Commodity Trade Mantra

Posts Tagged ‘Volatility’

History Says Markets Could Crash in the Cruelest Month - September

What month is the great menace for markets? September… What could possibly go wrong? Turns out the 30 days ahead are peppered with land mines that could go off with…detonative effects on the market. One of them is Sept. 21. The markets have most definitely not “priced in” a rate hike. It will sell off violently if the Fed goes ahead and raises rates.

Any Eruption of Reality will Reveal this Stock Market Rally as a Head-Fake

All the technical “buy” signals are precisely what you’d expect in a rigged rally. If there’s nothing supporting this rally but euphoric sentiment arising from orchestrated buying, any eruption of reality will reveal the stock market rally as a head-fake. Having exterminated short-sellers, there won’t be many who will benefit should the rally be transformed into a rout by reality.

Is There A Better Insurance Against Global Risk Than Gold? I Doubt It!

Negative rates kill the incentive to save & without savings, there will be no investments or growth in the economy. But the biggest disaster is hitting the pension sector. When risks are major, it is critical to protect yourself against them. It is not a coincidence that some of the most successful investors in the world are recommending physical gold as insurance against these risks.

Why Goldman Is Suddenly Warning About A "Large Drop" In The Market

After recent bearish conversions by the JPM, BofA, Citi & UBS, the only bank that steadfastly held a bullish view on stocks during the recent market squeeze higher was Goldman Sachs. Not any more. With 80% of fund managers underperforming, the probability of irrational capital allocations increases & as a result there is a reasonably high probability of a large drop in the S&P500.

Volatility Frustrates Traders: No Rational Explanations On What’s Going On

Traders are frustrated in a market where nothing makes sense. A casualty of this current volatility is that at any given time there are no rational explanations for what’s going on. Back & forth swings of meaningful proportion are characterized, by necessity, with a random reason generator. Better to just put it down to simple things like China’s economy or European banking system is collapsing.

Gold Never Changes, It's The World Around It That Does

To understand how the price of gold is affected relative to risk assets, we foremost need to understand how risk assets move. When fear is low, investors may embrace “risk assets,” including stocks and junk bonds. When fear comes back to the market, ‘risk assets’ tend to under-perform as investors reduce their exposure & move to a ‘safe haven’ asset – Gold.

The Real Reason Behind Crazy Volatility In Crude Oil This Week

The volatility in crude oil trading has been incredible to say the least, and has reached the highest levels since Lehman’s systemic crisis in 2008. Intraday swings of 5-10% are now de rigeur with OPEC and geopolitical headlines jockeying for narrative amid collapsing fundamentals.. but there is another, much bigger driver of this sudden chaos.

Did Janet Yellen Just Shoot Herself In The Foot, Again

The bigger problem now is that Yellen just reset the market’s expectations, and in fact set the bar for disappointment even higher. As FTN rates strategist Jim Vogel very correctly notes, “financial market risk is calmer this morning, but Yellen actually elevated the stakes with her detailed speech yesterday afternoon.”

Will They Or Won't They? Five Fed Meeting Scenarios & Market Impact

Even beyond the immediacy of this Fed decision, the high likelihood that the Fed will still hike in 2015 even if it passes on doing so this week is contributing to levels of 3m implied volatility being near the highs of the year. Here are Credit Suisse’s 5 scenarios & possibilities that could emerge from today’s FOMC.

Dependence On Central Banks Is "Unrealistic And Dangerous", BIS Warns

This is a world in which interest rates have been extraordinarily low for exceptionally long and in which financial markets have worryingly come to depend on every word and deed of the central banks, in turn complicating the needed policy normalisation. It is unrealistic and dangerous to expect that monetary policy can cure all the global economy’s ills.

Why So Much Volatility In Oil Prices? Blame The Speculators

Much of the gain was related to speculative movements & decisions of oil traders moving barrels of oil on paper. Speculators had taken a near-record level of short positions on oil, predicting oil prices would continue to fall. They did fall, for about 2 months. However, with such a large preponderance of short positions, the timing was right for a correction.

Traders Are Buying Gold & Silver At Fastest Pace In Over A Decade

Large speculators increased their net long gold exposure to $14.8bn from $9.2bn & Silver net long position to $4.4bn from $2.4bn notional. It seems as if Yellen’s introduction of complications has led to at least contemplation about it, tipping the scales, ever so slightly, back toward financial suicide.

It’s Time to Hold More Cash and Buy Gold

Bank of America highlights problems with raising rates. The real economy in the U.S. is not currently strong enough to withstand a rise in interest rates. That raising rates could cause a shock to the markets & economy. To deal with this they advocate adding gold to one’s portfolio along with higher levels of cash.

Is The Claimed Gold Really There? – Part II

When gold becomes “important” again, really and truly having it WILL matter. “Trust us” will no longer be good enough, proof will be required. Gold demand will explode either out of financial fear of the actions in paper markets or …it will explode because the revelation is uncovered the “gold really isn’t there”. BOOM…

Citi Warns - Central Banks Grip On The World Economy Is Waning

Not only are central bank policies having a disappointing effect on business sentiment and investment; they are failing even to revive inflation expectations. Despite having growing doubts as to central banks’ ability to create durable economic growth, we remain convinced as to their ability to push up risky asset prices.

CME Implements Gold, Precious Metals Circuit Breakers Up To $400 Wide

Effective for trade date Mon, Dec 22, 2014, & pending all relevant CFTC regulatory review periods, NYMEX & COMEX will implement new Rule 589 (Special Price Fluctuation Limits) to apply price fluctuation limits to precious metals futures and options contracts. Wonder why now & what does CME know about upcoming volatility that nobody else does.

The Fed “IS” the Problem!

The solvency of the Fed itself will be questioned during the next crisis, which seems to already have begun. Either the Fed gets the markets calmed down or, the markets will begin to question the Fed’s “all-encompassing power.” When will speculators take them on? Announcement of further QE will probably do the trick.

QE Ending Because It Was Successful? Then Here Are A Few Questions

Certainly, QE-induced perpetually rising asset prices & sinking volatility, likely boosted consumer confidence through the interpretation of lofty prices as ‘all must be well’. However, those aspects dangerously conspire to produce a false perception about the true state of economic fundamentals. Some simple questions need answers.

Could Dollar lose its status as the Reserve Currency Status?

For a currency to have international reserve status, the related assets must be useable with minimal transaction-price impact & have relatively stable values in times of stress. Financial stability reforms can, alongside fiscal prudence, help protect the safety & liquidity of sovereign assets & can hence play a crucial role for reserve-currency status.

Diversification and Discipline Are Key to Investing in Gold

When gold prices plunge as they did in 2013, it’s instinctive for our so-called reptilian brains to hijack our better judgment. Our primordial fight-or-flight response kicks in & too often we choose to fly, only to regret our decision later. Like training for a marathon, investing in gold isn’t for the apathetic. It requires strong-willed discipline.

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