Gold on Verge of Major Decline; Commodity Currencies Warn of Trend Shift
The US Dollar has been well bid over the past several weeks and we are now nearing the point at which we will soon find out if the rally in the Greenback has been more of a corrective rally within a broader USD downtrend, or if the Buck is attempting to mount a significant longer-term across the board appreciation.
View full post on All Stories
Euro rally fades as contagion fears grip investors
Traders make bolder bets after news of the Irish bail-out offers a positive start to the week, helping lift equities and commodity prices while squeezing the dollar
View full post on All Stories
Foreign Exchange , Fraud
Product Description
If you are a consumer or investor of stocks or precious metals, dabble in foreign currency trading, or trade commodity futures and options on the Internet, then you can’t afford to miss this up-to-the-minute Investor Alert and Fraud Advisory issued by the Commodity Futures Trading Commission (CFTC) itself! Protect your money from financial fraud and learn how to spot the “real deal” versus get scammed by get-rich-quick schemes that offer high-return, low-risk inves… More >>
Australian dollar lifted by stockpiling
Australian dollar hits 26-month high against greenback as data reveal central banks have been adding commodity-linked currencies to reserves
View full post on All Stories
U.N. Calls Emergency Meeting Over Rising World Food Prices
Rome, Italy (AHN) – United Nations officials warned of a major new world food crisis Friday at an emergency meeting over rising international food prices
The U.N.’s Food and Agriculture Organization (FAO) called the meeting in Rome to discuss the looming crisis. FAO officials blame recent environmental disasters as well as rampant speculative trading on commodity futures markets by investors.
Although food prices have not risen as much as they did during the 2008 food crisis, FAO officials were concerned.
“The FAO has recognized a variety of drivers behind food price spikes, such as drought, energy prices and trade restrictions; however, the impact of crude oil prices on food inflation cuts across all national boundaries and has a disproportionate impact on food prices,” said Bliss Baker, a spokesperson for Global Renewable Fuels Alliance.
“As long as we are dependent on crude oil for our primary source of energy, we will continue to see food prices climb as crude oil prices climb,” Baker added.
However, other forces are at work to increase food prices, according to the U.N.’s special rapporteur on food, Olivier De Schutter. In a paper released earlier this week, De Schutter said that as other investments turned sour and lost investor interest–including overvalued asset backed securitization investments–investors looking for profits flocked to invest in food commodity futures because everyone must eat.
“Beginning at the end of 2001, food commodities derivatives markets, and commodities indexes in particular began to see an influx of non-traditional investors, such as pension funds, hedge funds, sovereign wealth funds, and large banks that packaged and dealt the commodity index instruments,” De Schutter wrote. “The reason for this was simply because other markets dried up one by one: the dotcoms vanished at the end of 2001, the stock market soon after, and the U.S. housing market in August 2007.”
“As each bubble burst, these large institutional investors moved into other markets, each traditionally considered more stable than the last. Strong similarities can be seen between the price behavior of food commodities and other refuge values, such as gold. As the European Commission notes, the prices of both had been largely stable, began to rise slowly in 2005, and accelerated sharply in August 2007, when the subprime crisis hit. Similar behavior obtained in oil markets, which hit the $100 per barrel mark in February 2008 and peaked in June 2008, only to fall back subsequently,” De Schutter said.
De Schutter calls for regulation of the food commodity markets in a report titled “Food Commodities Speculation and Food Price Crises, Regulation to reduce the risks of price volatility.” The full report is available at: srfood.org/images/stories/pdf/otherdocuments/20102309_briefing_note_02_en.pdf
View full post on All Stories
Market Risk – Not To Be Ignored or Overlooked
The first of a two part article….
Fund managers, whether they be equity or bond traders, know all too well that returns are not simply a result of their asset selection prowess. Many external factors come into play. But what are the issues facing the professional money manager.
Commodity Trading Advisor, Genuine Trading Solutions of Toronto, find not all fund managers analyze their market risk. The company explains this is often due to a lack of education and a failure to understand the mitigating solutions for off-setting risk.
Genuine Trading Solutions President, Dwayne Strocen explains market risk as “the unexpected financial loss following a market decline due to events out of your control.” He goes on to explain that stock or bond market volatility or market reversals can be the result of global events happening in far flung corners of the globe. Top analysts and fund managers simply do not have the resources to crystal ball gaze and predict those events.
Examples of several major unexpected events that sent shock waves throughout the financial community have been:
- 1982 Mexican Peso devaluation;
- 1987 stock market crash knows as “Black Monday”;
- 1989 USA Savings and Loan Crisis;
- 1998 Russian Ruble devaluation;
- 1998 $125 billion collapse of Hedge Fund Long Term Capital Management;
- 2006 collapse of Hedge Fund Amaranth with losses of $5.85 billion.
In 1994 Bank J.P. Morgan developed a risk metrics model known as Value-At-Risk or VaR. While VaR is considered the industry standard of risk measurement, it has its drawbacks. VaR can measure total dollar value of a funds risk exposure within a certain level of confidence, usually 95% or 99%. What it cannot do, is predict when a triggering event will occur or the magnitude of the subsequent fallout. For some company’s and funds, a steep decline or protracted recession can be devastating. Even forcing some un-hedged firms into bankruptcy. A triggering event can have a ripple effect forcing people out of work and economies into recession effectively putting more people out of work. No person and no economy is immune.
If you own a mutual fund, chances are your fund is un-hedged. Until recently, mutual fund legislation prevented mutual funds from hedging. Many jurisdictions have repealed this rule however mutual fund managers have been slow or decided to continue with ‘business as usual”. The reason is that most investors of mutual funds are unsophisticated and do not understand the hedging process and may re-deem their money from an investment strategy they do not understand.
Hedge funds on the other hand do not have these restraints. Investors are more sophisticated and are more open to the nature of hedge fund strategies. Some of which are not disclosed due to a fear of piracy by competing hedge fund managers.
Risk reduction solutions are not complicated but do require the services of a professional who understands the process. This is the role of Commodity Trading Advisor firms such as Genuine Trading Solutions, also known as a CTA. President, Dwayne Strocen states that while most CTA’s are hedge fund managers, few specialize in risk management analytics. Our focus is on the analysis of solutions to reduce or eliminate market and / or operational risk. No matter the role, all Commodity Trading Advisors are specialists in the derivatives market.
The first step is the value at risk calculation to determine a funds risk liability. A risk mitigation strategy known as a hedge is then implemented. After all, identification of one’s risk is only beneficial if a solution to off-set that risk is put into place. Hedging requires the use of derivatives, either exchange traded or over-the-counter. They can take many forms. The most commonly used hedging instruments are index futures, interest rate futures, foreign exchange, exchange traded commodities such as Crude Oil, options and SWAPS.
A more detailed explanation of derivatives and hedging will be discussed in our next article. Now that we’ve identified an easy solution for your market risk worries, the implementation of the right strategy can be as easy as a call to a qualified and registered Commodity Trading Advisor.
Forex Blog – FREE Forex Tips and Resources! Click Here To Get All You Need To Know About FOREX! Article Source:http://www.articlesbase.com/currency-trading-articles/market-risk-not-to-be-ignored-or-overlooked-1775139.html
-
Day Trading Guide- Swing Trading System Automated Forex Trading – Many Advantages
- Why You Should Be Using Automated Forex Trading System To Leverage Your Time And Earn a Passive Income while You Sleeping
- Wall Street opens higher Friday fueled by a strong jobs report
- Court rules for Motorola and makes Apple pull iPads and iPhones in Germany
- How an Automated Forex Trading Software Helps You Become a Successful Forex Trader
- Never so divided, never so united
- President Obama lauds as U.S. Senate reigns in insider trading by lawmakers
- U.S. Senate puts lid on multi-million dollar bonuses of Freddie, Fannie
- French mapping firm wins $660,000 damage against Google
- The Basics On Stock Trading
- Trade Online, Online Opportunities
- Business Credit Information
- Honda widens recall for airbag problem
- GM CEO: Earnings good, but not good enough
- Chinese companies buying automaker Saab
- Suzuki demands VW return shares after alleged contract breach
- Chrysler has best September since 2007
- Honda recalls million cars worldwide
- General Motors to manufacture plug-in Cadillac ELR plug-in hybrid electric car
- GM earnings soar 92 percent on global sales
- Volkswagen postpones MAN supervisory board takeover
- Business Loans
- Consumer credit card debt down
- Remittances to developing countries rebound
- Fixed mortgage rates steady near 4 percent
- Bank fee hike gives credit unions a boost
- Study: Canadians want to retire at 63
- Study: Growing number of college grads filing for bankruptcy protection
- Survey: Canadians expect to be free from debt when they reach 55
- Monthly Payments Lowered on Defaulted Debt?
- Number of hacked Citi credit card accounts rises to 360,000
- Virgin Atlantic pilots vote to strike over lack of pay increase
- Private Personal Loans
- Never send money to relatives using Paypal
- Prevent Banks from Holding Checks
- Sending Money Abroad – Western Union Alternatives
- Rent to Own Furnishings – A Rip-Off?
- Are Canadian Housing Prices at the Top?
- Low Interest Credit Card Checks
- U.S. lawmakers aim to lure foreigners to buy American homes
- BoE pushes banks to cut bonuses, dividends to improve balance sheets
- No monetary penalty for Fannie, Freddie in proposed settlement
- U.S. to sue big banks over risky mortgages
- personal loans
- Mass. Governor Patrick disappointed in Bruins goalie’s snub of Obama
- Mortgage rates hit another record low
- Big hack attack on Israel inevitable, say experts
- U.S. stocks slip in early trading Wednesday after successful Italian debt auction
- Just a second: Butler rallies past Purdue on Andrew Smith’s late tip-in
- Debt woes come back to haunt Dubai
- Mortgage rates approach record lows
- Clinton sets out new U.S. focus
- America’s Growing Income Gap, by the Numbers
- Flying high: Falcons defense prevails in victory over Lions
- Personal and Business Loans
- Roseanne Barr running for president
- Weak U.S. dollar keeps gold glistening
- Mass. Governor Patrick disappointed in Bruins goalie’s snub of Obama
- Nation’s Mayors Support Gay Marriage But Complain About Unemployment
- Allied forces lose 10 soldiers in separate Afghanistan incidents
- Red-hot Senators one of the surprise teams in the Eastern Conference
- U.S. unemployment claims rise to 399,000
- E-commerce lures Mideast shoppers
- Myanmar president Sein uses Independence Day to reaffirm army role
- Dow ended final trading day of 2011 down, closed up for the year
