Volatility seems to be the order of the day, every day, where the precious metals are concerned.
Yesterday, while the dollar continued to decline, crude raced higher, making for mixed signals that failed to drive gold.
Optimist Zachary Oxman, of Wisdom Financial, is of the opinion that, “It seems like another instance of the long side paring back positions because of the worries in the equities markets.”
Oxman added that, “The housing data is very equity bearish and we saw a huge acceleration in the sale of gold … I think that it's another case of traders/funds looking to get cash free.”
James Moore, of TheBullionDesk.com is equally confident, writing that, “The ongoing weakness in the dollar and fresh highs for oil look set to entice further anti-recessionary/inflationary hedging toward gold and will ultimately push the metal higher … The big question now is how much resistance lies ahead of $1,000, or perhaps as was seen at $850 an ounce, how many stops lie in hiding above?”
From Ed Steer:
Gold sold off a bit at the Sydney open on Thursday morning, but silver stayed flat. This situation continued until Sydney closed and Hong Kong had the market to itself. From there, both metals rose until shortly after London opened for the day. Then the sell-off began...ending with an intermediate bottom for gold at the p.m. fix. Then it rallied until the London close and then got taken to the woodshed after that. Silver declined the entire session, but rallied along with the gold price during the New York lunch hour.
On yesterday's spectacular rally in gold and silver, gold o.i. increased only 2,822 contracts, which is nothing compared to what would have happened five years ago on such a move. It would have been more like 20-25,000 contracts. And in silver, the o.i. actually fell 881 contracts on a one dollar plus move to the up-side. That's amazing. The gold and silver shorts are in huge trouble.
I see that Eldorado Gold finally got their Kislqadaq mine in Turkey re-opened. That popped the stock for a very nice gain. And South Africa is now guaranteeing the mining industry 95% power. Let's see if they can actually deliver that over the long term. In light of the huge hit on the Dow, and gold and silver prices, the HUI managed to finish in positive territory. That's very encouraging. Things are now at the point where the Cartel "can't fool all of the people all of the time."
I'm going to mention the U.S. real estate market today. First is this chart of U.S. median home prices over the last 38 years. It speaks volumes. Click here.
It's my opinion that the real estate industry that exists today, will not exist by the end of 2009...and that any bottom in the real estate market is at least five years away. Even then, unless we have massive hyperinflation, none of us will live long enough to see house prices rise back to the levels that existed only a few years ago. I have two stories today...the first is entitled "Rapid Deterioration - Housing in deepest decline since the Great Depression, economist says". Note to the economist in this story: before this housing bust has run its course, it will become the worst decline in history. The story is linked here.
The second one is entitled "Homeowner equity is lowest since 1945". This story, combined with the prior one, should scare the hell out of you. It certainly did me. So far, this is just in the USA. Soon, all of the Western world will follow suit. I hope you're ready. The story is linked here.
Weakness of attitude becomes weakness of character. - Albert Einstein (1879-1955)
Yesterday's financial news was beyond horrific! How long the financial system can stand in the face of this hurricane of monetary destruction is unknown. But something's got to give. What it is, is unknown. But it's probably coming soon. Today's Friday, and unless the boys are at battle stations, it could get really ugly. I'll talk about it on Saturday, and I'll see you then.
Casey Research correspondent-at-large Ed Steer is a keen observer of the financial scene and a board member of GATA.org.
Quelle: Casey's Daily Resource Plus