All posts by David Allen

Jim Rogers sees currency crisis this autumn

Famous former hedge fund manager Jim Rogers highlights the dangers of inflation and predicts a currency crisis this autumn. He sees more hard times ahead and says move to Asia and buy agricultural commodities. The bottom is not in markets. Financial markets have more troubles to come. Commodities win whatever happens.

But, there are other sides to see as far as financial markets are concerned. The key concept is that every state is not permanent. There are frequent fluctuations, rising and lowering of prices. But, things are prone to stabilise and balance over a short period of time or longer if the conditions are very much worse. As there are multiple elements that contribute to the changes in the market, the right cause cannot be identified. This happens with any form of market, be the stock market, commodities, gold or even the cryptocurrencies.

It is quite important to mention about the cryptocurrency market as it is the current talk of the world. It is considered one of the best means of investments. There are no much intermediaries involved. However, the entire transactions are encrypted. It is completely safe and secure. But, trading in cryptocurrencies is a challenging task as it is relatively a new medium of transaction. Individuals are not fully well versed with its knowledge. To help the people and assist them in smart investing, we have some companies or individuals developing highly sophisticated software exclusively for this purpose. The software completely works on behalf of the users. It has well developed algorithms and programs to function in a way that is much expected out of a super computer.

They are legitimate and authentic auto trading robots that can generate valuable results. Crypto VIP Club is one of the best among the available software systems that are bound to reap higher benefits for the users. It has got good reviews from the customers with regard to its performance. We will have to just register for free with them and then start trading. Once the auto trading mode is fully understood, we can start observing and learn the art of investing. It has proven to give good results too. This digital currency solutions have become essential in this fast paced world. They also have efficient customer care team to facilitate and assist the users round the clock on any difficulty. Decide to invest and plan for a stronger future.

Dr Marc Faber explains the market correction

Legendary investment adviser Dr. Marc Faber thinks the S&P will drop to 750 before the rally resumes. He thinks financials are looking oversold. Treasury bonds are now in a bear market that will last 15-20 years. Asian markets should be bought on setbacks.

International financial markets make such legendary histories. They are known for their uncertainties. It is expected to be volatile because of the many market influential elements. We have democratic, political, financial and other seasonal changes that reflect the market conditions. In today’s world we also see climatic conditions also playing a major role. It affects the demand and supply of goods. This in turn will trigger inflation and we will have to see the consequences of it all.  Currency fluctuations and its effects are felt in every sphere of life. It affects every common man in terms of their buying capacity. Further, stress becomes a way of life.

But, financial planning is very much essential as it is often required to be stable for managing uncertain events in life. The only solution here is smart investing. We have many options. Stock markets, commodity market, gold and real estate. There is also this major sensation, the cryptocurrency.

The cryptocurrency world has caught the attention of millions of people in the current market. Bitcoins are the most traded amongst them. Since it is relatively a new concept we have difficult terminologies to face. This makes it difficult for us to take even the simple steps. Being a novice user, it is highly essential that we take secure steps in the right direction. The first simple and secure step will be to get acquainted with a good guide. We have some sophisticated and highly authenticated software systems that can assist in the most professional manner. Bitcoin Loophole is one of the best of its kind. We see many positive reviews for this product. It is a fully developed software built on highly efficient algorithms. They keep monitoring the ongoing market conditions and make very accurate forecast. This is essentially the working principle explained in general terms.

Getting acquainted with such systems are easy. We will have to just register with them for free and then start trading at our own pace. These software systems have made it easy as the interfaces are user friendly and the customer care services are very much approachable. Just try it and reap very high profits.

What does the $3.5bn Saudi gold rush in two weeks mean?


The revelation on this blog, actually sourced from what appears to be a reliable story in the Gulf News, the leading regional newspaper, that Saudi Arabia has spent a total of $3.5 billion on gold over the past two weeks has naturally attracted huge worldwide interest.

I can not verify the source but all I can say is that this has the hallmarks of a genuine story, based on my 25 years in financial journalism. First, it was buried on an inside page and the amount was given in UAE currency later in the story –

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hardly the action of somebody looking to manipulate the gold price, more an indication that the sub-editors did not understand the importance of this story.

Second, this is how the best stories emerge from Saudi Arabia – the market is not very transparent but insiders do notice big changes and pass this information on, and it surfaces as well sourced rumor. I am afraid this is about as good as it gets in the Middle East.

Truth in rumors?

After 9/11 we had rumors about chartered 747s flying full of gold and dollars back to the Kingdom to avoid the increased scrutiny of US regulators. Was it true? Real estate here is said to have boomed on the back of this new money – that certainly happened, did the transfer? We do not know for sure.

So what is going on? By whom and why are these gold purchased being made? Again we can only indulge in informed speculation – nobody is ever going to give an on the record comment on this.

However, we do know that the Saudi stock market has crashed over the past two weeks. There has been an enormous amount of money cashed out. The obvious source of the money for gold purchases has to be that money.

The problem for Saudis is that by cashing out of local stocks they get their own riyals in exchange, and riyals are effectively US dollars due to the currency fixed link. The US dollar is presently high, so diversifying into another asset class makes sense.

But what do you buy? What is safe these days? Dubai villas, perhaps but the rest of regional real estate is crashing? US stocks – you must be joking?

Conspiracy nonsense

I think some of the conspiracy theorists are wide of the mark. People love to come up with elaborate rationales for actions. It is laughable to see Saudi Arabians rushing to buy gold as a conspiracy to bring down the West. The West has brought that on itself, and the Saudis are just trying to find an effective shelter for their wealth from that collapse.

Gold and silver are precious metals with a limited supply that retain their value over time. Also if we are in a repeat of the late 1970s, as this author believes, then cash and gold are the safe havens, with silver probably the best of all, if very volatile.

Therefore, my lesson to draw from the Saudi gold rush is that very much higher gold prices are coming and investors in the Kingdom are making a logical choice ahead of the global pack. If you can not beat them I would join them and preserve your capital.

Incidentally, what I would like to know is who is buying? The report in Gulf News makes it sound like the broad mass of local investors, not the government, and that would explain why such a report has surfaced. If it was the government we would not have heard about it.

So this is just a local flight to a safe haven asset class by people panicking about plunging local and global stocks. But $3.5 billion in two weeks is a big shift in demand for gold in a short period.
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Gerald Celente buys gold, predicts US revolution

If only Gerald Celente had not been right so many times before. If you visit YouTube there is a complete library of correct predictions. He recommended gold first in 2006. Now he is talking about the breakdown of law-and-order in America as the country experiences a period worse than the Great Depression. He sees President Obama’s mission impossible for what it is – I just hope he is wrong!
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Chinese economy down 4%, US house prices still falling


Perhaps the most significant economic data to emerge yesterday was the four per cent contraction in Chinese electricity consumption in the first quarter, generally considered a better proxy for GDP growth than the official figures, and the 18.7 per cent drop in US house prices in March, according to the Case-Shiller Home Price Index of 20 cities.

These are what is known as hard economic data. Wall Street chose to focus its attention on the US Conference Board’s Consumer Confidence Index which it has successfully managed to talk up. US consumers are apparently less pessimistic about the future, which has some merit unless their perception is incorrect because they have been misled.

German confidence

It is the same story in Germany. The worse GDP decline since 1990, and yet suddenly confidence has picked up. German GDP fell 6.9 per cent in Q1, and exports by 9.7 per cent, worse than expected.

Then again Russian President Dmitry Medvedev yesterday warned that his country faced a recession 50 per cent worse than in 1998. Presumably then Russians are now feeling more confident about the future. South Africa is officially in its first recession for 17 years. They must be dancing in the streets. So what is going on?

This just has to be human psychology and a response mechanism to bad news. At first there is a very nasty shock and depression. Then the mood lightens and perhaps it does not seem as bad as first feared. The danger then is becoming over optimistic about the future for no good reason.

That would appear to be where consumer confidence and stock markets stand right now. The problem is that when you think rationally there is nothing to be confident about. All that has happened is that the human mind has adjusted to worse conditions, which are still worsening but not quite as fast as at the start. This is not good news.

We have such puzzling situations. But, investments are also necessary. It is always questioned what can be other options to move on. There are auto trading robots in the cryptocurrency trading platform that can analyse the market and take smart decisions on our behalf. Bitcoin Code is one of the best.

Optimistic fallacy

If you now blithely behave as though nothing has happened and that things will inevitably get better then in the investment context you will put your money into the stock market, and then lose it when the truth inevitably returns to revalue the market. Or if you run a business you will carry on until your cash flow is completely exhausted.

Better to be a realist, observe those economic growth and housing figures and reflect on what it means for the outlook. Another bout of US foreclosures are expected to take house prices lower again this summer, and what do you think is happening to global demand for Chinese manufactured goods?

Have emerging markets entered a new bull market?


Templeton Asset Management chairman Mark Mobius has had a long, and at times successful career as a specialist in emerging markets. He says the next bull rally in emerging markets has just started. Should he be believed?

A Reuters report from Shanghai boldly claimed that Dr. Mobius ‘correctly predicted in December that emerging markets will rebound before developed nations’.

That might have been true for China, but Middle East investors have not seen a rally while developed countries have already enjoyed an upturn. Whether any of these rallies is sustainable is another issue entirely.

Gulf stocks up

The Gulf stock markets saw a modest rally of two to six per cent today, mainly on the back of higher oil prices in the wake of the Obama PR machine’s launch of the $500 billion toxic asset plan. That is nice to see but it is hardly a rally to speak of, let alone a new bull market.

Gulf economies are highly geared to the oil price, and there is a six-month time lag between oil price increases and an upturn in the general economy. It is a bit early to see if the Obama plan will turn out to be anything more than hot air, or more likely an expensive waste of US tax payers money.

But let us ask Dr. Mobius a simple question: how can the emerging markets lead the recovery in a year when the World Trade Organization forecasts that global trade will fall by nine per cent, its worst performance since the Second World War?

Trade catastrophe

Are we to imagine that stock markets have instantly discounted this trade catastrophe, and think better times must be around the corner? This is ridiculous, there is no reason to believe that life for business in emerging markets is not going to get a whole lot worse before it gets better.

Then again the global financial system is still largely frozen. Even if, and it is quite a big if, the Obama bailouts succeed it will take several years to rev global trade up to the levels seen before the crash.

In the meantime, public companies will report losses, banks will make further write downs and asset prices decline further. How can emerging markets deliver a sustained bull market under these conditions? Dr. Mobius ought to know better after so long in the business.

Will oil and gold prices rise further with the Fed printing money?


Last week’s surprise move by the Federal Reserve to buy $300 billion in long-dated bonds and effectively start printing money brought a sharp fall in the US dollar, and a strong bounce in oil and gold prices.

Is this the story of things to come? Pimco CEO Bill Gross, the bond king says the Fed may need to expand its balance sheet from a projected $2-3 trillion to $5-6 trillion to get the economy moving again.

This is a slow motion process. The more immediate impact, apart from lowering the cost of borrowing, is a lower dollar. Then by 2011 or so Mr. Gross sees the return of inflation, and is buying inflation-protected bonds called TIPS – which also jumped in price last week.

Oil market

For Middle Eastern investors in particular this scenario has important implications for the oil market: a lower US dollar generally means a higher oil price. Remember it was dollar weakness that helped to drive oil prices to $147 last July, and dollar strength popped that bubble (see graph above).

But hold on a moment, how are stock prices going to react to quantitative easing or money printing by any other name? Last week the 20 per cent rally in the Dow Jones stopped and reversed on news of the Fed’s action.

The US stock market will be nervously watching statements this week for more detail of the Fed and Treasury’s plans. However, if you look at share valuations then they are back to the lows of 2003 and that hardly appears low enough for the profit depression now certainly ahead for major companies.

When markets go under such drastic revolutions, we have to be very cautious on our investments. We should seek other means of investments, just like the cryptocurrency to make use of the best in the economic world. We have well developed software systems like the Crypto CFD Trader to ensure profits.

Stock sell-off

Now what happens if shares sell-off again, perhaps in a probably not unjustified panic about the three-year outlook for profits? Then the dollar will rally, precisely as it did last autumn, because stocks will be sold for cash, increasing the demand for the dollar.

That would lower oil and gold prices, just like last autumn. So it might still be too early to go back into stocks, and even to abandon US treasuries. For there is another down leg in the stock market to endure before such a shift should be considered.

All the same, with inflation definitely on the horizon – albeit at some distance – oil and gold will eventually come out on top, and may not suffer as much in the next bear market down shift.

Fed starts printing money, gold up sharply


The surprise move to quantitative easing by the Federal Reserve yesterday caught the market unaware. The $300 billion bond purchase sent gold prices jumping $50 an ounce and must have given a few gold bears a nasty awakening.

Gold prices will surely now go higher as the market digests what the start of printing dollars means for the USA. The Bank of England started printing money a week earlier and its success in lowering yields perhaps encouraged the Fed to take this step into the abyss.

Inflation objective?

For an inflationary abyss is what opens up if these central banks have got their calculations wrong. Or is it that the central banks now think their banking systems are in such bad shape that a good dose of inflation is the only thing that will sort them out?

The Fed sent bond yields tumbling 0.5 per cent just as the Old Lady of Threadneedle Street managed to accomplish. However, the US dollar also took a three per cent tumble, following the pound in yet another competitive global devaluation.

Bond holders gained capital value as yields fell but that gain was immediately eroded by the currency fall. Is this a pattern that we are going to see repeated with more and more printing of money via quantitative easing?

There really is no such thing as a free lunch in economics. Countries with massive budget deficits should be cutting expenditure, and not borrowing more.

Puzzled here are the common people due to these market influencers, inflation especially. Those who are active investors in the cryptocurrencies for example, have to take extensive strategic steps to plan their moves in the highly volatile market. But, auto trading robots such as the Ethereum Code have been a complete guidance.

Buying up your own debt is no more useful that swapping one credit card for another. It is nothing close to sound finance. It is the last act of desperation when there is nothing else left to do.

Inflation and debt

You do not need to be highly qualified in economics to see where this is leading. You flood an indebted banking system with money, you get inflation and the relative value of fixed debt goes down.

But this is not a magic bullet. You get inflation back in the system, and anybody on a fixed income becomes poorer as prices rise. If you are an investor your dollars become worth less, and eventually worthless.

That is why the gold price jumped yesterday. And it is going to go a lot higher as investors reach for a safe haven. Beware being left sat on cash when you should be owning gold and silver as a hedge against desperate actions by the central banks.

UAE federal structure handles crisis well


UAE stocks picked up yesterday on news that the UAE Central Bank is about to lower interest rates as a part of its strategy for handling the global financial crisis.

On the same day it was reported that Abu Dhabi Commercial Bank is to convert $1.8 billion of federal government deposits into Tier II capital and that the Commercial Bank of Dubai is also converting $500 million of federal deposits in the same fashion.

Calm response

The calm and measured response of the UAE Central Bank to the global financial crisis shows federal institutions responding well to the slump in the world economy. The contrast with fellow GCC member Kuwait, with its current political chaos and bank defaults is notable.

UAE bankers say an even more comprehensive response is coming, in particular to address the imbalance between loans and deposits, a matter already highlighted by the Governor of the Central Bank in a recent speech.

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If the UAE is serious about realizing the objective of becoming the region’s banking centre then this is exactly the right way to go about it, and bankers in London and New York will be taking note. It is only in a crisis that systemic strength is tested.

They will be watching the next steps with interest. It seems that far from disengaging from heavily indebted Dubai, Abu Dhabi is seeking a harmonious federal solution to the benefit of all citizens, and residents with employment.

Dream ticket

Harnessing the financial strength of Abu Dhabi to the commercial and entrepreneurial dynamism of Dubai sounds like a winning formula. This is the dream ticket that larger and more systemically challenged countries could only hope to emulate.

That said the UAE is hardly out of the woods entirely with oil revenues set to tumble by half in 2009 and the six-year real estate boom obviously over. Banks will need recapitalizing to meet the strain on their balance sheets and to assist customers through a very tough time.

But looking forward this could still prove to be a seminal moment in the emergence of the UAE federation into an admired, respected and again highly profitable business model.
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