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Commodities Week Ahead: ‘Super Fed Week’ Could Dominate Oil, Gold
Move over, OPEC and the IEA: the Federal Reserve is here.
A slew of speeches by the U.S. central bank’s top officials could feed the recent market’s obsession for a rate cut this week, driving oil prices just as powerfully as the OPEC and IEA monthly reports.
There are 10 speeches by Fed bankers scheduled between Tuesday and Thursday, including two testimonies by Chairman Jerome Powell. Over and above that, minutes from June’ monetary policy meeting are due on Wednesday.
While gold traders would typically be glued to every one of these, those in the oil market are also expected to pay particular attention to the events, given the pressure wrought upon the central bank for a rate cut at its July 30-31 meeting.
A drop in interest rates would weaken the U.S. dollar and lift alternative assets such as commodities. Conversely, a Fed stay would steady—or even strengthen—the greenback, weighing on oil and gold prices.
Price Volatility To Prompt Greater Fed Watch
While there are other factors that could influence the direction in commodities this week, conflicting supply-demand signals have lately muddied the path for prices, particularly in oil. A stellar U.S. jobs report for June, released last week, has raised doubts on whether the Fed is ready for an easing, given its stance that there have to be sufficient grounds for such action.
That means that even with the OPEC report scheduled on Thursday and International Energy Agency report due on Friday, oil traders might be more attentive to what this week’s Fed speakers have to say – to see if some insight could be gained on the central bank’s thinking on rates.
Aside from Powell, this week’s line-up includes New York Fed President John Williams , St Louis Fed president James Bullard , Fed Atlanta President Raphael Bostic , Fed Vice Chair for Supervision Randal Quarles , Richmond Fed President Thomas Barkin and Minneapolis Fed President Neel Kashkari .
Powell leads the honors with remarks on Tuesday at the Federal Reserve Bank of Boston, followed by two days of congressional testimony to discuss the Fed’s semi-annual monetary policy report .
Of the rest, the most closely watched would be Bullard, who was the only dissenting voice at the June Fed meeting, when the central bank decided to hold rates. The St. Louis Fed president is one of the more dovish members of the central bank’s policy-setting committee, also known as the FOMC.
The FOMC minutes, due for release on Wednesday, will be closely perused for precise reasons on the committee’s last voting patterns.
Chances Intact For July Rate Cut?
Investing.com’s Fed Rate Monitor Tool still suggests a 100% chance the Fed will cut its key federal funds rate from 2.25%-2.5% to 2%-2.25% in July.
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Powell said in a recent speech “an ounce of prevention is worth more than a pound of cure”, a hint that the central bank might lean toward a so-called insurance cut to head off a potential economic slowdown.
Yet, some market participants have scaled back expectations that a July cut is almost a certainty.
Fawad Razaqzada, technical analyst for precious metals and currencies at FOREX.com, said:
“The market is wondering now whether the rebound in employment growth has reduced the need for a rate cut in July, especially in light of trade talks between the U.S. and China resuming.”
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Both spot gold and gold futures skidded below the key $1,400 level last week after a growth of 224,000 U.S. jobs in June vs expectations for 160,000 deflated hopes for a Fed easing by this month.
Razaqzada said this week’s U.S. Consumer Price Index report and the European Central Bank’s July 25 meeting could be game changers though.
If the ECB chose to cut rates unexpectedly at its meeting, then the Fed could follow, he said, “regardless of any further improvement in U.S. data in the interim.”
Oil bulls hope the OPEC and IEA monthly reports would provide fundamental leads to the convoluted picture in the market after the unimpressive restart to U.S.-China trade talks and the increasingly worsening U.S.-Iran nuclear sanctions showdown. Both U.S. West Texas Intermediate crude and U.K. Brent oil posted weekly losses last week on demand worries, despite promises of tighter OPEC supply extending into March 2020.
Oil output by the Vienna-based OPEC, or the Organization of the Petroleum Exporting Countries, sank to a new five-year low in June, a Reuters survey last week showed, as growing Saudi supply proved unable to cover losses in Iran and Venezuela due to U.S. sanctions and other outages.
The Paris-based IEA, meanwhile, said in June that even if global oil demand grew by 1.4 million barrels per day in 2020, supply would expand even faster, at 2.3 million bpd.
It also said OPEC was pumping more than would be needed next year.
Super EZ Forex Review: Is this a Scam Indicator?
Super EZ Forex Review: Is this a Scam Indicator?
Last Updated: Aug 16, 2020 @ 9:36 pm
This review talks about Super EZ Forex indicator which the owner claims was created for his wife and kids so they can start trading like professionals in minutes. With this indicator, they claim that we can make money at will. The indicator in question can be found at superezforex.com. The sales page is quite interesting which is why we have decided to review it because the author seems to have something different from the regular indicators that the trading community is used to. For instance, they claim that it has 8 indicators within this product and only one repaints because it is a predictive indicator which tells us what the market will do next. The other 7 indicators are reactive meaning that their action is a confirmation that the predictive indicator is following in the right direction of the market.
Along the indicator, traders also gain access to live trading room sessions, free updates, members area training and their triple arrow trading system. Today, we will be providing a full analysis of the service, and letting you know all of the details that the vendor is providing us with.
is a Forex indicator built to take 20 minutes to learn for a lifetime of profits. Along the indicator, traders also gain access to live trading room sessions, free updates, members area training and their triple arrow trading system. Today, we will be providing a full analysis of the service, and letting you know all of the details that the vendor is providing us with.
The vendor provides no information about who they are, or where they are located. There is a connection in the testimonial section that the service is developed by someone named Pat, but that’s essentially all we know. According to the sales page, Pat has been developing the trading system for approximately 4 years.
There is no contact information provided on the sales page either, so traders cannot get in touch with support before purchasing. This is certainly an odd way of doing things, and not a positive sign. Before we can go far, we are reminding you to check out this page because it contains products that can be very helpful to your Forex trading journey.
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Super EZ Forex review
The sales page is clean, and not overly developed or unique but it’s also lacking real detail about the Super EZ Forex services. The website is comprised of 5 different sections, including what is Forex, why us, features, testimonials and frequently asked questions. None of these sections provide the amount of information you would expect from an investment service or Forex trading strategy with multiple areas of interest.
In order to qualify, and be considered one of the best Forex indicators, a vendor has to provide enough of valuable information to prove that their product is viable. That does not seem to be the case with this current iteration of the sales page.
Strategy used by Super EZ Forex
The Super EZ Forex trading system works for position trades, swing trades and day trades. Though, much like the rest of the presentation, the explanations are lacking. The vendor does not tell us how he Forex indicator works with different trading styles or strategies. The vendor also fails to tell us the overall methodologies and approaches the triple arrow trading system.
Instead, the only section of the website dedicated to strategy is a short story about how the creator came to the conclusion that he should build a Forex indicator. He tells us that he “originally set out to create a simple system” to teach his wife and children so that they would have an easy way making money. Then, after sharing the system with his friends, and his pastor, he felt that this would be perfect program to released to the world. It’s a fun story, but it’s fluff and lacks any sort of real substance that a Forex presentation should provide.
In summary, this product is a Forex Indicator owned by a developer called Pat and founded in 2020. The price of this indicator is $323.67.
There is one package available for traders looking to sign up with the Super EZ Forex service. This package costs $323.67, it can be purchased via PayPal or Bitcoin. The price of the software is much higher than most Forex indicators, as the majority of the products in this marketplace go for somewhere around $100. This is apparent in our most recent Forex indicator reviews of FX Delta, and the Perfect Trend System.
In the why us section of the Super EZ Forex website, there are a few images under the label system proof. These images show sample trades that the indicator has provided. While the images are impressive and show gains of anywhere from 41 to 166 pips in a single transaction, it can hardly be considered proof.
The problem with this type of trading results, is that the trades can easily be cherry picked, or manipulated by the vendor in any way. This is because the vendor is not using a statement sharing service provider that offers verified trading results. In fact, the results provided don’t even show the details of the trade, so they could be taken from any date and time for all we know. The results drastically need to be updated.
There are a few testimonials on the sales page, but outside of these, there is little to no information online. This is obviously not very popular program at this point in time, though that is not always meant to be a deterrent or concern.
Our best advice for you
The Super EZ Forex indicator appears to be a very good indicator but besides this, the developer needs to do a good job at proving that it is a viable trading tool. They need to provide the trading methodology used, trading performance and probably take time to think about the price tag. If you have used this product before, leave your feedback. Otherwise these alternatives will suit your needs as far as trading is concerned.
Comparing Oil vs. Gold
In Another Way to Measure Inflation we spoke about comparing other commodity prices to the price of gold. In the past we have compared Stock Market vs. Gold but today I’d like to compare the price of Oil to Gold.
Oil vs. Gold
In the modern economy, oil is just as important, if not more important, than gold. Everything depends on oil, it heats our homes, runs our cars and machinery, and produces our electricity which in turn runs our computers, the internet, entertainment, lights and HVAC. An argument could be made that our currency should actually be based on oil rather than gold. The only problem is portability… who wants to carry a barrel of oil to the grocery store?
Oil as a measure of inflation:
Oil might also serve as a measure of inflation.
Today, I’d like to compare the price of gold with the price of oil. Theoretically, since both are commodities, if it were truly democratic, inflation would raise all prices equally. Thus the ratio of the price of gold to the price of oil would remain constant. So then, as the value of the dollar depreciated (due to an increased supply of dollars) the price of both gold and oil would increase in tandem. This however has not happened. Both oil and gold are subject to external forces that have affected their price. So at times each has been overpriced compared to the other.
Traditionally economists have measured gold in terms of oil i.e. one barrel of oil is equal to some fraction of an ounce of gold (ounces per barrel of oil). But I prefer dealing with whole numbers rather than fractions so I’ve created this chart in terms of the number of barrels of oil a single ounce of gold will buy.
For the period when Nixon set price controls on oil, we also used the free market price of oil (called stripper because some “stripper” wells that were nearing their end of life were exempt from price controls.) We also used the free market price of gold rather than the government fixed price of $35 / ounce.
Oil vs. Gold Chart Analysis
In looking at the chart we can see that the average since 1946 has been that one ounce of gold would buy 14.83 barrels of oil. Therefore, whenever one ounce of gold would buy more than 14.83 barrels of oil either oil was cheap or gold was expensive. And conversely, whenever an ounce of gold would buy less than 14.83 barrels, then oil was expensive or gold was cheap.
Click for larger Image
Knowing this we can decide when we should be buying gold and when we should be investing in oil instead. With the benefit of 20/20 hindsight we can see that from 1948 through 1970, oil was expensive and/or gold was cheap.
That makes sense because the price of gold was fixed and that is what eventually led to Nixon having to stop selling U.S. gold to foreign governments (closing the gold window) but also opening up gold sales to U.S. citizens. Once that pent up demand was released from 1970 to 1972 the price of gold shot up 62% while oil increased 6.2%. By 1973 oil was up over 40% but gold was up over 170%. Over 10 years (by 1980), oil was up over 1000% but gold was up over 1600%.
But what about that brief period from 1973 -1975 when gold was expensive compared to oil? Well from 1973 to 1974 oil prices were up almost 97% while gold prices were “only” up 58.13%. The following year oil prices actually fell so from 1973 – 1975 oil was up 61+% while gold was up 65% but then in 1976 gold fell and oil took off so that by 1978 oil was up 214.7% and gold was “only” up 98.6%. So once again when the ratio indicated that gold was overpriced oil performed better.
So if you had held gold from 1970 -1973 switched to oil from 1974-1976 and back to gold for 1976-1980 instead of just being up 1600% you would have been up about 3600%!
Neither oil nor gold were good investments for the decade of the 1980’s with gold losing -37.6% over the decade and oil losing -38% . From 1990 – 1999 oil lost another -28.6% and gold lost -27.3% . However by buying the cheap one and simultaneously selling the expensive one “short” you could still have made a tidy profit.
Note that in 1998, oil was cheap or gold was expensive and from 1999 -2000 oil was up 65.6% while gold was basically flat. In the early 2000’s gold was once again very cheap and it went from $271 in 2001 to $1669 in 2020 when oil was cheap again. Remember these are average annual prices, so you wouldn’t need to get the timing exactly right to hit them.
Where are we Now?
The average price of oil in 2020 was $91.17 and the average price of gold was $1,411.23 which resulted in 15.48 barrels per ounce or a slightly above average ratio, meaning that gold was slightly overpriced or oil was very slightly under-priced, not generating a signal either way.
By April of 2020 the prices had shifted to $95.20 / barrel and $1293.94 / oz resulting in a ratio of 13.59 barrels per ounce. Thus in April the ratio has moved barely into the gold is cheap side. Over this relatively brief period oil has risen 4.42% while gold has fallen -8.31%.
At this point, the ratio is really so close to the average that you can say they are both nearly correctly priced and you need to wait for an extreme to take a position.
For traditionalists I have also included the chart in ounces of gold per barrel of oil or more precisely in fractions of an ounce per barrel of oil. Click for larger Image.
A full list of prices and ratios are below.
How to Invest in Oil
Investors have many options for getting involved with oil. These methods come with varying degrees of risk and range from direct investment in oil as a commodity, to indirect exposure in oil through the ownership of energy-related equities. Each of these investment types can be acquired through an online brokerage account.
How Can I Buy Oil As An Investment?
One direct method of owning oil is through the purchase of oil futures or oil futures options. Futures are highly volatile and involve a high degree of risk. Additionally, investing in futures may require the investor to do a lot of homework as well as invest a large amount of capital.
Another direct method of owning oil is through the purchase of commodity-based oil exchange-traded funds (ETFs). ETFs trade on a stock exchange and can be purchased and sold in a manner similar to stocks. For example, buying one share of the U.S. Oil Fund (USO) would give you exposure to roughly one barrel of oil.
In addition, investors can gain indirect exposure to oil through the purchase of energy-sector ETFs, like the iShares Global Energy Sector Index Fund (IXC), and to energy-sector mutual funds, like the the T. Rowe Price New Era Fund (PRNEX). These energy-specific ETFs and mutual funds invest solely in the stocks of oil and oil services companies and come with lower risk.
Silber Bennett Financial, Los Angeles, CA
There are many ways that you can invest in oil commodities. You can even buy actual oil by the barrel.
Crude oil trades on the New York Mercantile Exchange as light sweet crude oil futures contracts, as well as other commodities exchanges around the world. Futures contracts are agreements to deliver a quantity of a commodity at a fixed price and date in the future.
Oil options are another way to buy oil. Options contracts give the buyer or seller the option to trade oil on a future date. If you choose to buy futures or options directly in oil, you will need to trade them on a commodities exchange.
The more common way to invest in oil for the average investor is to buy shares of an oil ETF.
Finally, you can also invest in oil through indirect exposure by owning various oil companies.
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