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Is The Commodities Crash Under Way?

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http://uk.finance.yahoo.com/news/Silver-sparks-decline-reuters_molt-3344509508.html?x=0

Silver sparks decline in commodities, stocks fall

Saikat "Cat" Chatterjee, 6:53, Thursday 5 May 2011
HONG KONG (Reuters) - Spot silver prices slid for the fifth straight day Thursday to the lowest in a month, while the euro secured gains against the dollar Thursday before the European Central Bank meeting where it is expected to reinforce its hawkish outlook.
The precious metal's 20 percent slide from a record high near $50 an ounce hit last Thursday rippled into other markets such as crude oil and the Australian dollar, encouraging investors to take profits after a recent rally.
But some scattered short-covering by traders before the ECB meeting pulled some markets off lows with the Aussie advancing versus the yen and silver from the day's lows.
The pull-back in commodities this week pushed Asian shares outside Japan (NYSE: MCO - news) down for the third consecutive day, moving further away from a three-year high tested last week, even as commodities trading giant Glencore readied for a blockbuster IPO in London and Hong Kong.

Its been a very long bull run for commodites of all sorts and perhaps its time for the massive bust poor old Buffett was going on about a couple of years ago. If most developed nations are teetering under debt and the collapsing deman from China we might see some exciting action on the shorts market.

I dumped all my oil shares this week after a nice run up. Peak oil can't be far away.

Bonds might begin to shine again. PIMCO's massive corporate bond fund is still headed up.

PLS avoid turnng this into a specific metals thread or it will get moved to the dark cellar.

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Unprecedented amount of manipulation using the required margin to squeeze positions and cause a break in price movements (upwards).

This will attract more poeple to holding physical instead or just buy contracts outright.

Going to be intersting as this may well backfire big time.

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No

just a healthy correction following such a big run up

trend will still be up

housing will be a poor investment in 2011

Housing wil take at least another 5-7 years to recover--whatever recover means. Worst days for housng lie ahead IMO. We still need another 20-40% down (depending on area) to achieve affordability--even with record low IR and the possibility of an IR cut before the next hike.

Commodities have been sentiment driven and sentiment may be shifting. Nothing rises forever as we have seen with houses.

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Housing wil take at least another 5-7 years to recover--whatever recover means. Worst days for housng lie ahead IMO. We still need another 20-40% down (depending on area) to achieve affordability--even with record low IR and the possibility of an IR cut before the next hike.

Commodities have been sentiment driven and sentiment may be shifting. Nothing rises forever as we have seen with houses.

check out the price of physical G/S and you will see it has barely shifted this week

what does that tell you ?

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check out the price of physical G/S and you will see it has barely shifted this week

what does that tell you ?

I should think it is very unlikely producers and physical silver holders will poney up commitments to deliver silver to the exchange when there is such a disconnect in pricing.

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A very interesting listen, in particular regards silver.

US treasury asking for another $2 trillion to tide the country over too. No coincidence of course with what is going on.

mms://wideawake.gsradio.net/wideawake/050411.mp3

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Housing wil take at least another 5-7 years to recover--whatever recover means. Worst days for housng lie ahead IMO. We still need another 20-40% down (depending on area) to achieve affordability--even with record low IR and the possibility of an IR cut before the next hike.

Commodities have been sentiment driven and sentiment may be shifting. Nothing rises forever as we have seen with houses.

Not all commodities are the same. Whilst you can reasonably expect demand-destruction to occur with real-estate or Ipods, demand-destruction of other, more essential, commodities doesn't happen so easily (food, fuel etc). However, even for these more essential commodities short-term prices are, of course, partially driven by sentiment.

Long term, though, such essential commodity prices are driven by supply/demand variables. Both in terms of the supply of the commodity and of the money it is being exchanged for. In terms of the commodities themselves, supply is getting tighter due to resource contraints and a burgeoning global population who naturally all want a Western lifestyle. In terms of the money they are being exchanged for, the supply is increasing as Western governments try to paper over their economic embarrasments.

Long-term (in real terms), whatever happens to the money supply, commodity prices are going only one way;

North.

Edited by tallguy

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check out the price of physical G/S and you will see it has barely shifted this week

what does that tell you ?

Selling shovels is the most profitable trade in a gold rush?

China's share of glow ball demand in various commods. Who said it isn't demand? :blink:

china%2Bcommodity%2B1.png

china%2Bcommodity%2B2.png

Hat tip Fa Fa! from Mish/Pettis article

http://globaleconomicanalysis.blogspot.com/2011/05/ponzi-financing-involving-copper-trade.html

Edited by Red Karma

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Long term, though, such essential commodity prices are driven by supply/demand variables. Both in terms of the supply of the commodity and of the money it is being exchanged for. In terms of the commodities themselves, supply is getting tighter due to resource contraints and a burgeoning global population who naturally all want a Western lifestyle. In terms of the money they are being exchanged for, the supply is increasing as Western governments try to paper over their economic embarrasments.

err, thats wrong. The demand is not a function of the money used to buy them, its a function of, well, demand. Demand can go up when prices are going down and demand can go down when prices are going up, as we saw in 2008.

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There is some news today on the wires and in the media about gold. No-one so far seems to have referred to this news which a good blog post points out.

Central banks and their bizarre behaviour with their gold reserves

Most of the worlds central banks hold gold as part of their currency/foreign exchange reserves. This became distinctly unfashionable in the early part of the last decade and many central banks some at least some of their gold. You may have already guessed from the date given that this was at a low price for gold in some cases at a historic low. For example Gordon Brown’s sale of 395 tonnes of the UK’s gold in 17 auctions between July 1999 and March 2002 was at an average price of US $275.6. The price as I type this is now US $1520.

Somewhat bizarrely Alan Beattie has written an article in the Financial Times defending these sales which first made me check that the date was not April 1st and then reminded me of the football terrace chant “Are you Gordon Brown in disguise?” Mr.Beattie goes on to point out that the difference in the two values which he calculates at US $15.5 billion is “hardly pivotal”..........Surely they (central banks) have not been buying at the top as well as selling at the bottom? Er, well yes

http://t.co/zlMUN0I

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Silver sparks decline in commodities, stocks fall

Yes, yes RB, we've been here before, many times in gold's run up from $500 to $1500.

In the dictionary, under "déjà vu" it says "see RealistBear".

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Yes, yes RB, we've been here before, many times in gold's run up from $500 to $1500.

In the dictionary, under "déjà vu" it says "see RealistBear".

Quite a few silver hoarders getting jumpy today. And gold bugs are telling themslves gold only goes up--its a safe bet--buy more--price only goes one way--buy more--gold is safe.... :ph34r:

GOLD

05/05/2011

10:29

1502.00

1503.00

-14.50

SILVER

05/05/2011

10:29

37.00

37.06

-2.39

-6.07%

Gold should hold above £1500. Probably safe to hold on just a little bit longer.

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Quite a few silver hoarders getting jumpy today.

I'm quite pleased to be honest. I was hoping for a pullback and here it is.

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I'm quite pleased to be honest. I was hoping for a pullback and here it is.

Pull backs can often be a sign that the price is falling. At least according to Tautologous Tim.

Seriously though, we are seeing a $30+ drop today on the back of oil price drops and a severe sell off in silver. If we are seeing Buffetts comodities contagion this might be a convenient moment to sell off and take your profits.

I sold off my oil shares this week because the US recovery looks feeble and China is starting to wobble. Also, oil has had a good run up and I am content with the return I made (mostly on Fidelity's FSENX as I can't be bothered buying individual oil stocks).

If (if) this is the big one for gold the only question to ask yourself is: am I content with what I have made and do I want to risk it all for a bit more?

1479.90

-36.60

Edited by Realistbear

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If (if) this is the big one for gold

If it's the Big One for gold, why is it? That's the question you never answer.

Volatility? (re. your post in a parallel thread) It's the PM market, it's always volatile.

At least in 1980 you could point to Paul Volcker.

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If it's the Big One for gold, why is it? That's the question you never answer.

Volatility? (re. your post in a parallel thread) It's the PM market, it's always volatile.

At least in 1980 you could point to Paul Volcker.

yes but only in hindsight

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yes but only in hindsight

Not our RB and his legendary "calling of the top" in 1980.

Clearly he's lost his touch since then.

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err, thats wrong. The demand is not a function of the money used to buy them, its a function of, well, demand. Demand can go up when prices are going down and demand can go down when prices are going up, as we saw in 2008.

No.

Demand is made up of two components including;

* Do you want something?

* Can you pay for it?

The combined answer to the above two questions reveals the level of demand for a given commodity/service in a given market place. If either of them are significantly absent, demand is less than it might otherwise be.

In other words, you can talk about "potential" demand (by only referring to "want/need")till the cows come home. Demand is, however, only revealed after-the-fact and for that you need both a want/need and also the means (money in the case of a modern economy) to satisfy it.

Edited by tallguy

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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