SPDR Gold Trust (ETF), NYSE:GLD, iShares Silver Trust (ETF), NYSE:SLV, United States Oil Fund LP (ETF) NYSE:USO

The Overall Fundamentals

The commodity market saw lots of volatility last week. A number of factors sent prices diverging.

Early in the week, the IMF revised down its growth forecasts for the US, Japan and the UK and left the Global GDP forecasts unchanged.

The World lender warned that risks posed by disruptions in Crude Oil production and spikes in Crude Oil prices on Global economic growth are skewed to the Southside.

Its comments were voiced by the International Oil Agency (IEA) that stated, “Crude Oil prices above 100 would hurt demand.”

Crude Oil sold off earlier in the week, but recovered on a report saying Saudi Arabia has cut its production this month, reversing the outputs it increased to offset Libya’s Crude Oil supply in March.
Precious Metals

After falling early last week in tandem with Crude Oil prices, Gold reversed all its losses, and made new highs Thursday and Friday.

The benchmark Comex Gold contract rose to an all-time high of 1489.1 oz before closing at 1486 oz, + +0.81% on the week.

Lots of factors boosted the precious Yellow metal last week: sovereign crisis in the European periphery, rising inflationary pressures, weakness in the USD and ongoing tensions in the MENA region. These events are expected to continue, and will support Gold’s up-trend IMO.

Silver took Gold’s cue and rose too. The White metal continues to outperform the Yellow one, taking the Gold/Silver ratio to below 35.

Investment demand remains Strong with retail purchase particularly Strong. While I expect the Silver price to continue to rise with its moniker as “Poor Mans Gold”, weakness in fundamentals may cause a sharp correction in prices anytime in here.

Base Metals

The complex got hammered last week on the back of tightening worries in China. Apart from monetary policy, players are concern about the demand outlook.

Recent FX measures in China have raised worries over import financing too. On March 30, the State Administration of Foreign Exchange (SAFE) announced it would cut domestic financial institutions’ short-term overseas borrowing quotas from April 1.

It also reduces the net amount of RMB (Yuan) forward contracts that some banks can sell to clients.

Meanwhile, China’s regulator will strengthen the foreign exchange administration of “entrepot” trade. If the income to be settled or credited to the current account is higher than 20% of the payment for the commodity imported, the company will have to seek permission from local foreign exchange bureaus. This rule may reduce import financing for some firms.

That said, the impact on imports should be short-lived IMO, and will not change the Big Picture. The demand/supply outlook for Copper, was and remains tight. Substantial supply shortage will continue to support the Copper price.
Crude Oil

Crude Oil fell early last week too, as the IMF warned of the threats in Global economic slowdown by high commodity prices.

At the April World Economic Outlook (WEO), the World lender stated that rising food and commodity prices pose ‘a threat to poor households, adding to social and economic tensions, notably in the Middle East and North Africa (MENA) region.

While disruptions in Crude Oil production and rises in Crude Oil prices to date will have ‘only mild effects on economic activity’, risks are on the ‘Southside’ with ‘falling spare Oil production capacity’.

The International Energy Agency (IEA) said in its monthly report that Crude Oil prices above 100 bbl are detrimental to growth.

Crude Oil prices were also pressured as 3 major Oil agencies (EIA, IEA and OPEC) increased their forecasts on non-OPEC supplies. Despite a recovery since the middle of the week, the Crude Oil market recorded a small loss on the week.

Gasoline was an exception with the front-month Nymex contract gaining some, by +0.87% to settle at 3.289.

The -7 mmb decline in the Gasoline stockpile in the week ended Apr 8 was a Key price driver. While its normal for Gasoline inventory to decline ahead of Summer, recent draws have been huge.

The Gasoline inventory fell below last year’s level and 5-yr average in early and late March respectively.

Players may be amazed by this as US Gasoline demand growth has been mild since the beginning of the year.

Demand slipped -1.33% in January, followed by an average +0.48% increase in February and March.

Note: growth rates for February and March were calculated using weekly data which are subject to revisions, usually downward, in coming months.

It is suggested that a large volume of Gasoline went to Mexico as well as some other Latin American countries including Argentina and Brazil. According to the DOE/EIA, over 90% of the exports are shipped from the US Gulf Coast and about 70% of the exports go to Mexico.

The Overall Technicals
Comex Gold (GC)

Gold’s up-trend extended to new record high of 1489.1 last week and closed strong at 1487.1. My target of 61.8% projection of 1155.6 to 1432.5 from 1309.1 at 1480.2 has been met.

My initial bias is tn the Northside this week for 1500, the psych mark, 1st and then 100% projection of 1309.1 to 1445.7 from 1380.7 at 1517.3.

On the Downside: a clear break of 1445, Key support, is needed to signal short term Topping. Barring that my outlook is Bullish even if there is a pullback.

The Big Picture: Gold’s long term up-trend is in progress, and regaining momentum. That said, I will stay Bullish as long as 1380.7, Key support, holds, and again expect the current up-trend to target 1500, the psych mark, next. Further acceleration will lead the way to 100% projection of 1155.6 to 1432.5 from 1309.1 at 1586 IMO.

The Long Term Picture: the rise from 681 is treated as resumption of the long term up-trend from the Y 1999 low of 253. 100% projection of 253 to 1033.9 from 681 at 1462 is already met, and there is no sign of reversal in here. Continued strong trading above 1462.6 possibly leads the way towards 161.8% projection at 1945.6 in the longer term. Stay tuned…

Comex Silver (SI)

Silver’s up_trend extended further to 43.05 last week, just below medium term projection target of 43.71. At this point, there is no sign of a reversal.

My POV is Bullish, and sustained trading above 43.71 targets 161.8% projection of 17.735 to 31.275 from 26.30 at 48.208 next.

The 4 hrs 55 EMA, now at 40.489, indicates that a short term Top is formed, and should bring pull back to 39.70 support and below I believe.

The Big Picture: the long term up-trend in Silver is still in progress, and is regaining momentum. This rally will likely extend towards 261.8% projection of 8.4 to 19.5 from 14.65 at 43.71. A clear break there targets 50, the psych mark, next, and a clear break of 36.74, the Key support, is needed to be the 1st signal of medium term Topping. Barring that, my medium term outlook is Bullish on Silver

The Long Term Picture: Silver’s up-trend from its Y 2001 low of 4.01 is still in progress. I am staying Bullish as long as 21.44, Key resistance turned support, holds, and expect the up-trend to extend further to 261.8% projection of 4.01, the Y 2001 low to 21.44, the Y 2008 high, from 8.4, the Y 2008 low, at 54.03. Stay tuned…

Nymex Crude Oil (CL)

Crude Oil fell to 105.31 last week, but formed a temporary bottom there, and recovered. My initial bias is Neutral this week, and some sideway trading could be seen. With 110.24,the minor resistance, intact, another fall could come on, and a move below 105.31 will extend the correction from 113.46 lower IMO.

But, Strong support should be seen above 96.22, Key support, to resume the larger up-trend. A break above 110.24, minor resistance, will turn intra-day bias back to the Northside for retreating 113.46 resistance 1st. A clear break there targets a 100% projection of 33.2 to 83.95 from 64.23 at 114.98.

The Big Picture: the medium term rebound from 33.2 is in progress and a Stronger rise should be seen towards 100% projection of 33.2 to 83.95 from 64.23 at 114.98.

But, there is no change in my POV that this rally is the 2nd wave of the consolidation pattern that started at 147.27, the Y 2008 high. So, I will start to look for reversal signal again above 114.98 projection level. But, remember, a clear break of 96.22, Key support, is needed to indicate medium term Topping. Barring that my outlook will is Bullish.

The Long Term Picture: Crude Oil is in a long term consolidation pattern from 147.27, with the 1st wave completed at 33.2, 2nd wave unfolding. A clear break of 83.85, Key support, confirms that the 2nd wave is finished, and the 3rd wave, a downward one, will have begun. Stay tuned…

China’s reserves + US$3T,and Premier Wen resists Yuan pressure

Chinas foreign-exchange reserves exceeded US$3T for the 1st time, highlighting Global imbalances that Group of 20 (G-20) finance chiefs aim to tackle at meetings in Washington.

China’s currency holdings, the World’s largest, grew by US$197B in Q-1 to US$3.04T, the central bank said yesterday. New loans were a more-than-estimated 679.4B Yuan (US$104B) in March, it said.

Premier Wen Jiabao’s policy of controlling the currency, along with trade surpluses and flows of capital into the fastest-growing major economy, have boosted the reserves by US$1T in 2 yrs.

G-20 finance Chiefs are seeking to agree on an early-warning system that can prevent the type of imbalances in trade and financial patterns that contributed to the Y’s 2007-09 crisis and recession.

The official numbers, to be released today, will exceed economists’ median forecasts for 9.4% growth and 5.2% inflation.

The currency holdings at the end of March compared with the US$2.98T estimate in a survey of 5 economists and US$2.85T at the end of last year. M-2 money supply rose 16.6% in March from a year earlier, exceeding analysts’ median estimate.

Yesterday’s reports underscore the challenges for China’s policy makers as they seek to stem inflation while at the same time preventing the Yuan from rising.

The Yuan closed at 6.5315 per USD in Shanghai yesterday, about 4.5% higher than a year ago. By contrast, Singapore’s currency has climbed 10% in that time frame. That Nation, which uses its exchange rate as the main monetary policy tool, said yesterday it will allow further appreciation after a greater-than-forecast acceleration in growth last Quarter.

Any slowing in the pace of gross domestic product(GDP) growth may help defuse risks of overheating and aid Wen’s campaign to contain consumer prices. The high Y-Y gain in GDP growth during Y 2010 was 11.9%.

South Korea’s parliamentary subcommittee rejects S. Korea-EU trade pact

South Korean parliament’s subcommittee on foreign and trade affairs voted down a free trade pact with the European Union Friday, making it difficult to ratify the pact by July.

Members of the subcommittee rejected the ratification motion by a vote of 3 to 2, with 1 abstention, foiling an attempt by the ruling Grand National Party to railroad the contentious bill.

The bill, submitted to the parliament in October last year, has been objected by minor parties over concerns that it could harm the country’s pork and dairy industries hit hard by the outbreaks of foot-and-mouth disease.

The European parliament endorsed in February what it said was “the most ambitious trade agreement the EU has ever negotiated.”

The pact is expected to eliminate import duties and other trade barriers on about 98% of manufactured goods, agricultural products and services over the next 5 yrs.

South Korea projects the bi-lateral pact will increase its gross domestic product by 5.6% and create 250,000 new jobs, along with average annual trade surplus of US$360M over the next 15 yrs.

Goh Chok Tong, one of the men responsible for Singapore’s success discusses the future of the nation.

Former Prime Minister of Singapore Goh Chok Tong articulates 5 key challenges and 7 strategies to overcome them as the island state gets ready for a general election. This is an edited version of a speech delivered by the Senior Minister

What is Singapore’s future? This is a particularly timely question given that the General Election is around the corner. Indeed, all voters should ask themselves: how do we secure Singapore’s and our own future?

First, our domestic limits to growth: finite land area declining Total Fertility Rate (1.16) ageing workforce (median age of resident workforce increased from 38 to 41 over last 10 years. By 2020, the median age will be 40 – 44). Have we reached the limits of growth?

Second, our vulnerability to external events. As a small and open economy, we are price-takers, not price leaders. We are buffeted by uncertain geo-political developments and shocks to the international financial and economic system, e.g. political trends in South-east Asia upheavals in the Middle East and exposure to severe downturns in the major markets. Can we withstand geopolitical earthquakes and economic tsunamis?

Third, our ability to compete internationally. With the rise of China and India, amongst others, can we compete? Can we continue to make Singapore relevant to the region and the world?

Fourth, rising expectations of Singaporeans. Singaporeans expect the already high standard of living to keep on rising. A younger generation naturally worries whether they can do better than their parents. Can we meet their expectations? Or will they strive to do more for themselves and depend less on the government?

Fifth, political and social stability: We are preparing for another generational change in leadership. Will this proceed smoothly? Over the next 20 years, can we maintain our political stability, cohesiveness as a nation, social harmony, and solid tri-partite relations?

The Strategies For Singapore

I believe the answer to the question, “What is the future of Singapore” lies in us. I believe the future is what we make of it. We cannot wait passively for the future to arrive. We have to step up and actively meet it. Here are some of my own suggestions:

First we should continue to invest heavily in our people and focus on developing an adaptable and highly educated workforce.

We already have one of the best workforces in the world (Business Environment Risk Intelligence [BERI]). By 2030, the bulk of our workforce will have at least a polytechnic diploma, making it one of the most educated workforces in the world. We would continue to invest in our entire education system from pre-school to schools, ITE, polytechnics and universities.

We are spending more on continuous education and training for workers and Professional, Managers, Executives and Technicians (PMETs) to upgrade their skills to keep up with changing demands.

Second, Singaporean economy should be well positioned to take advantage of the shift of the global economic centre of gravity to Asia.

By 2050, China and India GDP combined would be one third of the total global GDP and along with that growth would come demands for services and skills. Asia’s growing urbanization, infrastructure development and increasing demand for services will provide ample opportunities for Singaporeans. We have the skill-sets, know-how, products and reputation which they are looking for.

Singapore must aim to be the natural destination for Foreign Direct Investment (FDI). Last year, we had more than $50bil in FDI, which exceeded even the FDI into India!

Our low tax rates, pro-business environment, educated and disciplined workforce and stable, clean and competent government, make us an ideal base for local, foreign, large Multi-National Companies (MNCs) and Small Medium Enterprises (SMEs) to take advantage of the opportunities in the region.

The PAP government will ommit $850 million in grants under the Enterprise Development Fund over the next 5 years which will help SMEs access capital, build capabilities, nurture talent and establish business networks. Other schemes are also available to help SMEs.

Third, we are restructuring our economy and improving productivity.

Over the last 50 years, we have moved from a labour-intensive manufacturing hub to an innovative and highly-skilled economy. In the next phase, we aim to become an entrepreneurial and creative economy. We are determined to increase productivity by 2-3% a year. This year, we will double the National Productivity Fund to $2bil. Training support for PMETs will also be expanded.

Fourth, we will maintain high standards of leadership in politics, Civil Service, Armed Forces and Home Team departments.

We are now preparing for a fourth-generation leadership to look after Singapore. Very few countries in the world do this. This leadership transition is even more crucial than previous transitions. The new leaders will lead a better educated and more questioning Singaporean population in a developed, prosperous city-nation. But most of the leaders would not have experienced first-hand our struggles for survival. Neither would the majority of the population.

Fifth, we will continue to be open to international talent as that is a critical advantage. But we will do so judiciously to benefit Singaporeans.

Although we have local talent in many fields, we do not have enough for us to compete internationally. We are only 3.2 million Singaporeans. Global companies are willing to invest in Singapore and create more jobs only if they are confident they can get the talent they need from Singapore or anywhere in the world.

Sixth, we will maintain our core values which are:

§ Just and fair society

§ Meritocracy

§ Equal opportunities

§ Integrity

§ Multiracialism

§ Being hardworking and prudent

§ Self-reliance

Individually, they are not unique, but together, they set us apart from other societies. They are our competitive advantage.

Last but not least, we will create an inclusive society, with a Singaporean core, even if the income gap widens.

To navigate this unpredictable world, we need to have the best crew we can get, the competencies, the strategies, the unity, and the will to overcome crises. How successful we will be depends on how we respond to challenges and how we seize opportunities. If we adopt a passive approach, we will be like a man lost in the wilderness without a compass – we will end up walking in circles, going nowhere.

We will grow real incomes by 30%. By 2020, Singapore’s per capita GDP will reach around US$55,000 from US$43,900 now, and we will be one of the top 10 richest countries in the world. All Singaporeans will benefit from this growth. I believe that together we can create a bright future for Singapore.

Bank of America NYSE:BAC has missed more than beat over the last 8 Quarters however the strong result from JPM indicates BAC will beat estimates but loan growth and other key factors will unnerve investors.

Bank of America NYSE:BAC results are closely tied to the health of U.S. consumers, which is still weak nearly three years after the financial crisis peaked.

The Charlotte, North Carolina-based bank does business with one out of every two U.S. households, whose myriad of consumer lending businesses are either the largest, or among the largest in the country. But with high U.S. unemployment and consumers’ cutting back on their debt loads it has left the bank with little room to grow its domestic lending business.

Loan growth is necessary for a long-term increase in net interest income, but analysts said they do not expect the bank to show an increase in the first quarter.

Estimates vs Actual	Estimate	Actual	Difference	Surprise %
SALES (in millions)
Quarter Ending  Dec-10	24,903.50	22,398.00	2,505.54	10.06
Quarter Ending  Sep-10	27,142.10	26,700.00	442.09	1.63
Quarter Ending  Jun-10	29,781.90	29,153.00	628.95	2.11
Quarter Ending  Mar-10	27,875.50	31,969.00	4,093.49	14.68
Quarter Ending  Dec-09	27,042.80	25,076.00	1,966.77	7.27
Earnings (per share)
Quarter Ending  Dec-10	0.15	0.04	0.11	72.73
Quarter Ending  Sep-10	0.16	0.27	0.11	64.13
Quarter Ending  Jun-10	0.22	0.27	0.05	22.45
Quarter Ending  Mar-10	0.09	0.28	0.19	217.46
Quarter Ending  Dec-09	-0.53	-0.60	0.07	-13.72