Wednesday, July 05, 2006
Gold, Silver Shine In 'Rockets Red Glare'
Geopolitics dominated the Wednsday trading action. "Gold and silver futures closed Wednesday at their highest levels in a month as news that North Korea tested at least seven missiles created safe-haven demand for the precious metals. Gold for August delivery rose $13.70, or 2.2%, to close at $629.70 an ounce on the New York Mercantile Exchange after peaking at $631.90. The contract hasn't traded or closed at levels this high since June 7."
"The standout among the metals was September silver, which tacked on 49.5 cents, or 4.5%, to close at $11.415 an ounce. This followed a session high of $11.46, an intraday level the contract hasn't seen since June 9."
"Gold's safe-haven status in the wake of the missile tests only embellished the strength it's enjoyed over the last week, Kevin Kerr noted. 'Gold's more vocal detractors of late are being muted by the realization that that the yellow metal is a true 'flight to quality' instrument and that's piled on top of the recent strength we have seen in gold anyway after the FOMC announcement' last week, he said."
"'In the meantime, those that doubted gold's strength are getting yet another lesson of how worldwide geopolitical uncertainty can drive investors into the yellow metal in a heartbeat, and the big loser at least for now is the dollar and yen,' said Kerr."
"Other metals were higher. September palladium closed up $4.20 at $327.70 an ounce and October platinum finished at $1,248.60 an ounce, up $6.90."
"Meanwhile, indexes that track the metals-mining stocks closed lower, taking their cue from a broad decline in the stock market. 'Even though gold jumped on the North Korea missile tests, gold stocks are down due some profit taking, given their strong move over the last week (about 11% in the last 6 days),' said Amaury Conti, an equity trader."
From Bloomberg. "Commodity prices are unlikely to drop back to their historic averages because of the influx of money from investment funds, JPMorgan Chase & Co. said. The 'boom-bust' scenario 'is not dead, but the old mean- reversion levels are,' John Normand, global currency and fixed income strategist, said at the Commodity Investment Summit in London today."
"The commodities bull market is in its fifth year, with oil, copper and zinc advancing to records in 2006. Hedge funds, banks and other institutions, with between $90 billion and $130 billion invested globally in commodities, have had a greater impact on prices than demand for the underlying raw materials from China, India and other emerging markets, Normand said."
"Crude oil touched a record $75.40 a barrel today in New York. It has averaged $67.24 so far this year, compared with $22 a barrel in the five years to 2002."
"Between 1970 and 2000, rallies in commodities markets lasted about three years, with prices rising 45 percent, Normand said. Slumps would last the same period of time, with prices falling 42 percent. The current rally in prices has lasted 51 months with prices rising 171 percent, he said."
"'Demand shocks have been prevalent in all commodities while supply shocks have only affected prices for gold and refined oil,' Normand said."
"The standout among the metals was September silver, which tacked on 49.5 cents, or 4.5%, to close at $11.415 an ounce. This followed a session high of $11.46, an intraday level the contract hasn't seen since June 9."
"Gold's safe-haven status in the wake of the missile tests only embellished the strength it's enjoyed over the last week, Kevin Kerr noted. 'Gold's more vocal detractors of late are being muted by the realization that that the yellow metal is a true 'flight to quality' instrument and that's piled on top of the recent strength we have seen in gold anyway after the FOMC announcement' last week, he said."
"'In the meantime, those that doubted gold's strength are getting yet another lesson of how worldwide geopolitical uncertainty can drive investors into the yellow metal in a heartbeat, and the big loser at least for now is the dollar and yen,' said Kerr."
"Other metals were higher. September palladium closed up $4.20 at $327.70 an ounce and October platinum finished at $1,248.60 an ounce, up $6.90."
"Meanwhile, indexes that track the metals-mining stocks closed lower, taking their cue from a broad decline in the stock market. 'Even though gold jumped on the North Korea missile tests, gold stocks are down due some profit taking, given their strong move over the last week (about 11% in the last 6 days),' said Amaury Conti, an equity trader."
From Bloomberg. "Commodity prices are unlikely to drop back to their historic averages because of the influx of money from investment funds, JPMorgan Chase & Co. said. The 'boom-bust' scenario 'is not dead, but the old mean- reversion levels are,' John Normand, global currency and fixed income strategist, said at the Commodity Investment Summit in London today."
"The commodities bull market is in its fifth year, with oil, copper and zinc advancing to records in 2006. Hedge funds, banks and other institutions, with between $90 billion and $130 billion invested globally in commodities, have had a greater impact on prices than demand for the underlying raw materials from China, India and other emerging markets, Normand said."
"Crude oil touched a record $75.40 a barrel today in New York. It has averaged $67.24 so far this year, compared with $22 a barrel in the five years to 2002."
"Between 1970 and 2000, rallies in commodities markets lasted about three years, with prices rising 45 percent, Normand said. Slumps would last the same period of time, with prices falling 42 percent. The current rally in prices has lasted 51 months with prices rising 171 percent, he said."
"'Demand shocks have been prevalent in all commodities while supply shocks have only affected prices for gold and refined oil,' Normand said."
# posted by Ben Jones @ 2:50 PM 
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****Mogambo sez: The way that the gold lease rates have just collapsed tells me that the gold market manipulators are going to try to manufacture a sell-off in gold. Get ready to do some bargain buying! Whoopee!
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