Thursday, April 26, 2007


Gold Falls Away From $700 Mark

Bloomberg reports on the markets. "Gold in New York fell the most in eight weeks on speculation a rebound in the dollar may reduce the appeal of the precious metal as an alternative investment. Silver declined more than 3 percent. 'The weakness in the currencies are bearing down on the gold market,' said Stephen Platt, a commodity analyst at Archer Financial Services Inc. 'There's disappointment that gold wasn't able to break through to $700, so we've seen a pulling back in investment demand.'"

"Gold futures for June delivery fell $9.40, or 1.4 percent, to $678 an ounce on the Comex division of the New York Mercantile Exchange, the biggest percentage drop since March 2."

"Gold is sold in dollars and five of the past six bear markets in the U.S. currency have led to a higher gold price. The dollar yesterday touched an all-time low of $1.3666 per euro, previously set on Dec. 30, 2004. The European currency started trading in January 1999 at $1.17."

"'The surprising strength in the dollar overnight has had a negative impact in the gold market,' said Daniel Vaught, a commodity analyst at A.G. Edwards Inc. 'You're seeing general weakness in gold because it didn't break out of $700 when it had the chance.'"

"Silver, which has wider manufacturing use than gold, fell as a slump in the U.S. housing market sparked speculation that demand for copper and other base metals will slow. 'Silver seems to be backtracking,' Platt said. 'The market is going to need some fresh impetus in terms of industrial demand to get it going.'"

"Silver for July delivery fell 44.2 cents, or 3.2 percent, to $13.455 an ounce, the most since March 2."

"July platinum settled down $13.60 at $1,303.60 an ounce, while June palladium settled down $9.65 at $373.40 an ounce. Spot gold at 1:31 p.m. ET traded at $675.05, down $11 an ounce."

"The front-month June light, sweet crude contract settled down 78-cents at $65.06 a barrel. May gasoline settled up 0.77 cent at $2.2903 a gallon. May heating oil settled down 1.24 cents at $1.8891 a gallon."

The Associated Press. "The dollar traded mostly higher Thursday after holding off an all-time high by the euro. The British pound fell from record territory. The 13-nation euro rose as high as $1.3653, just short of its all-time high of $1.3667 in December 2004. It later retreated to as low as $1.3582 before climbing to $1.3601 in late New York trading. That compared with $1.3640 on Wednesday."

"The U.S. Labor Department reported that applications for jobless benefits totaled 321,000 last week, a drop of 20,000 from the previous week, making it the largest dip in nine weeks and double economists' expectations."

"The pound rose as high as $2.0059 before falling to $1.9910 in late trading. It bought $2.0020 on Wednesday after breaching $2 last week for the first time in nearly 15 years."

"The drop came after British housing prices surged in April, signaling that the Bank of England was likely to raise interest rates above the current 5.25 percent."

"In other New York the dollar moved little against Japan's currency, dipping to 119.63 yen from 118.69 yen. It bought 1.2079 Swiss francs, up from 1.2047 Wednesday, and 1.1205 Canadian dollars, up from 1.1150."

Strength in the dollar? Who writes this stuff? Even a dead cat will bounce, but it's still a dead cat. Anyone who bets on the dollar strength for anything but a short term trade deserves what they get.
I'm still waiting for a truly bone-chilling correction before I buy again. I know that current prices are still cheap relative to what they will be in the future, but there are much bigger dips ahead on the ol' roller coaster.
tj --

I hear you. The old "sell in May and go away" rule is about to be put to the test once again.

The argument for a continued climb in the markets is that "we've already had our correction" -- but I think that's way off base. We've got a real plummet ahead of us. I'm about half in, half out already -- and I'm getting out a little more every day...

I think we'll see a nail biter sometime in the next month...
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