mynameis
30-06-2009, 04:27 AM
Does gold, commodities surge signal war?
Commentary: Gold bug sees impending attack on Iran
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) -- Bears were blindsided by the past week's sudden spike in gold and commodities. But gold bugs have an explanation: the world smells war in the Middle East, specifically, an attack on Iran.
When I last wrote on gold, it had withstood a serious late-April sell-off and had started a rally. The Gartman Letter, the widely-followed institutionally-oriented newsletter with a good record of catching rallies had jumped back in. An exciting time for gold's friends seemed ahead. See May 18 column
Well, it was exciting, both for bulls and bears. Euphoria and misery swept both camps in unprecedented quick succession.
Gold continued to climb, gaining to above $930 an ounce, but then it ran into stern resistance.
Late May saw concentrated waves of selling send gold reeling down as low as $864 at Thursday's New York open. Having been stopped out, the Gartman Letter actually went short on Thursday, for the first time in several years, loudly proclaiming that a wide commodity sell-off imminent.
Gartman, as is often rumored, may well have known something. Despite a general, powerful rally in commodities, gold, having opened with a violent drop, only partially recovered, finishing down $8.30 on the day. Australia's the Privateer noted: "On June 5 ... oil rose $5.50 and the $US index (USDX) fell 0.43 -- and gold fell $8.30. Even silver was up 23 cents on the day. We cannot remember the last time we saw a 'shear' of such magnitude between the gold and silver price."
But Friday, of course, saw the bears massacred. Gold rose $23.50, blowing Gartman ignominiously out of its stop. And this was only the quiet part of a sweeping commodity rally, led by oil. As the Privateer pointed out: "The oil price rise on June 6 was its biggest one-day rise ever in simple dollar terms. In two days, it rose 13.3%. To put this in perspective, had gold risen by a similar percentage amount over June 5-6, it would have closed the week this week at $992 instead of $US 899."
Nevertheless, Friday's gold move was enough to turn the Privateer's authoritative $US5X3 chart positive. See chart
What is going on? And can it continue?
Answer to Question Two: probably. MarketVane's Bullish Consensus for gold closed Friday up 3 points at only 74%, four points below its mid-May top. It spent a good deal of March over 90%. Oil closed up two points at 76%. It was at 90% as recently as of May 20. There seems to be no reason from a contrary-opinion standpoint that further advances cannot occur.
And the first question? I am temperamentally drawn to the radical gold bugs appearing on the LeMetropoleCafe Website. See Website See May 4 column
One LeMetropoleCafe contributor formulated the issue like this: "Today's fantastic, 1979-style action, with gold up $23.50 in the Comex regular session (and more in the after market) was of course matched by events in other markets, notably grain and oil. All have fundamental reasons for strength: but sudden moves of this magnitude need more explanation."
And another contributor offered the probable explanation: "To all; this smells like war to me. Oil has rallied $17 in 24 hours to new all-time highs. Diesel is currently locked "up limit". The equity markets are faltering badly. CNBC as usual has nothing but candy a---d explanations of these market movements. Nothing in today's environment has any logical explanation. I smell war."
Wall Street hates having to think about politics, much less foreign affairs. But around the world, especially in potential war zones, people do think about them.
They also think about gold.
http://www.marketwatch.com/story/does-gold-commodities-surge-signal-impending-war
Gold price soars on war fears
Gold display case
Gold is a safe haven in uncertain times
Fears of a military conflict between India and Pakistan have pushed the price of gold to a 27-month high.
The gold price reached $319.60 an ounce on Wednesday, its highest price since it hit $338 in October 1999, as investors sought a safe-haven for their money.
Gold will go up to $325 - that's only $7 away now, but ultimately I think $340 is a very real possibility
Peter Hillyard
ANZ Investment Bank
"You've got to look at the political situation in Kashmir with India and Pakistan seemingly preparing for war. This is now the key driver pushing gold prices higher," said TheBullionDesk.com analyst, Ross Norman.
India's Prime Minister Atal Behari Vajpayee fuelled gold buying when he told soldiers confronting Pakistani forces in Kashmir that the time had come for a "decisive battle".
The two countries, with over a million troops in the region, have exchanged fire since Kashmiri separatists attacked an Indian army camp last Tuesday killing more than 30 people.
Ironically, India, the world's largest consumer of gold, will be especially hard hit as the rising price has been exacerbated by the rupee's sliding value against the dollar.
Still rising
Britain's planned withdrawal of some embassy staff from Pakistan in response to security threats, and the temporary closure of the Brooklyn Bridge in New York over fears of a terrorist attack, also unnerved traders.
"India-Pakistan is a factor, the threat of more terrorist attacks in the US is a factor. These are things that are moving investors further into gold as they lose faith in the stock markets," said Peter Hillyard, senior manager at ANZ Investment Bank in London.
"Gold will go up to $325 - that's only $7 away now, but ultimately I think $340 is a very real possibility," he said.
The weakening US dollar had earlier been key to gold's rise.
It hit seven-month lows against the euro and five-month lows against the yen this week, making the metal cheaper to investors outside the US.
Gold has risen 14% since January, breaking through $300 an ounce at the end of March when Israeli forces reoccupied the West Bank following a series of Palestinian suicide bombings in Israel.
http://news.bbc.co.uk/2/hi/business/2002691.stm
Commentary: Gold bug sees impending attack on Iran
By Peter Brimelow, MarketWatch
NEW YORK (MarketWatch) -- Bears were blindsided by the past week's sudden spike in gold and commodities. But gold bugs have an explanation: the world smells war in the Middle East, specifically, an attack on Iran.
When I last wrote on gold, it had withstood a serious late-April sell-off and had started a rally. The Gartman Letter, the widely-followed institutionally-oriented newsletter with a good record of catching rallies had jumped back in. An exciting time for gold's friends seemed ahead. See May 18 column
Well, it was exciting, both for bulls and bears. Euphoria and misery swept both camps in unprecedented quick succession.
Gold continued to climb, gaining to above $930 an ounce, but then it ran into stern resistance.
Late May saw concentrated waves of selling send gold reeling down as low as $864 at Thursday's New York open. Having been stopped out, the Gartman Letter actually went short on Thursday, for the first time in several years, loudly proclaiming that a wide commodity sell-off imminent.
Gartman, as is often rumored, may well have known something. Despite a general, powerful rally in commodities, gold, having opened with a violent drop, only partially recovered, finishing down $8.30 on the day. Australia's the Privateer noted: "On June 5 ... oil rose $5.50 and the $US index (USDX) fell 0.43 -- and gold fell $8.30. Even silver was up 23 cents on the day. We cannot remember the last time we saw a 'shear' of such magnitude between the gold and silver price."
But Friday, of course, saw the bears massacred. Gold rose $23.50, blowing Gartman ignominiously out of its stop. And this was only the quiet part of a sweeping commodity rally, led by oil. As the Privateer pointed out: "The oil price rise on June 6 was its biggest one-day rise ever in simple dollar terms. In two days, it rose 13.3%. To put this in perspective, had gold risen by a similar percentage amount over June 5-6, it would have closed the week this week at $992 instead of $US 899."
Nevertheless, Friday's gold move was enough to turn the Privateer's authoritative $US5X3 chart positive. See chart
What is going on? And can it continue?
Answer to Question Two: probably. MarketVane's Bullish Consensus for gold closed Friday up 3 points at only 74%, four points below its mid-May top. It spent a good deal of March over 90%. Oil closed up two points at 76%. It was at 90% as recently as of May 20. There seems to be no reason from a contrary-opinion standpoint that further advances cannot occur.
And the first question? I am temperamentally drawn to the radical gold bugs appearing on the LeMetropoleCafe Website. See Website See May 4 column
One LeMetropoleCafe contributor formulated the issue like this: "Today's fantastic, 1979-style action, with gold up $23.50 in the Comex regular session (and more in the after market) was of course matched by events in other markets, notably grain and oil. All have fundamental reasons for strength: but sudden moves of this magnitude need more explanation."
And another contributor offered the probable explanation: "To all; this smells like war to me. Oil has rallied $17 in 24 hours to new all-time highs. Diesel is currently locked "up limit". The equity markets are faltering badly. CNBC as usual has nothing but candy a---d explanations of these market movements. Nothing in today's environment has any logical explanation. I smell war."
Wall Street hates having to think about politics, much less foreign affairs. But around the world, especially in potential war zones, people do think about them.
They also think about gold.
http://www.marketwatch.com/story/does-gold-commodities-surge-signal-impending-war
Gold price soars on war fears
Gold display case
Gold is a safe haven in uncertain times
Fears of a military conflict between India and Pakistan have pushed the price of gold to a 27-month high.
The gold price reached $319.60 an ounce on Wednesday, its highest price since it hit $338 in October 1999, as investors sought a safe-haven for their money.
Gold will go up to $325 - that's only $7 away now, but ultimately I think $340 is a very real possibility
Peter Hillyard
ANZ Investment Bank
"You've got to look at the political situation in Kashmir with India and Pakistan seemingly preparing for war. This is now the key driver pushing gold prices higher," said TheBullionDesk.com analyst, Ross Norman.
India's Prime Minister Atal Behari Vajpayee fuelled gold buying when he told soldiers confronting Pakistani forces in Kashmir that the time had come for a "decisive battle".
The two countries, with over a million troops in the region, have exchanged fire since Kashmiri separatists attacked an Indian army camp last Tuesday killing more than 30 people.
Ironically, India, the world's largest consumer of gold, will be especially hard hit as the rising price has been exacerbated by the rupee's sliding value against the dollar.
Still rising
Britain's planned withdrawal of some embassy staff from Pakistan in response to security threats, and the temporary closure of the Brooklyn Bridge in New York over fears of a terrorist attack, also unnerved traders.
"India-Pakistan is a factor, the threat of more terrorist attacks in the US is a factor. These are things that are moving investors further into gold as they lose faith in the stock markets," said Peter Hillyard, senior manager at ANZ Investment Bank in London.
"Gold will go up to $325 - that's only $7 away now, but ultimately I think $340 is a very real possibility," he said.
The weakening US dollar had earlier been key to gold's rise.
It hit seven-month lows against the euro and five-month lows against the yen this week, making the metal cheaper to investors outside the US.
Gold has risen 14% since January, breaking through $300 an ounce at the end of March when Israeli forces reoccupied the West Bank following a series of Palestinian suicide bombings in Israel.
http://news.bbc.co.uk/2/hi/business/2002691.stm