Archive for September, 2009

Gold continues to move higher ?

September 24th, 2009 Comments off

After the Fed meeting of yesterday Gold is a little down at $ 1014 /ounce in today’s morning trade. The dollar stands at 1.4770 against the Euro.

So will Gold continue to move higher?

Ok, a short term setback is always possible. Gold is rather volatile and attracts a lot of short term traders and hedge funds.

But as I pointed out, watch for the strategic moves of the Asian countries and the Oil producing Arab countries!

Will they continue to move away from the US-$ as their dominant currency reserve and diversify? Gold is clearly one of their options.

Don’t forget that the US and the other Western countries lost a lot of credibility during the financial crisis. Asia looks at this as a Western crisis.

The level of Western indebtness worries Asia where neither the countries nor the banks or consumers are leveraged as their Western counterparts.

A good indicator could be the declarations of China and other Asian countries at the G-20 summit in Pittsburgh.

They already ask for more voting rights for Asian countries within the IMF. And definitely this will not be their last move.

Recently the last „bear” of the big gold mines, Barrick Gold (NYSE: ABX), threw in the towel and annouced a huge $ 5.6 billion charge in Q3 2009 in order to eliminate their fixed price gold contracts, reflecting an „increasing positive outlook on the gold price”.

Stay tuned!

Everyone is so bullish on gold!

September 14th, 2009 Comments off

The gold price is flirting with the $ 1000 threshold for some days now. This move comes after the price of the precious metal has been hovering around for 18 months.

So is a breakout imminent? Indeed some technical factors may suggest this move.

But this blog does not favor technical analysis so we will not discuss this.

Normally bullish market mood indicates that all positive factors are already priced in and every market participant is already positioned. So the expected move will not happen because there is no new demand coming to the market.

Could it be different this time?

If you seek an answer watch out how big sovereign market participants behave:

  • China and other Asian countries for some time now expressed their low confidence in the US-Dollar and are seeking to diversify their currency reserves. And for sure they will not jump into the Euro as this monetary union has their own structural problems which are now starting to surface.

  • China for some time now is closing deals for resources and commodities. And since 2007 the country is also the biggest gold producer as the South African Mines are starting to deplete.

  • Hongkong is repatriating its physical gold reserves from London and invites Asian central banks to store their gold with them. The Hongkong Monetary Authority wants to create a new gold bullion ETF based on gold stored in the vaults of Hongkong.

These market participants make big longterm strategic moves. They are not positioning themselves for the short term.

The US are running a budget deficit of 13% of GDP. The big Western European countries are at an average of 7%. The financial crisis has been accomodated essentially by throwing money at the problems. This money is still floating around.

Their are first signs that the Fed and other central banks are disposed to tolerate a higher inflation rate than they actually admit. An inflation rate of 0 to 2% seems to be a thing of the past once the economy picks up.

So will the central banks be credible when they have to start to raise interest rates again?

Perhaps you should watch out for more bullish signs of the gold market in the coming weeks and months!

Colfax Earnings Q2 2009

September 4th, 2009 Comments off

Certainly, Colfax future earning’s power does not only depend on cost savings and on the solution of the asbestos problem.

Will orders of the oil and gas industry pick up in the second half of 2009 and in 2010?

This could happen if the price of crude oil continues to strengthen.

Will the „Global Navy and Commercial Marine End Market” remain strong?

As always in investing there is no guarantee but one thing is assured:

Colfax has a disciplined management. They are positioning the company for better times.

We just don’t know exactly when that will be!

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