Friday, October 14, 2005


Gold In 'Tailspin' As Hedge Funds Shake

Here is the weeks precious metals news in light of the Refco fiasco. "Gold in New York tumbled for a third straight session on Friday as some speculators ditched holdings amid a lack of investor interest this week and as uncertainty grew over problems at commodities brokerage Refco."

"But a burst of dealer and local broker buying hoisted silver prices at the close, as some players played the gray metal against much more expensive gold. Benchmark gold futures had hit their highest level since January 1988 on Wednesday, at $483.10 an ounce, before prices then slipped into a tailspin. By Friday's close, December delivery gold lost $2 to stand at $471.80 an ounce on the New York Mercantile Exchange's COMEX division, trading from $474.80 to an eight-day low of $468.30."

"George Nickas said the recent speculative interest seen in gold became more subdued this week. 'Also, the large spec position in COMEX gold has not been addressed yet and it is underlying the market,' he said."

"U.S. economic data was a mixed bag on Friday. Consumer prices shot up an unexpectedly large 1.2 percent last month, the biggest gain in more than 25 years. NYMEX January platinum fell $7.10 to $927.30 an ounce. Spot changed hands at $923/926. December palladium was off $1.75 at $210.20 an ounce. Spot fetched $206/209."

"Refco Inc. sped toward collapse as regulators barred its owners from taking out money and Standard & Poor's said a debt default may be imminent. S&P cut Refco's credit rating for the third time in four days and said 'a payment default is highly likely.'"

"A crisis in the world's hedge fund industry was in prospect last night after one of the world's largest derivatives brokers was forced to freeze trades potentially worth billions of pounds. The implications..may be felt across the world financial system, depending upon the size of the funds caught up inside Refco and the types of institutions which are unable to remove their money from the operation."

Just like Black Monday, just when gold should be more desirable than ever, the price falls. It is situations like this that have prompted some to suggest there is manipulation of golds price.

Also note that this occurred with the high US inflation number.
That's how I feel. If I want to own something, I want to get it cheaper.
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