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Bullion Research Report

Bullion Research Report

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Published by Integer Financials

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Published by: Integer Financials on Nov 08, 2010
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Kundan Narkhede.
Research Analyst, Commodities
[October 19, 2010]
[Current Scenario in Bullion] 
 As per technical views are concerned Gold and Silver have been
climbing pretty well since last few weeks. It wasn’t just the technical
analysis signal but it also had fundamental support as there were globaleconomic concerns in ev
eryone’s mind. As the global economic conditionswere rising, gold and silver also called as “Safe
Currency” were being
bought in huge quantity by investors to hedge their portfolio and it can bealso termed as shift of volume from risky assets to safe assets. WhenGreece, Portugal and Spain were being saved by the IMF and ECB(European Central Bank) all investors were considering it as a sign of 
recovery in global markets, but it wasn’t the case.
  At the same time few months back Base metals were hit hard by allthese global economic concerns and were trading at 52 week lows. But inthe recent weeks as the news of recovery in global economy started to come,base metals started to cover the grounds as much as possible but still theywere left behind by Bullion.
October 2010]1
Gold and silver also referred to as “Safe Heaven Currencies” as they are precious
metals. Gold made high of $1387 per ounce and Silver made high of $24.90 per ounce, whichare their life time highs. This could explain a little about the risk which is involved in theglobal markets. As investors and ETFs are buying bullions to hedge their portfolio. Currentlydeveloped countries like US and China are taking steps to bring the economy back on track,which has led them to monetary tightening. Whereas Ireland is in trouble again and
Ireland’s government bonds rating are also being downgraded which has given boost to the
bullion to go up.
There was time fewmonths back when gold wasstruggling near $1157 per ouncein the end of July; only fewanalysts expected that gold couldclimb up to $1387 per ounce. Thennews came around regarding CallOptions which were being boughtby investors in COMEX for the strike price of $1500 per ounce. News from the developedcountrie
s wasn’t that good to support risk class assets
. Global Economy was lookingvulnerable and investors started to diverse their portfolio by buying gold. As gold has alreadytouched the lifetime high of $1387 per ounce, investors are still expecting some upwardmovement. As of now gold is trading around $1350 to $1370 per ounce and investors are bookingprofits around these levels, which could mean only one thing that is; investors are stillinterested in buying yellow metal. And we personally expect it to touch highs in range of $1420 to $1460 per ounce in coming months. Only level which is very important in Gold is $
1325 per ounce, if gold sustains below this level could mean only one thing that is “BearTrend” formation.
Gold & Silver has touchedhighest level recently and theyare still trading near to it, whenglobal economy is still in trouble.
October 2010]2
Silver also referred to as another safe haven currency and also a very importantmetal used in the various industries. There was a time when silver was trading around $17per ounce and it was struggling to breakout from that level. As there were economic concernsand which was hitting hard base metals, at that point of time investors were confusedwhether to buy it or to sell it. When Silver broke out of the $17 to $19 per ounce range, it waspretty clear that silver has had good chances of touching new highs. And as economicconcerns started to grow around the globe, investors also started to buy silver; another safehaven currency.US government is taking steps to bringing the economy back on track; FederalReserve is thinking of further monetary policy tightening. Also Chinese economy has notbeen improving as expected which has put investors in more dilemma about the globalmarkets. European side is quite a little now after the IMF & ECB (European Central Bank)saved the countries like Greece, Spain and Portugal which were on the verge of bankruptcy.IMF and ECB paid approximately $1 trillion. After this rescue work, as the dust of risk of settling down then came another shocking news from the Ireland which was in trouble yetagain.Currently silver is trading in $24 to $24.50 per ounce; we personally expect silver totouch highs of around $25.20 to $25.60 per ounce in near future looking at the currentmarket conditions.In recent news when US government took steps to bring the economy back on trackand made changes in the monetary policies, whereas china raised its lending rates which hadthe negative impact on the yellow metal as well as silver. As European countries are stilltrying to make up the grounds they have lost in past few months, here another developedcountries are in trouble again. As the technical analysis speaks, we feel that the current time when gold and silverare coming down from its recent high is just an profit booking or it can also be said as theyare making their base for further appreciation in near future.Only level to watch for in the silver in $ 23.20 per ounce, which is very importantlevel and if it sustains below it for sometime then it might for bearish trend.

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