Looking at what's going with the commodities market (specifically xauusd and xagusd), the yen pairs and the SnP; there seems to be shift going on. Looks to me like most, if not all the covering, is close to finished. AGL and BIL could be the big winners in the coming weeks. The SnP might well make new highs again this year. We'll see the bottom being put in this week. Tell me why I'm wrong. : )
Ah come on! I need a better reason than that. I'm predicting based on what I see happening in the other markets. It's called intermarket analysis. There's a good book about it written by John Murphy - check it out.
I'm not right just yet. And I suppose it doesn't matter to anyone else. I trade currencies and metals and it's just interesting to see that the yen strength, gold weakness and the global stock market slump are all so directly linking nowadays - it hasn't always been like this. The yen lost a lot of ground overnight and xau/usd (gold) is stronger = stronger global markets.
faure (or anybody else for that matter, SimonPB? Tango? GOLDIIEEE!), if you trade currencies & metals etc, would you care to answer the question about the $gold-price vs the usd/rand relationship? Huaron had a go recently, but I think he was predicting more than he was explaining. The question again: WHY does the rand weaken or strengthen in tandem with the dollar price of gold? The relationship appears to keep the RAND-price of gold within a certain range, that range being about R4k-R5k/oz this year. WHO sets the value of the rand? - is it determined by international investors? or by the local big gold mines? or by Tito (or the Lone Ranger???)
AvS, I am also battling with this one for some time now. The only reason I can see is that because SA is producing so much gold, an improvement in the $/Gold price is an improvement for SA, which makes the Zar stronger. As simple as that. Therefore we always have and always will miss part of the gold party. But we are also protected somewhat when gold drops, because then the ZAR weakens, as it is bad for the country! Faure, we await your reply..
Do a bit of reading at www.thebulliondesk.com They always talk about the fact that gold "normaly" goes up when the USD weakens(and other way round) So the one is used as a hedge against the other one. But if you in gold, this is a very usefull website.
I think it's a common misconception that gold and the rand trade together. Right now what's happening is that traders who were borrowing yen at .25/.5 pa and leveraging into higher yielding currencies (aud, nzd, rand), gold and international markets, notebaly China, are/were unwinding their positions. This meant that we had a line of causation going like this. China down = stronger yen = selling gold/high yeilding currencies & weaker global markets. Right now the same market forces are affecting both gold and the rand (and aud for that matter). The correlation between a strong yen and a weak rand and gold price is very high. But it is just temporary. It is the cause of other market factors. Gold forms a much smaller part of our exports than what most people realise. And yes they are both denominated in usd, so that also keeps them in line. The rand/gold relationship will change in the future and then people will ask why aren't they moving together. Gold and the rand are affected by two opposing fundamental forces. Gold is a safe haven while the rand is a emerging market currency, kinda the opposite of a safe haven.