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[Presentation]Silver & USD/JPY[Prepared by: Mohammad Adnan]
FXCM• Forex capital markets• Established in 1999• Works in more than 20 countries• One of the top three brokers in the world• Shares of FXCM are floated in NYSE• Regulated by: NFA (USA) FSA (UK)
Silver• Ag• Soft, White Precious Metal• Used in used in currency, decorative items, and mirrors• Symbol XAG/USD• Trading unit $/T.OZ• Standard lot 5000 T./OZ.• Exchange COMEX
History• Mining of silver began 5000 years ago• Roman currency depended on silver• Chinese Empire used Silver as a medium of exchange• Silver Standard was used in 19th century
Demand• 1040.6 Million Ounces annual global demand• Top silver consumers (2010): USA 21.6% China 14.5% Japan 11.6% India 10.7%• Uses: Industrial 46.8% Photography 6.4% Jewelry 15.4% Coins and Medals 11.4%
Producers• Top three producers of Silver: Mexico 152.8 M Oz Peru 109.8 M Oz China 103.9 M Oz
Price action of SilverNet increase of 100% in value of silver inlast 5 years
Rise in Silver prices?• When dollar is weak Silver is used as an hedge against inflation• Increase in industrial demand of silver• Decrease in supply of Silver• Correlation with Gold
Reasons for investment in Silver• Hedge against inflation• Safe Haven asset• Poor Man’s Gold• Average annual return of silver has been 88% roughly is last 5 years• Prices are expected to go up: #China Net importer # Demand supply mismatch # New uses of silver # No recycling and quickly increasing silver production
Forecasts• Upward trend is expected in prices of silver: Increase in Industrial use Increase in Demand by China Global economic problems
US Dollar/Japanese Yen• USD/JPY• Bank of Japan• 3rd most traded currency globally after Dollar and Euro
History• Officially adopted in 1871• After world war II Yen was fixed at 360 USD/YEN• This continued till 1971 when us started Free floating exchange rates
Price action High 110 low 76, A downward trend
Intervention by Bank of Japan• Export based economy of Japan so devalued yen can result in favorable current account balance• BOJ intervenes to devalue Yen whenever its on the rise• The value of increases due to Japanese trade surplus and Net Inflows of Yen• BOJ intervenes through asset purchase program to devalue Yen
Reasons for Investment in USD/JPY • Safe haven • Continuous intervention by BOJ ensures that USD/JPY value increases • Lowest interests rate in Japan means no strengthening of yen
Forecasts• Price of Yen is expected to go up: BOJ intervention Pressure of Automobile giants Mitsubishi Toyota and Honda.