ 110, but inflation is low. Dow Jones test 13.000, which means business are doing well but inflation is low.

Gold price surged on inflationary pressure but inflation is very low. In UK inflation is over 5 pct against target of 2 pct, so anything over 3pct is supposed to be reported by the BoE. But who cares UK bank rate is ½ pct.

It is said that since 2008, USA printed notes over USD 5 trillion, but who cares inflation is still at a very comfortable level. FED continues its easing policy since last decade. Troubled banks were given chap money to invest and get higher return. Look they are in profit.

ECB rule never allowed direct bank borrowing, but special permission have been given to buy bonds directly, which has strengthen the market. Accounting rules have been changed to accommodate corporation so that they may avoid showing losses. Look this has helped. Life of Greek bond is 30-years. This will help in buying time and calm may prevail for longer period of time in context to Greek bond.  

The point that I am trying to make is that the job of the economist and analyst is only point the positives and hide the negative to avoid possible unrest that can lead to collapse, it also helps in protecting the rich.

US experiment soft monetary policy stance has been very successful. Ample of liquidity injection is technically bad and inflation but interestingly there is no inflation. So this may be good for USA, but please keep in mind Euro-zone consist of many countries so the problems could be numerous and hence, we are going to see gradual exit of weak economies.

Bottom line to Euro’s query is that yes, it is possible that 1.2650’s could be the low for the year because in such a situation, economic happening does not make sense, it is force that plays bigger role like in this case. But Euro will remain volatile with ups and downs as situation demand.

Gold has two supportive factors, genuine individual demand for gold and higher gold price means healthier Central Banks balance sheet. So Central Bank buying to continue, but it is not going to be one sided affair. When prices will rise we are often going to witness low demand. But weak Asian currencies may not be good news for gold because reduces purchasing power. Overall answer would be yes gold will make gradual climb unless global Central Banks decides to offload their gold holding, which is not possible without IMF understanding.  

However, for investment purpose it is always for the investors to decide.

Cheers

Comment by Tahir Khan on February 29, 2012 at 8:49am

I believe as well that if the auction goes well and possibly surpassing expectations would be a relief sentiment that things indeed are getting better in Europe and that investor's faith has return.

However like all big news event I be watching 3525-30 as a breaker point.. If price halts here would be time to hedge shorts for me to see if we can head back up once the noises clears off...  A break higher to 3530 and I would be gunning 3595-3605 area...

Interestingly nkt purely seems to be waiting the auction as evident from the price action for the past 24 hrs or so...

another 70 mins and the game begins...

GL..

Comment by asad rizvi on February 29, 2012 at 8:52am

Thanks for sharing. Cheers

Comment by asad rizvi on February 29, 2012 at 8:55am

London time 8:57…….LTRO expected at 10.15 London Time

Comment by naivetrader1 on February 29, 2012 at 9:16am

It appears that everyone knows that ECB would come out with a favourable decision, in a hours time & that the Market would react +vely....... Still in next couple of hours >90% traders would lose money ..... Fascinating!!! For Naivetraders, it's time to watch from the ring side ..... & absorb & learn .... I'm sure that there would be more events (opportunities) like this, in coming months & we might be inside the ring, then ......!!!

Comment by asad rizvi on February 29, 2012 at 9:18am

I have no diagreement with you.

Comment by Tahir Khan on February 29, 2012 at 9:19am

thanks i thought it was 10:00 GMT...

GL...

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