Money and Metals

CNN Money has some trading numbers. "U.S. gold futures gave back some recent gains by the close and held at lower levels throughout the session on Tuesday, as some large players decided to take profits, traders said. 'It was just a little bit of profit taking. Guys who have sizable positions are just taking some money off the table. That's it,' said one New York gold dealer."

"June gold on the New York Mercantile Exchange's COMEX division fell $3.70 to $590.60 an ounce by the close and set a session range between $589.50 to $595.30. Spot silver slipped to $11.66/11.69 an once, from $11.75/78 previously. It was fixed at $11.7450 on Tuesday. NYMEX July platinum firmed $2.50 to finish at $1,091.60 an ounce. It hit a 26-year high above $1,105 last week."

"Spot platinum fetched $1,078/1,082 an ounce, $5 more than Monday's late quotes. June palladium lost $4.05 to end at $342.35 an ounce. Last Thursday, it climbed to a near four-year high at $355.80. Spot palladium was indicated at $339/343 an ounce, slightly more than Monday's close."

"After striking a 25-year peak on Monday, some traders said they thought a target of $600 an ounce was still in view for both COMEX and spot gold. 'At this point in the game, it's all technical. We're still working toward our objective in gold, the initial objective which is $600,' a trader said."

"Deutsche Bank's global head of commodities research said on Tuesday gold may head beyond $600 and toward $700, boosted by upbeat fundamental factors and by fund buying."

"The dollar fell to a two-month low against the euro on Tuesday, as investors expectations for a European interest rate increase were heightened after a news report said the European Central Bank may raise rates at its May meeting. While the dollar's weakness may have underpinned gold's losses, traders said they thought its influence these days was secondary to technical factors."

"'We've somewhat separated from our relationship with the euro. It's one of the things we factor in, but it's not the driving force that it used to be,' said one trader."

And Market Watch has this on the silver ETF. "A highly anticipated exchange-traded fund tracking silver prices may usher in a correction from multidecade commodity highs if it follows the pattern of gold ETFs, analysts say. Analysts, though, say the introduction of the silver ETF could actually set up a price pullback in the days and weeks following the start of trading."

"The most successful gold ETF launches were Gold Bullion Securities on the London Stock Exchange in December 2003, and StreetTracks Gold Trust in November 2004 on the New York Stock Exchange. Mohinta found gold prices rose by up to 12% in the 90-day periods leading up to the ETF launch dates, only to fall between 7% and 10% in the corresponding period after the listing date. So far in 2006, through Monday's close, silver futures are up more than 32%, fueled in part by the ETF talk."

"Mohinta said he doubts that the entire 13 million-share allocation will immediately sell out, pointing to the common practice of using mining stocks such as Pan American Silver Corp. to get exposure to silver without holding the physical metal. Stocks have the added benefit of dividends, he added."

"'While silver can get to $15 or $20 before it's all said and done, the actual launching of the silver ETF could mark a short-term top for silver,' added Peter Grandich, noting that the silver ETF could represent a 'buy the rumor, sell the news' trade."

"Analysts are also warning about potential confusion over the tax structure of precious-metals ETFs. Under current tax law, long-term gains from the sale of silver are taxed as 'collectibles' like artwork. Therefore, if held for more than a year, gains on the silver ETF would be taxed at a maximum rate of 28%, compared with 15% for so-called long-term gains on stocks. If sold in less than a year, gains are taxed as ordinary income.'