Oil, Gold, Copper will all fall this week.

airstrip1 · Heavy Crude Joined: Aug 15, 2004 Posts: 311

Copper Trade Losses Spark Fear of Defaults

The risk of defaults was hanging over the London Metal Exchange last night after a clutch of clients failed to meet margin calls on losing copper trades, leaving brokers struggling frantically to match their books.

The liquidity crunch follows another day of wild gyrations at the exchange, where copper, aluminium, zinc and lead all tumbled on bad US inflation data after failing to conquer new highs.

Copper fell 3.3pc to $8,080 a tonne in late trading. "The hedge books of the banks are seriously underwater on copper, but apart from that there are now brokers in trouble because clients can't meet the margin payments," said a market source.

Copper Trade Losses

As I suspected this weeks market volatility has left some traders positions underwater. I suppose the big question is how serious are these defaults ?. The London Metal Exchange is making a lot of soothing noises but I expect it is brown trouser time for some people.

Chaparral

Dukat_Reloaded · Light Sweet Crude Joined: Jul 31, 2005 Posts: 1007

Looks like I am correct, Gold and copper both moving south very quickly.

What I am concerned about is the Oil price, that hasn't moved down, oil at that price should have been bullish for gold. I suppose the oil market is too big for the FED to manipulate and short sell like the other commodities.
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Man's like a candle in a candlestick,
Made up of tallow and a little wick;

firestarter · Light Sweet Crude Joined: Mar 19, 2006 Posts: 1109

deconstructionist

after last month's boom in prices, i set a fall back to $650 in my mind as a good benchmark to buy a little bit more... with the news about S. Africa's output falling, it seems safe that prices will continue to rise over the medium-term... what do you guys think? are they going down more before they start to go up again? impossible to know for sure of course...
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UNLESS

Dukat_Reloaded · Light Sweet Crude Joined: Jul 31, 2005 Posts: 1007

I wouldn't read too much "PRO GOLD" news. You probably found that artical at kitco.com, all they do is print and link to articals that are pro gold.

I don't think gold will testing $700 for quite some time now, I expect gold to keep testing lower levels. This bull run from $420 to $720 in less than a year has to turn bearish at some time. Today is was the first major bearish sign in along time for gold, don't except it to be over in one day, the bearishness has been brewing in the uprun for such along time and will take some time to turn bullish again, this could be the start of a bearish trend, remember bullruns have bearish runs on the way up, and this is the time we have all been waiting, that magical correction to get in. I think many people will have

I will say to all now, perhaps if you have 10k, start buying gold stocks, spend $1,000 a day, just keep buying when the price gets lower and lower, if it jumps up before then say in 3 days, well you have $3,000 worth of gold stocks that will most likely double, then to the moon, i think way better choice than bullion right now, FSN says that the gold stocks are trading negative to their net assets meaning they are a bargain compared to the gold price, and on monday many of them will be trading at half the price they were trading at last week.

I expect most small cap gold stocks will be trading at 1/2 of their value on monday.

Deconstuctionist, that artical is abit bogus. The reason mine output is down is because of mine closures, they weren't profitable because the rand moves very heavily with gold, SA hasn't seen much price appreation of gold in their local currency.
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Man's like a candle in a candlestick,
Made up of tallow and a little wick;

o2ny

I would say you were 100% correct about metals this week... especially silver. As soon as Buffet announced that he sold all his silver I should have known what was coming. The herd players all got in a couple weeks ago on news and momentum and just built a bubbling froth of 'irrational exuberance' that was bound to come crashing down.

As soon as people on the street start talking to you about how much their gold rings are worth, you know it's time to sell... (which is exactly what happened to me, except I haven't sold because my gold positions are still way up from 450 last year).

I'm glad to see this correction so gold and silver can go back in the 'shadows' and begin the nice, slow & steady low-profile bull run that was meant to occur in the face of dollar decline and oil prices.
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"If you're always looking for the invisible hand to guide you, you will find that the invisible hand often gives you the invisible finger." - some guy on CNBC

clueless

I just about made a bullion purchase yesterday, but decided to wait until monday..

Can - Regarding these EFT's can anyone make a suggestion ?

I cannot much information about them on the web.

pb_2_au · Tar Sands Joined: Feb 07, 2006 Posts: 40

I'll take a stab at this...

Gold we're gonna touch 565 or perhaps 548 a couple of times really quickly and then we'll hover low 600s like it was before the run above 700. This is just where a new base is building. As the magnitude of the downturn hits people harder there will be more upside.

Silver will hit that 11.70 mark again, but I don't see the 10's there's just too much upside bug in people's ears about Silver, being a safe haven and an industrial material.

Eventually that $850 record is going down on this bull run for sure, and who knows where Silver will be at that point.

I like my long equity positions overseas, in countries not highly reliant on US trade and with good int'l diversification (Singapore,Malaysia). Short on the risky lenders now, but there is prolly more downside to the HBs as well, waiting for a little bounce there.

Also, I had to sell off my alt energy (PBW) ETF I think free flowing investment capital will be hard to come by and a lot of the concept companies will shrivel up. Too bad there wasn't more investment during the good times.

Sold off 1/3 my Au but holding tight to my Ag, FXE is 1/2 my cash.

Next week is new home sales and durable goods Wed (5/24), existing home and GDP on Thursday.

Hold tight, it's gonna get rocky, if you've gotta go away on vaca, think of the most radically negative situation you can tolerate for your open positions and close out the ones you need to in case it
is even worse for you than you can imagine.

Good LUCK!

deconstructionist

greenworm · Light Sweet Crude Joined: Jan 27, 2006 Posts: 1368

What a crazy week!! I shorted every major gold mining stock on last friday morning and cashed out today on all of them. Laughing

You know what they say about "buy and hold", buy and hold nothing. I think next week will be less bumpy(hope not), but should start trending upward. I am looking forward to the mastercard ipo, should bring in some speculation. Everyone has debt and with increasing energy costs, everyone should have lots of debt unless leveraged against that sort of thing. Laughing

basketballjones

green_achers

You boys mind some dumb questions? I'm semi-retired and have been buying the physical stuff since December, just a bit at a time, and now have a modest amount in a safe deposit box located in another town. A mixed bag of Au and Ag (bullion bars, coins, rounds, and a few commemoratives I got for spot.) Mostly just for peace of mind, maybe 1-2% of cash-type assets.

What I have no clue about is the type of trading you're talking about, e.g., "long", "short", funds, mining stocks, etc. I don't even know how you go about buying such a thing or keeping up with it, except for kitco.com and a few other links I've found, where they speak whatever foreign language y'all are using. Do you use a broker, or have accounts with Ameritrade or something? What about the Kitco gold and silver accounts? I guess I need a basic primer. I'm thinking the insights provided by being PO aware could help me, but would have to do a lot of homework first. As I have said elsewhere, market forces are still real.

greenworm · Light Sweet Crude Joined: Jan 27, 2006 Posts: 1368

Hey green_achers,

There is no such thing as a stupid question, only stupid people who don't ask questions! Laughing

With that said, if you have any question concerning terminology I suggest investopedia.com and look for the glossary link. This contains every imaginable phrase that has any relationship with the markets. Very cool! To trade mining stocks, yes, ameritrade will do, there are countless others, I recommend doing research on all of them to see who will give you the best deal. Shop around, some will give $5 a trade with no hidden costs. Using a broker is probably not a good idea, basically, you are paying someone to do what you could easily teach yourself with in a couple of hours. Kitco account? Not sure what this is, sorry. Long --> "hold your position for a long time, this could refer to stocks, commodity contracts, the gold you have in your very hand", short -->"when you take the position that the price will fall, (usually with borrowed money)" Let me know if I can answer any questions about stocks, I stay away from commodity trading as the upfront cost doesn't justify the eventual return in my opinion.

Marklar · Tar Sands Joined: Aug 17, 2005 Posts: 75

what you will find discussed frequently on this board, and especially in the "traders corner" thread is people talking about trading futures contracts. However, with the new ETFs we recently got we now have Gold, Silver, and Oil ETFs that can be traded with an ordinary stock broker account. Instead of trading futures you can trade these ETFs which look and work like stocks but give you exposure to the prices reflected in the futures.

As far as the terminology, investopedia, as greenworm said, is a great resource. I used it to learn about simple options trading and selling short.

Going long or taking the long position, means you are buying a stock believing it will go up in price.

Going short is just the opposite. You believe the price will go down so you want to sell. But the point of selling short is that you don't have to own the stock. Going short means that you borrow the stock from your broker and sell them at the market price. So if you borrow 100 shares of XYZ and sell them at it's current market price of $30 you practically just received a $3,000 loan from your broker. Instead of owing money all you owe is 100 shares. Let's say over the next two weeks it goes your way and the price is now $25. You decide to buy back 100 shares, called buy to cover, and give them back to your broker. Out of the $3,000 that you received by selling them two weeks ago you must use $2500 of it to buy them back since it's now cheaper. Meaning you made $500 profit.

It of course is more risky. It could jump up in price and you would actually owe your broker money. So if in two weeks the price is $35 a share you would have to pay $3500 to buy them back meaning you would owe an additional $500 of your own money. It literally has unlimited risk. Investopedia stresses this point in their short selling article but what they don't seem to mention is that you can limit your risks by using stop losses. Meaning you can set it to automatically buy to cover if it goes higher than you would like.