3SOF

Gold hits new record of $974.80 on dollar's tumble

By Polya Lesova, MarketWatch
Last update: 3:00 p.m. EST Feb. 28, 2008Print E-mail RSS Disable Live Quotes
NEW YORK (MarketWatch) -- Gold futures ended with strong gains Thursday, surging to a record high of $974.80 in after-hours trading, propelled by the dollar's tumble to a new low against the euro.
Gold for April delivery rose $6.50 to end regular trading at $967.50 an ounce on the New York Mercantile Exchange.
In after-hours, electronic trading, the contract surged to a record of $974.80 an ounce, surpassing the $970 high hit in regular trading.
"The recent string of U.S. data has been appalling and this is putting significant pressure on the dollar and supporting gold," said Mark O'Byrne, executive director at Gold and Silver Investments Ltd., in a note.
On Wednesday, gold rose $12.10, or 1.3%, to $961.0 an ounce.
Weakness in the U.S. dollar boosted gold's investment appeal. Gold, like many commodities, is denominated in dollars, and a lower U.S. currency makes it more affordable in other currencies.
'The recent string of U.S. data has been appalling and this is putting significant pressure on the dollar and supporting gold.'
— Mark O'Byrne, Gold and Silver Investments Ltd.
On the currency markets Thursday, the U.S. dollar tumbled to record lows against the euro and the Swiss franc after lackluster data and Federal Reserve Chairman Ben Bernanke's comments raised fears about the U.S. economy.
The dollar fell to a lifetime low of 1.0483 Swiss francs. The 15-nation European currency rose as high as $1.5228, its loftiest level since it began trading in January 1999, as Bernanke spoke on Capitol Hill for the second day of his report on monetary policy.
While he downplayed concerns that the U.S. economy might be in the grip of stagflation, a combination of low growth and inflation, Bernanke said there would likely be some bank failures, though not large firms. See The Fed.
The trade-weighted dollar index, which measures the greenback against a basket of six major currencies, fell 1.2% to 73.68. See Currencies.
The Commerce Department reported that the U.S. economy grew at an unrevised 0.6% annual rate for the fourth quarter, underscoring how economic conditions slowed toward the end of 2007. And for all of 2007, the economy grew at the weakest pace in five years. Read more.
Also Thursday, the Labor Department reported that first-time claims for state unemployment benefits rose 19,000 last week, reaching the highest level since late January.
Crude-oil futures rose more than2% to a new record high of $102.74 a barrel as production was partially shut down in Nigeria after military attacks and as the dollar fell further against the euro. See Futures Movers.
Playing the commodities surge
While global capital markets have already priced in a mild U.S. recession, the prices of raw material prices continue to hit new highs, S&P analysts said Thursday. Tighter global capacity along with strong demand from emerging markets has counter-balanced weak demand from developed countries, S&P said.
"We believe commodity prices are benefiting from investors' increasing worries that inflation, which has begun to inch up globally, will continue to rise," said Alec Young, international equity strategist for Standard & Poor's Equity Research, in a statement Thursday.
The current commodity bull market offers opportunities for equities in the materials sector, S&P said. Metals companies have been delivering solid earnings for a sustained period, said Leo Larkin, diversified metals and mining analyst for Standard & Poor's Equity Research.
"Gold has been particularly rewarding, as it has enjoyed a seven-year bull run, and we recommend the purchase of Barrick Gold (ABX:Barrick Gold Corporation
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Last: 53.31+1.86+3.62%

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ABX 53.31, +1.86, +3.6%) ," Larkin said.
"Copper also has been a nice surprise that has rewarded investors with strong returns," he said. Larkin has a buy recommendation on Teck Cominco (TCK:teck cominco ltd cl b
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TCK 42.02, +2.07, +5.2%) (TCK:teck cominco ltd cl b
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TCK 42.02, +2.07, +5.2%) partly based on higher copper prices.

2:48PM Nymex Energy Closing Prices (COMDX) : After making new all time highs at $102.74pbl, crude closed the session up $2.98 to $102.60pbl (record high). Natural gas finished higher by 39.6 cents to $9.456mbtu, heating oil settled up 7.74 cents to $2.8485/gal and RBOB ended higher by 1.73 cents to $2.4950/gal.

BigSully,  Thought you would like to read this.  I think you know where I stand from my prior posts about precious metals.  We will all know in the fullness of time.  Good health and trading to you.
Poli

*** ONCE-IN-A-MILLENIUM BOOM ***

Coxe: Global bull market for metals has just begun

BMO strategist Don Coxe is singing the praises of "the music of the metals markets," whose final movement will be "the longest and loveliest performance of metals music in history."

Author: Dorothy Kosich
Posted: Thursday , 28 Feb 2008

RENO, NV -

In his latest "Basic Points" report, BMO Commodity Portfolio Strategist Don Coxe declared "platinum is the current commodity star" as prices have soared due to South African power failures.

"Ominously, the South African government's repeated failures to implement a program of strengthening the state-owned electricity system mean that such production cutbacks will last for years. At some point, the catalytic converter in a scrapped car could be worth more than the rest of the wreck," Coxe asserted.

"Although gold stocks have not, as a group, performed as well as gold in recent months (largely because of perceived political risks), shares of many junior, speculative gold and/or silver companies have produced rich rewards for their backers," he said. "It is paradoxical that the collective market value of the hundreds of gold exploration companies that trade in Canada, Britain and Australia has risen so sharply, while the value of the companies that collectively produce most of the world's new-mined gold has increased so moderately."

Coxe noted increasing skepticism from clients "about the investment merits of the leading gold mines. They say it makes far better sense to buy the gold ETF than to buy the miners. They cite growing political risks and soaring production costs."

"We respond that the least-risky investment strategy is to own both the gold ETF and the well-managed mines," he advised.

BULL METALS MARKET

Nevertheless, Coxe does believe that base mining stocks have been hurt by the mortgage mess as stock prices are sliding "and the margin clerks take charge." Meanwhile, the bursting of the real estate bubble has pushed the U.S. into recession, which "has always been punishing to the prices of industrial metals. Finally, if the U.S. and Europe enter recession, exports from China and India will suffer. That means, Wall Street believes, that the two fastest-growing large-scale commodity-consuming economies will no longer be supporting raw material markets," he explained.

Although Coxe believes "we have entered the time when western metal demand will shrink in response to economic slowdowns. This will mean a modest slowing in the growth of the total world demand for metals."

Nonetheless, Coxe asserts that "the global bull market for metals has just begun."

"When the commodity bull market began, the total global capitalization of mining stocks was less than the market cap of Microsoft and Cisco...Now, the major mines are the global giants."

"The BHP-Rio Tinto-Chinalco-Alcoa battle may end in the biggest merger in world history," Coxe noted. "That statistic in itself shows how China is changing the global economy. Faced with a takeover of the #3 iron ore shipper by the #2, China authorized a blocking attempt by one of its state-controlled entities. Alcoa, once the world's leading aluminum company, was tapped as the junior partner in the swoop that bought 12% of Rio Tinto, giving it potentially a place at the bargaining table-or maybe the dissecting table-where it can scoop up precious parts of Alcan."

Coxe asserted that what is needed "is to get the investment community to share the industry's new-found convictions about the impact of the Chinese-Indian renaissance. Already China's consumption of copper is roughly twice America's, and its demand for iron ore dwarfs U.S. demand. This is no mere hiccup, but a hinge of history."

"It has become clear that this is a once-in-a-millennium commodity boom that will last at least as long as the commodity crash-two decades," he declared

INVESTMENT RECOMMENDATIONS

1) Coxe advised that long-term investors 'should remain heavily overweight commodity stocks, including the base metal stocks. As the bear market grinds on, use days of stock market weakness to add to commodity stock exposure. They not only remain the asset class with the best earnings outlook, but remain the asset class that is least understood by conventional asset allocators, who still see them as cyclicals dependent on OECD growth."

2) "In the near term, gold will continue to outperform stock markets and to act as a form of hedge against two kinds of shocks-financial panics and inflation stocks.

3) "With the commodity groups, continue to emphasize investment in companies with long-duration unhedged reserves in the ground in politically-secure regions."

4)"Long-term oriented investors should use any temporary pullback in base metals producers to build their portfolios for the Final Movement of the Sonata-which will be the longest and loveliest performance of metal music in history."

Poli, I do appreciate your article. Thanks and applaud. I am holding BVN AUY AZK PAAS SWC and PAL. I sold some PAL and SWC, but only because I was way too heavy and they went up so fast.

Basic metals holding SID MTL PCU RIO GGB.  RIO reported tonight, but nothing special. Best wishes and happy trading to you. Oh yeah, I still hold a little ROY, most of it at a loss.

7:57AM S&P futures vs fair value: -17.4. Nasdaq futures vs fair value: -29.5. : Futures suggest the stock market is going to extend yesterday's losses.  Cautious comments from Dell (DELL) and a $5.3 billion fourth quarter loss from AIG (AIG) is fuelling the selling pressure.  A CNBC commentator said the bailout of bond insurer Ambac (ABK) has hit a fairly significant snag over the amount of capital the consortium of banks are willing to put up, which is also weighing on sentiment.  The commentator said this does not mean the situation is dead.  The January personal income and spending report is set for release at 8:30 ET.

QuoteFocusing on the SPY, despite all the short term noise, I see the short term trend as bullish. I guess today we'll probably break down below $137 which will throw a lot of weak hands out of board ... but this is just to touch the ascending support line at $136.25. We'll close back above $137 and this time the market we'll move beyond $140 ...

The SPY is opening sharply lower today, at $135.54 in pre-market trading. So my short term outlook was wrong and there's some more downside than I thought. I guess we're still in the $137 playing mode ... the initial phase of a bullish move is usually very turbulent and noisy from a technical standpoint and this is why it is so difficult to pick up a bottom in the general market. The bottoming process usually makes a good job at throwing the majority of short term players out of board before making its move. It will only be clear that this market is bullish when it moves above $143 or so. At least this is my expectation.

In an effort to technically explain what's happening over the short term (an effort that probably I shouldn't make - but I have 11 years of this on my back), I guess that what the SPY is doing is a retest to the broken descending trendline. The trendline was a resistance that should now work as support. I see it at $135.23 today and I don't expect the SPY to close below that level.

The problem with descending supports is that the market may keep sliding even while it keeps respecting the support level. But eventually, if bulls are correct as I think they are, the market will rally from the support area and will breakout above the 50 days SMA (currently at $138.85) and the $139 and change horizontal resistance.

Quote of the day: "There is still hope that the 'recession' is substantially contained in the financial, housing, retail, auto, and airline sectors."

Quote from: BigSully1 on February 29, 2008, 12:08:43 PM
Quote of the day: "There is still hope that the 'recession' is substantially contained in the financial, housing, retail, auto, and airline sectors."

I'm thinking of joining the Omish.



uc.

Quote from: usedcasting on February 29, 2008, 01:11:50 PM

Quote from: BigSully1 on February 29, 2008, 12:08:43 PM
Quote of the day: "There is still hope that the 'recession' is substantially contained in the financial, housing, retail, auto, and airline sectors."

I'm thinking of joining the Omish.



uc.

LOL. I'm thinking about moving to Costa Rica, seriously.

Quote from: usedcasting on February 29, 2008, 01:11:50 PM

Quote from: BigSully1 on February 29, 2008, 12:08:43 PM
Quote of the day: "There is still hope that the 'recession' is substantially contained in the financial, housing, retail, auto, and airline sectors."

I'm thinking of joining the Omish.



uc.

08:35 am : S&P futures vs fair value: -15.4. Nasdaq futures vs fair value: -30.0.  Futures don't get much of boost after better than expected income and spending numbers. January personal income increased by 0.3% month over month (consensus +0.2%), spending increased by 0.4% (consensus +0.2%) and core PCE rose by 0.3% (consensus +0.3%).  December's spending reading was revised higher to 0.3% from 0.2%.

09:00 am : S&P futures vs fair value: -13.2. Nasdaq futures vs fair value: -26.0.  Futures contine to point to a negative start, but have climbed off their worst levels. UBS said financial companies are likely to have at least $600 billion in write-downs, according to Bloomberg.com.  This is far more than the current total of write-downs, which stands at more than $160 billion.

09:45 am : Stocks extend yesterday's losses.  A record loss at AIG (AIG), cautious outlook from Dell (DELL) and reports that the Ambac (ABK) bailout has hit a "snag" are weighing on sentiment.

On the bright side, January personal income and spending were slightly better than expected.  PCE core, an inflation measure, came in-line with expectations.  When adjusted for inflation, income was flat and spending was up a slight 0.1% month-over-month.DJ30 -139.78 NASDAQ -17.94 SP500 -16.

10:00 am : Stocks extend their losses after a poor survey on manufacturing in the Chicago region.

The February Chicago PMI came in at 44.5, lower than the consensus estimate that stood at 49.5.  It reflects a contraction in manufacturing in the Chicago region because the reading is below 50.  It is the lowest number since December 2001.

Meanwhile, the revised February University of Michigan confidence survey was revised slightly higher to 70.8 from 69.6.DJ30 -156.20 NASDAQ -18.29 SP500 -24.73 NASDAQ Dec/Adv/Vol 1793/629/629 mln NYSE Dec/Adv/Vol 2367/412/160 mln


10:30 am : The major indices extend their losses.  The recent wave of selling pressure was led by the tech sector (-1.9%)

The ten economic sectors are in the red, with all but consumer staples (-0.9%) posting a loss of more than 1%.  Energy (-1.9%) is the main laggard as crude prices slide roughly 1% from all-time highs.  Weakness is broad-based.  Of the 147 S&P 500 industry groups, only two are posting a gain.

AIG (AIG 47.11, -3.04) is the worst performing stock in the S&P 500.  The company reported a large $5.3 billion fourth quarter loss, resulting from a huge $11.1 billion in asset write-downs.  It was AIG's largest loss ever.DJ30 -215.98 NASDAQ -41.34 SP500 -23.67 NASDAQ Dec/Adv/Vol 2002/572/494 mln NYSE Dec/Adv/Vol 2474/402/275 mln

11:00 am : The stock market is trading slightly above its worst level that was reached in the past half-hour, although buyers have yet to show much interest.

Gold is up for the fourth day in a row as traders buy the precious metal on inflation and economic concerns.  Gold hit an all-time noninflation adjusted intraday high of $978.50 per ounce in earlier trade. The commodity is up nearly 37% compared to a year ago, and is up 15% in 2008 alone.

Meanwhile, Treasuries are rallying for the second straight day as weaker than expected economic data prompted traders to up their bets on the size of the March 18 fed funds rate cut.  Fed funds futures now suggest a 62% chance of a 75 basis point cut, with a 50 basis point cut fully priced in.  Last week there was only a 2% chance of a 75 basis point cut.

11:30 am : The stock market makes a modest gain from its session low, although losses remain substantial.  Market breadth is bearish.  Decliners outpace advancers by 6-to-1 on the NYSE and by 3.5-to-1 on the Nasdaq.

The major indices around the world are down today.  The Dow Jones World Ex US Index is down 1.5%.DJ30 -202.71 NASDAQ -40.11 SP500 -23.09 NASDAQ Dec/Adv/Vol 2072/602/793 mln NYSE Dec/Adv/Vol 2539/436/478 mln


12:00 pm : Stocks extend yesterday's losses on weak economic and corporate news. Stocks are sharply lower at midday, and are poised to end the month in the red. If the S&P finishes this month in the red, it would mark its first four month consecutive losing streak since April 2002 to July 2002.

In corporate news, AIG (AIG 46.79, -3.36) was the latest company to fall victim to the credit market turmoil. It reported a fourth quarter loss of $5.3 billion, its largest ever. The loss was due to a massive $11.1 billion write-down related to subprime mortgages.

On a related note, Bloomberg.com reports that UBS believes financial companies will write-down a total of $600 billion in assets. This is much larger than the current write-downs of more than $160 billion.

Meanwhile, Ambac (ABK 11.23, -0.57) is lower after CNBC reported that its bailout plan has stalled over the amount of capital the consortium of banks are willing to put up. Also weighing on Ambac and fellow bond insurer MBIA (MBI 13.33, -0.73) is news that leveraged buyout mogul Wilbur Ross chose to invest up to $1 billion in Assured Guaranty (AGO 25.24, +2.46). Ross believes Assured is better positioned to flourish than MBIA and Ambac, according to Reuters.

Financials (-2.2%) are underperforming the broader market.

Dell (DELL 20.03, -0.84) is leading tech (-1.7%) lower after it reported fourth quarter earnings of $0.31 per share, including charges and gains. Dell's cautious comment that it is seeing a more conservative spending environment in some global accounts is weighing on tech stocks.

In economic news, the major indices fell to their worst levels of the session after the February Chicago PMI came in at 44.5, lower than the consensus estimate that stood at 49.5. It reflects a contraction in manufacturing in the Chicago region because the reading is below 50. It is the lowest number since December 2001.

On the bright side, January personal income and spending were slightly better than expected. PCE core, an inflation measure, was in-line with expectations. When adjusted for inflation, income was flat and spending was up a slight 0.1% month-over-month.

All ten economic sectors are lower, with telecom posting the largest loss of 2.7%. Consumer staples (-0.8%) is outperforming on a relative basis, and is the only sector that is posting loss of less than 1%. Selling interest has been broad-based. Only three of the 147 S&P 500 industry groups are trending higher. DJ30 -205.07 NASDAQ -40.06 SP500 -23.16 NASDAQ Dec/Adv/Vol 2073/624/916 mln NYSE Dec/Adv/Vol 2511/491/560 mln

12:35 pm : Major indices catch a modest bid on a bond insurer headline, although losses remain steep. After this session's retreat, the stock market has given up all of this week's prior gains.

Moody's said it is continuing to review Ambac (ABK 11.30, -0.37) for a possible downgrade, but believes Ambac's capital exceeds the minimum Aaa standard, but falls below the Aaa target level.  The ratings firm expects Ambac will hit the target level if capital raising efforts succeed.DJ30 -200.10 NASDAQ -37.36 SP500 -22.45 NASDAQ Dec/Adv/Vol 2050/701/1.04 bln NYSE Dec/Adv/Vol 2451/568/637 mln


2:00 pm : Stocks have taken a turn lower to establish fresh session lows in another broad based selling wave.  The three major indices are each down more than 2.0%.

All ten economic sectors are showing a loss in excess of 1.0%.

Investor sentiment remains strongly negative.  Declining issues outpace advancers by more than 5-to-1 on the NYSE.DJ30 -269.71 NASDAQ -49.54 SP500 -30.48 NASDAQ Dec/Adv/Vol 2224/633/1.39 bln NYSE Dec/Adv/Vol 2605/459/840 mln

I begining to think that "diversification" only means that you have many stocks that go down rather than just one or a couple.  Only 7 of the 38 stocks I watch are green.  I'm beginning to return 360 to the idea that swing trading is the most profitable; not day trading, but 10% up swings over the course of a couple days.

some one once said

Quote"he who controls the gold controls the world"

or something like that.
http://in.reuters.com/article/businessNews/idINIndia-32210720080229

I am starting to agree with you buddjas1
I could have sold half my position in CIMT when I saw it wednesday on premarket knowing what the stochastics were telling me and I could get back in at 3 

1:47PM Comex Metals Closing Prices (COMDX) : Gold settled the session higher by $7.50 to $975.00/oz, silver ended up 20.5 cents to $19.915/oz and copper closed lower by 2.30 cents to $3.8550/lb.

Hi BigSully1

I sold AEM for $70 as I planned ..
I'll be waiting for it again around $65+  if not I will buy it if it close above 70.50 for safety .

I agree with you Gold will go up but not as must as it already did ..
I'm trying to benefit from the up and down moves in this too volatile market ..

GLD will probably see $100 soon .. now $96

good luck