Posted on 04/12/2011 2:51:47 PM PDT by blam
Gold And Silver Fall As Goldman Says "Sell Commodities"
Commodities / Gold and Silver 2011
Apr 12, 2011 - 09:04 AM
By: Adrian Ash
THE PRICE OF physical gold slipped to a 3-session low in London trade on Tuesday, bouncing higher from $1455 per ounce – 1.5% below yesterday's new Dollar high – as world stock markets fell and major-economy government bond prices rose.
Commodity markets fell after the International Energy Agency said crude oil at "$100-plus...will prove incompatible with...economic recovery" and weaker than expected UK inflation data followed the International Monetary Fund's newly downgraded global growth forecasts.
"Not only are there nascent signs of demand destruction...but also record speculative length in the oil market," says Goldman Sachs' closely-followed commodities strategist Jeffrey Currie in a note, advising the bank's clients to take profits on his recommendations in crude oil, copper, cotton, soyabean and platinum.
"The near term risk-reward no longer favours being long."
The world's largest commodities trader, Glencore International, is planning to raise $11 billion next month by floating its stock in London and Hong Kong, according to a Bloomberg report.
Silver bullion today bounced from an overnight dip to $40 per ounce, trading 3.5% below yesterday's new 31-year highs as the start of New York dealing drew near.
"Near term gold price are likely to be volatile, following each scrap of news flow," says the latest Metals Monthly from London consultancy the VM Group for ABN Amro clients.
"Any positive data from the US and hints of rate hikes [would] create headwinds. [But] the debt-financing needs of the US government (which are projected at $1.7 trillion this year) could again hinder any such moves, specifically as the Treasury has been borrowing at the short end of the curve, where rates are practically at zero."
More immediately, "A lowered outlook for growth has led many to conclude that inflation fears are unwarranted, thereby reducing demand for precious metals as an inflation hedge," notes Marc Ground at Standard Bank today.
But recent comments by Federal Reserve vice-chairman Janet Yellen – stating that strong food and fuel inflation "is temporary" and does not require a US rate hike – "ease concerns over a reduction in global liquidity [and] are supportive of precious metals, especially gold."
Here in the UK, the odds of a rate-hike in May sank from 80% to barely 20% on the futures market, says thew Evening Standard, after official data showed the pace of inflation slipping to 4.0% in March – still twice the Bank of England's mandated target, but below Feb.'s two-year peak.
Libyan rebels rejected any cease-fire talks until four-decade dictator Colonel Gaddafi steps aside.
The Pound fell to its weakest level in a week beneath $1.6250. The gold price in Sterling re-touched £900 per ounce, near last week's new 2011 highs.
The Euro meantime rose towards new 15-month highs vs. the Dollar as IMF and Eurozone officials met in Lisbon to discuss Portugal's proposed €80 billion bail out.
That knocked the wholesale price of gold for Eurozone investors down to a 1-week low beneath €32,500 per kilo.
"We must make good use of various pricing and quantitative tools, including...interest rates and exchange rates, to manage monetary factors in inflation," said Chinese prime minister Wen Jiabao at the weekend – the first time he's referred to foreign exchange rates as a tool for controlling inflation according to the China Daily's report on Tuesday.
The wholesale price of gold bars for Chinese buyers today slipped 0.6% from last week's new record highs, standing more than one fifth above this time in April 2010.
"The macro economic trends from emerging markets are positive for both gold and silver," said HSBC bank's senior metals analyst James Steel in a presentation last month, noting how the economies of the world's strongest precious metals consumers "are growing at three times the rate of the established industrialized world."
Hurry and sell, They need it to cover the shorts.
No matter what the investment: “beware of the mountain”.
Why would anyone listen to Tungstenman Sachs?
"With gold pulling back to $1,450, Richard Russell says “buy again”, if you’ve been holding off"
>> Commodity markets fell after the International Energy Agency said crude oil at “$100-plus...will prove incompatible with...economic recovery” and weaker than expected UK inflation data followed the International Monetary Fund’s newly downgraded global growth forecasts.
Yeah. Like that’s the true and only explanation.
Just watch... in three or four trading days the situation will be reversed and the pundits will trade this lame explanation in for a different lame explanation.
And the world goes round.
I think it’s even easy to be a financial writer than it is to be a weatherman. Always wrong, never in doubt. Great work if you can get it.
Some insiders will profit from this latest and short-lived attempt to deflate precious metals, when the fundamentals driving up the prices remain unchanged. They will have already sold, will buy back in at a discount, then let the prices rise to a new high. How many former Goldman types have worked for various Democrat and Republican administrations again?
“And if Goldman Sachs told you to jump off a cliff, I suppose you’d do that, too..”
(oh - wait...)
Oh, Goldman! Surely a bank so intertwined with the Federal Reserve and the rest of the American economic and political establishment could have no ulterior motives and the best interests of all at heart?
Screw them and the lear jet they rode in on. These crooks are limo libs of the worst order. Should have shut them down along with the rest of them.
Hopefully one day we will be rid of them and George Soros. They are evil incarnate and always have one of their evil creeps positioned in the administration.
No matter what the investment: “beware of the mountain”.
Hey, How am I supposed to sneak up on anyone if you warn them?
Gold is down $5 or .0032%, Crude is down but gasoline is going up.
Article does not seem to understand the drive for PM and commodities. Unless the feds stop printing money and QE, commodities and PM overall will keep rising due to the debasement of the dollar currency. Silver is even more unique because unlike gold, silver is used in many products and never recycled. The mining capacity is barely keeping up with industrial demand and investors demand (as protection against inflation) with the US and EU economies barely expanding. Imagine what the demand will be like if the US/EU economies recover!!!
PM will decline when the US gov and states embark on cuts and austerity to retire the national/local debts, and the fed stops QE. If neither happens the price of PM and commodities will keep rising in dollar terms despite intermittent pullbacks. GS is pulling out of the commodities game because new SEC rules are kicking in. Central banks of the world are buying gold and silver in the last two years (why would they do that if PM values will drop). Let us face it, the well to do and central banks know that the fiat currency system is on borrowed time and attempts to inflate the depressed economies/prices thru QE (ala currency printing) is fraught with risk of high inflation or worst hyperinflation. Since politicians are unwilling to stop spending, then a stash of PM is the only insurance to protect wealth. So PM has a temporary pull back, guess who will be buying and guess what the elite powers to be will tell Joe Public, PM is a bubble please sell all the scrap gold and silver you got to us for paper currency (that will lose value). Freepers be wise, if you already own PM keep it, if prices seem too high, just cutback the amount you will buy.
What do you really thing about them? Don’t be shy.
I’d be happy to be Iceland right about now, telling banks to cover their own losses, and the governments who chose to cover private banks’ losses to do the same.
bttt
think, instead of thing above. Lazy reading apparently trumps spell-check.
This is because the dollar is making a strong comeback in the light of the budget deal that will cut the deficit by a massive $38B!
And I should trust Goldman Sachs because...
On the money! That’s the best explanation of reality I’ve read in quite a while, well done!
p.s. Physical gold and silver should be no less than 20% of
your investment porfolio. Physical means metal in your hands, not paper representing metal.
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