Just how the imminent reality of lower Chinese and Indian GDP growth is still able to fuel bullish-to-the-extreme market talk and forecasts among…commodities’ oriented players on the other hand, remains a bit of a mystery at this point.
The developing interest rate “situation” is largely similar in the EU, where it is said that “the path is open for the ECB to return to the path of monetary normalcy quicker than expected. The overriding view among market pundits is for the ECB to raise rates, come the month of May or June. Such a move is thought to coincide with the nomination and eventually likely appointment of Mario Draghi.
Meanwhile, French President Nicolas Sarkozy said during a visit to Ankara on Friday that he had asked Turkey to host a ministerial seminar with Russia in April on commodities regulation as part of France's G20 presidency. According to Reuters, “increasing the regulation of commodities markets is one of the main planks of France's year-long G20 presidency, but ministers responded cautiously to calls for curbs on price volatility when they met in Paris last weekend.”
The emergent trend towards the normalization of interest rates and attempt to rein in runaway commodities’ speculation is also manifest in other countries. Brazil and Russia have recently lifted their key rates, and Thailand has now joined in with its own assessment that rates will need to rise in order to neutralize manifest inflationary threats.
All of that type of talk and statistical reality aside, the bullish posturing in gold (mainly) by speculative hedge funds remained at or near highs not seen since last December as the final trading session of February got underway. The month showed gains in the speculative net long gold positions as unrest in North Africa and the Middle East drove funds back into the yellow metal and made for five weeks’ worth of gains in prices. January’s 6%+ losses in value were nearly reversed by February’s 5%+ gains. One veteran observer pointed out that bullish chatter trotted out all of the usual fear (and greed) inducing arguments during the month, and then some.
The Value View Gold Report noted that –according to alarmist “promoters” for whom every new world development is cause for the issuance of uber-bullish forecasts- there were declarations made that “all the despots in the Middle East were to be removed, chaos was to follow, oil production in that area would be drastically reduced, famine would be widespread, and that the logical conclusion of all that was to buy junior mining stocks. [The] favorite [one] was that the Egyptian situation would cause silver, junior mining stocks, and green energy plays to explode. All those ideas were pursued till about middle of this past week when apparently a significant part of the investment community decided the nonsense had gone too far.”