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The Daily Resource 10/14/05


Gold falls again. Trade deficit widens. Outlook for oil brightens and more in The Daily Resource.


Gold headed downward from its New York opening yesterday, falling throughout the morning and flirting with the $467/oz. mark, an obvious entry point for buyers, at 12:30. From there it moved sharply up, firming at $471, where it spent the rest of the day. Closing price for spot was $471.40, off only $1.80.


Silver shared its sister metalÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s fate, following WednesdayÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s decline with another 9 cent drop to close at $7.67/oz, while platinum was also pummeled, giving up $8 to finish at $926/oz. (Click here for charts)


Analysts correlated goldÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s continuing decline with WednesdayÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s release of a Fed report indicating that the FOMC intends to remain vigilant in combating inflation, as well as with declining weekly jobless claims and an import price shock.


The latter appeared Thursday in an unexpectedly incendiary report from the Department of Labor showing that prices of goods imported into the U.S. climbed 2.3% in September, the biggest increase in 15 years. Imported natural gas led the way, soaring 28.8%, while imported oil prices rose by 7.3%.


Domestically, inflationary signs were posted by September figures for the chemicals and building materials sectors. With both strongly affected by recovery efforts in areas leveled by Hurricanes Rita and Katrina, the cost of building materials jumped 2.5% while chemicals rose 1.4%.


All things considered, analystsÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢ consensus is that the Fed will raise interest rates again at its November 1 meeting, to 4%, and that advancing interest rates will serve to prop up the dollar in the short term and retard goldÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s advance.


In energy news, a Department of Energy report released yesterday indicated an increase of 1 million barrels in crude inventories for the week ended Oct. 7, the first rise in oil stocks in seven weeks. Separately, the American Petroleum Institute said that supplies actually climbed 7.2 million barrels, a discrepancy not uncommon because of the differing ways in which data are collected.


Whatever the actual figure, the inventory increase sent the price of oil sharply south. Crude for November delivery fell to a low of $62.45 a barrel on the New York Mercantile Exchange before bottoming out. It closed at $63.08 a barrel, down $1.04. November heating oil lost 1.88 cents, to end at $1.9969 a gallon, while November unleaded gasoline closed at $1.7579 per gallon, down a motorist-friendly 6.97 cents.


In related good news, the DoE also reported that Gulf Coast refinery capacity utilization rose to 74.9% last week from 69.8% during the week ended Sept. 30.


All of this provided strong support for the dollar. Continuing its four-day rally, the buck pushed below the $1.20/euro mark, strengthening to $1.1989 in late trading. Buyers shrugged off Commerce Department figures showing that the U.S. trade deficit grew in August to a near-record $59.03 billion from $57.96 billion in July. The dollar is now up 12% against the euro since its January lows (Click here for currency prices).


The base metals market was dominated by the continuing freefall of nickel, which today plunged more than 20 cents to close at $5.5101/lb., a 13-month low. The London Metal Exchange reported that inventories have risen 7.1% this month, marking a decline in demand for the metal that analysts attribute to the growing fabrication of stainless steel with a lower nickel content. In particular, Chinese and Indian mills have been increasing production of Series 200 stainless, which uses less nickel.


Speaking of base metals...One of our sponsors, Cornerstone Capital, is very active in base metals mining. For more information about Cornerstone, check out their full corporate profile.


Copper also continued its recent decline, falling a little over 2 cents, to close at $1.8074/lb. Zinc moderated by $0.0024 to $0.6628/lb. Lead traded up and down through a 4-cent range but ended virtually unchanged at $0.4406/lb. Aluminum gave back most of yesterdayÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s gain, losing a penny to close at $0.8734/lb.


ThatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s whatÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¾Ãƒâہ¡ÃƒÆ’‚¢s happeningÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¦ until tomorrow! http://www.sharescene.com/html/emoticons/smile.gif



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QUOTE (dali @ Saturday 17/12/05 03:27pm)


This is quite good article from bloomberg quoting all the gruru"s including,

Jim Rogers, Stephen Roach, Marc Faber, Robert Prechter(eillot wave specialist)



I have highlited in bold what Marc Faber has to say , & as you can read he

changes his mind to suit what day it is.

This confirms my theory i have been forming that nobody knows what the hell is going on.

---------------------------------------------------------------------------regards datum--------



Commodity Selloff Prompts Consensus for Bulls, Bears (Update2)

May 22 (Bloomberg) -- Mayur Ajmani bought copper last month only to see $11,000 of his investment vanish in an hour when the metal had its biggest decline May 15 since 2004.


``The loss was about the same as my entire salary for the year,'' said the 27-year-old manager of a call center in an interview from his New Delhi office. ``I just can't understand this market now.''


What looked like the surest of bets -- buying any of the 19 commodities in the Reuters/Jefferies CRB Futures Price Index -- only a month ago is now hazardous to even some of the market's steadfast investors after the index tumbled 6.4 percent last week, the biggest drop since 1980.


``Be aware that in all bull markets, there will be big corrections,'' said Jim Rogers, who in 1999 predicted what has become the longest bull market for commodities in at least five decades. ``And it may last a quarter to two years,'' he said in a telephone interview from his New York office.


Copper, silver, gold, orange juice, heating oil, sugar and gasoline declined by more than 5 percent in the rout last week that left wheat and hog futures as the only gainers. At stake are $30 billion of commodity investments to be made this year, an increase of almost 40 percent from 2005, according to estimates by London-based bank Barclays Plc.


Since 2001, copper quadrupled while gold and oil doubled, mostly on demand from China's burgeoning economy and buying by hedge funds in search of anything that beats the traditional returns of stocks and bonds. While the CRB index climbed 55 percent during the past five years, the Standard & Poor's 500 Index returned 6.8 percent with dividends reinvested over the same period. U.S. government securities returned 26 percent on average, according to bond indices from Merrill Lynch & Co.


`End Badly'


Copper, which traded between $1,301 a metric ton and $3,257 a ton between May 1986 and the end of 2004, has since soared to $7,610 and peaked at $8,800 on May 11. Graham Birch's Gold & General Fund at Merrill Lynch & Co. is still up 18 percent this year. Wolfgang Mayr's VCH Expert Natural Resources Fund in Munich shows a 16 percent gain, in part because of a bet on titanium.


Now the euphoria that made commodities unbeatable is giving way to anxiety. ``Signs of psychological excess are building,'' said Stephen Roach, the chief economist at Morgan Stanley, in a memo to customers of the world's second-largest securities firm on the day of the market's mid-May debacle. The ``blow-out can only end badly.''



Marc Faber, who told investors to bail out of U.S. stocks a week before the 1987 so-called Black Monday crash, is telling clients that commodity prices may plunge as much as 30 percent in three to six months. Only four weeks ago, Faber, who has 10 percent of his personal assets in gold bullion, was telling the same customers that commodities were five years into a rally that may last three decades.


Sell Now


``As an investor, you may be better off taking some chips off the table right here,'' the 60-year-old Faber said in a telephone interview from New York. ``We will have a very serious correction in commodities, and then we'll have to reassess.''



The commodities markets are ``extremely overvalued and very vulnerable to a substantial drop,'' said Robert Prechter, chief executive officer and president of Elliott Wave International Inc. in Gainesville, Georgia, a firm that makes forecasts based on price charts. ``Usually within a single week or a month, they will go up a lot and down a lot at the same time, that is what's most likely for copper,'' Prechter said in a telephone interview.


While Prechter in 1998 predicted a stock market crash that never occurred, he was named ``the champion market forecaster'' by Fortune magazine and the ``Guru of the Decade'' in 1989 by Financial News Network, now CNBC. He predicted the 1980s bull market with a September 1982 call that the Dow Jones Industrial Average would jump to five times its August 1982 level.


Rogers Stays Long


To be sure, some of the market's most influential bulls aren't giving up. Rogers, co-founder of the Quantum Fund with George Soros and author of the 2004 business bestseller ``Hot Commodities,'' predicts the boom in raw material prices will continue.


``This is a secular bull market which has another 15 years to run because supply and demand are out of whack,'' he said after the tailspin last week. ``There's an excess of dollars in the world and the dollar should be sold. There's a shortage of commodities in the world and commodities should be bought.'' Gold and copper will keep climbing and agricultural commodities may be the best bet, the 63-year-old Rogers now insists.


`Talk of a Bubble'


He's not the only one. ``There's been a lot of talk of a bubble in commodities,'' said Scott Gardner, who helps manage $7 billion, including shares of mining companies Rio Tinto Plc, Xstrata Plc and Teck Cominco Ltd. for Bank of NT Butterfield & Son in Bermuda. That the market is calling it a bubble indicates that it ``under-appreciates the asset class.''


Michael Coleman, who helps manage a $185 million commodity hedge fund in Singapore, said it's too early to call the end of the commodity boom. ``The bull market will be over when demand growth drops below 3 percent a year for raw materials and is flat for energy,'' Coleman said May 16. ``I don't see that scenario this year.''


Prices of commodities may still rally because of rising demand from India and China, the world's most populous nations. China, the world's fastest growing major economy, expanded 10.2 percent in the first quarter. India, Asia's fourth-largest economy, grew 8.1 percent in the year ended March 31, the government estimates.


`It's Noise'


``Chinese demand for raw materials is, if anything, understated,'' said Paul Xiradis, who helps manage $5.2 billion at Ausbil Dexia Ltd. in Sydney, which holds BHP Billiton and Rio Tinto Group shares. ``There will be hiccups as short-sightedness sets in from time to time, but in the long term the earnings of these companies will power their share prices.''


Copper output this year has been curbed by a strike in Mexico and a decline in production from Indonesia's Grasberg, the world's second-largest copper mine. The price of copper on May 19 slid 5.4 percent, the largest decline since January 2005. Zinc lost 5 percent. Gold last week had its largest drop since 1983. Metal prices extended their declines today.


``It's noise, there's nothing wrong with where commodities prices are at or where mining shares are at,'' said Gary Armor, who helps manage $2.9 billion in resources shares at AMP Capital Investors in Sydney. ``Nothing has changed. Every once in a while the market gets nervous about resources, but that's all this is.''


Nonsense, says Morgan Stanley's Roach. ``The super-cycle theory of ever-rising commodity prices is based on the false premise that China stays the same course it has been on for the past 27 years,'' he told customers in his May 15 memo. ``The world is in the midst of another bubble, this one in commodities. It, too, will burst. The only question is when.''


Metz Dumps Metals


Michael Metz, chief investment strategist for Oppenheimer & Co. Inc. in New York, is more circumspect. He's telling customers that ``the hot commodities'' among the metals have already seen their highs. ``Gold is the exception,'' said Metz, 70, who recommends soft commodities such as grains, where prices have yet to challenge their records.


Central bankers also may attempt to slow the pace of economic growth, which would curb demand for commodities. The U.S. Federal Reserve on May 10 raised its key interest rate a 16th time to 5 percent and suggested the credit tightening isn't over after almost two years of rising overnight lending rates between banks.


`Near the End'


European Central Bank policy makers also have signaled they will raise the benchmark interest rate as soon as next month to limit the effects of higher energy costs. Japan's consumer prices will rise for the next two years and the economy will keep expanding, the central bank said on April 28.


``I don't know if it is the end'' of the speculative bubble in commodities ``but we are near the end,'' said Stephen Jarislowsky, chairman of Montreal-based Jarislowsky Fraser Ltd., which manages about C$60 billion ($54 billion), including shares of uranium producer Cameco Corp.


``We've got the first crack, and there might be a whole bunch of people who think this is a buying opportunity,'' Jarislowsky, 80, said in an interview last week. ``Eventually we will have a second crack and after a while people will start to believe it.''


That's cold comfort for investors like New Delhi's Ajmani. ``I've booked half my losses,'' he said in an e-mail May 16. ``The remaining positions are still in a fix.''

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below is a partial re-print from todays Age.

According to one of the world"s largest broking houses

........"resources are stuffed".......

Obviously a highly trained economist came to that conclusion





Party over? Inflation fears dig in

Email Print Normal font Large font By Barry Fitzgerald

May 23, 2006



Goldman Sachs JBWere's sales and trading desk ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ as distinct from its research department ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ summed up sentiment by telling clients in an afternoon note that "resources are stuffed and commodity prices look to be in a spiral".............................................



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In reply to: datum on Tuesday 23/05/06 04:57pm

" Goldman Sachs JBWere's sales and trading desk ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ as distinct from its research department ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â‚¬Å¡Ã‚¬Ãƒâ€¦Ã‚¡ÃƒÆ’‚¬Ãƒâہ¡ÃƒÆ’‚ summed up sentiment by telling clients in an afternoon note that "resources are stuffed and commodity prices look to be in a spiral"............................................. "


Thats a promising sign. Wonder how much commission they need to earn before they change their tune and recommend clients get back in........?



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In reply to: dali on Saturday 17/12/05 02:27pm

Hey Dali,


Love the link, very entertaining stuff. His comments about US hedge funds are rippers.


" If you assume that all of these hedge funds are operated by geniuses, what you have to allow for then is the greatest short term expansion of investment genius in the history of financial markets. Indeed, it is at a level which is beyond belief. It's as if we had suddenly had unlimited cloning."


Have you read Buffet's 2005 letter to shareholders? It outlines the adventures (to date) of Berkshire Hathaway with Gen Re that get referred to by Don Coxe. A cautionary tale well worth hearing, I reckon.




Gen Re comes in towards the end of the letter.


Cheers, mm

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In reply to: Gofish1 on Tuesday 23/05/06 07:12pm

How are you Gofish. Some time since we were at the OXR $1 billion bash.


Brokers are 'churn merchants" and in my view pretty low down the pecking order. Got very little credibility. Sure I miss out on "sophisticated" status and hand outs of promising IPO's but I don't care.


Underlying demand for base metals is still strong. No clear evidence of actual decline in major economies yet. Sure we will shake out the speculators and faint - hearted over coming few weeks, but then fundemetals will drive the SP up to match future earnings. I am NOT convinced that we will see prices come well off the boil as the "future" capacity still has to arrive.


Industrial disputes, deterioration in grades etc. will keep things boiling thru 06 and into early 07.


POG will IMHO hit all time high this year.


Patience and judious research are what's called for. Do your own research. I'm wrong very often.

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End of bull run for base metals - prices and stocks thumped


By Barry FitzGerald


Australia's leading miners were crunched on the sharemarket after an overnight rout in base metals markets, triggered in part by downbeat comments on the outlook for metal prices by the miners themselves.


The rout brought to an abrupt end the 26-month bull run in base metals prices that had been fuelled by seemingly insatiable demand from China.


But fresh concerns about the pace of growth in China - one report cited a 21 per cent fall in its copper consumption in July - and the impact of record oil prices on the global economy prompted heavy selling by hedge funds and other speculators.


Commonwealth Bank commodity strategist David Thurtell said "metals were smashed overnight as the funds took some money off the table". He said the same funds had driven prices well past "fundamental" levels in the first place.


Prices of key metals fell by as much as 17 per cent in the pace-setting London market, prompting a sell-off in both the leading miners and the Australian dollar to account for the country's reduced export revenue from the sector. The dollar closed weaker at US72.62c, down on the previous close of US72.97c but up from the session's low of US72.15c.


The share price of sector leader BHP Billiton yesterday dived 63c to $13.97, Rio Tinto plunged $1.20 to $36.80 and WMC Resources tumbled 33c to $4.96. Zinifex fell 8c to $1.99 and Oxiana closed 2c weaker at 85c.


Those falls were in response to the heavy falls in base metals - copper down 9.9 per cent to $US1.32 a pound, aluminium down 6.6 per cent to US80.1c a pound, nickel down 16.7 per cent to $US5.97 a pound and zinc down 7.3 per cent to US47.9c a pound.


Some of those falls were the biggest single-day retreats in 15 years. The profits of the leading miners are highly sensitive to movements in base metals prices. BHP Billiton highlighted that earlier in the week by revealing that a US1c movement could move its net annual profit by $US22 million. Copper fell by more than US14c a pound in the rout.


The attack on base metal prices came as producers and traders assembled in London for a week-long conference sponsored by the London Metal Exchange.


Representatives from BHP Billiton's base metals division and WMC chief executive Andrew Michelmore separately added to the nervousness on metal prices.


BHP Billiton spooked the copper market when it said world copper production would surpass demand in the second half of 2005.


Mr Michelmore unsettled some by saying the nickel price (then $US7.17 a pound) raised concerns about the profitability of end users, the stainless steel manufacturers.


The reporter owns BHP Billiton and Oxiana shares.


October 15, 2004


End of bull run for base metals - prices and stocks thumped




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