The second gold rush

With the announcement coming from the US Federal Reserve last week that they would print a further $600 billion in order to acquire longer tern Treasury securities, alternative options such as gold are trading at new highs in dollar terms.

The new injection of US billions is in addition to bringing interest rates to nearly 0% and purchasing more than a $ trillion dollars of Treasury Securities and US backed mortgage securities.

The dual mandate of the US Federal Reserve is to promote a high level of employment and low, stable inflation.

Gold is a safe haven asset and in times of uncertainty, ultra low interest rates, demand has continued to push the price up.

The last real bull run was in the 1970’s when gold started the decade at around $35/oz and peaked at over $850 in early 1980. Most of the price appreciation occurred in the last 2 years of this bull market as the price moved up sharply from $200 at the beginning of 1979 to the $850/oz just over a year later.

The chart below superimposes that rally with the current price starting in 2001, producing one view of the possible further upside for the yellow metal.

Source: Sarasin, Ned Davis September 2010

Priced to perfection

This is the ALSI futures end of day graph.

It's looking to break to the downside and and looks to run out of momentum.

A break downwards will confirm our view, and a close/trading below 27 000 could confirm the trend.

Safe trading

A positive day ahead

By the looks of things to come today, it looks like an up day around the world with positive news from the G20 Summit regarding the currency situation.

The G20 countries have all agreed that they will not weaken their currencies to help boost their income from exports.

The ALSH has crossed over on the moving averages and looks to be struggling to keep the upwards momentum intact.

Shares showing weakness are Cadiz, Standard Bank, Old Mutual, ABSA, Lonmin, Amplats, and Wesizwe.

Shares giving a heads up are Firstrand, Illovo, Remgro and Vodacom, with Pick n Pay looking to extend gains to the upside.

To find out more about increasing the probability on making profits with the use of technical analysis, give us a call.

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Markets peaking out.

The JSE contintued its rally from yesterday's close as we're up 197 points.

Volatility is starting to show since we've had fairly good days with the market moving down on Tuesday, and bouncing back yesterday. In the end we are where we were on Monday...

Out of a technical perspective, the moving averages are starting to converge, but hasn't crossed yet. Some stocks showing weakness is MTN, Standard Bank, Old Mutual and Discovery.

Resource stocks are providing the momentum on the JSE at the moment, with the rand also trading between R6.98 -R6.90 to the dollar.

Stocks that's performing well are Reinet, BATS and Anglos and Billiton to name a few.

For a more detailed discussion, give us a call on 0861117625.

Look out for jobless claims later this afternoon out from the USA.

Safe trading.