Daniel Kertcher: Market Update April 2013




Stuart Zadel :: Napoleon Hill » Podcast Feed show

Summary: Hi, Daniel Kertcher, CEO and founder of Trading Pursuits. Welcome to the monthly market recap for April 2013. Now, before we get started, there’s just a couple of quick things I need to share with you. Number one, what you’ll hear in this presentation is what we call general advice, it’s not individual specific advice. Furthermore, we haven’t taken into consideration your personal financial objectives. Number three, trading involves risks, past returns do not mean we’ll get the same returns in the future. And finally, we hold an Australian financial services license. Ok, now one of the big things to talk about this month is the gold price. As you may have heard, in the last couple of days, the gold price has fallen, one of the biggest two day drops we’ve had in over 30 odd years. In fact, the gold price has fallen about 15%. Now it’s started to rebound in the last day or so. Let’s zoom in now and a have a closer look at the gold price. Here you can clearly see how the gold price has fallen about 15%. I can say that’s one of the biggest drops we’ve seen in 20 years, 30 years in fact. You’ve got to ask yourself why is this happening. In times of high financial uncertainty, when the markets aren’t sure what’s going on, which is definitely the case… I mean, last month we were talking about the cypress scenario, which at that time seemed to be perhaps the reason for the markets to fall back but as it was it didn’t. The market stayed pretty strong. However, there’s still an ongoing uncertainty with Japan, with Europe, with the American economy. So, you would think then that investors would be scrambling to buy gold which is seen as a hedge or a safe haven in times of high financial uncertainty. Instead however, we’ve seen a massive drop in the price of gold. Now, who are the buyers of gold? Well we know around the world that China is one of the biggest buyers of gold in the world. China shut down their exports some years ago. That means all the gold that they mine in China, they keep in China. They don’t export it. On top of that, China has been a net buyer of gold, a net importer of gold now for many, many years. In fact they’re importing hundreds of tons of gold per year. China is stockpiling gold, as is India. India is a huge net importer of gold. With these massive big forces buying the gold, surely China and India didn’t both decide to dump their gold reserves in just a couple of days. No. As it seems to be with the news we’re finding through the market now is it seems that there’s been basically a concerted attack on the price of gold helping to drive the price of gold down. Well, who’s been doing this? Well essentially what we call short traders, people who are selling gold using what we call paper gold or synthetic gold. These are gold scripts that trade on the stock market or in the futures contracts, which don’t actually represent physical gold. It’s a little bit technical to talk about in this particular presentation. However, what we’re seeing though is a concerted effort to try to drive down the gold price. Now who is this helping? Well essentially it’s helping anyone who’s looking to purchase physical gold, because it’s brought the price back down. But it’s also helping the international central banks; those central banks of western countries… namely America, Europe, Japan – particularly these countries that are printing a lot of their own currency at the moment such as America and Japan. America is printing in excess of 80 billion dollars a month. Now, if the demand for the US dollar continues to fall around the world, and the uncertainty continues to climb, then investors are going more and more after gold. Now that’s not a good thing for the American economy. America wants the US dollar to remain strong. So, one way to try to scare off investors from buying gold and drive them back into US dollars would be to try to manipulate the gold price. Now of course I can’t point to any one particular group that[...]