Friday, May 6, 2011

Precious Metals: Gold and Silver Capitulate!


Gold and Silver both had a large fall last night. 

Silver plunging through it's 50 day moving average, falling to a low of less than US$34.30 ($5 lower than the May 4th close). 

Gold fell to a low of US$1462 after closing in NY at $1516 on May 4th. It's now trading slightly higher at $1475.

Some support areas pointed out yesterday did little to hold Silver higher (although Silver did bounce off $36 before continuing down). The Global Silver Miners ETF was well in the red closing 6.62% down, a smaller percentage fall than Silver itself.

It wasn't just the metals selling off, Bloomberg reports:
May 5 (Bloomberg) -- Commodities plunged the most since 2009, led by oil and silver, and stocks posted the biggest three-day drop since March as selling of energy futures drove down equities. The dollar strengthened and Treasuries jumped.

The Standard & Poor’s GSCI index of 24 commodities sank 6.5 percent at 4:32 p.m. in New York and has lost 9.9 percent this week. Oil tumbled 8.6 percent, the most in two years, to $99.80 a barrel. Silver dropped 8 percent, extending the biggest four- day slump since 1983 to 25 percent. The MSCI All-Country World Index of shares in 45 nations fell 1.1 percent. The dollar rose 2 percent versus the euro, making commodities quoted in the greenback more expensive for holders of other currencies.

“It’s panic,” said Michael Shaoul, chairman of Marketfield Asset Management, which oversees $1 billion in New York. “You have those super crowded trades. Now you’re in liquidation mode. There’s nothing to do with weak U.S. economic data. It’s not a global financial crisis. It’s a classic liquidation move in a crowded trade.”

Selling swept commodities markets as investors sold positions following gains of more than 23 percent in 2011 through April 29 by silver, oil, gasoline, coffee and cotton. The dollar, which slumped 13 percent versus the euro between Jan. 7 and May 2 as the S&P 500 Index rallied 7.2 percent, strengthened against all 16 major counterparts except the yen after European Central Bank President Jean-Claude Trichet signaled he will wait until after June to raise interest rates.
Futures on Brent crude, crude oil, gas oil, heating oil, gasoline and natural gas plunged more than 6.9 percent today. Crude oil dropped below $100 a barrel for the first time since March 17. Copper futures slumped 3.3 percent, falling below $4 a pound for the first time in five months. Among agricultural commodities, cocoa, cotton, corn and weak retreated more than 2.3 percent in futures trading. Bloomberg
An interview I stumbled across this morning that seems well worth a listen:
EXCLUSIVE ALERT: Peter Grandich Now Moves 100% BACK Into Gold & Silver


BB.

Disclosure: Positions held in Gold & Silver. Not investment advice. Do your own research.

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