Thursday, June 15, 2006

 

Precious Metals 'Rebound'

Some market numbers for Thursday. "After seven straight days of losses, gold futures closed higher Thursday, bolstering confidence in the metals sector, as the dollar faltered. Gold for August delivery closed up $3.80 at $570.30 an ounce on the New York Mercantile Exchange, having earlier touched a high of $579.50."

'Analysts said the move is the start of a rebound, after a healthy period of correction. 'I feel much better with gold at $570 rather than $750,' said Amaury Conti, at investment advisor Austin Calvert-Flavin. 'The drop was a correction in a bullish market. Now that the price of gold has gone down to a more reasonable level, people are seeing the opportunity to get involved again.'"

"Silver ended up 23.5 cents at $9.97 an ounce. Platinum finished up $22 at $1,160.90 an ounce and palladium added $13.15 to $305.80 an ounce."

"Ned Schmidt, editor of The Value View Gold Report, said the dollar is in a long-term bear market against other major currencies. Schmidt pointed to the rally of the Chinese yuan in the past few sessions as an indication that the dollar will continue to weaken, which would be good news for gold. 'Investors should be buying gold and silver this summer at bargain prices,' Schmidt said."

"'Thanks to the aggressive quest for profits by hedge funds, gold was being 'pushed' along for the last six or nine months,' said Jon Nadler, at bullion dealers Kitco.com. 'The past month has also witnessed the opposite effect taking place, as the exit from gold (by the opportunity-driven funds) has brought down values to a level that almost has the staunchest of its supporters spooked.'"

This jewelry site has a report on demand. "Jewelry demand in the U.S. softened dramatically in April due in part to a late Mothers Day selling period in May. Several jewelers commented that the timing of Mothers Day hurt April sales by several percentage points."

"April’s disappointing performance came after an unusually strong March as well as a six-month run of accelerating monthly sales gains. From a cyclical point of view, it was inevitable that jewelry sales would slow, but April’s decline year-over-year came as a surprise."

"Among the negative factors constraining U.S. retail sales are the following: High energy prices, the consumer debt burden is near record levels, and will increase as interest rates continue to climb. Negative vibes from the Fed, lack of home equity extraction. Slowdown in home price appreciation (and) rising health care costs."

Comments:
The diamond site functions strangely. Try clicking on the article to the right titled, 'IDEX Online Research: Jewelry Sales Plunge In April; Timing of Mothers Day Hurt.'

The graphs show a steep decline in sales.
 
Diamonds are a dangerous game anyway now that gem-quality flawless ones can be man made. Its only a matter of time before this market starts to be flooded. Bad news for DeBeers and friends...
 
I agree. Have you ever seen pictures of the DeBeers guys sitting at counting tables with piles of diamonds in front of them. It has to be one of the biggest rackets around.

I assume the sales info from the site includes gold and other metals.
 
DeBeers is bound to have its demise someday. They has incredible marketing and supply containment to keep diamond prices high. It's just compact carbon: nothing special in my book.
 
Easy there guys, remember diamonds are still a girl's best friend.
According to the link below, mercury can be transmuted to gold, fulfilling the ancient alchemists dream.

http://en.wikipedia.org/wiki/Nuclear_transmutation

Of course we won't be seeing any synthetic product showing up in vaults, but it's an interesting reminder that ultimately even gold has no intrinsic value- incredible extrinsic value, yes- both historic and present.
And don't you all think gold is ultimately rigged by central banks-not a monopoly, but a cartel of sorts
 
Gem quality flawless colorless diamonds can not be manufactured profitably. There are companies that can make tiny industrial quality diamonds used in drill bits and abrasives, and one company that makes reasonable clarity but low color(very yellow) synthetics that sell for a small discount from natural stones. I am a jeweler, and would absolutely love the myth of large, high clarity white diamonds at a bargain basement price to be true. I would make a fortune selling thousands of them. They just do not exist.

Also, consider that DeBeers only controls approximately 55% of the world's diamond market. They are not a monopoly anymore and haven't been for about 15 years. There are millions of carats mined in Australia and cut in India. There are significant diamond deposits in Russia that have never been controlled by DeBeers. There are new mines in Northern Canada that want nothing to do with DeBeers.

If it really was a monopoly you would see diamond prices dropping rapidly, no? Diamonds(large, high quality ones) have increased steadily in price over the last 10 years and especially over the last 5. I personally think this is a direct result of the credit/housing bubble as people have more disposable income to play with thanks to the HELOC ATM.
 
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