Biren Vakil, Commodity Consultant, Paradigm Commodity Advisors sees a strong support for crude at USD 35 per barrel and expects a bear market rally to around USD 48-49 per barrel. In the short-term, he estimates gold to consolidate between USD 860 per ounce and USD 910 per ounce. “Any weekly close above USD 880 per ounce would be a signal a very strong rally and might take it towards USD 930-950 per ounce but at present I do not prefer to go long.”
Here is a verbatim transcript of the exclusive interview with Biren Vakil on CNBC-TV18. Also watch the accompanying video.
Q: We have seen nearly 4% of gains in the last week and it has gained upto 11% on the markets today touching that high of USD 40-42 per barrel, what kind of a scenario do you see from hereon?
A: The market has probably found a very strong floor at USD 35 per barrel and I expect bear market rally of around USD 48-49 per barrel. This could be a catch up rally since the market hasn’t yet factored in the major Israeli offensives. We may see a good spike which could be a positional selling opportunity for a positional trader but contrarian traders having two-three days span can buy with the stoploss of Rs 1820 per barrel.
Q: Do you see crude prices trading in a range for this week since volumes are so thin, would you caution investors to actually stay on the sidelines?
A: I think those who are serious players they should consider this as a noise other than a signal. Those who are obsessed to trade and cannot remain on the sidelines and can buy on dips with proper light volume and little bit wider stop loss.
Q: The kind of concerns that are coming in from geo-political markets and also The Organization of Petroleum Exporting Countries (OPEC) pledging to cut output, how much of a support do you see from that coming in the near future and how do you see Q1 of 2009 panning out for in case of crude prices?
A: Recently Saudi has seen its integrity towards a cut if we go by OSD (Oil spill detection system). I think more cuts need to be implemented and there should be more verbal aggressive intervention from the OPEC to stabilize oil market. But I don’t see this, given the macro-economic weakness of Gulf economies.
Q: We have seen good gains on to that one as well we saw a level of USD 890 per ounce being touched on Friday seems it has seen some profit taking since then, how do you see gold ranging from hereon?
A: As far as gold is concerned, during the last couple of months or at least in the last quarter there was confused money is chasing a confused market. It could be volatile topping or it is between USD 800 and USD 900 per ounce. For the short-term I am expecting prices to consolidate between USD 860 per ounce and USD 910 per ounce. Any weekly close above USD 880 per ounce would be a signal to a very strong rally and might take it towards USD 930-950 per ounce but at present I do not prefer to go long.
Q: If you are a long-term bull in case of gold prices then at what sense would you buy gold? Is ETF (Exchange-Traded Funds) a good buy or would you buy it in physical or futures then?
A: I would prefer to buy in physical manner and on SIP (Systematic Investment Plan) like mutual fund people tend to go for Systematic Investment Plan. Those who have a two-three year old investment horizon see gold prices at around USD 2,000. I won’t be surprised if gold tests USD 2,000.
Q: We haven’t seen much of a recovery in base metals. When you see a rebound happen there and which commodity or which metal do you think would rebound faster in that sector?
A: The first sign of a bottom should be coming from red metal; that is copper. So as and when copper stabilise above USD 3,000 per tonne from the technical perspective as and when it closes above USD 3300 per tonne on a weekly basis then we see a bear market rally. It’s too early to say the worst is over.
Q: We have seen good amount of gain happening in case of sugar in the recent days, soybean prices have jumped up quite a bit and the Indian markets have also seen strength in these cases. Many people feel that agro-commodities would actually turn around faster than the non-agro commodities in 2009 when the recovery happens. Are you of the same view and if yes then what commodities would you choose on from the agro-pack?
A: This market has gone into backwardation and I think technically it is very strong and fundamentally also it is very strong. I expect soybean prices to test 2,500 per quintal in the coming quarter probably February-March.
