[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 Silver

Net increase of 100% in value of silver in

last 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.