Silver shines but equities decline (Silver breaks $10/ounce! 22-year high!)

Yahoo/Financial Times ^ | 3-2-06 | Dave Shellock

[Atlas Sneezed]

The prospect of further rises in interest rates in the eurozone unnerved both equity and bond markets on Thursday.

...

The price of silver rose to a fresh 22-year high above $10 an ounce amid expectations that a silver exchange-traded fund would soon receive US regulatory approval.

[M. Espinola]

"The Russell 2000, alrready at an all-time high to start the day, is up HUGE, and the NASDAQ and other major indicies are having a gangbusters day."

What you stated is all obviously true, the indexes are indeed soaring, hitting record highs. The Russell 2000 is a perfect shining example and anyone who was long last year and held on is very happy, however what is the realistic longevity of the current bullishness when there are a number of wild cards out there, nuclear (OPEC) Mohammedan mad Iran for instance.

When the spot price of crude oil is hovering @$70 she could easily double (+) if Tehran's trigger happy madmen lash out and pay the highest price, right in the middle of the Persian Gulf's supertanker lanes. Maybe some people in the metals markets are deeply concerned over the prospects of blazing oil fields and oil tankers - or far worse this summer.

$100 plus oil prices and continuing bullish stock indexes do not mix but they drive gold off the charts as a hedge against a petrol-fueled-inflation-spiral.

Gold Tops $700, Platinum Rises to Record on Iranian Tensions

Canadian Dollar Rises Above 91 Cents for First Time Since 1978

[MeneMeneTekelUpharsin]

I've got about 140-150 Franklin, Liberty and Kennedy (silver - pre 1964) halves I'll sell for $4.25 each. Freepmail me.

[Sic Luceat Lux]

From the first article:

***

Gold may reach $850 this year, Licata said. He correctly predicted gold would reach $500 in 2005.

China has about 75 percent of its reserves in dollars, compared with about 1.3 percent in gold.

``It's very possible that we could hit $1,000 soon,'' said Frank Holmes, who manages $5.2 billion, including $1.5 billion in gold stocks such as Barrick Gold Corp., at U.S. Global Investors Inc. in San Antonio. ``Governments, such as China, are buying bullion. It's like the way smart people buy insurance.''

Some analysts said China may have already moved to increase its gold reserves, contributing to the strength is gold prices in the past year.

South Africa and Russia have said they want to increase their gold reserves.

[Sic Luceat Lux]

They're callin' gold and silver up again in Asia now:

Gold now $707.80 Silver: $14.58

[Cicero]

As I said earlier on this thread, I expect gold and silver to go mostly up until they correct this summer.

There was a bit of a pause today because of the FOMC announcement, but gold closed over 700 anyway.

Let's not confuse politics with economics. This business of cheering every time the DJIA goes up is very dangerous. If it falls, as I expect it to do in a couple of months, it will not only be Bush's doing. Clinton and Greenspan were the chief culprits. In any case, you don't help Bush by losing your money.

[DM1]

"So basically unless the world fails, it's not going to go to 0 and if the world does fail, I would have been better invested in ammunition."

lol i saw a bumper sticker recently that said "ammo - currency for the 21st century"
some real logic to that

[Sic Luceat Lux]

Your informative posts are excellent, thanks.

[Freedom4US]

Let's not confuse politics with economics.

That's the whole point, isn't it? Since the money is a sort of moving target in theory, to preclude disastrous deflation in practice this means robbing people of their savings, not to mention any incentive to save, all we ever hear about is "job growth" or "growth of the economy". The whole "blame the oil companies" thing is getting a little long in the tooth, methinks.

[Sic Luceat Lux]

It just isn't stopping. They're calling gold up again now in Asia:
up $6.30 to $711.00

Silver: up .11 to $14.50

[Sic Luceat Lux]

[Cicero-have to quote myself]

"It just isn't stopping."

N Y gold now: $717.17 with silver now up at $14.92.

[djf]

Silver currently at 15.15, up over 8% for the day.

[Cicero]

Silver went over 15.000 intraday. People who like that sort of number have said that 12 and 15 were significant resistance numbers for silver to break through.

It ended a bit under, so it may take a little while here before breaking through again. But I expect the rise to resume soon.

The stocks are currently lagging, but they should break out within the next week, IMHO.

[ArrogantBustard]

Anyone know what the Hunt's are up to these days????????

Now THAT goes back a year or two ...

[Sic Luceat Lux]

Watching it as we speak. Over seas market has pulled silver back over the $15 level.

[Sic Luceat Lux]

But I expect the rise to resume soon.

With gold and the other metals continuing up/silver should and will follow, IMHO.

[djf]

I've seen that happen a few times the last couple weeks. A big jump early in the morning, followed by a decline in the afternoon when the market closes.

A bit of a lull, then a rise when Asia opens. Then another big jump in the morning when Europe/Wall Street come back online.

[Sic Luceat Lux]

Yep, and my guess is that tomorrow being Friday, many of the heavy hitters don't want to be long over the weekend. Gold and silver should back off a bit tomorrow and then it's back to the races Monday, esp. Tuesday.

[M. Espinola]

Gold, Silver, Platinum, and the Energies will really take off once the hot war begins with Iran. It could be a long hot summer and a very expensive Heating Oil season for the winter of 2006-2007.

Platinum, gold prices conquer new peaks

'LONDON, May 12TH (Reuters) - Platinum prices extended sharp gains to set a new record high on a positive supply-demand outlook and dollar weakness on Friday, while gold surged to a fresh 26-year peak on strong investor interest.'

"There is more fundamental justification for platinum. We believe that even at these high prices, the platinum market is in deficit at the moment," said John Reade, analyst at UBS Investment Bank.

China witnessed good consumer demand in the last few months and generally users, rather than speculators and investors, had been buying the metal, he said.

Platinum (XPT=) reached a record high of $1,334 an ounce before easing to $1,320/1,328 by 1446 GMT, against $1,291/1,298 in New York late on Thursday.

The platinum market was in deficit for the seventh year in a row in 2005 as robust demand from the automobile sector negated a consumption drop in the jewelry market.

The price has jumped 58 percent in the past 12 months, and added more than $150, or 13 percent, in the past seven days. "No matter how high platinum goes, there is demand to buy it from end-users, especially from car makers," said Akira Doi, director at Daiichi Commodities. Johnson Matthey will present its views on the market balance and price trends in its report due for release at 1200 GMT on Monday. GOLD GAINS

Gold surged to a new 26-year high of $730.00 an ounce before falling to $716.30/717.30, against $721.60/722.60 in New York.

It hit a record high of $850 in January 1980. Adjusted for inflation that would equate to about $1,500 now.

"We are targeting gold to reach $800 in 2007, but significant weakness in the dollar could deliver that level as early as the third quarter of 2006," J.P. Morgan said in a report.

J.P. Morgan lifted its forecast for gold prices to $669 in 2006 and $756 in 2007 from $566 and $609 respectively.

Gold has risen 40 percent this year and 70 percent in the past 12 months as investors diversify into precious metals as a hedge against global tensions, including those over U.S.-Iran relations, high oil prices and dollar instability.

The U.S. currency fell on Friday, making dollar-priced gold cheaper for holders of other currencies and prompting some investors to shift to commodities.

But some analysts said the metal was vulnerable to a sharp sell-off.

(The well healed funds will always take profits)

"There is now clearly a bubble around the gold market and the latest moves cry for a powerful correction at some stage," said Wolfgang Wrzesniok-Rossbach, head of precious metals marketing at Germany's Heraeus.

In other precious metals, palladium (XPD=) rose to a four-year high of $406 an ounce and was last at $397/402, against $395/400 in New York.

Silver (XAG=) rose as high as $15.05 an ounce, near a 25-year high of $15.17 reached on Thursday, before falling to $14.26. It was last quoted at $14.38/14.48, versus $14.94/15.04. (Additional reporting by Chikafumi Hodo in Tokyo)

Dollar Falls on Concern U.S. Report to Show Wider Trade Deficit

U.S. dollar tumbles against euro, pound

'NEW YORK - The dollar fell to one-year lows against the euro and British pound on Friday despite an unexpected decline in the U.S. trade deficit.'

'In afternoon New York trading, the euro rose to $1.2914, up from $1.2839 late Thursday in New York. The British pound jumped to $1.8932 from $1.8792 the day before.'

[djf]

I don't understand why they keep calling this a bubble. Copper has tripled in price. I remember not long ago filling up with unleaded for buck forty something a gallon. Nobody calls those "bubbles".

[M. Espinola]

I believe another 'bubble' is in the stock indexes. Key commodities can not continue to soar, driving up inflation, coupled with a declining USD in the currency market, plus interest rates climbing and have the US based stock indexes rocketing up as well. The last two days may have been a wake up call on Wall Street - maybe.

Copper High Grade (HG, Comex) Weekly Price Chart