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What author of Antifragile has not told about Precious Metals

27 Jul

Taleb does not say this in his book, but precious metals are both antifragile and robust or unchangeable in nature. Normally, the price of precious metals would have risen alongside the increase in the money supply.

The concept of antifragility comes from NaseemTaleb’s book Antifragile. In it, he describes things and processes that thrive on mistakes and volatility.

Basically, an antifragilesystem is one where error and/or risk is allowed, encouraged and leads to improvement overall.

Fragile versus robust

A fragile system is one that is artificially controlled, like a modern forest fire, for example. Such control ultimately leaves the system much more vulnerable to disaster.

Another example is the financial system in the age of constant bailouts and too big to fail companies. Add to this the absence of moral hazards, and the resulting extreme misallocation of capital and risk has resulted in apersistent disconnect between price and fundamentals.

On the other hand, a robust system is one that is essentially stable over long periods of time. An example would be the long term purchasing power of precious metals across all paper currencies.

Paper legal tender is fragile

Perhaps the ultimate fragility is an intrinsically worthless paper legal tender maintained by force and the control over the commodity futures markets by allowing sellers to pay for their trading losses in paper instead of real goods.

Paper currencies have value that is only based on debt and a country’s ability and willingness to repay it. Unfortunately, the debt can only be serviced by printing new paper currency, which then results in more debt.

Crises of confidence are the ultimate emotionally driven events, and a severe U.S. Dollar crisis could wipe out an entire investment class practically overnight.

Antifragile applied to precious metals

Taleb does not say this in his book, but precious metals are both antifragile and robust or unchangeable in nature. Normally, the price of precious metals would have risen alongside the increase in the money supply.

Nevertheless, the more intervention occurred, the worse the volatility observed as price swings increased. More volatility increased emotion and investor interest, thereby leading to greater liquidity and ultimately demand.

This is a sign of failure — as quiet desperation protects the fragile U.S. Dollar based fiat currency system.

Furthermore, precious metals are antifragile because market control and mispricing alongside rampant money creation results in bad money chasing out the good, a la Gresham’s law.

The more their prices areartificially suppressed— overtly through propaganda and covertly through price controls — the stronger the case for holding precious metals becomes.

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Perpetual volatility: Will investors abandon Gold?

24 Jul

mcx gold tradingGold futures are weighing and responding in earnest to the Ben Bernanke Congressional testimony of the last week. While the futures look comfortable in dealing with the anticipation that the Fed would not taper as soon as the markets had thought, lending it some buying appetite, the prospect of a tapering lingers with an uneasy calm.

“There’s still a bit of a thirst for the metal,” Jonathan Barratt, chief executive officer of Barratt’s Bulletin said to Bloomberg.

“Given that Bernanke has already suggested that tapering will only occur when they’re very comfortable with the economic outlook, we’re going to see tapering on the agenda but it’s going to be some time before it actually starts,” he added.

Gold on the Comex for delivery on August 13 was seen trading at $1,338.85/oz, a gain of $4.15 or 0.31% as of 10.05 AM IST.

The multi-billion Dollar question used to be this: When will the US Federal Reserve start to taper? After a series of testimonies this year, the answer looks very much elusive. The Fed could not be blamed on this, because they are doing what that is mandated out of them.

The Fed do own the trigger of shooting the Quantitative Easing measures point-blank. Only thing is that they cannot pull it at their will. In fact, having started this whirlpool of money printing, a genie is out, which is refusing to go into the bottle.

The markets have in effect become QE fetish to such an extent that it would be difficult to pull the trigger on QE execution. Playing to the gallery is imperative in a politicized economy.

Now, the mult-billion Dollar question is if the QE measures would be tapered at all? High profile leadership at PIMCO, world’s biggest institution investing in bond markets, believe that the ultra-loose monetary policy may continue until it is 2016.

That is no walking distance from 2013!

The fact remains that gold futures would see extended periods of volatility as data releases occur every time. The Fed has clubbed the QE measures to a recovery in job markets, housing markets and a moderate and healthy inflation. Each data release in this category, fluctuating as each one is, would take the futures on a roller coaster ride.

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Any negative sign is taken for a point to rally up and any positive sign on economy could be interpreted as a point to rally down in gold. Now imagine that happening all the way to 2016! That is a perfect incentive for investors to abandon gold. Especially when there are other less volatile instruments to conduct trade and make money.

But, at some point in time, all these QE measures would have to be curtailed. That would be the time when markets would see the perfect storm.

Copper drops 1% as dollar strengthens ahead of Bernanke

17 Jul

copper

Copper futures came under heavy selling pressure on Wednesday, as the U.S. dollar strengthened ahead testimony on monetary policy by Federal Reserve Chairman Ben Bernanke later in the day.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.139 a pound during European morning trade, down 1.4% on the day.

New York-traded copper prices fell by as much as 1.5% earlier in the day to hit a session low of USD3.137 a pound.

Copper prices struggled for upside traction due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 82.80.

Market participants looked ahead to Bernanke’s testimony on monetary policy amid speculation over the timing of a possible reduction to the bank’s USD85 billion-a-month bond buying program.

Copper prices advanced 2.7% last week after Bernanke said the Fed will continue to maintain accommodative monetary policy for the foreseeable future.

Investors also looked ahead to the release of key U.S. data on housing starts and building permits later in the day.

Any improvement in U.S. economic activity could scale back expectations for further easing, boosting the dollar and weighing on silver.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere on the Comex, gold for August delivery shed 0.5% to trade at USD1,284.05 a troy ounce, while silver for September delivery fell 0.9% to trade at USD19.74 a troy ounce.

Moves in gold and silver this year have largely tracked shifting expectations as to whether the U.S. central bank would end its bond-buying program sooner-than-expected.

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What will Greet Gold in H2, 2013: India Festival Demand or India Import Curbs?

8 Jul

While one cannot ascertain if gold imports by India would be met with added curbs, the Finance Ministry here is sure to lose sleep over the matter as festivities kick in and Rupee rout continues.

free gold trading tips

The second half of 2013 is marked by festivities in India and thereby enhanced gold demand. From Ramadan to Diwali to Dusserah to Dhanteras, Indians would go on a spiritual and materialistic binge bringing cheers to the markets and dating optimism.

But will that be the case this time around too as Current Account Deficit is still the Guerrilla in the room contributing substantially to Rupee weakness which has fallen to a record 60.22 against Dollar as of writing this. Will there be additional curbs on imports by India government?

A recent Reuters’ report quoting unidentified official suggests that this is unlikely as there are threats of enhanced smuggling activities in gold.

India recently hiked the import duty on gold to 8% and RBI too put in restrictions on import funding by banks.

These measures helped the gold imports by India to come down substantially as latest data say.

“Import of gold and silver is understood to have declined substantially to $2-2.5 billion in June, much below the $8.39 billion imported in May, and over $7 billion in April,” a senior government official said and was quoted by the Indian Express as saying.

June imports of Gold have dipped to a paltry 28 tons when compared to 162 tons in May. Data says that imports of gold to Gujarat, a major consuming centre, dipped to 3.73 tons in June against the 37.61 tons registered in May as per the air cargo complex data.

Trend seasonal

“The physical trend has always been very seasonal,” said Bernard Sin, the head of currency and metal trading at MKS (Switzerland) SA to Bloomberg on gold physical demand.

“Physical players are a different breed. They are always buying on the dip. Physical support will continue to be present and it will definitely trigger interest,” he added.

It has to be noted that while ETF demand has waned considerably, gold physical demand went up substantially in the past months.

While one cannot ascertain if gold imports by India would be met with added curbs, the Finance Ministry here is sure to lose sleep over the matter as festivities kick in and Rupee rout continues.

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Trading tips for crude, copper, nickel & natural gas

10 May

Dharmesh Bhatia of Kotak Commodities advises selling copper MCX around Rs 404-405 per kilogram with a stop loss at Rs 409 per kilogram for a target of Rs 391-395 per kilogram.

Renisha Chainani of Edelweiss recommends selling nickel MCX around Rs 830 per kilogram. One can place a stop loss at Rs 840 per kilogram and a target of Rs 810-815 per kilogram.

Ravindra Rao of Motilal Oswal advocates selling natural gas MCX around Rs 217. Rao says, “Keep a stop loss for this trade at Rs 222 per kilogram for a downside target of Rs 205 per kilogram”.

Sumeet Bagadia of Destimoney Commodities suggests selling crude MCX around Rs 5,250-5,260 per barrel. “Maintain a stop loss for this trade at Rs 5,310 per barrel for an initial target of Rs 5,180 per barrel followed by Rs 5,100 per barrel”, Bagadia adds.

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Source: moneycontrol

Here are trading tips for crude, nickel, copper & zinc

22 Apr

Renisha Chainani of Edelweiss recommends selling nickel on MCX at Rs 830 per kilogram. “Maintain a stop loss for this trade at Rs 845 per kilogram for a target of Rs 810-800 per kilogram”, Chainani adds.

Ram Pitre of Anand Rathi Commodities advises selling MCX crude at Rs 4,800-4,820 per barrel for a target of Rs 4,760-4,730 per barrel with a stop loss at Rs 4,850 per barrel.

Sumeet Bagadia of Destimoney Commodities advocates buying MCX zinc at Rs 99.50-100 per kilogram levels. Bagadia says, “Keep a stop loss for this trade at Rs 98 per kilogram for an initial target is of Rs 102.50 per kilogram followed by Rs 104 per kilogram”.

Dharmesh Bhatia of Kotak Commodities suggests selling MCX copper on rise up to Rs 379 per kilogram. Place a stop loss for this trade at Rs 383 per kilogram for a target of Rs 371-368 per kilogram.

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Source: http://www.moneycontrol.com/news/commodities/heretrading-tips-for-crude-nickel-copperzinc_856523.html

MARKET CALLS FOR TODAY 17-APRIL

17 Apr

SELL SILVER (MAY) BELOW 43600 TG- 43500/43350/43150 SL-43750

Buy ALBK Above 137 tgt 139 143 sl 133

SELL GOLD (JUNE) BELOW 25535 TG-25505/25470/25430 SL-25570

SELL LEAD (APR) BELOW 110.60 TG-110.10/100.50/99.80 SL-111.20

 

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