Thursday, January 12, 2006


Commodities Pulled By Supply Issues

MarketWatch has this report on todays metals action. "Gold futures edged lower Thursday as traders chose to lock in profits after closing above the $550-an-ounce level in the previous session. 'The strong close in New York [Wednesday] has again prompted profit taking from Asian traders...and again signals the market may need to consolidate back towards $525 before pushing through $550 and setting a new high for the year,' James Moore."

"Gold for February delivery fell $3.10 to $547 an ounce on the New York Mercantile Exchange after climbing more than $4 on Wednesday. 'The market is now in a highly overbought condition, which would lead me to believe that some short-term weakness may ensue,' said Dale Doelling."

"March silver traded down 6 cents at $9.005 an ounce. April platinum was up $2.60 at $1,027.90 an ounce, trading at its highest level since mid-December, while March palladium shed $2.50 to $275."

"Credit Suisse warned investors to expect severe price spikes for metals over the next two years and said the market had ignored supply issues, the big theme for 2006, as it was apparent the mining industry was not responding fast enough in bringing on new capacity."

"Nymex February West Texas Intermediate traded 76 cents higher at $64.70 a barrel after spiking to $65.10, the highest level since the start of October. IPE February Brent added 90 cents at $63.07 a barrel amid concerns over possible disruptions to Iran’s exports of 2.6m barrels of oil a day if the US and its allies ask the UN’s Security Council to impose sanctions."

"Traders were also concerned that Iran could suspend oil exports as a protest against any actions by the UN. Kevin Norrish of Barclays Capital said: 'What might have been a more minor issue for the oil market a few years ago, when there was 6m barrels a day or more of spare capacity, is a very major issue in a world with less than 2m barrels a day of spare capacity.'"

I for one believe Iran is going to be a real problem. It will not take much to trigger an oil shock. Of course what the U.N. has to say has little or no effect. PM's may take a roller coaster ride however longer term they are headed up,up,up! IMO.

I totally agree.

Although the reallly, really big question is: Does the "Iran Oil Bourse" (Google it people) and the downstream impact on the strength of US currency have anything to do with this? I'd love to say "no", but the more I see of this crazy administration, the more I'm not so sure.

March 23 is the date the IOB is set to launch. *If* we have some secondary objective up our sleeves (ie: saving the value of US currency because of a proposed PetroEuro market) then we're probably going to see military activity of some kind sometime in late February / early March.

If WMD's are really our concern here, then we'll probably see this go to the security council for a year before we see military activity. (The security council resolution IMHO will be a joke. There's no way in hell Germany and Russia are going to come down hard on Iran.).

Bottom line though -- I don't think sactions against corrupt, repressive regimes ever work. By definition a repressive regime doesn't give a crap about its people. And Condi's idea of a "sanction that targets the leadership directly" is just plain silly.
Seems to be two possible outcomes:

1) Let the IOB open up and risk USD's status as the global reserve currency. Would cause a decline in the USD's value vs other currencies. The effect should be a relatively quick, but painful, adjustment.

2) Premptive strike on Iran to stop the IOB's launch (oops, I mean WMD's). Iran shuts down its oil production and oil prices go ballistic. We then suffer a long painful recession from high energy prices. And we still have eventual adjustment of the USD to look forward to.

Correct me if my assumptions are wrong. But it seems that option #1 would be the easier way out.
I would not be surprised if the Bush administration targets Iran on non-existent WMDs. However, we all know it is to stop PetroEuros (Iraq II). I'm getting some Euros in hopes Iran's plans go through. Though the shadow government loves upsetting me.
Does anyone agree with the gold dip down to $525 before going back up?
Dip to $525? I won't place to much faith in all those "chartists" out there. If that stuff really worked, they would all be billionaires and wouldn't be hawking their wares on the internet. They started out by saying to wait for a dip to $450 to buy. And then a dip at $460, then $475, etc. But the buying dips never showed up.

Just buy gold and hold it. It will be a bumpy ride over the next couple years, don't waste your time trying to time the market.
I agree,Its the $us not WMD read w. clark article on aug. 5 2005.there are plenty of articles out there on this sub.
Also, if its "apparent the mining industry was not responding fast enough in bringing on new capacity"...

I'd call that a "Strong Buy" for metals.
There it goes again!!! $555 and climbing...
I loaded up on 2 oil stocks I thought were undervalued (TLM $ COP) after a sharp one day correction in late Dec. Both are up nicely now, and may explode soon. At the very least it is a solid hedge. I hate to say it, but I actually get happy seeing the price of gas rise. If ya can't beat em' join em'.

Now that's the spirit! If something costs too much, it's not a problem, it's an opportunity!
Ok, I'm pretty new to Gold, but it seems that the chart guys either don't know what they are talking about or.. the dynamics have changed. (Luckily, I didn't act on their recent predictions of consolidation.) Have the big boys become unable to affect prices. Any thoughts?
Re: The experts...

They all said Gold in Nov. wouldn't top $500 until the end of 2006.

PM, Oil is a pretty safe bet., or
we resolve the deficit ,and the housing bubble dosn't burst, and Iran backs down, and you count on increased retail spending while their wages go down... Think that'll happen?
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