2012 Top Trades of BOA - Buy Gold Versus Euro; Iran Warns of Oil at $250

Tyler Durden's picture

From GoldCore

2012 Top Trades of BOA - Buy Gold Versus Euro; Iran Warns of Oil at $250

Gold is trading at USD 1,740.10, EUR 1,295.90, GBP 1,114.30, CHF 1,604.5, JPY 135,900 and AUD 1,700.4 per ounce.
Gold’s London AM fix this morning was USD 1,744, GBP 1,114.88, and EUR 1,296.08 per ounce.
Friday's AM fix was USD 1,751.00, GBP 1,116.50, and EUR 1,298.29 per ounce.

Cross Currency Rates

At the open in Asia, gold spiked from $1,746.75/oz to $1,755/oz before being capped at that level and falling back to its opening price. It remained near the $1745/oz mark overnight and this morning in Europe until soon after the London AM Fix ($1,744/oz) when selling commenced again.

Traders may be hesitant to place positions ahead of the Franco-German summit and there may also be some profit taking after the nearly 4% gains seen last week.

Gold will likely be supported this week by the intractable eurozone debt crisis and renewed jitters about Iran which has seen oil rise again today (NYMEX/ WTI at $101.80).

Iran warned yesterday that any move to block its exports would lead to oil at $250 a barrel.

Physical buying continues internationally. Indian gold edged higher this morning following a weaker rupee and premiums in the physical market steadied after a recent lull in buying. Chinese demand is gradually picking up again ahead of Chinese New Year.

Safe haven demand from Eurozone countries has increased significantly in recent days due to the concerns about euro exposure due to the possible collapse of the single currency.

Speculators, hedge funds and money managers pared their holdings of Comex gold and silver futures and options in the week ended Nov. 29, according to data released Friday by the Commodity Futures Trading Commission (CFTC).

The CFTC data, typically released Friday, were delayed because of the Thanksgiving holiday.

In gold futures and options, 4,207 long positions were cut and 1,249 short positions were cut.

This reduced their net position by 2% to 146,298 long contracts, from 149,256 long contracts a week earlier.

The managed fund net-long position represents around 14.6 million troy ounces of gold.

In Comex silver futures and options, these funds added 110 long contracts and 316 short contracts. This reduced their net long position by 2% to 12,334 contracts, from 12,542 contracts the previous week.

The net silver position represents around 61.6 million troy ounces of silver.

In platinum, 243 long positions were cut and 555 short lots were added, taking the net long position down to 12,952, from 13,750.

In palladium, 64 long lots were cut and 506 short lots were added, reducing the net long position to 5,231 from 5,800.

Volatility in currency markets has increased markedly in recent months and this looks set to continue in the coming weeks as liquidity dries up in the run up to and during Christmas and New Years.

Currency markets have proved even more difficult to predict than usual due to the global debt crisis. News headlines and rumours are causing large swings in the market.

Intervention from governments around the world to weaken their currencies and competitive currency devaluations have surprised markets. Investors can no longer assume that the yen, Swiss franc and the US dollar will be safe havens.

Foreign exchange trading today normally averages £4 trillion (€4.7 trillion) a day, according to the Bank for International Settlements.

2012 Top Trades of BOA - Buy Gold Versus Euro

Gold and the dollar are Bank of America Merrill Lynch’s top currency trades for 2012.

The second-biggest U.S. bank by assets after JPMorgan Chase & Co. said that investors should buy gold versus the euro as the ECB engages in quantitative easing to contain debt turmoil.

David Woo, global head of rates and currencies in New York at the Bank of America Corp. unit, told clients in research note that “the ECB will be buying more government debt and doing QE, so buy gold against the euro.”

“The second major theme is U.S. fiscal tightening is about to come and the U.S. economy will slow, and this will be very good for the U.S. dollar.”

 “The general theme for the year ahead is pretty negative for the risk environment,” Woo said.


(Reuters) -- Gold inches up as key EU summit nears

(Reuters) -- Decision time for EU, with euro's future at stake

(Washington Post) -- Oil rises to near $102 a barrel in Asia amid rising Iran tension

(Reuters) -- Iran says oil would go over $250 if exports banned


(Financial Times) -- Are We Heading Back to 1929 - Or the Dark Ages?

(Financial Times) -- France and Germany Look Set to Fudge It Yet Again

(Best Bullion) -- Laura Gross: Goldbug Defined

(Economic Policy Journal) -- Is Your Money Safe at Your Brokerage Firm?

(NY Sun) -- Bernanke’s Forgotten Footnote

(ZeroHedge) -- No, Dylan Grice Did Not Say Germany's Unwillingness To Print May Lead To The Rise Of Another Hitler

(Wall Street Journal) -- Weighing Loss of Iran's Oil

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fonzanoon's picture

Fiscal tightening about to come to the U.S. Yup....sure.

MillionDollarBonus_'s picture

I appreciate your positive attitude, but I can't claim to be as optimistic about the Fed's dovishness. The high consumer confidence figure was promising indication that Americans are willing to spend, but we cannot be complacent. Bernanke needs to be vigilant and pre-empt the public's masochistic tendencies that lead to saving, credit contraction and a negative doomer attitute. Politicians and central bankers need to focus on GROWTH, and smooth political talk just isn't going to cut it.

Ghordius's picture

MDB, I really like your irony - or is it sarcasm? I believe you carefully prepare those phrases for the occasions.

In this spirit: Why Gold is flawed

Dear Goldbugs, Gold is flawed, sell your stash immediately. The endless discussions about why the Euro is flawed gave me this insight (thanks NeoKeynesians). You see, if we would ever go back to gold, we would have only one "money" (read currency) in the world. This would cause catastrophic imbalances, the net exporters would hoard the gold and the net importers would be starved of cash and shrivel. A Whole World in imbalance! Not worth trying. Repeat after me: every small region needs it's currency...

Ghordius's picture

"Gold and the dollar are Bank of America Merrill Lynch’s top currency trades for 2012"

Sell all your EUR against Dollars and Gold, instead of only Dollar - do as BoA says and you'll be fine.

BorisTheBlade's picture

In the same spirit: Why debt is good

Dear Gloomers and Doomers, despite what fringe financial blogs want you to believe: the more debt, the better. Countless arguments why fiat currencies are fundamentally flawed gave me that idea. You see, if we follow countries with lowest debt per capita, we will come across a host of most oppresive lunatic regimes who supress freedom of speech and human rights out there: China, Iran, North Korea. Better, look at the recent example: Libya which had extremely low debt per capita even by Africa standards and look where it got them. Well, thanks to our brave allies, Lubya's case was put to rest and their debt levels will grow together with seeds of democracy. On the contrary, countries with highest debt per capita happen to respect human rights and also have high GDP. Forget this nonsense about 'debt slavery' and repeat after me: debt is prosperity, debt is freedom.

San Diego Gold Bug's picture

Leave the site you Wall Street Tool!

prodigious_idea's picture

A NeoCon, or just flawed correlary logic?

JOYFUL's picture

Since some appear to have missed it, there's a spur o the moment homage to M$B happening here...reading his latest, I can understand why - there's a new layer of subtlety and gamemanship that shows the hand of a man who is able and willing to master his craft. 

Ask yourself, how many folks, in the throes of this death rattle, end of civilization as we know it, farcical circus of the absurb, have the balls to calmly work away at making themselves better at what they do?

In this dark moment, when black is white, lie is truth, and everything real has been inverted upside down, Ghordius & Boris have chosen to show the way ahead: stop, think, and give the man an uptick...later, you'll feel better for it - and be better prepared for survival! 

UGrev's picture

I gave him a down-tick, because down is up :)

BorisTheBlade's picture

I gave you an up-tick, because up is down :(

Snidley Whipsnae's picture

 “The general theme for the year ahead is pretty negative for the risk environment,” Woo said...


Only if you are not a congresscritter, connected banker, a friend of a friend of Paulson, Fed Reserve Board Member or Chairman, or anyone with enough connections to receive advance notice of ongoing asset market manipulations and/or printing fiat and bailing out soverigns and banks. All these folks can front run the wild swings and make a pile of FRNs... others need not play unless their ludomania overcomes their common sense...common sense being the most uncommon of all human traits.


Ratscam's picture

... need to focus on GROWTH.

As a reminder dear MDB, first thing in the morning for the next two weeks, watch Albert Bartlett Video on the exponential function.

proposing never ending economic growth in a finite world is not understanding mathematics

Snidley Whipsnae's picture

Every 1% move up from the Zero Bound adds ~ $160 Billion to annual interest payment on the natl debt.

What the hell, Ben doesn't flinch at a paltry number like one hundred and sixty billion dollars. Ben can print and throw money from choppers! Ben is a legend in his own mind. Hey, Ben can even save Europe with our dime.

Let's pick this time in history to return to a 'strong dollar policy'! Come on Ben, raise rates by 5% and get rid of the rest of Main Street! Get rid of the rest of the work force (except gov employees), and collapse the remainder of the economy!

Yeah... don't hold your breath.

terryfuckwit's picture

and  by little bit of ag too

noelforsythe's picture

BOA must read the Gartman Letter, he has had the long gold short Euro trade on for a big part of 2011.


backwaterdogs's picture

I guess I'd better short gold and go long euro.

eddiebe's picture

Tightening around the neck of the plebes you mean,right?

pragmatic hobo's picture

you know what this means ... sell gold and oil.

vegas's picture

Ohhhhhhh crap. I'm bullish on both pairs too [xaueur, wti & brent]. Better tighten my stops for the inevitable.



AngryGerman's picture

this is fun. it's like listening an old geezer on his death-bed (BOA) telling you what he would do next year...

Kina's picture

May as well post this here too.


Mutiny Gold (ASX: MYG) as part of a de-risking strategy at the Deflector gold copper deposit last month entered into a $11 million project loan and hedging facility agreement with Credit Suisse.

As part of the facility Mutiny will forward sell 50,000 gold ounces, and today announced the average price of A$1,847 per ounce - which is above historical Australian gold pricing.

Importantly this forward sale represents less that 8.5% of Mutiny’s current JORC gold resource of 590,000 ounces, with the company forecasting an upgrade in the near future after an extensive drilling campaign during 2011.

John Greeve, managing director of Mutiny, commented on the good news: “the board of Mutiny is delighted by the pricing that was achieved upon execution of the hedging facility.

"To have hedged a small component of our future gold production at record gold prices will greatly assist in de-risking the company and the project as it moves towards production from Deflector in late 2012 / early 2013.”

Under the agreement Mutiny will deliver gold to Credit Suisse over the period July 2013 to December 2016.

BW's picture

Who taking the other side of that trade?

LongSoupLine's picture



Top BoA Trade of 2012?:



I am Jobe's picture

Why is BAC advising when they are so crappy in their own dealings. What a crock of shitz. Fire the bitchezzzat BAC. Now report what the Squid has to say.

Hannibal's picture

I don't think the BofA lying shysters have any credibility left.

topcallingtroll's picture

I am going to post this several times.

So how does everyone feel about the thirty year treasury having the best thirty year return of all asset classes since 1981?

Richard Russell says bull markets are sneaky and no one ever rides them to the top.

All of us missed the greatest bull market of the last thirty years. 11.3 percent annualized return.

I am sure we will miss out on the next thirty year bull market. It cant possibly be gold. That is too easy and obvious.

BrocilyBeef's picture

Contrarian buys physical silver and holds 30-yr treasuries. Has been a good year.

unununium's picture

It will be Treasuries again.  AFTER they crash.

PulauHantu29's picture

Nomura predicted $220 oil for 2012. They seem to be on track.

I am a Man I am Forty's picture

i bet euro shorts get steamrolled in 2012, 2012 is going to be bullish for most currencies, b/c they are all going to be desperate for cash, europe is the most leveraged and therefore will be desperate for liquidity driving the euro up due to demand, or just wait until credit agricole or deutsche bank implodes, that will pop the euro, anyway, i would never listen to BOAML about anything, they probably won't make it through 2012

TruthInSunshine's picture

Yes, "they'll" be desperate for cash up until the point that all the merry fractional reserve banksters strap into their PrintMaster 9000s and add enough zeros to the money supply and electronically credit it to whomever they see fit.

Printing even 3% of what will be an astounding amount of fiat in physical form will be enough to flood the valley for decades.

Snidley Whipsnae's picture

From Jesse's Cafe Americain and Kyle Bass...

"To paraphrase what Kyle Bass recently said, 'There is $80 billion in open interest in gold futures and options, and there is $2.4 billion in deliverable gold at the exchange. The exchange is a fractional reserve system, and they plan for a one percent redemption. In the event of a greater demand for redemption, they assume that price will take care of it. The decision for a fiduciary is simple; take your billion in gold out now.'

and Jesse added...

"And the situation in the silver market is even worse. It is a disaster waiting to happen."

The article and link here... "Gold, Dollars and the Black Swan that will Devour the US Futures and Derviative Markets"


MFL8240's picture

The crime circus in DC will likely have about 1 or 2 more months of manipulating prices then I expect Gold to break loose from this criminal cartel.

The Fed is gonna bail out Europe with a balance sheet loaded with junk debt,  a country with 15.1 Trillion in debt in the mist of a depression that is being masked by false goverment reports, ie the BLS sham reported on friday and a deminishing GDP lol!!!.  This whole sitaution is disgusting and laughable. 

Chupacabra-322's picture

Gold isn't the only thing people are investing in.

“Numbers from the Federal Bureau of Investigation show an all-time one-day high for background check requests from gun buyers last Friday,” reports ABC News. “There were 129,166 requests to the National Instant Criminal Background Check System (NICS)–a third more than the previous record of 97,848 on Black Friday 2008, FBI spokesman Stephen Fischer said. On Black Friday last year, there were 87,061 requests.”

The actual number of sales was also likely to be far higher because a buyer can purchase numerous guns per each background check.


Snidley Whipsnae's picture

Duck hunting gaining in popularity?