Crude oil forecast for the week of July 24, 2017.

WTI crude prices are down showing a 1.5% loss. Weakness in the dollar was unable to help keep oil prices buoyed, while the breach in the Brent benchmark above $50.0 over the last day was seen as bullish-affirming price action. The looming OPEC-led meeting of major oil producers on Monday in St. Petersburg is an added bullish influence, along with tensions between Kuwait and Iran. The UAB’s energy minister said today that he hoped the OPEC-led production trimming would have a significant impact on crude prices in the third and fourth quarter.


Crude oil prices were unable to hold gains seen early in the week. This is a divergence in though as many believe Saudi Arabia will come to the rescue and reduce exports. Prices tumbled 1.5% on Friday, but held support near the 10-day moving average at 46.18.  Resistance on crude oil is seen near the weekly highs at 47.74.  Positive momentum is decelerating as the MACD (moving average convergence divergence) histogram prints in the black with a declining trajectory which points to consolidation.

Unofficial OPEC Meeting will be Important

Next week will be a very import week for the crude oil market. While global demand appears to be edging higher, the markets are clearly focusing on supply, which has many components. While production will likely continue its current pace, next week’s unofficial OPEC meeting in Russia will be the catalyst that drives prices.

While there will unlikely be any production changes, Saudi Arabia has floated the idea that the country will reduce exports globally by 1-million barrels a day. The reduction in Saudi exports has already showed up in U.S. import numbers, despite increases in U.S. domestic production. Now, the Saudis are not saying they will reduce production, they are just saying they will reduce exports, which is directly targeting prices.  If inventories around the globe begin to shrink, except for inventories in Saudi Arabia, then there corning the market technique will have worked.

This week’s inventory data showed a larger than expected draw in petroleum inventories, which was likely cause by the reduction in Saudi exports. If the cartel cannot reach some form of agreement that will help oil bulls push prices higher, the markets will likely punish crude prices in the later stage of next week.

U.S. crude oil production forecast to average 9.9 million barrels per day in 2018

Meanwhile, the EIA forecasts that total U.S. crude oil production will average 9.3 million barrels per day in 2017, up 0.5 million barrels a day from 2016. In 2018, crude oil production is expected to reach an average of 9.9 million barrels a day, which would surpass the previous record of 9.6 million barrels a day set in 1970. Most of the growth in U.S. crude oil production from June 2017 through the end of next year is expected to come from tight rock formations within the Permian region in Texas and from the Federal Offshore Gulf of Mexico.

Imports Dropped This Week

The Department of Energy reported on Wednesday that U.S. crude oil imports averaged 7.8 million barrels per day during the past month which is down 1.7% month over month. The overall decline in imports has not been offset by increases in production which rose by 30K barrels domestically in the United States during the past week.


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Bitcoin prices back to near record highs after new mechanism to improve usage.

Bitcoin backers celebrated as the community embraced a new mechanism to improve usage and allow it to scale, boosting confidence in the virtual currency and sending prices back near record highs.

The community, which had been split on how best to make the cryptocurrency more manageable, rallied behind a code upgrade known as SegWit2x, which aims to increase the network’s transaction capacity. That fueled a rally on Thursday in bitcoin’s price against the dollar, which had plummeted from a peak in June as concerns grew about its future.

“We’re thrilled to get past this impasse,” said Andrew Lee, head of bitcoin-shopping startup, whose team celebrated with beers at their San Francisco office. The development opens “the doors to much-awaited innovations,” he said.

Bitcoin enthusiasts in New York and San Francisco, to Hong Kong and Tokyo, gathered in bars and offices to hold impromptu parties, while others took to Twitter and social media to cheer the move, as well as the price rally.

The impasse arose from a limit placed on the size of blocks underpinning the network in bitcoin’s early days, in order to prevent hacker attacks. As the virtual currency grew in popularity over the past nine years, transaction times and processing fees soared, curtailing the community’s ability to process payments with the same efficiency as services like Visa Inc. Miners and developers were locked in a heated debate for years on how best to upgrade the software, culminating in the recent clash.

More than 93 percent of miners who function as the backbone of the digital tokens network locked in support for BIP91, the first necessary step in implementing SegWit2x, according to Coin Dance, a website tracking adoption. Bitcoin’s miners are independent groups that verify and process bitcoin’s transactions by solving complex computational problems, in order to be rewarded by fees and creation of the digital currency.

SegWit2x is essentially a compromise between two main competing camps. One proposed a direct approach, seeking to increase the block size. The other, a group of developers known collectively as Core, pushed for a long-term solution by moving some data outside of the main network, a scheme called SegWit that had been resisted by miners because it also could diminish their influence. In the end, the miners agreed to adopt SegWit, but also increase the block size to 2 megabytes.

The upgrade isn’t final. The BIP91 lock-in has a grace period of about two days, during which miners will prepare to activate the software. It will then take about two weeks for SegWit to be fully adopted. Developers still warn about potential hacker attacks that could disrupt the process.

Then, three months from now, the community will face another challenge when some of the world’s biggest miners move to adopt the second phase of the proposal, the doubling of the blocksize. Still, many in the community agrees that the hard part is over, with prices seen stabilizing and strengthening.

“We do believe it will continue, now that we’ve gotten over this hump,” said Ryan Rabaglia, head trader at digital-trading company Octagon Strategy in Hong Kong.

-Business Tech-

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Bitcoin surges as miners avert split for now.

Bitcoin prices surged this week as an overwhelming majority of miners, the computer operators who maintain its network, backed a software upgrade that will boost the speed of processing transactions, likely averting a split that could have resulted in multiple versions of the digital currency.

Through an online voting mechanism, miners representing 99% of the cryptocurrency’s computing power, backed a new piece of software, known as Segregated Witness, or SegWit, that would boost bitcoin’s processing power without altering the underlying software, The Wall Street Journal reported Friday.

See: Bitcoin may have reached a tipping point, now that ‘Downtown’ Josh Brown has invested

The debate leading up to the vote marked a split that largely pitted miners and entrepreneurs, who wanted to increase block size and maximize bitcoin’s value as a payments network, versus developers who fear larger block sizes will increase operating costs for miners, driving some out and leading to more centralized control, wrote the Journal’s Paul Vigna.

Bitcoin prices dipped early this week on fears over a potential split. Bitcoin BTCUSD, +7.81% One bitcoin traded at $2,813 at midday Saturday, according to Coinbase, up nearly 40% on the week.


– Market Watch-

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How Do Oil Prices Affect Your Wallet?

Crude Oil Affects Your Wallet

How Do Oil Prices Affect Your Wallet?

5 months agoByColin First

It is important for everyone to keep an eye on the live oil prices as it affects a large part of our life on a day to day basis. One of the main reasons for this fact is that unlike other commodities like gold, silver, diamond etc., oil is an essential commodity and considering its usage and impact in our lives, it is probably the most important commodity in the world. A couple of decades back, entire wars were fought by some of the greatest world powers in order to gain control over large reserves and this should be enough proof to stress the importance of oil as a commodity that impacts our daily lives.

For most of us, the most direction impact in our wallets due to changing oil pricesis through the petrol and the diesel that we use. Almost all kinds of motorised form of transport use some form of oil or the other. So, any fluctuations in the oil prices directly affect our wallet. Of course, it is not practicable to keep looking at live oil prices every time we use our car but it is good to know where we can see oil prices live so that we can get an idea of where it is headed and prepare ourselves if it looks as though it might start to pinch our wallet.

Apart from this direct impact, there is a much larger indirect impact of changing oil prices on our wallets. In our daily lives, we use a huge number of products, either household products, food products, food items like fruits, vegetables and processed items and it may be a surprise to many to know that the prices of each of these is affected by oil prices. All the stuff that we use for our daily lives are finished products or raw materials and they require transport. Finished products require the raw materials to be transported to the factories and the finished products to be transported back to the stores. Food items must be transported from the farms and factories to the shops as well. And as all kinds of transport depend on oil, we can safely say that the cost of each of these products and items are highly affected by changing oil prices.

And just as small bricks form the building blocks of gigantic buildings, we find that it is these small extra expenses that contribute to the overall GDP and inflation of an economy. So, we find that as oil prices rise, the inflation of many countries of the world rise up as well. Also, there are many countries which are major oil producers and their entire economy depends very closely on oil prices. You can rest assured that the large bankers and other government entities want to track oil prices live as their policy decisions might change based on the oil prices.

But in recent times, we have been seeing a trend of moving away from oil and we are seeing larger use of alternate sources of energy like solar, wind etc. This seeks to take some pressure off the large oil reserves found in different parts of the world and also ensure that there is some more equitable distribution of wealth around the world by reducing the dependence on oil and the oil producing countries. It is also good that many people around the world are reducing their dependency on oil as the burning of oil in different forms leads to a lot of pollution and is one of the major reasons for breathing defects especially in major parts of the third world.

But, the primacy of oil will continue to remain at least in the foreseeable future and though changes are taking place to reduce the dependence on oil, it is likely to take at least a decade or two for these to begin to have any major effect on the usage of oil and its variants. Till that time, it is important that you watch oil prices live and understand how it is likely to affect your wallet in the short and medium term.

– Source: FXEMPIRE-

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World War III – The Currency War

Are We Entering a Phase of Currency War?

After a long period that last for decades, we are now in a time, over the last decade or so, where wars are fought using currencies rather than using weapons. Countries realize that it is easier, cheaper and less violent to bring destruction to other countries by targeting their economies rather than targeting their military.

This is why we have been seeing currency wars between the major economies of the world which is essentially a race to keep their currency as low and as cheap as possible. Little do the countries realize that though such wars might be less violent, the effects are as devastating as conventional wars. In fact, such currency wars could lead to conventional wars as the countries and their people start looking inwards and care only about themselves and their country, look to dominate other countries after successfully destroying their economy.

Currency Wars Lead to Geopolitical Tensions

The major currency war right now seems to be between the US and China on the one hand and the US and Japan on the other with all these 3 economies going through a long QE program by printing more and more money to keep their respective currencies weak.

With Trump accusing Germany, Japan and China of manipulating their currencies to help their economies, the gloves are off and the spectra of currency wars looms overhead. China fully controls its currency and it sets the value of its yuan on a daily basis, this has helped China to push its exports into many markets around the world and becoming the clear leader as far as exports are concerned.

Moreover, This has led to a rash of cheap imported Chinese items in many parts of the world which has hit the domestic economies and manufacturing in an adverse manner. In some case, some domestic small scale industries in many countries have been destroyed due to the influx of Chinese products. The situation is the same in the US as well where the markets are flooded with cheaper Chinese items posing a grave risk to the American industry.

The same applies to the case between US and Japan which are also pursuing a trade war using currency, as the base of the Japanese government and the BOJ seek to pump in more and more money into the system to weaken the yen. It has to be said that the move has fairly succeeded over the few years as we have seen the USD/JPY pair move from around 75 to 115 as it stands now. This is likely to increase the tension between the two countries as they each accuse the other of weakening their currencies and launch themselves into a trade war where each country, not only the US, Japan and China, would try to weaken their currencies to boost their trade and economy. That would then lead to a situation where the currencies would lose their value leading to large inflation.

Trump and His Effect on the Currency Wars

It was unusual for a new President to speak about currencies but that’s exactly what Trump did when, within the first week of assuming charge, he accused Germany, Japan and China of currency manipulation.

Trump could escalate this issue into a full blown currency war and considering that his policies and his promises have been US-centric to keep the Americans and the American market out of reach of other economies by adopting an inward looking policy. We could see a period of change where more and more countries will start looking inwards and that could lead to the death of globalization as we see it now.

Globalization has been all about looking outward as countries helping each other out in order to grow their own economies and also helping other countries to grow their economies.

But this phase of looking inward would be made worse by Trump and his policies. Of course, the US could benefit in the short run as the goods become cheaper due to low value of the dollar, factories flourish as imports become costlier but they will start losing out on the quality of goods and also, it will be a race to the bottom as the value of currencies become lower and lower. This would also cause currency instability as the currencies lose their value despite the fundamentals pointing in the other direction, leading to increased volatility and less liquidity.

Currency wars threat global economy and political stability. With the arising power of nationalism across the world, first in the US and as we can estimate other countries will join the latest phenomenon, currency manipulation would be a major field that every person must follow.

– Source: FXEMPIRE-

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How Does a Country’s Gold Reserve Affect its Economy?

Last month I watched one of James Bond’s movies called ‘Golden Finger’, which was produced in 1964. The story was about a villain who wanted to contaminate the US gold reserve in Fort Knox, his notion was to save gold bullions that will eventually multiply its price. As I was watching this movie, I wondered about the reason of any government to own gold, and how important is that process? What will be the consequences if the movie’s events occurred in reality?

At first glance you may think that all governments are rushing to own gold by all means; however, the fact is not exactly the same. Gold used to be the historical unique reserve asset by any government and civilians for decades due to its unique chemical specifications which made it unable to react with any element including acids, which made it a store of the value.

Nevertheless, that form was changed in the 20th century. All governments represented in their central banks or the treasury secretaries own a significant amount of reserve in the form of diversified portfolio of foreign currencies, foreign governmental bonds, and precious metals.

Most published researches and articles focus blindly on the gold amount owned by the governments regardless of how much gold represents of the total reserves. This research focus on the gold percentage compared to the total countries reserve, which will reflect the political and economical perspective of the policy makers of any country. The research classifies countries relation to gold reserves in two groups. First group is expanding gold policy countries; second, shrinkage gold policy countries.

The Gold Standard Era

Without delving too deep in history, in 1694 the Bank of England established the gold standard system to the world by replacing gold direct dealing with written banknotes to a promise of exchanging notes into gold when asked for that. This system was accepted worldwide, and stayed for more than two centuries to create an efficient economic system.

Under the gold system, the value of each currency was fixed in terms of gold, implied that the exchange rate between two currencies are fixed. The gold standard system put a lot of heavy weight on the big and smaller countries jointly. From the bigger countries side, the absolute ascending inflation for more than two centuries made the people doubt the capability of central banks in covering the banknotes into gold; as a result, speculators started selling off currencies to exchange it by gold. Such speculative actions depleted the central banks gold including BOE in the forefront. On the other side, smaller countries were enforced to raise their interest rates when rates were raised abroad; otherwise, it will find itself exposed to severe losses. Mass selloff of the local currency triggered the obligation of gold reserves or trade the local currency to other foreign currencies with higher interest rates.

During WWI the gold standard system was suspended by all countries, yet, the US remained on gold standard during the war. The war burdens left its shadows on countries, which were loaded by the war debts and hyperinflation. However, the most effected was the banking sector as many banks faced insolvency. By the end of WWI central banks made extensive efforts to reconstitute the gold standard system. Notwithstanding of printing large amounts of money bills during the war without its covering gold reserve, countries could reestablish the gold standard system. Despite these facts, the post WWI period lacked monetary stability, and countries including the UK itself seemed to give up the adoption of this system.

With the lack of political and ideological support of the gold standard system, central banks started to reevaluate its policies, especially after the world great depression era in the 30s. A significant amendments was made on the system by president Roosevelt.

Top Countries with Expanding Gold Reserve System

  • Untied states of America

As the markets crashed in 1929, UK left the gold standard system after the frequent attacks made by the speculators effected the pound price to float and to determined by the market forces. Countries started to disbelieve in the gold standard system, and one after another gave up the system.

By the collapse of the pound against the gold, speculators started to focus on US Federal gold reserve, which refused to give up the gold standard system. The US took new actions to recover the world crisis. One of the actions was to raise interest rates that was below 20% in order to break down speculations against the dollar. As the government pressured the Fed, the Federal Open Markets operations Committee (FOMC) was established to increase supply by decreasing interest rates on governmental and corporate bonds. Eventually the Fed and the government realized that they were not on the right track and they have had to change something. They realized that the gold was the pivot point of the fiscal policy and nothing can be changed without system revision.

By the beginning of President Roosevelt period, reconsideration of the gold standard system was a priority. It didn’t take too long to recognize that lifting the gold standard up was a key element to recover the great depression. Straightaway, Roosevelt took a decision to let the dollar price float against gold by resetting its value at significant low level.

WWII  burdens were insufferable, by that time every country took the decision to give up the gold standard system as it became very exhausting. In 1944, before the end of the war, the big governments signed the Breton Woods agreement, which stated currencies prices to be fixed to the US dollar instead of gold.

Nevertheless, the US Dollar should be converted in gold whenever there was a demand and gold to be priced at $38 per ounce. The final destination for gold role in the fiscal policy came in 1971 when President Richard Nixon decided to terminate the gold standard system and to replace it by the petrodollar system. Starting from that date, interest rates replaced gold and became the pivotal point of fiscal policy.

By that time, gold was out of the Federal Reserve fiscal policy; although the importance as a reserve asset did not diminish for the Treasury secretary. According to the world gold council, USA lead the countries gold reserves list. It stated that the USA holds 8133.5 (USD12 000 000 000) which consists 74% of the total reserves held by the treasury. The treasury is responsible to reserve the gold in deep storage since January 31 1934 in three places: Denver, CO, Fort Knox, KY, and West point, NY. US is the forth gold producer with 209 tons a year.

Moreover, If we’re consider the classification of gold percentage out of total reserves as no other country is keeping that high percentage of gold reserves but Tajikistan, the US is placed as the second on that list. A question should arise here, what does that means? a) USA, as the producer of the most dominating currency doesn’t need a large amount of foreign currencies. b) Gold has an inverse movement with the dollar, meaning that as the demand for gold rises by the treasury, gold price will go up and US Dollar will devalue. In other words, weakest dollar can boost economy, and higher reserved gold value.

  • European Countries Using the Euro

Similarly to the US policy, the Euro considered to be one of the world economy columns. Despite the fact that ECB holds 26% of its gold reserves by 504 Tons, every country in the EU represents its treasury by holding a separate amount of gold reserves. The form of ‘sell Euros buy gold’ as a reserve is a common policy within Eurozone countries. Germany comes second on the list by holding 3377 tons representing 68.8%, followed by Italy with 2451 tons representing 67.8% of the reserves. However, Cyprus holds only 33tons, represents 64.1% of its reserves. France 2435T 63.8%, Netherlands 612T 63.9%, Portugal 382T 59.1% and Austria 280T 45%.

The European countries maintain structured formula to hold high gold reserves of their total reserves(commodities, currencies, etc.). As the Gold standard system rules global economy, a country must sustain gold reserves in order to control its currency and economy.

  • Venezuela Learnt the Lesson

Venezuela, one of the top oil producer, was determined to hold anti-west policy, adopted the anti-dollar system by putting 64.8% of its reserves in gold instead of foreign currencies which represents only 187.5 Tons, the lowest in three decades.

That wasn’t the plan of Venezuela; in December 2009, Venezuela’s central bank released the “gold reorganizing”. They had a 10 year plan to increase gold reserves  – they didn’t declare the amount they plan to increase due to the financial crisis and the decreasing confidence in USD, and they called this year “the year of gold”. Actually the plan worked for while, where the reserved amount rose from 355T to 365T by 2011; Nevertheless, it didn’t work for a long time. The country faced a severe crisis in 2016 caused a sell-off of two thirds of its gold reserves in a lower price than 2010.

As a result, the increased amount bought after the 2009 “Reorganization” was sold by loss, and Venezuela is classified as shrinking economy. Important lesson we should learn from the Venezuela model as we go through this research.

-Source: FXEMPIRE-

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A slice of Kolkata in Dubai’s jewellery markets.

Over the past few years Dubai, the nerve-centre of UAE’s gem trade, has established itself as an important global player in diamond trading, diversifying from its traditional status as a gold hub. It is now ranked the world’s fourth largest diamond trading hub, after Antwerp, New York, and Mumbai.

According to the Kimberly Process, a research body with a commitment to remove conflict diamonds from the global supply chain, the UAE imported US$5.44bn in rough diamonds in 2015 and exported US$7.56bn (a slight dip from 2014, but a massive increase from the US$1.5 and US$2.3bn figures recorded 10 years ago).

While its geographical advantages make it the ideal base for international trade, particularly in emerging markets in the East, it is also developing a niche for high-quality manufacturing, particularly for high-precision diamond jewellery usually set in 18K gold – a mainstay for most businesses such as Cara. This is where the artistic talents of Kolkata’s famed karigars (craftsmen) come into play.

While decades of communist rule had left the economy of the once-wealthy state of West Bengal on its knees, with traditional industries flagging and little innovation to make up for it, the enduring gems and jewellery industry provides a glimmer of hope.

Not only are these karigars now an essential cog in the manufacturing wheel of the UAE, it is estimated that more than 50 per cent of the jewellery manufactured in Kolkata is exported. And with the Middle East among the top three markets for the gems and jewellery sector alongside the US and UK, the capital is in prime position to take advantage.

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Gold Price Prediction for July 3, 2017

Gold prices edged lower on Friday following a softer than expected EMU HICP inflation report, which took some of the luster out of the yellow metal. Prices are and are poised to test support near an upward sloping trend line that comes in near 1,233. Resistance on the yellow metal is seen near the 10-day moving average at 1,247. Momentum is neutral as the MACD (moving average convergence divergence) index prints near the zero-index level with a flat trajectory which points to consolidation.

Eurozone HICP Inflation Dipped in June
Eurozone June HICP inflation fell back to 1.3% year over year from 1.4% year over year in the previous month. The number was slightly above expectations of a 1.2% increase. Core inflation rose to 1.1% year over year from 0.9% year over year. The fact remains that the ECB is heading for QE tapering from early next year, even if Draghi remains reluctant to commit to reduced purchase volumes just yet.


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Crude Oil Price Forecast 3rd July 2017

WTI Crude Oil

The WTI Crude Oil market bounced from the $42.50 level, breaking above the $45 level. It looks as if the buyers are trying to push towards the $47.50 level, but I would expect to see a lot of resistance in that area. I’m looking for and exhaustive candle to take advantage of as we certainly have a lot of headwinds when it comes to pricing of crude oil. The oversupply continues to be extreme, and of course the demand hasn’t exactly been stellar either. American producers continue to drive down the cost of oil as they fled the market.

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