IS GOLD STILL AN EFFECTIVE U.S. DOLLAR HEDGE?

During the first nine years of this gold bull market, gold prices moved with a near perfect inverse relationship to the US dollar. Indeed, in the early years gold was only really moving up against the greenback, it was only after a few years that it began to appreciate against all currencies. The game plan was simple; the dollar is going down, so gold in USD terms is going up with some leverage factor. Gold worked well as both a USD hedge and as a tool to speculate on a USD decline. This is no longer the case.

 Nothing lasts forever and over the past two years or so this inverse relationship has broken down significantly. The gold story is no longer simply a USD devaluation play. Relationship remains intact, there are long periods where gold and the USD move together.

The most significant reason for this is that the Euros are a lot less desirable than they were a few years ago. Since all currencies trade on a relative basis, it doesn't matter if the USD has poor fundamentals; if the picture for the Euro is worse relative to the USD, then the greenback will make gains against the Euro. During periods where the Euro zone debt crisis has been the focus of market attention, gold and US dollars have been bought since both are preferable to Euros and provided a safe haven.

The key point of this article is not to say that gold will not rise is if the US dollar falls it is to point out that gold is no longer as effective as a USD hedge. In conclusion we hope to have shown that gold simply isn't a clean hedge against the USD any more. When trading one should aim to tailor positions to match your view and optimize the risk/reward dynamics. If we think that the USD is going to fall, short it. If we think gold is going to rise, then buy gold. Taking a long position on gold purely since we think the USD index is going to fall is not really statistically justifiable due to the weakness of the relationship between the two.

Mansukh brings to you the most updated monthly magazine which will help you in understanding online share market but will also help you in doing online stock market trading conveniently and smartly. For all the latest happening of Share market trading, visit www.moneysukh.com. Make more for sure!!!

Related Post about Gold Price

Financial Investment And Fundamental Pick For Lupin Ltd

In last quarter Lupin has also got the final approval of Nabumetone used for acute and chronic treatment from the department USFDA. The annual sale of the Nabumetone in US market was $66.80 million for the twelve months ended September 2010.

Lupin, with the presence of over 70 countries is engaged in development of APIs, generic, branded formulations and also the largest manufacturer of TB drugs in the world. Company provides wide range of products like treatment of Cephalosporins, CVS, central nervous system CNS, Anti-Asthma, Anti-TB, Diabetology, Dermatology, GI, and many more. Being a fastest growing top 10 Generics players in the two largest pharmaceutical markets of the world U.S and Japan Lupin has presence in Europe and other emerging countries.

Financials: Top Line and Bottom Line of Lupin grown at CAGR of 30% and 50% respectively in FY05-FY10. In FY10 the Consolidated Net Sales of Lupin rose by 30%% to Rs 4740.52 crore over FY09, Operating

Profit also surged by 33% to Rs 983.89 crore, PAT for the same period also jumped by 37% to Rs 699.67 crore over FY09. In Q3FY11 Consolidated Net Sales of the bank surged by 16.87%, Operating Profit & PAT also grew by 13.64% & 38.23% respectively while the OPM & PATM of Lupin for the same period were 20.26% & 15% respectively.

INVESTMENT GROUNDS
Industry Outline

Indian pharmaceutical industry in one of the fastest growing markets in the world and with the value of worth US$ 11bn India is also top exporting country in generic medicines. The generic drugs market valued US$ 20bn in India is expected to grow at a CAGR of around 16% during FY11-FY13. US generic market which has crossed US$ 80bn mark in 2010 is projected to grow at CAGR of around 10% during 20102013 while on the other hand with the value of US$ 75bn Japan is the second largest pharma market in the world and Japanese generic drugs market has also been witnessing positive developments for the past few years and reached US$ 8bn in 2010 and further expected to grow at CAGR of 9-10% during FY09 to Fy13.

Subsidiary likely to get the benefit from recent crises in Japan…

Lupin is likely to get the benefit from the recent calamity occurred in Japan. Actually Lupin's 100% subsidiary Kyowa Pharma operates in world's second-largest pharmaceutical market (Japan) with the portfolio of over 200 brands. Kyowa is one of the largest generic players in the Neurology segment with 95 products and covers 94% of psychiatry hospitals in Japan. Kyowa contributes 11% to the total revenue of the Lupin and recently a massive earthquake followed by devastating tsunami have created several health problems like gastrointestinal, post-traumatic care and infections, Kyowa which has variety of products for these kind of diseases and also a leader in the CNS segment might see the phenomenal demand for such drugs in near term.

Insured Revenue from New Drug Approvals, Agreements and Settlements…

In last quarter Lupin has also got the final approval of Nabumetone used for acute and chronic treatment from the department USFDA. The annual sale of the Nabumetone in US market was $66.80 million

for the twelve months ended September 2010. In US branded portfolio already forms 29% of US Turnover and so far in US Lupin has filled for the approval of 137 drugs and out of which 47 products approved

while in Europe out of 86 drugs 38 got the final approval. In US Lupin has also settled its ongoing litigations with Sunovion over Generic of Lunesta.

Phenomenal Growth in Overseas Markets in Q3FY11…

In quarter ended Dec 2010 Lupin has registered exceptional growth in developed countries like US and Europe. US, which forms branded portfolio 29% of US turnover and accounts 41% of overall revenue of Lupin's 41% is the 5th largest Generic player in terms of prescriptions. Its Generics business grew by 49% in US and 72% in Europe during the same quarter. In Europe it has launched some vital products and also got the approval for the same. Lupin's one of the products like Ceftiofur Ranked #1 and Cefpodoxime Proxetil has market share of 72% in France. In South African market with the growth of 37% in ZAR terms Lupin is sixth largest generic company.

Mansukh brings to you the most updated monthly magazine which will not only help you in understanding online share market but will also give you online trading solution conveniently and smartly. For all the latest happening of Share market trading, visit http://moneysukh.com. 

Equity Research Weekly Market Outlook Report By Mansukh 26-March-2011

SNAPSHOT

Despite starting the week with a lackadaisical performance and ending below the crucial support levels of 5,400 and 18,000, the benchmarks convalesced on Tuesday and carried forward the strong rally for rest of the of the week as they vivaciously conquered a lot of psychological levels on their way up. The consolidation in crude prices around $105 levels despite escalating turbulences in the Middle East nations was also seen as an opportunity by the local investors who resorted to broad based buying as tabling of the banking sector amendment bill and the Constitution Amendment Bill in parliament buttressed the chances of a rebound for the domestic indices. Moreover, bourses rallied over two percentage points on the last trading day of the week to finish the action-packed week on an exciting note. The spurt on the last trading day in benchmarks was not only due to sanguine leads from the global market but also on encouraging local cues like the overall growth  in the farm sector being pegged at 5.4% along with finance minister's avowal of 9% growth in the next fiscal in the upper house of Parliament stoking investor sentiments. 

Boisterous Indian stock markets witnessed an awe-inspiring week of trade as it seemed like the bullishness of the recent past has come to the fore. The frontline indices accumulated over a gargantuan five percentage points for the week taking the benchmarks to around two month high levels as optimistic global cues coupled with encouraging local developments fortified investors' mood. The Bombay Stock Exchange (BSE) Sensex surged 936.83 points or 5.24% to 18,815.64 during the week ended March 25, 2011.The BSE Mid-cap index gained 3.25% to 6,721.56 and the Small-cap index advanced 2.61% to 8,001.63. All the sectoral indices on the BSE were in the positive terrain; Realty was up 184.64 points or 8.99% to 2,237.87, Bankex up by 741.78 points or 6.09% to 12926.07, IT up 344.65 points or 5.74% to 6,344.62, TECk up by 198.55 points or 5.62% to 3729.29 and Capital Goods (CG) up by 646.72 points or 5.23% to 12,373.27 were the major gainer. The S&P CNX Nifty zoomed 280.55 points or 5.22% to 5,654.25. On the National Stock Exchange (NSE), Bank Nifty surged 6.27% to 11,387.30, CNX IT soared 5.77% to 6,930.65, CNX Nifty Junior advanced 3.08% to 10,943.10 and CNX mid- cap gained 3.05% to 7,824.15. 

WEEK AHEAD
Amidst rising crude oil prices would continue to be threat for the equity markets in the coming week which is characterized by the volatility of  the expiry of F&O series for the month of March, Investor's in the coming week will be eagerly eyeing the core sector growth data, as measured
by the index of six key infrastructure industries, having a combined weight of 26.7% in the Index of Industrial Production (IIP) and also the HSBC India Manufacturing PMI data for the month of March. Further, investor's will keep a close watch on telecom stocks as recommendations on the proposed new policies for telecom infrastructure and manufacturing will be coming in the next week. On the global front, investor's will be eyeing lots of major economic data from the US, starting with Existing Home Sales data on March 21,2011, New Home Sales data, Durable Goods Orders and Jobless Claims data and finally the Corporate Profits data.  Therefore any closing above 5670-5690 for at least two consecutive days may reap indices towards 5800-5850 where we might see some sort of consolidation. On the flip side 5355 still a major support for the March series. HAPPY TRADING…..

Trade In Crude Being Extra Alert Mansukh Monthly Report

Crude oil price still appears to go up but how long this bullishness will sustain is very difficult to predict. So do trade in crude but being very active & cautious.

A MONTH ago Brent crude oil stood at around $96 a barrel and Hosni Mubarak was ensconced as Egypt's ruler. Now he is gone, overthrown by a display of people power that is shaking autocratic leaders across North Africa and the Middle East. And oil has surged above $111. Little wonder. The region provides 35% of the world's oil. Libya, the scene of growing violence this week, produces 1.7m of the world's 88m barrels a day. So far prices have not been pushed up by actual disruptions to supply. Oil hit a peak even before news emerged that some foreign oil companies operating in Libya would stop some production and that the country's ports had temporarily closed. As we think, oil prices are driven both by current conditions and by future expectations.

Oil markets don't like surprises. The sudden ousting of Mr Mubarak and the unrest in Libya, Bahrain, Yemen, Iran and Algeria (which between them supply a tenth of the world's oil) have added 16% to oil
prices. But the big worry is that spreading unrest will culminate in another shock akin to the oil embargo of 1973, the Iranian revolution or Iraq's invasion of Kuwait. Oil is now more global than it was during those previous crises. In the 1970s production was concentrated around the Persian Gulf. Since then a gusher of non-OPEC oil has hit markets from fields in Latin America, West Africa and beyond. Russia overtook Saudi Arabia as the world's biggest crude supplier in 2009; OPEC's share of production has gone from around 54% in the mid- 1970s to just over 40% now.

If Libya's oil stopped flowing importers would look to Saudi Arabia to make up the shortfall. The oil could probably flow to fill the gap in Europe, Libya's main market, in a matter of weeks. That is ample to plug a Libyan gap but would hasten the day when growing world demand sucks up all spare production capacity and sends oil prices rocketing. Despite rising prices, Saudi Arabia has so far been reluctant to turn its stopcocks. OPEC claims that the world is amply supplied with oil and seems content with a price around $100 a barrel. Traders hope that Saudi Arabia will boost production stealthily or that OPEC will call a special meeting to raise quotas and calm markets.

The worst-case scenario for oil prices would be some kind of disruption to Saudi supply itself. That concern has become livelier given the unrest in neighboring Bahrain. The tiny island kingdom produces little oil but is of vital strategic importance in the Persian Gulf, a seaway that carries 18% of the world's oil. America's 5th Fleet, which polices the Gulf against troublemakers (i.e. Iran), uses the country as a base.

The Saudis may also fear that protests by Bahrain's Shia population could spill over their own borders. Saudi Arabia's eastern provinces are home to both its oil industry and most of its Shias, who may also have cause for grievance with their Sunni rulers. One crumb of comfort is that oil facilities across the region are generally located far from the population centers, where protests tend to be concentrated, and are well defended against anything but a concerted military assault.

The impact of a crisis would therefore depend on how much oil production was lost and for how long. Even seismic shocks in oil- producing countries might not cut off supplies for very long. Yet the example of Iran shows what can go wrong. The world could probably weather a short-lived crisis. But the damage if oil prices spiked and stayed high for a long time could be great for the recovering economies of the rich world. As for the prospects of reducing the importance of the Middle East to global oil supplies, forget it. Strong Asian demand is likely to mean that OPEC's share of oil production rises again as it pumps extra output eastward. A troubled region's capacity to cause trouble will not diminish.

India’s domestic Oil production is insufficient (at 0.8 million barrels per day), to meet with growing demand of oil in the country. India is hugely depends on the OPEC countries for his requirements. Instability in political scenario and some rise in crude oil prices will also affect National Stock Exchange and Bombay Stock Exchange. Equity market and commodity and exchange market, seems to get most affected from this.

Tips To Make Better Options Trades

Buying options by the traders is always being considered while keeping the focus on the premium paid rather than the potential returns. Whereas this is important information in terms of making a calculated trade, many options traders tend to lose sight of the probability of the market reaching and exceeding its position's strike. The average monthly range of the market number provides perspective on two important elements of an options trade: whether volatility is expanding or contracting and whether the market has a chance of reaching and exceeding the breakeven point of the position.

What Is The Probability?
It is commonly said that the majority of options expire worthless. If that is a true statement and you are trading a position that is long premium (i.e. buying a call or a put), you need the market to have a chance of reaching a price that will make your option position profitable. When considering an option position, it is important to consider if it is probable that the market will reach that point. Just because the premium paid is cheap or under priced does not make the trade a good one, especially if the market has little or no probability of reaching that goal.

Calculate the Average Monthly Range
To calculate the average monthly range, all you need is access to reliable historical prices. For any stock, you can get historical open, high, low and closing prices for a given date range. This will give you all the key numbers that will be used in the calculation - the high and the low for each trading day. To calculate this average for a given period of time, subtract the low from the high for each month to get that month's range. For the time frame, add up each month's range and divide by the number of months.

Select a Time Period
Generally, it pays to look at a time frame of twice the length of the option position you are considering, and then break this up into two separate blocks of time. For example, if the option you are considering has three months of time to expiration, look at the average monthly range of the last three months, the three months prior to that and the last six months.

Apply the Strategy
Generally, an Option Strategy involves the simultaneous purchase and/or sale of different option contracts, also known as an Option Combination. There are such a wide variety of option strategies that
use multiple legs as their structure, however, even a one legged (Long Call Option) can be viewed as an option strategy. That is, if a trader thought that Coca Cola's share price was going to increase over the next month a simple way to profit from this move while limiting his/her risk is to buy a call option. Of course, s/he could also sell a put option. If the market price of an option contract implies that it is 50% more expensive than the historical prices for the same characteristics, then you may decide against buying into this option and hence make a move to sell it instead.

Words of Caution
In certain markets and at certain times, by using the average monthly range to choose options strikes, we may find that the implied volatility has pushed the option premiums to unreasonable levels. This causes smaller traders to buy strikes that are too far out of the money, simply because they want to be in a given market and have limited capital. In these cases, the use of the average monthly range should be telling you to either avoid that market, or to use a strategy that can get you closer to the current market price, such as a debit spread (bull call spread or bear put spread).

The Debit Spread
In certain market conditions, the debit spread gives the investor a limited risk position and gets closer to the current market than buying an option outright. In exchange, the investor sacrifices unlimited gains for a limited, but defined, maximum gain. This is often a favorable tradeoff, and will keep the investor grounded in the reality of what the market is more likely to do. The advantage of
unlimited gains is normally only effective if the market were to make a rare historic move.

Option Trading Tactics:
Option trading is still one of the safest methods of trading although it considered risky by many. Although, there are credit ratings of different firms based on the liquidity of options. Being an underlying asset, buyer of the option gains the right, but not the obligation. In India, the biggest player in options trading is National Stock Exchange and Bombay Stock Exchange. Since options listed in NSE & BSE separately, it results in tough competition from each other. Exchange having more volume will have more liquidity. So keep these things in mind while trading in Options.