Commodities Take a Dive!

DRS112 · 03-21-2008, 08:33 AM

Oil and Gold Prices Continue to Slide
By MICHAEL M. GRYNBAUM
Published: March 21, 2008

Oil, gold and other major commodities fell sharply on Thursday, capping their steepest weekly drop in a half-century, as investors fled what many had believed to be the last safe haven in turbulent markets.

Traders at work in the crude oil futures pit at the New York Mercantile Exchange on Thursday. In the last two days, oil slid 6.9 percent, and most other commodities fell by 7 percent or more.

Oil tumbled 6.9 percent in two days of trading, and most other commodities fell by 7 percent or more in that period — including a precipitous 15 percent drop for wheat.

This week’s declines brought an abrupt end to months of big price increases that had attracted speculative cash. “It was the last thing that bankers could hang their hats on,” said Fadel Gheit, an analyst at Oppenheimer & Company. “Everything else had melted before their eyes.”

For the four-day week ending Thursday, an index created by the Commodity Research Bureau in Chicago fell 8.3 percent, the sharpest one-week decline since the index began in 1956. (Markets are closed for Good Friday.)

Seeking to make sense of the sharp declines, some analysts on Thursday saw a bubble bursting.

“Commodities prices got way out of hand because people felt that when you couldn’t buy stocks because of the soft dollar and the economy, the place to be was in these hard commodities,” said Michael Rose, a trader at Angus Jackson in Fort Lauderdale, Fla. “Every speculator in the world bought gold and crude oil and the grains and coffee and sugar and cocoa. Prices became insane.”

If the declines continue, they could be good news for consumers. Lower prices for commodities like oil and wheat can translate into lower inflation for many products, including gasoline and groceries. Such a development would ease the job of the Federal Reserve, which is battling lower economic growth with steps that risk adding to inflation.

Indeed, one such step earlier in the week may have started the commodity sell-off. Almost all commodities are priced in dollars on global markets. When the dollar falls, commodity prices tend to rise, and vice versa.

On Tuesday, the Federal Reserve cut interest rates by three-quarters of a percentage point. That was less than markets had expected, sending the dollar higher. Within hours, commodity prices — which had been volatile for weeks — began to drop. Investors who had seen commodities as a hedge against the dollar scrambled to get out of their bets.

“The precious metals markets and all commodity markets had built in a higher cut,” said James Steel, a commodities analyst at HSBC.

Gold, which had recently crossed the $1,000-an-ounce mark after a huge run-up, settled on Thursday at $920 in New York trading. Oil intermittently straddled the $100 mark before settling down 2.5 percent, at $101.84 a barrel. That is still an unusually high price, but it is down 7.6 percent since the beginning of the week.

“These are all significant declines,” Mr. Steel said.

Some analysts saw them as more than just a reaction to a higher dollar. In their view, investors are growing increasingly worried that a recession will cause a worldwide drop-off in demand for raw materials.

“This is absolutely indicative that the economy is extremely weak, and perhaps in a recession,” said Adam Robinson, an energy analyst at Lehman Brothers. Since the start of the year, demand for oil in the United States has fallen 2.4 percent, or 510,000 barrels a day, compared with the same period last year.

In the last four weeks, that drop has accelerated, according to figures compiled by Lehman Brothers. Some reports also indicate a softening of demand for precious metals. “We had a battery of data showing a real erosion in jewelry demand in India and China,” Mr. Steel said.

But other analysts said growth in China, India and developing economies would likely keep prices elevated for energy, metals and food. In a report, analysts at Barclays Capital predicted that gold would rebound “towards and beyond $1,000 an ounce.”

In fact, even with the recent declines, several analysts noted that commodity prices remained at historic levels.

“We see headlines: ‘Oil collapses to $102,’ ” said Paul Horsnell, a commodities analyst at Barclays in London. “Is that really a collapse?”

VKMHVM2 · 03-21-2008, 10:35 AM

More than likely, the gold and silver markets are simply being manipulated by huge short contracts in the futures market. There probably are a few people that still need to sell gold to cover margin calls and a few large holders have decided to sell into the market. As the price drops, certain computer-traded funds have to sell.

VKMHVM2 · 03-21-2008, 10:40 AM

March 20 Market Update: Nobody Wants Silver So Badly, You Can't Buy Any

by Edgar J. Steele

It's just like pro rasslin', maw. He's up ... he's down ... he's been thrown completely out of the ring and landed in the laps of New York's governor and his ... is that his wife? What's this? Silver is down yet another dollar today, after being down over a buck and a half yesterday? So, the stock market must be up a gazillion points, eh? Nope.

Then, the dollar - they must have struck the world's biggest gusher on the White House lawn? Nope. But the dollar is up - way up. Will it stay up? Nope.

This is a simple takedown, folks. Artificial manipulation by the big boys, designed to force out what they dismiss as "weak hands" holding silver. Well, don't pay attention. We're in this for the long haul. In fact, if yesterday was such a great time to buy more silver, then today must be an even better day, right? That's absolutely correct! Go the head of the line and really load 'em up this time!

Aggravating this is the exit from paper silver of those who have gotten too nervous by this manipulated and phony downtake. My pal the chart freak says that this is a standard Fibonacci retracement from a base price of $9.85. Meaning that those who bought in on paper (ETFs and futures) at around $9 or $10 now finally are selling and counting themselves lucky to have the profits they just booked. Standard stuff, he says, while silver consolidates and builds a new base in this area, preparatory to heading higher...much higher.

One day soon, paper silver will be shown to be the fraud that it is when sellers are unable to deliver the physical that somebody bought. Then physical will rule. That is when the moon shot comes. And, to be on board, you have to be holding the real thing, physically...in your hands.

Meanwhile, local dealers have jacked their margin up from .50 an ounce to .85 and higher. APMEX pushed theirs up 9 cents yesterday and today, you can't even buy anything from them except 100-oz bars, "generic" .999 silver and junk coins.

So, nobody wants silver so badly that its price takes a $3 nosedive in the course of about 24 hours. On the other hand, just try to find some to buy. When you do, the dealer is jacking up the price. Nobody wants it so badly, you can't buy any! Go figure. And go buy some, while you are at it.

Right now. This minute. Don't ask why. Don't ask what. Don't ask when. Just do it.

DRS112 · 03-21-2008, 10:41 AM

Margin calls usually only happen when there is a drop in price....the prices had been increasing for some time...so it doesn't explain why they would have been forced to sell...and I doubt that even if they were that it would have triggered that kind of drop...being that it would be a fraction of a fraction of the market.

All commodities are down...not just gold and silver...they got too high too fast....the dollar climbed...they fell.

DRS112 · 03-21-2008, 10:50 AM

If you've got the money to swing it...copper

Report: Metals price rally to continueMarch 21, 2008 1:23 PM ET

All Associated Press newsNEW YORK (AP) - Despite this week's decline in some benchmark metal price indexes, analysts say underlying fundamentals will keep pushing up the prices of many metals, especially copper and aluminum.

The Standard & Poor's Metals and Mining Index fell 7.3 percent this week as investors grew uncertain about demand.

But Barclays Capital, in a report released Thursday, said "supply issues have not gone away and low copper, tin and lead (inventories) mean that there is very little cushion in these markets, so should supply disruptions emerge then prices are likely to react widely."

The report forecasts a rally in base metals from April through June.

"Currently copper looks the tightest market from a fundamental perspective. We see a very substantial market deficit emerging in the first half of 2008 and inventories returning to all-time lows and prices testing all-time highs," the report says. Barclays forecasts copper rising from about $6,800 per ton in the first quarter of this year to approximately $8,300 by Oct. 1.

A combination of increased physical buying of aluminum and continued tight supplies of electricity will lift that commodity's prices in the second quarter, the report says.

The investment house urged clients to "go long" on aluminum and as for copper "build length on dips to high $7000s."

Prices for tin and nickel are headed higher, too, Barclays said.

One exception to the updraft is zinc, the price for which Barclays forecasts falling to $1,800 per ton by fourth quarter -- roughly half its average price in the second quarter of last year.

Report: Metals price rally to continue: Associated Press Business News - MSN Money

VKMHVM2 · 03-21-2008, 10:55 AM

Metal Exchange Closes Website Due to Overwhelming Demand

Don't be fooled by the central banks dumping of gold and silver reserves in order to halt the rise in metal prices. The lowering of interest rates by the Fed this week only opens the door for more printing of dollars backed by nothing. The illusion the Fed is trying to create of a strong dollar while at the same time pushing a policy of printing unlimited quantities of cash can't hold for long. The reality is driven by the market, and the market is running dry. Every supplier of silver and gold is running out due to huge consumer demand to trade in worthless dollars for something that will hold its value.

The_Heretic · 03-21-2008, 04:39 PM

Quote:

Originally Posted by DRS112

Margin calls usually only happen when there is a drop in price....the prices had been increasing for some time...so it doesn't explain why they would have been forced to sell...and I doubt that even if they were that it would have triggered that kind of drop...being that it would be a fraction of a fraction of the market.

All commodities are down...not just gold and silver...they got too high too fast....the dollar climbed...they fell.

Do you think the drop in commodies are related to the dollar, becuse they all fell by similar numbers?

DRS112 · 03-21-2008, 06:33 PM

Quote:

Originally Posted by The_Heretic

Do you think the drop in commodies are related to the dollar, becuse they all fell by similar numbers?

Yes...in part...stronger dollar means cheaper goods...which would be the biggest reason the drop was similar across the board. Another reason is because the prices got too high too fast....but that wouldn't make the drop similar in percentage points.

The_Heretic · 03-21-2008, 09:01 PM

Quote:

Originally Posted by DRS112

Yes...in part...stronger dollar means cheaper goods...which would be the biggest reason the drop was similar across the board. Another reason is because the prices got too high too fast....but that wouldn't make the drop similar in percentage points.

See, that's something which struct me odd; how all the commodies took a dive and by similar percentages [only so learning from this article].

slowhand · 03-21-2008, 09:10 PM

Thursday started off nasty, but there was a rally in the afternoon..Even the financial institutions were up..Some were way up right to the closing bell

03-21-2008, 08:33 AM	#1 (permalink)
DRS112 Administrator Join Date: Aug 2007 Posts: 5,368 My Mood: Thanks: 48 Thanked 66 Times in 48 Posts	Commodities Take a Dive! Oil and Gold Prices Continue to Slide By MICHAEL M. GRYNBAUM Published: March 21, 2008 Oil, gold and other major commodities fell sharply on Thursday, capping their steepest weekly drop in a half-century, as investors fled what many had believed to be the last safe haven in turbulent markets. Traders at work in the crude oil futures pit at the New York Mercantile Exchange on Thursday. In the last two days, oil slid 6.9 percent, and most other commodities fell by 7 percent or more. Oil tumbled 6.9 percent in two days of trading, and most other commodities fell by 7 percent or more in that period — including a precipitous 15 percent drop for wheat. This week’s declines brought an abrupt end to months of big price increases that had attracted speculative cash. “It was the last thing that bankers could hang their hats on,” said Fadel Gheit, an analyst at Oppenheimer & Company. “Everything else had melted before their eyes.” For the four-day week ending Thursday, an index created by the Commodity Research Bureau in Chicago fell 8.3 percent, the sharpest one-week decline since the index began in 1956. (Markets are closed for Good Friday.) Seeking to make sense of the sharp declines, some analysts on Thursday saw a bubble bursting. “Commodities prices got way out of hand because people felt that when you couldn’t buy stocks because of the soft dollar and the economy, the place to be was in these hard commodities,” said Michael Rose, a trader at Angus Jackson in Fort Lauderdale, Fla. “Every speculator in the world bought gold and crude oil and the grains and coffee and sugar and cocoa. Prices became insane.” If the declines continue, they could be good news for consumers. Lower prices for commodities like oil and wheat can translate into lower inflation for many products, including gasoline and groceries. Such a development would ease the job of the Federal Reserve, which is battling lower economic growth with steps that risk adding to inflation. Indeed, one such step earlier in the week may have started the commodity sell-off. Almost all commodities are priced in dollars on global markets. When the dollar falls, commodity prices tend to rise, and vice versa. On Tuesday, the Federal Reserve cut interest rates by three-quarters of a percentage point. That was less than markets had expected, sending the dollar higher. Within hours, commodity prices — which had been volatile for weeks — began to drop. Investors who had seen commodities as a hedge against the dollar scrambled to get out of their bets. “The precious metals markets and all commodity markets had built in a higher cut,” said James Steel, a commodities analyst at HSBC. Gold, which had recently crossed the $1,000-an-ounce mark after a huge run-up, settled on Thursday at $920 in New York trading. Oil intermittently straddled the $100 mark before settling down 2.5 percent, at $101.84 a barrel. That is still an unusually high price, but it is down 7.6 percent since the beginning of the week. “These are all significant declines,” Mr. Steel said. Some analysts saw them as more than just a reaction to a higher dollar. In their view, investors are growing increasingly worried that a recession will cause a worldwide drop-off in demand for raw materials. “This is absolutely indicative that the economy is extremely weak, and perhaps in a recession,” said Adam Robinson, an energy analyst at Lehman Brothers. Since the start of the year, demand for oil in the United States has fallen 2.4 percent, or 510,000 barrels a day, compared with the same period last year. In the last four weeks, that drop has accelerated, according to figures compiled by Lehman Brothers. Some reports also indicate a softening of demand for precious metals. “We had a battery of data showing a real erosion in jewelry demand in India and China,” Mr. Steel said. But other analysts said growth in China, India and developing economies would likely keep prices elevated for energy, metals and food. In a report, analysts at Barclays Capital predicted that gold would rebound “towards and beyond $1,000 an ounce.” In fact, even with the recent declines, several analysts noted that commodity prices remained at historic levels. “We see headlines: ‘Oil collapses to $102,’ ” said Paul Horsnell, a commodities analyst at Barclays in London. “Is that really a collapse?”
	Top

03-21-2008, 10:35 AM	#2 (permalink)
VKMHVM2 Senior Member Join Date: Aug 2007 Location: NYC Posts: 2,609 My Mood: Thanks: 57 Thanked 47 Times in 36 Posts	More than likely, the gold and silver markets are simply being manipulated by huge short contracts in the futures market. There probably are a few people that still need to sell gold to cover margin calls and a few large holders have decided to sell into the market. As the price drops, certain computer-traded funds have to sell. __________________ It's All Here! Dr. Albert Pastore: An Independent Investigation of 9-11 and the War on Terrorism
	Top

03-21-2008, 10:40 AM	#3 (permalink)
VKMHVM2 Senior Member Join Date: Aug 2007 Location: NYC Posts: 2,609 My Mood: Thanks: 57 Thanked 47 Times in 36 Posts	March 20 Market Update: Nobody Wants Silver So Badly, You Can't Buy Any by Edgar J. Steele It's just like pro rasslin', maw. He's up ... he's down ... he's been thrown completely out of the ring and landed in the laps of New York's governor and his ... is that his wife? What's this? Silver is down yet another dollar today, after being down over a buck and a half yesterday? So, the stock market must be up a gazillion points, eh? Nope. Then, the dollar - they must have struck the world's biggest gusher on the White House lawn? Nope. But the dollar is up - way up. Will it stay up? Nope. This is a simple takedown, folks. Artificial manipulation by the big boys, designed to force out what they dismiss as "weak hands" holding silver. Well, don't pay attention. We're in this for the long haul. In fact, if yesterday was such a great time to buy more silver, then today must be an even better day, right? That's absolutely correct! Go the head of the line and really load 'em up this time! Aggravating this is the exit from paper silver of those who have gotten too nervous by this manipulated and phony downtake. My pal the chart freak says that this is a standard Fibonacci retracement from a base price of $9.85. Meaning that those who bought in on paper (ETFs and futures) at around $9 or $10 now finally are selling and counting themselves lucky to have the profits they just booked. Standard stuff, he says, while silver consolidates and builds a new base in this area, preparatory to heading higher...much higher. One day soon, paper silver will be shown to be the fraud that it is when sellers are unable to deliver the physical that somebody bought. Then physical will rule. That is when the moon shot comes. And, to be on board, you have to be holding the real thing, physically...in your hands. Meanwhile, local dealers have jacked their margin up from .50 an ounce to .85 and higher. APMEX pushed theirs up 9 cents yesterday and today, you can't even buy anything from them except 100-oz bars, "generic" .999 silver and junk coins. So, nobody wants silver so badly that its price takes a $3 nosedive in the course of about 24 hours. On the other hand, just try to find some to buy. When you do, the dealer is jacking up the price. Nobody wants it so badly, you can't buy any! Go figure. And go buy some, while you are at it. Right now. This minute. Don't ask why. Don't ask what. Don't ask when. Just do it. __________________ It's All Here! Dr. Albert Pastore: An Independent Investigation of 9-11 and the War on Terrorism Last edited by VKMHVM2; 03-21-2008 at 10:42 AM.
	Top

03-21-2008, 10:41 AM	#4 (permalink)
DRS112 Administrator Join Date: Aug 2007 Posts: 5,368 My Mood: Thanks: 48 Thanked 66 Times in 48 Posts	Margin calls usually only happen when there is a drop in price....the prices had been increasing for some time...so it doesn't explain why they would have been forced to sell...and I doubt that even if they were that it would have triggered that kind of drop...being that it would be a fraction of a fraction of the market. All commodities are down...not just gold and silver...they got too high too fast....the dollar climbed...they fell.
	Top

03-21-2008, 10:50 AM	#5 (permalink)
DRS112 Administrator Join Date: Aug 2007 Posts: 5,368 My Mood: Thanks: 48 Thanked 66 Times in 48 Posts	If you've got the money to swing it...copper Report: Metals price rally to continueMarch 21, 2008 1:23 PM ET All Associated Press newsNEW YORK (AP) - Despite this week's decline in some benchmark metal price indexes, analysts say underlying fundamentals will keep pushing up the prices of many metals, especially copper and aluminum. The Standard & Poor's Metals and Mining Index fell 7.3 percent this week as investors grew uncertain about demand. But Barclays Capital, in a report released Thursday, said "supply issues have not gone away and low copper, tin and lead (inventories) mean that there is very little cushion in these markets, so should supply disruptions emerge then prices are likely to react widely." The report forecasts a rally in base metals from April through June. "Currently copper looks the tightest market from a fundamental perspective. We see a very substantial market deficit emerging in the first half of 2008 and inventories returning to all-time lows and prices testing all-time highs," the report says. Barclays forecasts copper rising from about $6,800 per ton in the first quarter of this year to approximately $8,300 by Oct. 1. A combination of increased physical buying of aluminum and continued tight supplies of electricity will lift that commodity's prices in the second quarter, the report says. The investment house urged clients to "go long" on aluminum and as for copper "build length on dips to high $7000s." Prices for tin and nickel are headed higher, too, Barclays said. One exception to the updraft is zinc, the price for which Barclays forecasts falling to $1,800 per ton by fourth quarter -- roughly half its average price in the second quarter of last year. Report: Metals price rally to continue: Associated Press Business News - MSN Money
	Top

03-21-2008, 10:55 AM	#6 (permalink)
VKMHVM2 Senior Member Join Date: Aug 2007 Location: NYC Posts: 2,609 My Mood: Thanks: 57 Thanked 47 Times in 36 Posts	Metal Exchange Closes Website Due to Overwhelming Demand Don't be fooled by the central banks dumping of gold and silver reserves in order to halt the rise in metal prices. The lowering of interest rates by the Fed this week only opens the door for more printing of dollars backed by nothing. The illusion the Fed is trying to create of a strong dollar while at the same time pushing a policy of printing unlimited quantities of cash can't hold for long. The reality is driven by the market, and the market is running dry. Every supplier of silver and gold is running out due to huge consumer demand to trade in worthless dollars for something that will hold its value. __________________ It's All Here! Dr. Albert Pastore: An Independent Investigation of 9-11 and the War on Terrorism Last edited by VKMHVM2; 03-21-2008 at 10:58 AM.
	Top

03-21-2008, 09:10 PM	#10 (permalink)
slowhand Senior Member Join Date: Aug 2007 Location: Can't find my way home Posts: 3,131 Blog Entries: 1 Thanks: 40 Thanked 44 Times in 29 Posts	Thursday started off nasty, but there was a rally in the afternoon..Even the financial institutions were up..Some were way up right to the closing bell
	Top

Thread Tools
Show Printable Version Email this Page
Display Modes
Linear Mode Switch to Hybrid Mode Switch to Threaded Mode

New To Site?	Need Help?
Register to Participate View Forum Leaders Contact Us	Frequently Asked Questions Did you forget your password? Mark Forums Read