Maybe the fall of the Euro will be the 2012 catastrophe that the Mayans predicted

“We continue to hold gold and gold mining equities, reflecting our concerns that global fiscal and monetary policies continue to tempt fate.”

The above comment comes from the 2011 year-end investor letter of Greenlight Capital, the investment firm run by hedge fund magnate David Einhorn. As one of the more prominent gold bulls of late, Einhorn has held a considerable stake in the SPDR Gold Trust (GLD) for several years and acquired a large position in the Market Vectors Gold Miners ETF (GDX) last year.

Although the majority of Greenlight’s year-end letter did not focus on the firm’s gold positions, Einhorn did note that the yellow metal itself and the GDX were two of Greenlight’s five largest positions as of December 31, 2011.

The letter also discussed several macroeconomic issues that are likely to have an indirect impact on gold prices in the year ahead. Highlights of those include:

The global environment is very complicated. On the one hand, the Federal Reserve has taken a much-needed break from quantitative easing (at least for the moment).

Asia appears to be in much worse shape than it was at this time last year and could be a drag on the world economy going forward.

The European currency crisis has continued to worsen…The latest solution is a work-in-progress treaty being heavily negotiated that, in its current incarnation, will only need to be ratified by a subset of the Eurozone countries. While the leaders have committed in principle, there is significant risk that once the details emerge (and the necessary electorates are consulted), we will discover that some leaders pledged with their fingers cross and, as with prior efforts, this too will fail to get the job done. 2012 may be the year in which the currency crisis will no longer be kept at bay by politicians buying time with empty promises. Maybe the fall of the Euro will be the 2012 catastrophe that the Mayans predicted.

MayBank Likely Rally Up To RM8.60 Level Soon

Base on Maybank chart, share price likely rally up to RM8.60 level in short term. This level is the old high for 2011.

However, in long term MayBank is hard to hold on this support level.

Potential for a third round of quantitative easing (QE3) will continue to be a critical factor for the gold price heading into 2012

Looking ahead to the first trading week of the new year, a slew of U.S. economic reports are likely to serve as catalysts for the gold price. Later this morning, the ISM Index – a key manufacturing gauge – and a report on Construction Spending will be released. The latest Fed minutes – from last month’s Federal Open Market Committee (FOMC) meeting – are due out this afternoon. The remainder of the week includes several data points on the labor market – with ADP employment and weekly jobless claims scheduled for Thursday, followed by the monthly non-farm payrolls data on Friday.

The Federal Reserve will undoubtedly be keeping a close eye on the economic data as it prepares for its next FOMC meeting on January 25-26. The potential for a third round of quantitative easing (QE3) will continue to be a critical factor for the gold price heading into 2012. Thus far, the Ben Bernanke-led Fed has stressed the importance of maintaining accommodative monetary policies for the foreseeable future, but has yet to launch a new money printing campaign.

While the calendar is considerably quieter in Europe this week, German Chancellor Angela Merkel and French President Nicolas Sarkozy announced yesterday that they will meet in Berlin on January 9 to discuss next steps in combating the sovereign debt crisis. Euro zone officials are then scheduled to meet on January 30 at the next European Summit to draft a stricter set of measures for reigning in government spending.

Commenting on the outlook for the gold price, VTB Capital analyst Andrey Kryuchenkov wrote in a recent note to clients that “Longer-term players and physical buyers are likely to return to the market in the first half (of 2012), while the latest price retreat could serve as a good encouragement for hesitant market participants…There is little alternative to gold in times of economic uncertainty, despite the recent rush for the dollar. Gold stands on its own in terms of safe haven buying and bullion allocations are only likely to gain with currency protectionism still at large.”

Euro - more pessimistic than last week about reaching an overall deal

As investors await Friday’s European Union summit in which policymakers are expected to craft the next set of measures to deal with the sovereign debt crisis, a senior German official expressed a particularly cautious view on the summits’ likely outcomes.

“I have to say today, on Wednesday, that I am more pessimistic than last week about reaching an overall deal … A lot of protagonists still have not understood how serious the situation is,” the official stated at a pre-summit briefing, according to Reuters.

“My pessimism stems from the overall picture that I see at this point, in which institutions and member states will have to move on many points to make possible the new treaty rules that we are aiming for,” added the official, who spoke on condition of anonymity.

Other highlights from the report included:

President Nicolas Sarkozy and Chancellor Angela Merkel detailed their plan to amend the EU treaty to anchor stricter budget discipline in the euro area in a letter to European Council President Herman Van Rompuy on Wednesday…The French finance minister said the leaders of France and Germany would not leave Friday’s European Union summit until a ”powerful” deal is reached to restore market trust and prevent the sovereign debt crisis spiraling out of control.

One key uncertainty hanging over the summit is whether the EU treaty can be changed quickly to strengthen budget control.

Van Rompuy says tighter budget oversight sought by Paris and Berlin for the euro area could be achieved quickly by tweaking a protocol to the EU treaty that would not require full ratification procedures in many countries. The German official dismissed that idea as a “trick.”

FBM KLCI Showing Bullish Sign!

FBM KLCI, KLCI, Gold, Share market

















Yesterday FBM KLCI close above 1,480 level showing a bullish sign for this month. Share market windows dressing will start 2 week before end year and base on the trading vol, likely FBM KLCI will close above 1,500 by year end.

Bad news from US and Euro will slow down due to coming of long holidays till new year. When no news is good news, share market is ready for mark up.

Chance that the benchmark FBM KLCI will break past its immediate resistance barrier of 1,465 today

There is a chance that the benchmark FBM KLCI will break past its immediate resistance barrier of 1,465 today. If so, then the bellwether could be climbing towards the next resistance line of 1,495 ahead.

This follows a positive overnight performance by Wall Street. Major U.S. equity indices jumped between 2.5% and 3.0%, lifted by hopes that the U.S. President would be announcing a US$300b economic stimulus package later tonight. Back home, on tap today are:

1. Bank Negara Malaysia’s monetary policy committee meeting, which is expected to leave interest rates unchanged; and
2. external trade statistics for Jul with one media survey projecting an annual rise of 6.6% for exports and 5.9% for imports, translating to a monthly trade surplus of RM7.7b.

Separately, Fututech will be in the limelight after it has received an unconditional takeover offer to acquire its shares at RM0.50 each (versus its last done price of RM0.485) and warrants at RM0.09 each (versus the existing warrant price of RM0.13).

Asian equities may show a sense of calmness today after coming under selling pressures

Although Wall Street fell last night (with its key stock indices down between 0.3% and 0.9% at the closing bell), Asian equities may show a sense of calmness today after coming under selling pressures yesterday.

Back home, we expect the benchmark FBM KLCI to recover parts of its 20-point (or 1.3%) cumulative loss suffered over the past two days. Nevertheless, from a technical perspective, the bellwether will probably struggle to break past the immediate resistance threshold of 1,465 ahead.

Stocks that could get a lift today include:

1. Alam Maritim, which has signed a charter party agreement for the provision of vessel and tug transportation services valued at up to RM221m; and
2. Taliswork after clinching sub-contract works for a dam expansion project in Penang worth RM339m.