Gold Bull Market Not Yet Manic

he "R-Man" is 85 years old and has been writing about the market since the 1950s. The reason he gives for the above statement is that the psychological pressure to lock in your gains when you face a rough patch is very strong. Few people have the strength of conviction to weather such tough times.
Gold has been acting very strongly. Depending on whether a gold bug or traditional financial writer is telling it, agreement is wide that we are due for a correction, minor or sharp. The more I hear that, the more convinced I am that the correction is further out, and will be smaller than we expect. Central banks are now holding back or even buying gold to replace their rotting dollar reserves. For years they've been dumping their gold to buy dollars. They've wised up.
There have been numerous gut-wrenching corrections on gold's journey in price from a low of $256 back in early 2001 through its recent run past $1,100, but gold has continued to rise inexorably. Each time it pulls back, the media give reasons why it was just a bubble and it's deflating. They're wrong.
Look at the strength in gold just this year.
Gold is simply the inverse of the dollar, which is worth less and less every year. The dollar has its short-term reversals, but that's all they are, just as gold's pullbacks are short-term corrections.

 

BROKER'S WORLD CANADA: RBC Tightens Leveraged ETF Policy

TORONTO (Dow Jones)--Royal Bank of Canada (RY) has opted to be choosy on which type of investors in Canada can purchase leveraged Exchange-Traded funds.
In recent months, RBC Dominion Securities, the retail brokerage arm of the Canadian bank, has started to sell leveraged ETFs only to accounts that have been approved for options trading, given that options are the underlying securities in leverage ETFs.
The new policy is effective for investment adviser-managed fee-based and transactional commission-based acccounts, said Mike Scott, managing director for RBC Dominion.

 

Investors rush to commodity funds

The world's largest commodity hedge fund, Clive Capital, closed its doors to new investors this week, providing a clear illustration of this year's remarkable turnround in investor appetite for commodities.
At the beginning of the year, many commodity hedge funds were being forced to sell holdings to meet investor redemptions.
Clive Capital's move follows a similar decision by prominent commodity fund manager Galena Asset Management, which last month stopped accepting new money into its metals fund.
This strong investor appetite for commodity hedge funds mirrors demand for commodity exchange-traded products and index funds as growing confidence in global economic recovery and China's voracious hunger for raw materials continues to draw large inflows.
Broader based hedge funds have also dramatically expanded their commodity positions.
Suki Cooper, analyst at Barclays Capital, estimates that commodity assets under management reached $224bn at the end of the third quarter, up 36.6 per cent from $164bn at the end of last year.
Although rising commodity prices have boosted total assets under management, about $51.4bn of new money entered commodity markets between January and September, says Barclays.
Robust inflows continued in October pushing total commodity assets under management towards the all-time high of $270bn, reached in the second quarter of 2008, just as crude oil was approaching its all-time high of $147 a barrel.
Ms Cooper says that the lion's share of inflows in the first quarter of the year were captured by exchange-traded products, particularly physically backed precious metal funds.
Holdings in the gold, silver, platinum and palladium exchange traded funds all stand either at or near to record levels, with inflows continuing into the second half of 2009, albeit at a slower pace than in the first half of the year.
At a Credit Suisse conference in September, 51 per cent of managers surveyed said they would increase their level of commodity investment to overweight over the next year, compared with 30 per cent now.
Barclays says ETF inflows have been bolstered by a renewed interest in broad-based commodity indices, which can enhance portfolio diversification and reduce volatility.
"The evidence is that investors continue to value commodity exposure for portfolio diversification and as an inflation hedge," says Barclays: "We expect this trend to continue, with commodities continuing to capture a growing share of the global investment portfolio."
Kamal Naqvi, a director in commodities at Credit Suisse, says commodities are now widely recognised as a key influence over returns from other asset classes. "The outlook for crude oil prices is now an accepted driver of future economic growth and inflation expectations," he says.
But the prospect of further investor interest is viewed as a potentially mixed blessing by some traders, who remain concerned that financial inflows could divorce some commodities from supply and demand fundamentals.
Looking at copper, where prices have more than doubled this year, one senior trader says: "Stocks are rising, consumer demand outside China remains flat and we should expect prices to pull back before year-end.
"Yet prices will remain dislocated as long as money looks for a haven."

 

Meltdown 101: Some signs of strength in US exports

The trade deficit might have widened in September, but try telling that to U.S. jewelry makers, loggers and machine manufacturers who have customers in other countries.
U.S exports rose in September, making steady gains across economic sectors. That strength was hidden by a surge in oil imports, which helped widen the trade deficit for the month. Still, exports jumped 2.9 percent to $132 billion in September as factories sold more goods overseas.
That figure remains well below the all-time high of $164.4 billion set in July 2008. But there was unmistakable improvement during the month. And it might not just be a flash in the pan. If the value of the dollar continues to sink, it could make U.S. goods even more affordable overseas and increase demand.
Some sectors of the economy fared better than others -- with exports of jewelry, machinery and precious metals standing out -- but the improvement was evident across the board. Consumer goods, capital goods like factory equipment and automobiles all rose.
One exception was farm products, with exports of corn, soybeans and other foods falling steeply during the month.
Here's a look at items being shipped overseas, by the numbers.
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BIG TICKET ITEMS
17 percent: September increase in industrial machinery exports, worth $2.8 billion.
3.2 percent: Jump in laboratory testing equipment exports, worth $729 million.
14 percent: Jump in generator exports, worth $860 million.
15 percent: Jump in textile and sewing machine exports, worth $93 million.
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EXPORTING THE FINER THINGS
63 percent: Jump in jewelry exports, worth $715 million.
21 percent: Jump in art, antique and stamp exports, worth $434 million.
23 percent: Jump in glass and chinaware exports, worth $38 million.
2.5 percent: Jump in musical instrument exports, worth $161 million.
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COMPUTER DROP
2.3 percent: Drop in computer exports, worth $989 million.
1.5 percent: Drop in semiconductor exports, worth $3.18 billion.
6 percent: Drop in telecommunications equipment exports, worth $2.3 billion.
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AROUND THE HOUSE
2 percent: Jump in household appliance exports, worth $516 million.
9 percent: Jump in TV, VCR and similar equipment exports, worth $348 million.
7 percent: Jump in rug exports, worth $73 million.
3 percent: Jump in book and printed material exports, worth $449 million.
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DOWN ON THE FARM
32 percent: Decrease in soybean exports, worth $952 million.
13 percent: Decrease in nut exports, worth $292 million.
15 percent: Decrease in rice exports, worth $140 million.
1 percent: Decrease in corn exports, worth $975 million.
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HOT COMMODITIES
30 percent: Jump in precious metals exports, worth $759 million.
30 percent: Jump in copper exports, worth $426 million.
6 percent: Jump in pulpwood and wood pulp exports, worth $634 million.

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Malaysia Central Bank Chief: Forex Volatility Hasn't Been Excessive

SINGAPORE (Dow Jones)--The foreign-exchange market in Malaysia hasn't seen excessive volatility, and trading conditions have been orderly, the country's central bank chief said Saturday.