MC:Bullish on crude, gold, silver: Swiss Asia Capital
In an interview with CNBC-TV18, Juerg Kiener, MD and CIO, Swiss Asia Capital said the underlying trend for crude is still very bullish.
He is also bullish on gold and silver. “I think we are going to retest the old highs in silver. For gold, USD 1,750 per ounce this year into early next year shouldn’t be much of a problem here,” he added.
Below is a transcript of his interview with CNBC-TV18's Latha Venkatesh and Anuj Singhal. Also watch the accompanying video.
Q: The immediate trend in crude seems to have fallen into a narrow range. What is the trend telling you for the next quarter?
A: I think during summer we might trade a bit sideways. We might chop a bit up and down in the same range that we have seen this last month. But the underlying trend, from the fundamental point of view, is still very bullish because we don’t see additional Libyan oil coming to the market. If you don’t see that happen in the next 6-12 months then I think the demand-supply structure on crude will automatically move prices higher.
Q: How do you read now the macro data coming out of the US? If economic development in the US slows, what will this mean to commodities, especially to crude? Will that takeaway a chunk of demand or sentiment and keep it capped or do you think none of that will happen?
A: I think in the short-term sentiment might be quite bad because everybody thinks there is no QE3 and therefore commodities go down and economic activity is bad. But what we are looking at is as long as economic activity is bad, government will stimulate, the economy will have negative interest rate. We will probably have QE3 in the making.
If you look at M-zero right now, we are growing at about USD 50 billion a week. So, QE3 has already started. The government has been tapping their fingers into pension funds to keep afloat. So, it is probably a formal issue, until we get more money legally on the debt ceiling in June of about USD 2 trillion to keep the economy basically going into next year.
Q: Last couple of days we have heard comments from some of the OPEC members, even Saudi Arabia is saying that they need to now ramp up production or increase supply because at USD 100 per barrel you are seeing a bit of slowdown. They are saying that even if it means bringing down the prices, they will do that. Do you think just in the near-term there is a risk of Nymex crude going back to USD 90 per barrel or so?
A: I don’t see it going down much below USD 100 per barrel. If you look at the Middle East, they have been talking about higher production for last few years. All the countries, which has been able to increase production slightly over Saudi Arabia, if you look at number, we are far below the all time high production.
