Friday, May 12, 2006
'Sentiment Remains Extremely Poor' For US$
A wrapup on a busy week for money and metals. "Gold prices fell Friday, but ended the week with a gain of more than $30 an ounce. The metal rallied sharply this week above $700 an ounce to 26-year highs, fueled by fund buying. The dollar was mixed Friday, gaining ground against Japan's yen and paring losses against the euro following a report that showed the U.S. trade deficit narrowing in March."
"After climbing more than 6 percent over the past three days, June gold futures pulled back to settle at $711.80 an ounce on the New York Mercantile Exchange, down $9.70 on the day. The contract moved as high as $732 an ounce in electronic trading, the highest futures level since September 1980."
"Elsewhere in metals, July platinum settled up $22.90 at $1,318.50 an ounce, extending Thursday's strength to touch a record at $1,340. June palladium lost $1.65 to settle at $398.35 an ounce, after trading at a four-year high of $409.July silver dropped 70 cents to settle at $14.235 an ounce after reaching a 25-year high of $15.20 on Thursday."
"The Philadelphia Gold and Silver Index was down 4.4 percent at 158.77 and the CBOE Gold Index retreated to 160.96, down 4.7 percent, this after touching a lofty 175.05."
"The Amex Gold Bugs Index stood at 368.03, losing 5 percent. Among individual standouts, shares of Randgold Resources fell 12.1 percent to $21.69 and Hecla Mining lost 9.3 percent to trade at $5.49."
"The dollar fell to one-year lows against the euro and British pound on Friday despite an unexpected decline in the U.S. trade deficit. In afternoon New York trading, the euro rose to $1.2914, up from $1.2839 late Thursday in New York. The British pound jumped to $1.8932 from $1.8792 the day before."
"The dollar also dropped against the Japanese currency, falling to 110.03 yen from 110.63 late Thursday. In other trading, the dollar bought 1.1979 Swiss francs, down from 1.2123 late Thursday, and 1.1093 Canadian dollars, up from 1.1011."
"A report from the U.S. Commerce Department that the gap between what the country sells abroad and what it imports narrowed to $62 billion in March, the smallest deficit in seven months, failed to boost the dollar against the euro, which has been trading strongly all week. Traders said the widespread bearishness on the dollar made it hard for the U.S. currency to sustain any strength, despite the positive news."
"'Sentiment remains extremely poor,' Marc Chandler, global head of currency research at Brown Brothers Harriman said."
"The Canadian dollar fell against the greenback on Friday, hampered by disappointing economic data, weaker commodity prices and uncertainty over the likelihood of a Bank of Canada interest rate hike this month. Weaker oil and gold prices, key drivers behind the currency, coupled with a surprise drop in Canada's March trade surplus, conspired to push the loonie down."
"Statistics Canada said the trade surplus narrowed sharply in March to C$5.14 billion, shy of analysts' forecasts of C$6.05 billion."
"'What's influenced price action today has been position squaring, short covering and Canada losing on the crosses,' said Jack Spitz, director of foreign exchange at National Bank of Canada. 'Canada's been quite a loser against euro and yen and, in fact, sterling.'"
"After climbing more than 6 percent over the past three days, June gold futures pulled back to settle at $711.80 an ounce on the New York Mercantile Exchange, down $9.70 on the day. The contract moved as high as $732 an ounce in electronic trading, the highest futures level since September 1980."
"Elsewhere in metals, July platinum settled up $22.90 at $1,318.50 an ounce, extending Thursday's strength to touch a record at $1,340. June palladium lost $1.65 to settle at $398.35 an ounce, after trading at a four-year high of $409.July silver dropped 70 cents to settle at $14.235 an ounce after reaching a 25-year high of $15.20 on Thursday."
"The Philadelphia Gold and Silver Index was down 4.4 percent at 158.77 and the CBOE Gold Index retreated to 160.96, down 4.7 percent, this after touching a lofty 175.05."
"The Amex Gold Bugs Index stood at 368.03, losing 5 percent. Among individual standouts, shares of Randgold Resources fell 12.1 percent to $21.69 and Hecla Mining lost 9.3 percent to trade at $5.49."
"The dollar fell to one-year lows against the euro and British pound on Friday despite an unexpected decline in the U.S. trade deficit. In afternoon New York trading, the euro rose to $1.2914, up from $1.2839 late Thursday in New York. The British pound jumped to $1.8932 from $1.8792 the day before."
"The dollar also dropped against the Japanese currency, falling to 110.03 yen from 110.63 late Thursday. In other trading, the dollar bought 1.1979 Swiss francs, down from 1.2123 late Thursday, and 1.1093 Canadian dollars, up from 1.1011."
"A report from the U.S. Commerce Department that the gap between what the country sells abroad and what it imports narrowed to $62 billion in March, the smallest deficit in seven months, failed to boost the dollar against the euro, which has been trading strongly all week. Traders said the widespread bearishness on the dollar made it hard for the U.S. currency to sustain any strength, despite the positive news."
"'Sentiment remains extremely poor,' Marc Chandler, global head of currency research at Brown Brothers Harriman said."
"The Canadian dollar fell against the greenback on Friday, hampered by disappointing economic data, weaker commodity prices and uncertainty over the likelihood of a Bank of Canada interest rate hike this month. Weaker oil and gold prices, key drivers behind the currency, coupled with a surprise drop in Canada's March trade surplus, conspired to push the loonie down."
"Statistics Canada said the trade surplus narrowed sharply in March to C$5.14 billion, shy of analysts' forecasts of C$6.05 billion."
"'What's influenced price action today has been position squaring, short covering and Canada losing on the crosses,' said Jack Spitz, director of foreign exchange at National Bank of Canada. 'Canada's been quite a loser against euro and yen and, in fact, sterling.'"
# posted by Ben Jones @ 3:32 PM 
Comments:
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The Gold Price - A "Spike" or Something Else?
Just cracks me up how quite a few of those over at Ben's HB blog think PMs are a bubble. Missed my opportunity to blast'em earlier today... maybe tomorrow.
p.s.: Wouldn't touch the copper market with a 10ft pole. China cane make or break that market on a whim.
Just cracks me up how quite a few of those over at Ben's HB blog think PMs are a bubble. Missed my opportunity to blast'em earlier today... maybe tomorrow.
p.s.: Wouldn't touch the copper market with a 10ft pole. China cane make or break that market on a whim.
John in VA,
Heh heh heh... I was WONDERING whether you lurked over here or not! ;)
BTW, did you see my comment a few days ago? If gold's such a bubble, why isn't this blog more popular??
A price spike and a few published articles hardly qualifies as bubble stuff. You'll have to do better than that.
Heh heh heh... I was WONDERING whether you lurked over here or not! ;)
BTW, did you see my comment a few days ago? If gold's such a bubble, why isn't this blog more popular??
A price spike and a few published articles hardly qualifies as bubble stuff. You'll have to do better than that.
John in VA,
Now see... you're exactly the type we need here so that we don't engage in too much "confirmation bias". I like reasoned debate with smart people, because that's the only way you really learn things. If I am wrong, I'm hoping someone will (in the course of debate) present me with something I didn't know to enlighten me.
Unfortunately for you, you've not done so! ;)
If you're willing, I'd like to engage in a point-by-point discussion to see if one of us can convince the other. Interested?
Now see... you're exactly the type we need here so that we don't engage in too much "confirmation bias". I like reasoned debate with smart people, because that's the only way you really learn things. If I am wrong, I'm hoping someone will (in the course of debate) present me with something I didn't know to enlighten me.
Unfortunately for you, you've not done so! ;)
If you're willing, I'd like to engage in a point-by-point discussion to see if one of us can convince the other. Interested?
want an easy way to value gold?
1. just check the 100+ year dow/gold ratio
2. commodoties and stocks alternate bull and bear markets. gold has only been in a bull for about 5 years, bull markets usually last 17 years, abouts.
3. if you believe gold is the only true currency, think of all the paper money thats been created the last 20 years. check out the M3 numbers.
1. just check the 100+ year dow/gold ratio
2. commodoties and stocks alternate bull and bear markets. gold has only been in a bull for about 5 years, bull markets usually last 17 years, abouts.
3. if you believe gold is the only true currency, think of all the paper money thats been created the last 20 years. check out the M3 numbers.
I'll chime in simply to say that there is a powerful rationale behind investing in metals. And that rationale isn't speculative. It is driven by validated, painfully real dynamics. This rationale makes for an important difference between recent housing moves and metal moves. While there are many individual investors who (no doubt) simply invest in the "trend" without understanding its basis -- the big money in metals continues to be institutional and governmental. Those who point to metals and see a bubble, aren't understanding the larger forces at work.
Those who keep their money in US dollars are the ones engaging in wild, baseless speculation. Because while all the evidence in the world suggests that the dollar is heading towards the abyss, the majority of Americans cling to an unfounded belief in its immortality without providing a single rational argument to support their position. Metals investors aren't engaging in a speculative bubble. Our government is, and has been since 1971.
Those who keep their money in US dollars are the ones engaging in wild, baseless speculation. Because while all the evidence in the world suggests that the dollar is heading towards the abyss, the majority of Americans cling to an unfounded belief in its immortality without providing a single rational argument to support their position. Metals investors aren't engaging in a speculative bubble. Our government is, and has been since 1971.
John in VA,
Good start, but I'd already read all that. Strachan identifies the fundamentals underlying the boom but provides absolutely no support for his assertion of "disastrous consequences". Buffett's comments in particular can be taken as supporting both sides, since he doesn't address where metals are in the cycle.
Here's something for you to read. It's two years old, but good stuff nonetheless:
Commodity Numbers FAQ
I particularly like this quote: Meanwhile the entire gold stock of the world - including the privately held bulk - is much less than one half of one percent of the underwritten risk in the global financial derivatives markets.
Hedge funds are whales, and whales can't play in a koi pond. Of course, you can imagine what would happen if they tried... and you wouldn't want to miss out on that now, would you?
Good start, but I'd already read all that. Strachan identifies the fundamentals underlying the boom but provides absolutely no support for his assertion of "disastrous consequences". Buffett's comments in particular can be taken as supporting both sides, since he doesn't address where metals are in the cycle.
Here's something for you to read. It's two years old, but good stuff nonetheless:
Commodity Numbers FAQ
I particularly like this quote: Meanwhile the entire gold stock of the world - including the privately held bulk - is much less than one half of one percent of the underwritten risk in the global financial derivatives markets.
Hedge funds are whales, and whales can't play in a koi pond. Of course, you can imagine what would happen if they tried... and you wouldn't want to miss out on that now, would you?
remmeber this, the spike in gold and silver is no doubt related to the silver and gold short positions being covered. people like jim puplava and david morgan have said that there is much more paper ounces short than there is actual physical silver(I don't know about gold) out there. I think that may be a rise in gold. remember this also, the wealth is flowing to the countries where gold is no barbarous relic.
like someone said above, the amount of global assets in gold is almost nothing.
like someone said above, the amount of global assets in gold is almost nothing.
Here it comes. Another major correction today triggered by a strengthening USD. Amazing how dollars are still considered a "flight to safety"; that notion will take a while to go away, won't it? Still, it points out that when the USD does eventually tank it'll probably take all other currencies & debt instruments with it, regardless of nationality. Except PMs, of course!
I'd never deny that there's speculation at work. The roller coaster movements are to be expected.
My perspective is ultimately that of a long-term, buy-and-hold strategy. In that regard, I ignore these ups-and-downs (except for timing purchases) and focus on the fundamentals.
Fundamentally, speculation is not driving the underlying trend. Guess this just dovetails with my belief that a depression is inevitable, and that a depression will seal the fate of the dollar.
My perspective is ultimately that of a long-term, buy-and-hold strategy. In that regard, I ignore these ups-and-downs (except for timing purchases) and focus on the fundamentals.
Fundamentally, speculation is not driving the underlying trend. Guess this just dovetails with my belief that a depression is inevitable, and that a depression will seal the fate of the dollar.
all the evidence in the world suggests that the dollar is heading towards the abyss
My sentiments, too. True fiat dollars have only existed for the last 35 years, and history shows they all fail eventually.
A depression is a deflationary phenomenon.
Not necessarily. We're clearly facing a future where scarce resources will rise while wages and other assets will fall.
A depression would be terrible for gold prices and other asset prices as well - they would all depreciate vs. the dollar.
Gold isn't a commodity, it's the world's oldest currency. There's no history to support your statement.
Hedge funds are not all whales.
When the media discusses the impact of hedge funds, they're talking about the whales. The little guys involved in metals aren't worth mentioning, since their influence on the market pales beside that of more traditional funds.
The S&P report fails to break gold out from copper, etc. The gold market simply doesn't have the volume to drive industry-wide hedge fund profits, but copper and other base metals do.
hedge funds can and do play in koi ponds and sometimes they crush the koi and splash all the water out
Again, if this were to occur in metals, we'd be talking thousands of dollars already, not hundreds.
Clearly he was saying that commodities are in a bubble
Buffett doesn't mince words. If he wanted to say that, he would have. Instead, he cleverly avoided doing so, choosing to describe the cycle every boom goes through... again, without divulging where exactly in the cycle he thinks oil & metals may be. He also does not say "precious metals", either. All he acknowledges is that there was a terrific move.
There are few if any fools in PMs; they're still in stocks & real estate. Any hedgies out there are definitely not fools, either.
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My sentiments, too. True fiat dollars have only existed for the last 35 years, and history shows they all fail eventually.
A depression is a deflationary phenomenon.
Not necessarily. We're clearly facing a future where scarce resources will rise while wages and other assets will fall.
A depression would be terrible for gold prices and other asset prices as well - they would all depreciate vs. the dollar.
Gold isn't a commodity, it's the world's oldest currency. There's no history to support your statement.
Hedge funds are not all whales.
When the media discusses the impact of hedge funds, they're talking about the whales. The little guys involved in metals aren't worth mentioning, since their influence on the market pales beside that of more traditional funds.
The S&P report fails to break gold out from copper, etc. The gold market simply doesn't have the volume to drive industry-wide hedge fund profits, but copper and other base metals do.
hedge funds can and do play in koi ponds and sometimes they crush the koi and splash all the water out
Again, if this were to occur in metals, we'd be talking thousands of dollars already, not hundreds.
Clearly he was saying that commodities are in a bubble
Buffett doesn't mince words. If he wanted to say that, he would have. Instead, he cleverly avoided doing so, choosing to describe the cycle every boom goes through... again, without divulging where exactly in the cycle he thinks oil & metals may be. He also does not say "precious metals", either. All he acknowledges is that there was a terrific move.
There are few if any fools in PMs; they're still in stocks & real estate. Any hedgies out there are definitely not fools, either.
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