Tuesday, January 17, 2012
Tuesday, November 15, 2011
Forex Android Apps: High Tech Trading
Forex android trading is about as high tech as it gets; while smart phones and mobile tablet devices may not boast quite the range and efficacy of features that are available to home traders, being able to monitor the market and make trades from a speeding train or restaurant is undeniably impressive. However no Forex android device is complete without the apps to go with it, let’s consider some of the ways that these apps can be utilized.
The most fundamental thing a trader can do with a Forex android device is keep track of market developments while on the move. In addition to tracking hundreds of currency pairs and exchange rates many modern devices are tuned into market news feeds so users can check out the forces behind market fluctuations.
The other thing a busy trader needs to do is trade! Admittedly Forex android trading is quite limited in many respects however it’s certainly possible to maintain a healthy trading career with a mobile device alone (as long as you can do without the fancy bells and whistles).
Some apps are dedicated to giving you a clear picture of the macroeconomic factors at play in the markets. For example there are apps that stream the latest info about the US economy such as inflation rates, national dept, stock indices, etc. These are intended to give your trades a strategic depth beyond historical figures.
Speaking of historical figures there are apps for that too! Many traders appreciate being able to reference historical precedents in order to make their trades more profitable and there are apps that make referencing and comparing such figures a breeze.
Finally a lot of Forex Android apps offer general tools for travelling businessmen such as quick currency convertors, world clocks, GPS and much more. Mobile trading is all about liberating the trader; why not give it a go?
The most fundamental thing a trader can do with a Forex android device is keep track of market developments while on the move. In addition to tracking hundreds of currency pairs and exchange rates many modern devices are tuned into market news feeds so users can check out the forces behind market fluctuations.
The other thing a busy trader needs to do is trade! Admittedly Forex android trading is quite limited in many respects however it’s certainly possible to maintain a healthy trading career with a mobile device alone (as long as you can do without the fancy bells and whistles).
Some apps are dedicated to giving you a clear picture of the macroeconomic factors at play in the markets. For example there are apps that stream the latest info about the US economy such as inflation rates, national dept, stock indices, etc. These are intended to give your trades a strategic depth beyond historical figures.
Speaking of historical figures there are apps for that too! Many traders appreciate being able to reference historical precedents in order to make their trades more profitable and there are apps that make referencing and comparing such figures a breeze.
Finally a lot of Forex Android apps offer general tools for travelling businessmen such as quick currency convertors, world clocks, GPS and much more. Mobile trading is all about liberating the trader; why not give it a go?
Forex Autotrading: Time Saved is Time Earned
Forex autotrading allows trader to manage their Forex careers in far less time than was previously possible. Not only does has this provided dedicated traders with a lot more time to study, network and plot their trades, it has also swung open the doors of Forex trading to previously inaccessible demographics.
Nowadays professionals with busy work and personal lives can easily manage their Forex trades without having to dedicate a lot of time to the process. As a result Forex autotrading has drastically increased the productivity of traders as well as the number of people trading.
Forex autotrading was not the only factor that spurred this growth. Of equal significance has been the gradual uptake of Internet connected computers in households across the world as well as the development of extremely simple and effective trading applications such as Metatrader 4.
It’s also a lot easier to find a broker and open an account nowadays. Have a look online and you’re sure to find countless online brokers offering live/demo accounts as well as useful software and Forex training. In addition these brokers are likely to offer introducing broker programs as well. Take your time when looking for a broker however, not all of them are quite what they seem and scams are not unheard of.
How exactly does Forex autotrading work?
Most major trading applications offer Forex autotrading as standard. The trader simply has to configure the application to buy/sell the desired currency or asset when the specified market conditions emerge. This way a trader can never lose money as a result of not being available to place trades individually. It also means they never miss an opportunity if the conditions they specify are effective.
Where can I get more information about Forex autotrading?
Contact a good Forex broker to get more information!
MT4 Education Videos: What they Show You
MT4 education videos are a great way to get to grips with the best trading application in the business. A good workman never blames his tools and you certainly will have nothing to complain about when it comes to Metatrader 4. Metatrader 4 is the industry leader for functionality, depth and range of features, market uptake as well as accessibility and ease of customization. Of course at first glance Metatrader’s more advanced features might be difficult to figure out, that means that MT4 education videos are a must.
What sophisticated features do MT4 education videos explain?
MT4 education videos will first explain how the latest Forex data is streamed to the application and how you can keep close track of market figures and statistics. It’s also important that a trader learns how to assess the wisdom of trades and how to place orders with their broker.
Sophisticated features like autotrading are difficult to get to grips with without guidance. Autotrading involves setting up parameters for automatic trades in response to predictable market phenomena. The videos will show you how to configure Metatrader to make these automatic trades as well as a little bit of information about the unique dynamics of autotrading in comparison to traditional trading.
It’s important to get a good handle on autotrading as it is gradually becoming the industry norm for day to day trades. Not only does automated trading significantly reduce the amount of time necessary to manage an account, it also encourages traders to think outside the box and search for repeated patterns in the market.
The best source for Forex training videos is a dedicated forex broker. Most Forex brokers are more than happy to set up curious, would-be traders with Metatrader demo accounts and videos to guide them on their way. If you think Forex trading might be for you, you should contact a Forex broker today.
Monday, October 10, 2011
Global Currency and Gold
By Mike Hewitt and Dr. Krassimir Petrov
Table 1 below, Currency Unions, provides the details for each currency union, such as its popular and technical name, its currency name, currency code, and member countries.
The five currency unions and 81 independent currencies cover a total of 122 countries that make up 98.4% of the world's GDP and 86.1% of the world's population. Figure 1 below visualizes the coverage. Areas with grey color on the map represent countries without available data. Areas with blue, red, and orange color represent the three most important economic unions, respectively the European, the West African, and the Central African Unions.
Reliable money supply data could not be found for all countries. The five largest economies for which data was unavailable were: Morocco, Vietnam, Angola, Sudan, and Cuba. These countries comprise 0.6% of world GDP and 2.8% of world population. Their relatively insignificant share of the global economy makes us believe that their exclusion from our analysis would not materially affect our results and our conclusions.
Myanmar (Burma) requires a special note. Cross-country money supply comparisons rank Myanmar very high. This apparent paradox arises from the discrepancy between the overvalued official exchange rate and the more realistic "black market" exchange rate. For the local currency, the 2005 money supply is reported at 1.83 trillion kyat (MMK). The official exchange rate (6.7147 MMK to 1 USD) makes this the fifth most valuable currency in the world with a value of US$273 billion. The unofficial black market exchange rate (1300 MMK to 1 USD) provides a value of only US$1.4 billion. In our opinion, the official rate overvalues the currency roughly 200 times and introduces an obvious bias in the data, so Myanmar money supply was not included.
Unfortunately, there is no unified methodology for calculating different monetary aggregates. This presents analytical problems as different countries use different definitions of money supply. Different definitions, in turn, require different methodologies for calculating different monetary aggregates, which immensely complicates cross-country comparisons. Unfortunately, we are not aware of any widely accepted solution to this particular problem.
Quite commonly, money is conceptually defined across a continuum from narrow money to broad money. Narrow money typically includes highly liquid forms of money that function as a medium of exchange, while broad money additionally includes other less liquid forms of money that function as a store of value. Monetary aggregates are conventionally denoted in ascending order by M0, M1, M2, M3, etc. Smaller aggregates like M0 and M1 correspond conceptually to narrow money supply, while larger aggregates like M2 and M3 correspond to broad money supply. We should note that in the heady days of monetarism, economists have further elaborated those aggregates and have devised M4, M5, M6, etc.
Most generally and most commonly, but not necessarily uniformly, M0 refers to outstanding currency (banknotes and coins) in circulation, but excludes cash reserves. M1 includes M0, demand deposits, and cash reserves. M2 includes M1 and savings deposits, conventionally maturing within two years or redeemable at notice within three months. M3 includes M2, repurchase agreements, money market funds, and debt securities maturing within two years.
Additionally, not every country publishes all four of the common monetary aggregates. For example, the U.S. Federal Reserve ceased publishing M3 on May 23, 2006. However, various independent sources have successfully reconstructed the M3 series and have continued to publish it.
For our analysis, we concentrated exclusively on the narrowest measure of money supply, M0. Conceptually, it corresponds best to the monetary interpretation of gold. We expect it to relate well to the value of gold, although further studies may be necessary to analyze the relationship of gold to higher aggregates, such as M1, M2, and M3.
The left-hand side of the figure shows that the four largest currencies in circulation comprise nearly three-quarters of the global narrow money supply. Not surprisingly, those currencies are the Euro, the U.S. Dollar, the Japanese Yen, and the Chinese Yuan. The right-hand side zooms in on the "other" 79 currencies of the left-hand side that were simply too small to see when shown together with the big currencies. We show the next thirteen most important currencies that comprise more than half of the "other" category. It is clear from the picture that those thirteen currencies are relatively small compared to the big currencies. Nevertheless, it illustrates well their portion of the global money supply.
Next, we consider narrow money supply growth rates. For the whole dataset, the average growth rate of M0 is 8.2%. Table 2 below shows the twelve currencies with the fastest annual growth rates of M0, shown in the middle column highlighted in yellow:
On the other hand, when converted to U.S. Dollars as of Oct 31, 2008, the fastest growing currencies in absolute terms are shown in Table 3 below.
From the comparison of the two tables above, it is quite obvious that the rapidly inflating currencies are too small to significantly affect global money supply growth rates. From the second table it is clear that the "big" currencies contribute the bulk of increases in the global money supply. From this particular analysis we can conclude that a sample of the largest 10-15 currencies in the world can provide a meaningful analysis of the growth rate of global money supply.
Figure 3 below shows the calculation of the value of all gold ever mined. The top left graph in the figure shows the price of gold for the period of 1970-2008. The top right graph in the figure shows the quantity of all gold mined for the same period. Finally, the bottom graph in the figure shows the product of the price with the quantity, which represents the value of all gold ever mined.
The October 31, 2008 closing spot price for one troy ounce of gold was US$806.62. Multiplied by the corresponding quantity, the total value of all gold ever mined was US$4.3 trillion. This is just slightly more than the US$4.03 trillion global M0 money supply from Figure 2 above.1
Figure 4 below shows a historical comparison for the value of mined gold against that of currency in circulation. This chart essentially overlays our previous data on global money supply with the data on the value of gold. It provides the basis for our valuation of gold.
Our analysis essentially begins with the collapse of Bretton Woods. The first major observation is that during the 1970s, gold advanced much farther than money supply. There are two fundamentally different explanations for this phenomenon. The first explanation, espoused by neoclassical economists, is that gold is inherently more volatile and more unstable than paper currencies. The other explanation, espoused by the School of Austrian Economics, holds the opposite to be true and that price swings in gold reflect the discounted value of expected future inflation. In other words, Austrian economists contend that the monetary policy associated with paper currencies is inherently unstable, and this instability of paper currencies is magnified when discounted to the current price of gold; this discounting mechanism generates the apparent excessive volatility of gold.
The second fundamental observation is that during the 1970s, gold rose at significantly faster rates than money supply. Neoclassical economists explain this with the inherently volatile nature of gold. However, volatility simply cannot explain this 10-year trend. Volatility relates to variability in prices around the trend, not to the direction of the trend. Neoclassical economists have no meaningful explanation here, except to resort to volatility of gold and irrational behaviour of gold "bugs". On the other hand, the explanation by Austrian economists is straightforward and logical: as inflation accelerated throughout the 1970s, the discounting mechanism of the gold market resulted in accelerating price of gold from the rising inflationary expectations.
The third fundamental observation is that there is a possibility for a long-term divergence between the value/price of gold and global money supply. This divergence is obvious for the period of 1980-2000. The neoclassical school has not offered a satisfactory explanation for this phenomenon except to point out disparagingly that gold is a "barbarous relic", "irrelevant" or "dead". The Austrian explanation, however, is again quite straightforward: the period was generally characterized by disinflation, so the discounting mechanism produced lower gold prices due to the falling inflationary expectations that more than offset increases in money supply.
Notes-->
1. Introduction
In this essay we attempt to estimate global money supply and relate it to global supply of gold. For the global money supply, we use money supply figures for currency in circulation from 86 selected currencies, from 81 independent countries and five monetary unions. For the global supply of gold, we use data from the World Gold Council (WGC). Finally, we attempt to interpret the price of gold as a relationship between global money supply and global gold supply.2. Data Description
For money supply, we consider five monetary unions and 81 sovereign (independent) currencies. Here is a quick survey of those unions. The first monetary union is the European Monetary Union (EMU), commonly known as the Eurozone, and using the Euro as a common currency. It includes 16 Western European countries, such as Germany, France, Belgium, and Austria. The second currency union is the East Caribbean Currency Union, which uses the East Caribbean Dollar, and includes members like Antigua and Barbuda. The third union is the West African Monetary Union (UEOMA), using the West African Franc, and includes members like Benin and Burkina Faso. The fourth union is the Central African Monetary Union, technically known as CEMAC, which uses the central African Franc, and includes members like Cameroon, Chad, and Congo. The fifth union is technically known as the IEOM, uses the French Pacific Franc, and includes members like French Polynesia and New Caledonia.Table 1 below, Currency Unions, provides the details for each currency union, such as its popular and technical name, its currency name, currency code, and member countries.
Table 1. Currency Unions
The five currency unions and 81 independent currencies cover a total of 122 countries that make up 98.4% of the world's GDP and 86.1% of the world's population. Figure 1 below visualizes the coverage. Areas with grey color on the map represent countries without available data. Areas with blue, red, and orange color represent the three most important economic unions, respectively the European, the West African, and the Central African Unions.
Figure 1. Countries Included in the Analysis
Myanmar (Burma) requires a special note. Cross-country money supply comparisons rank Myanmar very high. This apparent paradox arises from the discrepancy between the overvalued official exchange rate and the more realistic "black market" exchange rate. For the local currency, the 2005 money supply is reported at 1.83 trillion kyat (MMK). The official exchange rate (6.7147 MMK to 1 USD) makes this the fifth most valuable currency in the world with a value of US$273 billion. The unofficial black market exchange rate (1300 MMK to 1 USD) provides a value of only US$1.4 billion. In our opinion, the official rate overvalues the currency roughly 200 times and introduces an obvious bias in the data, so Myanmar money supply was not included.
3. Monetary Aggregates
The Bank of International Settlements (BIS) provides a link on their website that lists central banks for different countries. The following charts and tables use money supply data from these official websites, whereby each link identifies the economic area.Unfortunately, there is no unified methodology for calculating different monetary aggregates. This presents analytical problems as different countries use different definitions of money supply. Different definitions, in turn, require different methodologies for calculating different monetary aggregates, which immensely complicates cross-country comparisons. Unfortunately, we are not aware of any widely accepted solution to this particular problem.
Quite commonly, money is conceptually defined across a continuum from narrow money to broad money. Narrow money typically includes highly liquid forms of money that function as a medium of exchange, while broad money additionally includes other less liquid forms of money that function as a store of value. Monetary aggregates are conventionally denoted in ascending order by M0, M1, M2, M3, etc. Smaller aggregates like M0 and M1 correspond conceptually to narrow money supply, while larger aggregates like M2 and M3 correspond to broad money supply. We should note that in the heady days of monetarism, economists have further elaborated those aggregates and have devised M4, M5, M6, etc.
Most generally and most commonly, but not necessarily uniformly, M0 refers to outstanding currency (banknotes and coins) in circulation, but excludes cash reserves. M1 includes M0, demand deposits, and cash reserves. M2 includes M1 and savings deposits, conventionally maturing within two years or redeemable at notice within three months. M3 includes M2, repurchase agreements, money market funds, and debt securities maturing within two years.
Additionally, not every country publishes all four of the common monetary aggregates. For example, the U.S. Federal Reserve ceased publishing M3 on May 23, 2006. However, various independent sources have successfully reconstructed the M3 series and have continued to publish it.
For our analysis, we concentrated exclusively on the narrowest measure of money supply, M0. Conceptually, it corresponds best to the monetary interpretation of gold. We expect it to relate well to the value of gold, although further studies may be necessary to analyze the relationship of gold to higher aggregates, such as M1, M2, and M3.
4. Global Currency Comparisons
The following pie charts in Figure 2 below show the relative value of global currencies (M0) when converted to USD for means of comparison.Figure 2. Global Narrow Money Supply
Next, we consider narrow money supply growth rates. For the whole dataset, the average growth rate of M0 is 8.2%. Table 2 below shows the twelve currencies with the fastest annual growth rates of M0, shown in the middle column highlighted in yellow:
Table 2: Fastest Growing Currencies in Relative Terms
*The Reserve Bank of Zimbabwe ceased publishing any statistics after June 2008 at which point 1 USD equalled 40.9 billion Zimbabwe Dollars.
It is clear from the table above that while their growth rates are relatively high, the value of these currencies are relatively small in absolute terms.On the other hand, when converted to U.S. Dollars as of Oct 31, 2008, the fastest growing currencies in absolute terms are shown in Table 3 below.
Table 3: Fastest Growing Currencies in Absolute Terms
From the comparison of the two tables above, it is quite obvious that the rapidly inflating currencies are too small to significantly affect global money supply growth rates. From the second table it is clear that the "big" currencies contribute the bulk of increases in the global money supply. From this particular analysis we can conclude that a sample of the largest 10-15 currencies in the world can provide a meaningful analysis of the growth rate of global money supply.
5. Money Supply vs. Gold Supply
It is estimated by the WGC that a total of 165,547 tonnes of gold have been mined. This is equivalent to about 5.32 billion ounces. Most of that gold is currently available as supply at some price, possibly much higher than the current market price. Given that the total gold supply is relatively stable and that very little gold is consumed in industrial processes, the annual increase in the supply of gold from current mining is relatively stable -- about 1.5%.Figure 3 below shows the calculation of the value of all gold ever mined. The top left graph in the figure shows the price of gold for the period of 1970-2008. The top right graph in the figure shows the quantity of all gold mined for the same period. Finally, the bottom graph in the figure shows the product of the price with the quantity, which represents the value of all gold ever mined.
The October 31, 2008 closing spot price for one troy ounce of gold was US$806.62. Multiplied by the corresponding quantity, the total value of all gold ever mined was US$4.3 trillion. This is just slightly more than the US$4.03 trillion global M0 money supply from Figure 2 above.1
Figure 3. Global Value of Gold
Figure 4. Global Money Supply vs. Global Value of Gold
6. Gold Valuation
The period from 1945 to 1971 is widely known as the "Bretton Woods" era. The chief aim of the Bretton Woods Agreements was to establish the rules for commercial and financial relations among the world's major industrial countries. The policy required that each country maintained the exchange rate of its currency within a fixed value--plus or minus one percent - to the U.S. Dollar, which in turn would be convertible to gold at the rate of US$35/oz for foreign governments.2 The system collapsed when President Nixon took the U.S. Dollar off the gold standard on August 15, 1971 in response to growing demands from foreign governments to exchange their paper dollars for U.S. Treasury gold. At that time there was some speculation by professional economists and Wall Street that the price of gold would collapse as the U.S. Dollar 'would no longer hold it up'. In reality, just the opposite occurred - not only did gold not collapse, but instead it began a multi-year bull market, reaching an intraday peak of US$873 a troy ounce on January 21, 1980.3Our analysis essentially begins with the collapse of Bretton Woods. The first major observation is that during the 1970s, gold advanced much farther than money supply. There are two fundamentally different explanations for this phenomenon. The first explanation, espoused by neoclassical economists, is that gold is inherently more volatile and more unstable than paper currencies. The other explanation, espoused by the School of Austrian Economics, holds the opposite to be true and that price swings in gold reflect the discounted value of expected future inflation. In other words, Austrian economists contend that the monetary policy associated with paper currencies is inherently unstable, and this instability of paper currencies is magnified when discounted to the current price of gold; this discounting mechanism generates the apparent excessive volatility of gold.
The second fundamental observation is that during the 1970s, gold rose at significantly faster rates than money supply. Neoclassical economists explain this with the inherently volatile nature of gold. However, volatility simply cannot explain this 10-year trend. Volatility relates to variability in prices around the trend, not to the direction of the trend. Neoclassical economists have no meaningful explanation here, except to resort to volatility of gold and irrational behaviour of gold "bugs". On the other hand, the explanation by Austrian economists is straightforward and logical: as inflation accelerated throughout the 1970s, the discounting mechanism of the gold market resulted in accelerating price of gold from the rising inflationary expectations.
The third fundamental observation is that there is a possibility for a long-term divergence between the value/price of gold and global money supply. This divergence is obvious for the period of 1980-2000. The neoclassical school has not offered a satisfactory explanation for this phenomenon except to point out disparagingly that gold is a "barbarous relic", "irrelevant" or "dead". The Austrian explanation, however, is again quite straightforward: the period was generally characterized by disinflation, so the discounting mechanism produced lower gold prices due to the falling inflationary expectations that more than offset increases in money supply.
7. Conclusion
This analysis leads us to speculate that while divergences caused by inflationary expectations can last for a very long time, even decades, the long-term price of gold is driven by global money supply.Notes-->
Notes
1 As an interesting aside, one may note that the present U.S. debt of US$10.5 trillion easily exceeds the value of ALL circulating currencies in the world PLUS the value of all gold ever mined! A naive person may wonder just exactly how the American government ever intends to pay this debt off...
2 It was illegal for Americans to own gold for investment purposes since President Roosevelt signed Executive Order 6102 on April 5, 1933. It wasn't until Dec 31, 1974 when Americans could own once again own gold coins, bars and certificates.
3 In nominal terms, gold did not surpass this level until Jan 8, 2008 - nearly some 28 years later.
Published originally on DollarDaze.org - Jan 27, 2009._____
© 2009 Mike Hewitt and Dr. Krassimir Petrov
© 2009 Mike Hewitt and Dr. Krassimir Petrov
ABOUT THE AUTHORS
 | is the editor of DollarDaze.org, a website pertaining to commentary on the instability of the global fiat monetary system and investment strategies on mining companies. His website also provides a no-cost market data feed service with up-to-date quotes on currency exchange rates, commodity prices and major indices. Mike can be emailed at mikehewitt@hotmail.com. |
 | received his Ph. D. in economics from the Ohio State University and currently teaches Macroeconomics, International Finance, and Econometrics at the Prince Sultan University located in Riyadh, Saudi Arabia. He is a frequent contributer to www.FinancialSense.com, and a collection of his writings may be found here. |
Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.
Thursday, August 11, 2011
currency, oil, gold briefly
Week was bad for the euro may be even worse next week if you do not allow the Greek parliament a package of measures to stress. Have led to concerns about Greece fall of the euro against the dollar for three consecutive sessions, pushing the single currency fell by 0.9% for the week and by 1.6% during the month. Euro closed at 1.4220 dollars, and closed at 114.12 Japanese yen.
· Turn the pound sterling on Friday towards the losses against the dollar for the third day in a row, have expectations about cash incentives to encourage dealers to lift the centers of the bullish trend as all the bounce attract more sellers. Pound closed at 1.6015 dollars, the euro has closed at 0.8875 pounds.
· Canadian dollar fell on Friday to its lowest level in more than a week against the U.S. dollar continued its losses, which began in the middle of the week following the aggravated concerns about the debt problems of the euro area.
· Brent crude prices fell on Friday during intermittent dealings with the European debt problems led to the revival of the dollar index and oil continued to decline for the next day after it announced the consuming countries use strategic reserves.
· Price of gold fell sharply on Friday for the second straight session and reached its lowest level in a month, where concerns have led Greece to the rise of the dollar and pressure on the stock markets and commodities. gold closed at 1514.50 dollars
· Turn the pound sterling on Friday towards the losses against the dollar for the third day in a row, have expectations about cash incentives to encourage dealers to lift the centers of the bullish trend as all the bounce attract more sellers. Pound closed at 1.6015 dollars, the euro has closed at 0.8875 pounds.
· Canadian dollar fell on Friday to its lowest level in more than a week against the U.S. dollar continued its losses, which began in the middle of the week following the aggravated concerns about the debt problems of the euro area.
· Brent crude prices fell on Friday during intermittent dealings with the European debt problems led to the revival of the dollar index and oil continued to decline for the next day after it announced the consuming countries use strategic reserves.
· Price of gold fell sharply on Friday for the second straight session and reached its lowest level in a month, where concerns have led Greece to the rise of the dollar and pressure on the stock markets and commodities. gold closed at 1514.50 dollars
Wednesday, August 10, 2011
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