21 February 2015

GOLD & SILVER OUTLOOK FOR 23 FEB 2015


Gold was little changed on Friday as investors eyed talks over Greek debt, but the metal was headed for its fourth straight weekly dip as a last-minute deal was expected to break the impasse over the Mediterranean country's bailout program me.Gold had initially seen some safe-haven bids as the uncertainty over the Greek crisis dragged on, but market concerns eased on hopes that a deal would be patched together. Spot Gold is at $1207. MCX Gold Apr is currently trading at `26278. It is trading up by `12 points for the day. Comex Silver is at $16.43. whereas MCX Silver Mar is currently trading at `36497,it is up by `77.

Gold
Feb 2015
Bullish Trend-26070, s1-25934 s2-25934,R1-26314 , R2-26487

Silver


Silver
Mar 2015
Bullish Trend-36170,s2-35698,R1-36670 ,R2-37030

14 February 2015

IT'S REFORM TIME IN COMMODITY MARKET

Government seems to have  learnt  from  Rs. 5600 cr scam in NSEL ( National Spot Exchange) . After  the NSEL scam the turnover in the commodity exchanges has gone down drastically . For growing economy like India , we cannot afford the same.  In commodity exchange in the need of the hour is  right price discovery for the commodities that are being traded , however   due the reduced turnover market lacks depth and the objective is  not achieved.
Control of FMC shifted to finance ministry
The important step that has been taken  is the control of FMC (  Forward Market Commission )  the regulatory body of commodity exchanges has been shifted from consumer affairs ministry to finance ministry , however still lacks administrative free dom. The ultimate aim should be all the exchanges be it commodity , equity , currency should  be brought under the control of SEBI  with  requisite authority for effective  control , monitoring and prevention of scams .
Enhancing liquidity
FMC is considering   to introduce  “ market makers “  to  increase  turnover.  The price is the resultant  of trading which is outcome of supply and demand forces./  For this it is going to introduce  “ liquidity enhancement mechanism “ ( LES ) to encourage the brokers to participate activity and this create market makers.  Market maker is a  broker-dealer firm that accepts the risk of holding a certain number of units ( contracts)  of a particular commodity  in order to facilitate trading in that commodity  Each market maker competes for customer order flow by displaying buy and sell quotations .
Entry of FIIS and  commercial banks
The cost of transactions  in commodity market is high , in order to address this problem RBI is considering to allow the FIIs ( Foreign Institutional  Investors) and commercial banks to trade in commodity markets , this will serve the dual purpose  of  increasing the turnover in the market and  bring the cost of transactions down.  With increase turnover the will also serve the objective of right price discovery. At present commercial banks are not allowed to trade in commodity market under  Banking Regulation Act . However  government is considering amending the act  so that banks can participate in this market.  This will make the commodity exchange more live and active which had gone into huddle after NSEL scam broke out.
The flip side of FIIs participation
The FIIs have got massive financial power and the same has been demonstrated in the equity market  Indian stock market is virtually controlled by FIIs.  This may lead to  volatility  in commodity  spot prices and can  be serious cause of concern especially for agricultural commodities . Hence RBI and government  should strike the balance by equal participation by commercial banks and domestic financial institutions so that volatility   can be reduced to large extent and FIIs do not take the control of commodity markets .
Overall  it is  good that government  had decided to reform  the commodity markets as well , however  it  should be done with cautious and long term beneficial approach to benefit our economy

7 February 2015

An Overview Of Commodities Trading

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Commodities markets, both historically and in modern times, have had tremendous economic impact on nations and people. The impact of commodity markets throughout history is still not fully known, but it has been suggested that rice futures may have been traded in China as long ago as 6,000 years. Shortages on critical commodities have sparked wars throughout history (such as in World War II, when Japan ventured into foreign lands to secure oil and rubber), while oversupply can have a devastating impact on a region by devaluing the prices of core commodities.
Energy commodities such as crude are closely watched by countries, corporations and consumers alike. The average Western consumer can become significantly impacted by high crude prices. Alternatively, oil-producing countries in the Middle East (that are largely dependent on petrodollars as their source of income) can become adversely affected by low crude prices. Unusual disruptions caused by weather or natural disasters can not only be an impetus for price volatility, but can also cause regional food shortages. Read on to find out about the role that various commodities play in the global economy and how investors can turn economic events into opportunities.
The four categories of trading commodities include:
  • Energy (including crude oil, heating oil, natural gas and gasoline)
  • Metals (including gold, silver, platinum and copper)
  • Livestock and Meat (including lean hogs, pork bellies, live cattle and feeder cattle)
  • Agricultural (including corn, soybeans, wheat, rice, cocoa, coffee, cotton and sugar)
·         Ancient civilizations traded a wide array of commodities, including livestock, seashells, spices and gold. Although the quality of product, date of delivery and transportation methods were often unreliable, commodity trading was an essential business. The might of empires can be viewed as somewhat proportionate to their ability to create and manage complex trading systems and facilitate commodity trades, as these served as the wheels of commerce, economic development and taxation for the kingdom's treasuries. Reputation and reliability were critical underpinnings to secure the trust of ancient investors, traders and suppliers.