Thursday, September 21, 2006


Feds 'New Reality' Boosts Gold

The reports on the US dollar. "A weaker greenback helped push gold higher Thursday, despite some early-session concern over central-bank selling and hedge fund liquidation. 'The dollar weakness is due to the new reality that the Fed is very likely done raising interest rates,' says Randy Diamond, an analyst at Miller Tabak."

"With the next move in U.S. short-term interest rates likely to be lower, traders will likely be selling dollars in favor of yen and euros. The dollar was buying 116.38 yen, down from 117.45 yen late Wednesday, and was also losing against the euro."

"'The market's got its knickers in a twist about whether it's going to have to absorb more heavy sales from the signatories to the second Central Bank Gold Agreement,' says Rhona O'Connell, an analyst with GFMS Analytics in London. 'Whether they are or whether they aren't, it's the perception that is important.'"

"The European Central Bank sold about 499 million euros worth of gold last week, or about 34 tons of gold, and concern remains that more could be coming soon."

"Also dampening the mood was Amaranth, which was reported earlier this week to have lost $4 billion while trading in volatile natural gas futures. 'A news story like that is going to cause someone to stop and think,' says Bernard Hunter, director of precious metals in Toronto for bullion bank ScotiaMocatta. 'It surely must have an impact on your decision on whether to invest in commodities.'"

"Hunter adds that he is seeing increased physical buying of bullion, which is helping support the price level, although investors are quickly developing lower expectations about prices."

"'It's interesting that we are seeing demand increase as the price drops,' says Alex Edwards, chief operating officer at, who adds that business is up 30% in value terms in September compared with August despite the recent selloff."

From MarketWatch. "December gold climbed $2.10 to close at $588.30 an ounce in New York, as weakness in the U.S. dollar and strength in oil prices drove investment demand. Earlier, prices for the contract climbed as high as $590.80. December silver closed at $11.245 an ounce, up 10.5 cents."

"Scott Meyers of Pioneer Futures said gold closed higher but was unable to break out of Wednesday's trading range. 'It was meandering near its lows for the day and we are seeing support around the $575-$576 level but there is strong resistance near $600,' said Meyers."

"The silver market appeared to settle in better shape than gold as the December contract did push above Wednesday's session high. During the session the contract got as high as $11.29 an ounce."

"October platinum settled 50 cents lower at $1,139.50 an ounce while December palladium ended up $2.65 at $309 an ounce."

It is getting eerie. It almost seems like more and more people are taking a personal interest in the subject of economics, and more specifically, the fundamentals of how the US economy runs. The only downside is that when enough people truly understand what is going on, folks will be upset...quite upset. It is one thing to have someone whiz down your leg. It is another to have someone whiz down your leg and tell you it is raining. Especially from folks who you thought all along had the highest integrity.

The comment above does apply to PMs, if you think about it. The FED reality? They knew it 30 years ago. If they didn't, they have no business taking on this kind of responsibility. With enough bananas, you could have gotten a gorilla to do what the FED has done over the last 30 years. Anyone knows that any problem can be fixed by throwing money at it, right? (satire)
So some hedge fund blew up and I am supposed to think that is a warning against investing in commodities? Ridiculous, as any natural-gas trading hedge fund was totally leveraged in huge futures positions. The average investor buying some PMs as a hedge against USD devaluation is hardly in a similar situation. Wall St. doesn't even lie convincingly.
even hedge fund people said their leverage and risk controls were out of control. he was supposed leveraged 5:1.
What's amazing is in this day and age that just one fund can bring down the whole nat.gas market.. Now you know to what extent the whole game is manipulated. I have to think thr PM market is much smaller ,and more easily moved...I guess that can be good both ways,but am frustrated at the current election shinanigans
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