Is the winner the country that has the most ink? Gold prices soar to a new record high as once again a global central bank decides to print their way to prosperity. The Bank of Japan gave gold another reason to make a new high by announcing what Dow Jones Newswires says is, “an ambitious” ¥35 trillion monetary easing program to spur economic growth while cutting interest rates to virtually zero and launching a ¥5 trillion program to buy private and public sector assets. Ambitious?! Boy, I’d say. I guess there is more than one way to intervene in your currency. The Japan government is adding more stimuli while reducing the confidence in paper money. Looks like a golden opportunity to buy more gold.
Perhaps it's time to buy black gold as well. Oil traders love to exploit devalued currencies and devalued confidence in the same way. Yesterday the oil market ignored the rebounding dollar and supplies that are 13% above the five-year average and instead returned to focus on the shutdown of the Houston Shipping Channel that was shut down when a barge hit an electrical tower. That disruption helped send oil to an eight-week high. Dow Jones reported that U.S. Coast Guard says that the 3.5-mile stretch of the Houston shipping channel will likely be closed until late Tuesday so that low hanging power lines and a listing tower can be cleared away. The closure will affect crude deliveries to four refineries in the Houston ship channel. Dow says that the tower, which carries one of three transmission lines into Exxon Mobil Corp.'s (XOM) Baytown refinery, was struck by a barge early Sunday. Exxon's plant, which processes 560,640 barrels of crude per day, is unaffected by the accident because the transmission line had been shut off prior to the collision for maintenance and ship access to the refinery is not hampered by the closure, Coast Guard Capt. Marcus Woodring said at a news conference. Royal Dutch Shell PLC's (RDSA, RDSA.LN) Deer Park refinery and Petroleo Brasileiro SA's (PBR,PETR4.BR) 100,000 barrel-a-day Pasadena refinery, as well as Valero Energy Corp.'s (VLO) and Lyondell Basell Industries' Houston refineries are unable to receive crude deliveries until the wreckage is cleared, Woodring said.
The other concern for the market might be the widening strikes in Europe. Dow Jones News Wires reported the French refiners union francaise des industries petrolieres, or UFIP, Tuesday warned that the seven refineries supplied by the French Marseille port's Fos-Lavera oil terminal could stop producing as soon as one week if the current wildcat strikes at the oil terminal goes on.
On the other side of the rate story MarketWatch reported that the Reserve Bank of Australia on Tuesday left its benchmark interest rate unchanged at 4.5%, citing a moderation in inflation even as improving business investment was boosting national income. Economists were split in their expectations from the RBA, although those surveyed by Fact Set Research had estimated a quarter-point increase to 4.75%. The RBA, which has increased the cash rate target in six equal instalments of 0.25 points since April 2009, has left the rate unchanged since the last hike in May 2010.
The impact from the Japanese rate cuts and the disruptions from the Houston shipping channels are transitory so beware of a correction when they get solved. Make sure that you are getting my daily buy and sell points on all the major markets.
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.