Oil Market to re-balance by mid-year

Supply side issues continue to drive sentiment in the crude oil market, strategists at ANZ Bank apprise.

“Saudi Arabia aims to pump just under 7.5mb/d in June, compared with its official target of 8.5mb/d. This would take its output to the lowest level since mid-2002. The United Arab Emirates also announced it would cut by an additional 100kb/d in June.” 

“Continental Resources expects the market to re-balance by mid-year, and will reopen oil wells quickly once prices recover.”

“And while demand appears to be recovering, there are also doubts as to its timing. In the US, the volume of fuel sold by retailers rose by only 7% in the week ending 2 May. In Europe, the varying degrees of lock-downs continue to hobble demand.”

Further downside still on the cards


Traders increased their open interest positions for the second day in a row on Monday, now by nearly 5.2K contracts in light of advanced figures from CME Group. In the same direction, volume extended the erratic performance and went up by almost 94K contracts, partially reversing the previous large drop.

WTI could re-visit the $20.00/bbl mark


Prices of the WTI appear to have met important resistance around the $28.00 mark per barrel. Monday’s correction lower was amidst rising open interest, which is indicative that a deeper pullback could be in the offing in the short-term horizon.

Gold prices forecast largest annual rise in 9 years

Futures prices trade over 15% higher this year


Gold prices look to end the year more than 15% higher, on track to post their biggest annual climb in nine years.

“Gold has seen considerable safe haven buying from investors concerned [over] low and negative yields in the bond market and fearing a possible downturn in equities,” said George Milling-Stanley, chief gold strategist at State Street Global Advisors. Gold exchange-traded funds have also been “feeling the benefit of strategic asset allocation type buying by institutions and individuals.”

“Ongoing uncertainties, both macroeconomic and geopolitical have provided support for both types of buying,” he said.

On Friday, gold futures GCG20, +0.07%  settled at $1,481.20 an ounce, with prices based on the most-active contract up 15% year to date. That would make the largest yearly rise since 2010, when prices climbed by nearly 30%, according to FactSet data.

Milling-Stanley said he was surprised with the speed of gold’s move up through the $1,350 level this past summer. That “constituted the upper bound of the trading range that had been in existence for six years, since the spring of 2013,” he said.

Helped by Federal Reserve Chairman Jerome Powell said in June that he would “make a mid-cycle adjustment and give the markets the interest rate cut they had been clamoring for, gold rapidly rose to over $1,550 an ounce by September,” said Milling-Stanley.

Gold futures prices peaked this year at $1,560.40 on Sept. 4, the highest settlement since April 2013.

After cutting interest rates three times this year, the U.S. central bank on Dec. 11 held its benchmark interest rate steady at a range of 1.5% and 1.75%.

Gold has some gains in the wake of the latest policy announced, but it’s done very well from a larger time perspective.

In the decade from early 2001 to late 2010, prices for the metal climbed from $250 an ounce to $1,250 an ounce, for an “average gain of $100 per year,” said Milling-Stanley. He largely attributed that rise “to increasing jewelry purchases throughout the emerging markets on the back of sustained good economic growth in the region.”

“Speculative activity” drove prices up by $500 in just nine months in 2011, then as that speculative interest waned, gold prices fell back to the $1,250 level in the spring of 2013, he said, adding that while he is “hoping for modest, sustainable gains in gold over the coming years,” he is also “acutely conscious of the power the speculative community can have over gold in the short term.”

Next year, however, gold may face some challenges.

“The uptick in inflation prospects is likely to be challenging for gold” in the first half of 2020, said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “Higher inflation likely leads to higher interest rates, which could dampen demand or gold.”

A “more stable global economic regime, with or without a trade deal, would also undermine safe-haven demand” for the precious metal, he said. So a further gain in gold would likely “require additional interest rate cuts and rising supply of negative interest rate bonds around the world,” says Haworth, though he also cautions that an uptick in inflation expectations would undermine these catalysts.

Meanwhile, looking much further out to the next decade, Milling-Stanley said it’s “possible” for gold to see similar moves to the ones it’s seen in the past decade.

“I don’t believe the speculative community will want once again to risk missing the first 10 years of a bull market in gold, and the first $1,000 rise in the price, as it did at the beginning of this century,” said Milling-Stanley.

If you would like to learn how to take advantage of the increased value of Gold via a solid investment, however you keep control of your funds, please email support @ forshawcapitalgroup.com for a no obligation discussion and brochure.

Invest in Gold

Is now the time to Invest in Gold?

If the stock markets plunge and the world economy becomes compromised, one hard asset normally has its moment to shine in the spotlight.

In recent weeks, as markets worldwide have corrected sharply and a full-blown trade war between two of the globe’s powerhouses – the United States and China – looks increasingly likely, the gold price has rallied.

From a year low in August of $1,180.40 an ounce, it rose to $1,233.85 by the end of last month before falling back slightly and then rising again to $1,232.

Although the price remains lower than it was this time last year, there are some investment managers who now believe gold has a key – if minor – role to play in putting together a diversified portfolio.

One such individual is David Coombs, head of multi-assets at investment house Rathbones. Normally sceptical of gold as an asset class, he has built a three per cent holding in the £532 million Rathbone Strategic Growth Portfolio that he manages – a fund aiming to provide investors with returns in excess of inflation. It does this by investing in a broad range of assets including equities, bonds, private equity and commodities.

‘My long-term view on gold has not changed,’ says Coombs. ‘If you like it, wear it and don’t invest in it. Gold provides no income which is a big ‘no no’ for many investors, especially when interest rates are on the rise and cash and bond yields become more attractive.

‘But given the uncertain times we are currently living through here in the UK with all the speculation over Brexit, I do believe it has a role as a hedge.’

According to Coombs, the hedge is against the threat of ‘stagflation’ [economic stagnation combined with inflation] triggered by a Brexit deal not being done.

‘The UK economy is vulnerable to stagflation if a Brexit deal is pushed out,’ he explains. ‘Businesses will stall on capital investment projects and we could see UK economic growth slow and unemployment rise with inflation persisting – the ingredients for stagflation. If that happens, gold will represent a store of value.’

Investment trusts Personal Assets and Ruffer both have exposure to gold. Like Coombs’ fund, both Personal Assets and Ruffer are broadly diversified and are designed to maintain the real value of investors’ holdings. Personal Assets currently has eight per cent of its assets in solid gold (bullion) while Ruffer has seven per cent exposure through shares in gold mining companies.

Jason Hollands, of wealth manager Tilney, says some of the portfolios it runs for private clients have around two per cent exposure to gold. He says: ‘We do not see gold as a low-risk asset per se. Gold prices have at times endured long losing streaks and out of the last five consecutive 12-month periods, four have seen the gold price fall. ‘Also, a strong dollar is not good for gold because it means the currency is seen as a safer haven. Indeed, a strengthening dollar is often accompanied by a weakness in the gold price.

The cheapest and most straightforward approach is to buy an investment that tracks the gold price. These are called exchange traded funds . They can be bought through a stockbroker and most fund platforms.

Physical gold (bars and coins) can be bought from bullion dealers – Buyers can ask to have it stored, for a charge, or delivered.

SOURCE : Dailymail

Bank Instruments

Earning at HSBC’s investment bank vs. Goldman Sachs

It’s bonus day at HSBC today. Following the unexpected departure of Matthew Westerman, the ex-Goldman Sachs head of HSBC’s global banking group in November last year, all eyes are on how much HSBC pays its investment bankers. The compensation report accompanying today’s annual report suggests HSBC might actually pay them quite well.

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trade programs

EU takes eight countries off its tax haven blacklist

Campaigners accused the EU of going soft on tax dodgers

The European Union has taken eight countries off its tax havenblacklist after they apparently took measures to “remedy” EU concerns about their approaches to tax dodging.

Panama, Barbados and Grenada were among states that fell off the list, which now numbers only nine nations – amid claims by campaigners that ministers were “undermining” the process.

The three countries, as well as South Korea, Macau, Mongolia, Tunisia and the UAE, will now move onto a “greylist” of countries that the EU has concerns about but which it thinks are in the process of improving their approach.

Countries on the greylist can be moved back onto the blacklist if they fail to improve quickly enough, but this has not happened yet.

Fair tax campaigners reacted with dismay when the list was introduced late last year because of its narrow scope and omission of a number of notorious tax havens, including British overseas territories. On Tuesday, NGOs further hit out at the decision.

“The EU is rushing to take countries off the blacklist without it being clear what they have actually committed to improve; this is further undermining the process,” said Aurore Chardonnet, Oxfam’s EU policy adviser on tax and inequality.

“It is no secret that tax havens remain at the heart of the EU, with four European countries actually failing the EU’s own blacklisting criteria.

“EU governments should tackle tax havens within the EU with the same urgency they are pressuring other countries to adopt tax reforms that were decided by an exclusive club of rich countries.”

Markus Ferber, center-right MEP and vice-chair of the European Parliament’s economic committee, said: “Today’s decision is a confession of failure. Crossing Panama, one of the world’s most prolific tax havens off the blacklist, is a disastrous sign in the fight against tax avoidance.”

The decision to remove the countries was made by EU finance ministers in Brussels when they met for their monthly Ecofin  meeting.

Ministers agreed the move after a recommendation by EU tax experts in the Code of Conduct Group.

Vladislav Goranov, finance minister of Bulgaria, which holds the rotating EU presidency, said: “Jurisdictions around the world have worked hard to make commitments to reform their tax policies. Our aim is to promote good tax governance globally.”


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