Friday, February 10, 2006
Gold, Silver Touch Limit Down
Dow Jones Newswires reports on another wave of precious metals selling. "For the second time this week, a wave of fund and other speculative long liquidation knocked the New York precious-metals complex sharply lower Friday. Most of the metals managed to hold just above the lows that were reached during a liquidation sell-off that had knocked gold nearly $20 lower on Tuesday."
"However, April platinum futures were an exception as they fell through Tuesday's bottom to its weakest level in three weeks. April gold settled down $14.60 to $553.50 an ounce, while March silver tumbled 28 cents to $9.38 an ounce."
"'There was continued profit taking by those who didn't get out on the first time down,' said Don Tierney. 'But the activity does seem to be spotty.'"
"Much of this liquidation was from funds, he and others reported. 'It's a Friday. Some people wanted to flatten out their positions and take another look at it Monday, which is normal,' said Tierney. 'That was in both gold and silver. They are following each other pretty closely.'"
"Weakness first set in overnight as the Japanese yen strengthened, said George Gero. In response, the Japanese started selling metals and gold hit its daily yen limit-down on the Tokyo Commodity Exchange."
"Selling snowballed during New York hours. 'You had everyone walking through
the same door at the same time, trying to position themselves out first,' said Gero."
"As April gold fell back through $560, he said, 'nobody wanted to be the first
to buy on the way down.' Much of the liquidation may have been because market participants felt traders were already so heavily long, said Gero."
"'It's been over-owned,' said Gero. 'A lot of retail has been coming into the metals. There is concern when you have a lot of retail that the metal becomes over-owned. They (those booking profits) just want to be temporarily out.'"
"April gold bottomed at $550, just above Tuesday's bottom of $548.50. March silver held at a session low of $9.28, a half cent above Tuesday's bottom."
"As was the case earlier in the week, the gold held above the 50% retracement of the rise from the Dec. 21 low of $496.50 to last week's $579.50 high, pointed out Tierney. This support lies around $538. The 50-day moving average lies a short way above this at $540.20."
"In March silver, the 50% retracement of the rally of the December 21 low lies
around $9.12. The 50-day average is at $9.064."
"The Platinum Group Metals also fell sharply on fund liquidation, with the losses accelerating as sell stops were triggered, said a trader. April platinum tumbled $33.80 to $1,040.10 an ounce and March palladium lost $19.80 to $284.65."
"March palladium remained just above Tuesday's $281.50 bottom, holding at $283. However, for the second day this week, it fell through the 50% retracement of the December-February rally, which was just above $287. The 61.8% retracement of the rally from the Dec. 22 low to the Feb. 3 high is around $277.70. It's 50-day average is right around this, at $277.65."
"However, April platinum futures were an exception as they fell through Tuesday's bottom to its weakest level in three weeks. April gold settled down $14.60 to $553.50 an ounce, while March silver tumbled 28 cents to $9.38 an ounce."
"'There was continued profit taking by those who didn't get out on the first time down,' said Don Tierney. 'But the activity does seem to be spotty.'"
"Much of this liquidation was from funds, he and others reported. 'It's a Friday. Some people wanted to flatten out their positions and take another look at it Monday, which is normal,' said Tierney. 'That was in both gold and silver. They are following each other pretty closely.'"
"Weakness first set in overnight as the Japanese yen strengthened, said George Gero. In response, the Japanese started selling metals and gold hit its daily yen limit-down on the Tokyo Commodity Exchange."
"Selling snowballed during New York hours. 'You had everyone walking through
the same door at the same time, trying to position themselves out first,' said Gero."
"As April gold fell back through $560, he said, 'nobody wanted to be the first
to buy on the way down.' Much of the liquidation may have been because market participants felt traders were already so heavily long, said Gero."
"'It's been over-owned,' said Gero. 'A lot of retail has been coming into the metals. There is concern when you have a lot of retail that the metal becomes over-owned. They (those booking profits) just want to be temporarily out.'"
"April gold bottomed at $550, just above Tuesday's bottom of $548.50. March silver held at a session low of $9.28, a half cent above Tuesday's bottom."
"As was the case earlier in the week, the gold held above the 50% retracement of the rise from the Dec. 21 low of $496.50 to last week's $579.50 high, pointed out Tierney. This support lies around $538. The 50-day moving average lies a short way above this at $540.20."
"In March silver, the 50% retracement of the rally of the December 21 low lies
around $9.12. The 50-day average is at $9.064."
"The Platinum Group Metals also fell sharply on fund liquidation, with the losses accelerating as sell stops were triggered, said a trader. April platinum tumbled $33.80 to $1,040.10 an ounce and March palladium lost $19.80 to $284.65."
"March palladium remained just above Tuesday's $281.50 bottom, holding at $283. However, for the second day this week, it fell through the 50% retracement of the December-February rally, which was just above $287. The 61.8% retracement of the rally from the Dec. 22 low to the Feb. 3 high is around $277.70. It's 50-day average is right around this, at $277.65."
# posted by Ben Jones @ 1:43 PM 
Comments:
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This is where it can start to get interesting. I can remember back in the 80's, when these metals would be limit down one day and limit up the next. If a commodity is going to move into new territory, this kind of volatility is neccesary to shake out the faint of heart.
I suggest paying attention to the technical stuff in times like these. Look for a market 'floor.' If you don't know what is significant about the 61.8% retracement, I just became an affiliate of a firm that can explain that. Stay tuned.
I suggest paying attention to the technical stuff in times like these. Look for a market 'floor.' If you don't know what is significant about the 61.8% retracement, I just became an affiliate of a firm that can explain that. Stay tuned.
I think its important to emphasize that the fundamentals which have pushed oil and gold upwards over the past year haven't changed at all. The Middle East looks worse than its ever looked (at least in my lifetime) and inflation looks ready to positively soar.
Both points make me pretty confident that the analysts have it right: This is profit taking. Today's data on the trade deficit is positively alarming, and the more I read about Iran it looks decreasingly likely that the security council will be effective.
(China has over $75 Billion in new oil contracts with Iran and is pursuing multiple pipeline deals. Russia is selling Iran billions of dollars woth of airplanes, weaponry and nuclear reactors.
Europe is between a rock (their security interests) and a hard place (their energy interests) and in the wake of the Russian/Ukranian pipeline fiasco it looks increasingly likely that they'll bow to Moscow. All of which makes military action by the US and UK all the more likely.
(And we all know what's up with consumer spending, the housing bubble and foreign dollar purchases.)
This seems like a hell of a great opportunity to increase positions in oil, gold and mining stocks.
ps: Interestingly MNEAF went up all week.
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Both points make me pretty confident that the analysts have it right: This is profit taking. Today's data on the trade deficit is positively alarming, and the more I read about Iran it looks decreasingly likely that the security council will be effective.
(China has over $75 Billion in new oil contracts with Iran and is pursuing multiple pipeline deals. Russia is selling Iran billions of dollars woth of airplanes, weaponry and nuclear reactors.
Europe is between a rock (their security interests) and a hard place (their energy interests) and in the wake of the Russian/Ukranian pipeline fiasco it looks increasingly likely that they'll bow to Moscow. All of which makes military action by the US and UK all the more likely.
(And we all know what's up with consumer spending, the housing bubble and foreign dollar purchases.)
This seems like a hell of a great opportunity to increase positions in oil, gold and mining stocks.
ps: Interestingly MNEAF went up all week.
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