Monday, March 12, 2007


Traders "Hold Out For Bargain Basement"

Reuter reports on currencies. "The Canadian dollar edged higher against the U.S. currency on Monday, helped by the sale of higher-yielding currencies such as the greenback, while Friday's strong domestic data stoked optimism in Canada's economy."

"The currency finished at C$1.1702 to the U.S. dollar, or 85.46 U.S. cents, up from C$1.1723 to the U.S. dollar, or 85.30 U.S. cents, at Friday's close."

"Robust jobs and trade data released late last week continued to drive the currency, which touched its highest level in eight sessions on Monday. It also benefited from the sale of higher-yielding currencies in the wake of the recent selloff in global equity markets."

"The 30-year bond climbed 38 Canadian cents to C$126.45 to yield 4.095 percent. In the United States, the 30-year treasury yielded 4.699 percent. The three-month when-issued T-bill yielded 4.18 percent, unchanged from the previous close."

From Bloomberg. "The yen may weaken against the dollar on expectations a government report will show U.S. retail sales rose in February, prompting traders to reduce bets the Federal Reserve will lower borrowing costs. 'The U.S. retail data is going to support the swing away from believing in an interest rate cut by the Federal Reserve,'' said Meg Browne, a foreign-exchange strategist at Brown Brothers Harriman. 'That could weaken the yen.'"

"The yen traded at 117.73 per dollar at 6:06 a.m. in Tokyo, little change from 117.74 yesterday in New York."

"The yen gained against the dollar yesterday on speculation investors will unwind trades financed with the Japanese currency as losses in the U.S. subprime mortgage market ease demand for riskier assets."

"'There's a significant pool of funds looking at entering back into the carry trades,' said Mike Moran, senior currency strategist at Standard Chartered Bank. 'It's a matter of when they'll pull the trigger.'"

From MarketWatch. "Gold futures ended a volatile session Monday with a modest loss, pressured by uncertainty over global precious-metals demand and falling oil prices. Even so, gold still managed to finish above the $650-an-ounce level for a fourth session as dollar weakness and declining supplies of the metal provided support."

"'Gold seems directionless,' said Kevin Kerr, editor of Global Resources Trader. 'We need some more of these economic numbers to get a clear direction of some kind.'"

"Gold for April delivery fell $1.70 to close at $650.30 an ounce on the New York Mercantile Exchange. It traded between $647 and $654.30 for the day, but it has closed above $650 in each of the trading sessions since Wednesday."

"'The gold market had a significant amount of bullish information out this morning from Buenaventura dehedging announcements, continued slumping mine production from Australia, dollar weakness and more,' but oil prices had been putting the market under some pressure, said Neal Ryan, director of economic research at Blanchard."

"For now, 'volatility is not off the radar; neither are crude oil (down at the moment) or geopolitics,' said Jon Nadler, an analyst at Kitco Bullion Dealers. 'However, investors are exhibiting patience and some are evidently holding out for a possible visit to a lower level of the proverbial bargain basement.'"

"Other metals prices in New York ended Monday's volatile session main higher, with the exception of a modest decline in palladium prices. May silver added 11.5 cents to close at $13.085 an ounce, April platinum added $10.10 to finish at $1,213.80 an ounce, but June palladium shed 40 cents to close at $356 an ounce."

"'Gold seems directionless,' said Kevin Kerr, editor of Global Resources Trader..."
Gold seems as tied to oil as silver is tied to gold, mostly.

In an article a writer described the curent prices of houses as being divided up, are there any good quotes along the same lines with reguard to gold? i.e. 1/3 price is jewlery, 1/3 price is industrial, 1/3 price is key geopolitical tesions, 1/3 is speculation.
"...What drove the housing-led cycle was not as much the cost of credit,” notes Merrill Lynch’s David Rosenberg, “but rather the widespread availability of credit - irrespective of your FICO score [a measure of your ability to repay]...only a third of the parabolic run-up in the home price-to-rent ratio was due to low interest rates. The other two-thirds reflected other non-price influences, such as lax credit guidelines by the banks and mortgage brokers.”

Was gold short leasing by central banks and gold brokers the only thing different between the tech boom gold price of 1999 and the housing bubble boom gold price of 2006? All the so called fundamentals of gold demand during the tech boom mirror today with the exception of gold leasing. I may understand why Greenspan made the comment about gold being the victim of geopolitical tensions. Or do gold and silver ETFs make all the difference in the world?

Few days ago someone asked why, "...would silver have 'a greater exposure to speculative players' than gold?..." Are there simply more individuals and groups who own silver than gold? Silver being cheaper, the J6p can buy and speculate more easily as opposed to expensive gold. More players = more movement. It is easier to sell a cheap investment than an expensive one.
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