Gold drop hammers commodity producers ~~ gold off more than $90 an ounce over two days,....

MarketWatch ^ | March 20, 2008 11:04 a.m. EDT | Steve Goldstein, MarketWatch

[Ernest_at_the_Beach]

LONDON (MarketWatch) -- With gold off more than $90 an ounce over two days, commodity producers were hammered again Thursday, but banking stocks managed to rebound after U.K. regulators stepped in to quell rumors about the sector's health.

Gold and other metals remained under pressure amid calmer waters on Wall Street and ideas the Federal Reserve is no longer as unconcerned about inflation as previously believed after the central bank was somewhat less aggressive than expected in cutting its key interest rate earlier this week.

April gold futures were down $22.80 an ounce to $922.50, and silver and platinum futures also dropped sharply, leading the extractors of those commodities to also fall substantially. Read related currencies story.

Technical analysts at Credit Suisse suggested gold futures may test the $896 to $900 level an ounce, with the next support coming in at $876 to $880.

[Ernest_at_the_Beach]

We MAY be at the bottom....Democrats hopes fading.....

[Ernest_at_the_Beach]

Stocks Climb, Commodities Fall

Stocks traded higher after better-than-expected economic data as commodities prices continued to slide. Crude-oil futures hovered near $100 a barrel and gold continued to slide back toward $900.  12:10 p.m.

[babble-on]

oil down similarly, and the dollar is bouncing off the lows. Looks like there were bubbles in places other than Real Estate

[Thebaddog]

With gold off more than $90 an ounce over two days, commodity producers were hammered again Thursday

Should I really feel the pain for the owner of a GOLD MINE?

[Go Gordon]

We MAY be at the bottom....Democrats hopes fading.....

We are not at the bottom yet. While everyone keeps looking at liquidity, foreclosures etc, the economy is heading to recession and the tool normally available to curb recessions (the lowering of interest rates) is off the table (unless the feds want the dollar to be worthless). Remember what happened to Japan when they, in the late 80's, were in the same boat we're in. They had a 10 year span with no economic growth.

[RightWhale]

Platinum was fluctuating wildly last week, plenty of warning. Nobody was caught off base by this sudden drop.

[Moonman62]

We MAY be at the bottom....Democrats hopes fading.....

I think we are seeing a rotation of commodities and into financials.

[upchuck]

We MAY be at the bottom

You may be right. I was at a local jewelry store (the guy also buys and sells gold and coins) recently. The owner and I were discussing the price of gold. He speculated that the bottom would arrive soon because all sorts of people were wandering in wanting to buy gold coins.

He pointed out that in the post this activity invariably occurred just before the bottom. He also said the smart people were the ones coming in to sell gold.

We can hope :)

[dragnet2]

We MAY be at the bottom.

When that occurs, watch for a mad rush of home buying from those investors/buyers that have been sitting on the sidelines that have been waiting to purchase.

When that happens, well, we all know what direction the home prices will go.

It's going to happen...Just a matter of when.

Oh and by the way, they just shot down that project to build 5000 homes up near Santa Clarita Ca.

[Centurion2000]

looks like it’s time to go sell the silver ... that was bought at 4 :)

[LoneRangerMassachusetts]

We get conflicting reports. Gold is dropping; the dollar is dropping so buy gold. News is more about advertising to work on people’s fears for the simple reason to get people to move money from one account to another. This way the hustlers free the flow of money so they can grab some for themselves. The older I get, the more cons I see.

Cynic

[penowa]

"I think we are seeing a rotation of commodities and into financials."

You mean to tell me that the Fed isn't going to bail out commodities traders if the bubble has burst?

[BurbankKarl]

The Gold Train is derailing!

[HamiltonJay]

The commodity bubbles are finally popping as well? Guess the bigger fool can’t show up for ever.

[LambSlave]

IBs selling off commodities to raise cash?

[cinives]

Good luck with that one.

[upchuck]

Yeah, a 400% gain is always nice. But hurry - silver is falling faster than gold.

[GalaxieFiveHundred]

Great news, I mean, how depressing...

[FourtySeven]

Gold is never worth zero! I’m sure that’s a comfort to those who bought gold when it was $90 higher than it is today.

:-)

[sbMKE]

The unreported component of the commodity market run ups is the manner in which credit is extended to hedge funds to get in — No more than 25% of the actual contract price needs to be paid for the contract (sounds like the mortgage bubble to anyone else). 4:1 leverage on items going inflationary due to weak dollar policy is nothing short of free money and big money investors have been moving all-in at the expense of end-users.

In the UK news yesterday, trading firms have been changing terms on contracts the last couple days, right on the heels of collapsing leverage plays like the mortgage scheme put together by Bear Stearns. I just read this morning that trading firm in the UK are moving toward requiring 90% down terms on contracts, in a move that will hopefully shake out quite a bit of hedge fund play in the commodity markets. My feeling is that a lot of the boom of commodities has been boosted by nonexistent money creating artificial demand. By requiring that investors actually pay for investments, the firms can protect themselves in the face of maturing contracts - and hopefully some semblance of order will return to the markets.