"crack spread" is the difference paid for the commodity (crude oil) and the refined product (such as gasoline or heating oil).
different refiners have different crack spreads. Valero can handle the "heavy oil" such as Canadian tar sands and Venezuelan crudes. Heavy oil can sell for $90-$100/brl vs the near $120 for West Texas Intermediate quoted by CNBC and most media outlets. WTI is "lighter" and easier to refine.
So if Valero buys crude at $90 and creates gasoline for $2.75/g, they can undermine the "crack spread" for other refiners. Refined gasoline is refined gasoline. So Valero can profit and others can't. That's why some refiners can actually sell for a loss and thus they shut down. Which is why refinery utilization is very low right now causing gasoline to shoot even higher.
The world has plenty of heavy crude but a shortage of light crude. Most refiners can only handle the light crude. OPEC is right in that it is not a crude supply problem.
Speaking of oil, my friend's gas tank on his SUV was siphoned last night here in Central NJ where we enjoy the lowest gas prices in the nation. Can't imagine what is going on in CA.
Henry Hazlitt once wrote in his famous Economics in One Lesson that "Economics is haunted by more fallacies than any other study known to man." Indeed, I am supposed to teach fallacies in my classroom as part of modern economic orthodoxy.
Along with Hazlitt’s declaration comes the opening line in Carl Menger’s path breaking 1871 edition of Principles of Economics: "All things are subject to the law of cause and effect. This great principle knows no exception, and we would search in vain in the realm of experience for an example to the contrary." The key issue here is understanding the difference between cause and effect.
I write this because we are seeing a lot of supposedly intelligent people confusing cause with effect and declaring that the effect is the cause, and government must act upon that "cause" immediately. That, not surprisingly, is a recipe for disaster.
So if Valero buys crude at $90 and creates gasoline for $2.75/g, they can undermine the "crack spread" for other refiners. Refined gasoline is refined gasoline. So Valero can profit and others can't. That's why some refiners can actually sell for a loss and thus they shut down. Which is why refinery utilization is very low right now causing gasoline to shoot even higher.
I'm not aware of any U.S. refining operations that have shut down recently (in the past 10 years), other than for plant turnarounds or for Katrina. It's true that some refineries are not equipped to handle heavy crudes and must pay more for the lighter crudes, but those who can handle heavy crudes have also had to amortize the equipment needed to process the heavy crudes. But I agree with your point that there are different cost structures associated with different crude oil feedstocks and different refineries in general.
The U.S. also implemented an EPA mandate a couple years ago which requires low sulfur fuels, and which also cost the refineries major capital investment in order to make the plant modifications. Not all of them made those modifications, so they are paying higher prices for low-sulfur crudes or their outputs are limited by the amount of low sulfur products that they can blend off from high sulfur crude stocks.
Add to those factors, that the U.S. and the states require seasonal adjustments to the volatility of various grades (boutique fuels) of gasoline, and you have extra costs being incorporated into the production and distribution of gasoline, fuel oils, and aviation fuels, that didn't exist a few years ago. Nobody mentions how the government and environmentalists have put the industry in a full nelson which keeps it from functioning efficiently. And then there is the question of drilling. China will be drilling off the Gulf Coast (in conjunction with Venezuela) where U.S. companies are prohibited. How much sense does that make?
Q: Are You Printing Money? Bernanke: Not Literally
Here is info on refinery utilization. It is about as low now as just after Katrina:
4/16/2008 2:39:00 PM
OIL FUTURES: Crude Settles At Record On Gasoline Supply Fear
HOUSTON (Dow Jones)--Crude oil futures ended higher Wednesday on product supply fears sparked by a government report showing a big draw on gasoline inventories and low refinery runs.
Light, sweet crude for May delivery closed up $1.14, or 1%, at $114.93 a barrel on the New York Mercantile Exchange. June Brent crude on the ICE futures exchange closed up $1.02 at $112.60 a barrel.
May crude had three record-breaking runs Wednesday, the first during morning electronic trading after the dollar hit a low against the euro, and the second following the release of U.S. oil and product inventory data by the Energy Information Administration. The data, showing a surprise draw in oil stocks and a large decline in gasoline inventories, quickly sent the front-month contract to $114.95 a barrel. Traders and analysts also noted that refinery runs hit a more than two-year low, which combined with the gasoline draw created fears that the products market would not be adequately supplied heading into the summer driving season.
The refining figure was what ultimately sent futures shooting up for the third and final time, to the intraday high and current record of $115.07 a barrel, said Peter Beutel, president of Cameron Hanover, a trading advisory firm.
"A lot of people are looking at this utilization number and just trying to figure out how on earth we can be (so far) below the 7-year average for this time of year," Beutel said. "We're going to need the gasoline this summer."
The data, showing a surprise draw in oil stocks and a large decline in gasoline inventories, quickly sent the front-month contract to $114.95 a barrel. Traders and analysts also noted that refinery runs hit a more than two-year low,
I'm not sure that I fully understand how there was a "surprise draw" in oil stocks while refinery runs hit a 2-year low. That implies that the oil is being physically hoarded, somewhere. That's not out of the realm of possibility, if prices are expected to continue up.
Low utilization isn't the same thing as a (permanent) refinery shutdown, although there might be several plant maintenance turnarounds going on as we speak.
Q: Are You Printing Money? Bernanke: Not Literally
Re hoarding: I've read that the US has increased its buying for the SPR to something like 70k b/day. China has also started their own Strategic Reserve as well.
So even with record high prices and oil men in the White House, the US is buying more oil than ever before for the SPR. Can you say "Global Peak Oil"?
A friend sent me this post from another gold thread on a Yahoo forum, sorry I do not have the authors name, but pretty interesting read.
Enough Gloom Already 27-Apr-08 06:05 pm I see from Bloomberg today that the derivative market STILL exploding. Not surprising as this is the only way the big boys can keep the money rolling in. Selling little mortgages to Mr. Average is not going to do it.
In December 2007, the Bank for International Settlements reported derivative trades tallying in at $681 trillion - ten times the gross domestic product of all the countries in the world combined. Institutional investors have lost a good deal of money in all this, but the real calamity is to the banks. The institutional investors that formerly bought mortgage-backed bonds stopped buying them in 2007, when the housing market slumped. But the big investment houses that were selling them have billions' worth left on their books, and it is these banks that particularly stand to lose as the derivative Chernobyl implodes.
AMBAC is covering (and I use the word very loosely) the banks which originated these bundles of mortgages. Now that the mortgages are failing and the banks are stuck with them, AMBAC cannot possibly pay even a tiny part of this debt and has no intention of doing so as the money is ear marked for legal bills. So this deficit is just NOT covered and we are supposed to be in the final quarter of this mess. Oh, anybody thought more about munis?
This is not even the worst of it!!! For example: In CA for March, there were 27,541 FORECLOSURE FILINGS and 42,704 NOTICES OF DEFAULT for a total of 70,246 early/mid stage foreclosure filings. This is the killer that nobody reports...in CA in Feb, ALL HOMES (New & Existing) SOLD WERE ONLY 20,513. ALL NEW HOMES SALES for the ENTIRE 10-STATE WESTERN REGION in Feb were only 13k and ALL EXISTING HOME SALES for the ENTIRE 10-STATE WESTERN REGION were only 55k. One more thing...the MAJORITY of the Notice of Default surge is not from subprime loans. Not even close. I can't specifically tell you which program types are defaulting to the greatest degree, as that is part of a paid service rolling out soon, but I can say they are not subprime and they are not fixed .actually they likely are subprime but the ratings agencies just haven't got there yet! This means that March CA foreclosure activity is greater than all THE HOMES PURCHASED IN THE WESTERN REGION the month prior and nearly 350% GREATER than all the homes bought in CA alone! This is a not subprime problem. This is a disaster on top of subprime.
Anyways back to the banks. They refuse to mark these CDOs to market or even to any reasonable model because they are probably at best worth 50 cents on the dollar. How much is a commodity worth that no one wants to buy?, These CDOs are still being held by the banks on balance at roughly par despite the mark downs. Even a 30 percent haircut is enough debt to sink EVERY bank involved in this situation including the Treasury Dept who has only about $500 billion or so left which staggeringly enough is becoming pocket change.
Remember my constant postings that this remains the King Kong of credit crunches. Despite incredible amounts of liquidity injected into the system nothing has changed. Remember when the Treasury Dept goes bust or loses its ratings then wither goes bonds and what else do people buy? Indeed for all intents and purposes if marked to market banks are now totally insolvent. In January I posted the whole system is busted and my view has not changed one inch. My estimate of the INCREASE in the global derivative market this month alone is greater than the US GDP (15 trillion or so). THE SYSTEM IS BUST - NOW. Yet here we are bemoaning the gold market. I'm buying, I don't care if I take 10% haircut from here. The dollar is gone.
is anyone guessing with their wallet that the fed will NOT drop their interest rate to banks by .25?
gold is taking a hit and that is a sign many are betting that they will not?
my guess is that they will, since the president just had a news conference explaining that he knows people are anxious and he will do everything possible to make it better ;-)
i expect gold to bounce right back up. am i alone in these thoughts?
Most market participants fully expect the FED to cut 25bps. However, prevailing thought is that this will be all the cuts for some time. Many parts of the world are reporting economic slowness and thoughts are that they will have to start to reduce rates. The anticipation of an end to US rate cuts and the start of European rate cuts has caused the dollar to firm and the Euro to weaken. How long this lasts depends on the relative strength/weakness of the USA vs European economies.
From a technical standpoint both silver and gold are at critical inflection points. A break below current levels will jeopardize the recent uptrends and lead to decline. Firmness at these levels will support the recent runup. Its make or break time.
Uh, yes. They do want you to act contrary to your own self-interest, in order to support their interests.
i expect gold to bounce right back up. am i alone in these thoughts?
I don't expect anything. If I harbored expectations, I might be more prone to do something stupid at exactly the wrong time. I have become a terrible money manager with respect to maximizing my return on investment. I can sleep at night, though.
Q: Are You Printing Money? Bernanke: Not Literally
"i expect gold to bounce right back up. am i alone in these thoughts?"
Not too sure if it will bounce back up before summer is done. Here are my thoughts:
I would think that most of the speculative plays are already in place and those plays are in food commodities with any left overs being diverted to oil/oil futures. That leaves little for the players to bet on metal activity.
The trend for metals is conspicuously downward over the last few weeks and from what I noticed on another forum, $850 looks like a bottom target for now but everyone has an opinion so it would be hard to bet the farm on that but lower is not hard to believe in.
The people that bought on the metal run up at the end of last year and the first qurter of '08 are too long now and have to give up their metal, they are bleeding out there so surely they are trying to get that pig out of their portfolio.
I suspect the miners are bleeding as well. GLD was 100 in Mar, 86 in Apr, SLW was 20 in Mar, 13 in Apr. That probably translates to not as much metal buying going on.
The dollar is much stronger against the euro though only tenths of a cent but somehow that seems to make a big difference on people that buy gold for a play (just an observation).
My thinking is that gold will find it's bottom and it might even be below $800 but it would be very hard for it to hold below there. The strategy is still the same, accumulate through peaks and valleys and the average will work out.
Over all, I'm looking for gold to continue to settle into something reasonable, like 850 or so, that seems reasonable to me but not being a player, just an accumulator, this gives me a nice opportunity to watch for a near bottom. But, that has to be tempered with the observation that nothing has changed, the dollar is still being challenged, people have little cash to play with (including the banks), the credit and housing markets are in the cellar, we are at war in Iraq and looking down our gun barrels at Iran/N. Korea/Syria, China still has our treasuries in a strangle hold, we are in an election year so no big plays should be anticipated, and this is not an expansion period for the U.S. economy or job market or international trade other than shipping grain. Status quo and holding. Right now, everybody is looking at gas and oil but if one of the top 20 refineries in the world (we have 3 and they are in/around Houston) goes down, you're paying multiples of $3 for unleaded.
I am in agreement with many of mhammerman's observations.
Over the past month, there appears to be a major monies rotating through many markets (bubbles??), trying to achieve a very short term high return. It's been rotating through many commodity markets. Now with the dollar (temporarily??) strenghtening, the commodity prices are dropping. These fast monies are now trying to find another home. The bottom line seems to be there is a lot of noise out there but there is an underlying value to precious metals. It's just that the pm prices just got ahead of the value.
I am looking to continue to add when pm's reach lower prices for a longer term run. Right now, it appears to be very painful to buck the market trend of falling commodity prices.
I believe that the pm market is currently showing a correction from an amazing run (wish I would have listened to my intuition a few years ago) and is forming a base for the upcoming run. I can't believe we'll see much more of a down trend in the metals.
There are so few investors in the pm market that just a small increase in "flight to safety" and investors interest will raise the prices dramatically higher. And given our current situation still not out of the woods and a growing economy in many major countries, I'm betting on growing pm prices through 2010.
I see Gold around $1200 and silver $24 by years end.
I believe that the pm market is currently showing a correction from an amazing run (wish I would have listened to my intuition a few years ago) and is forming a base for the upcoming run. I can't believe we'll see much more of a down trend in the metals.
There are so few investors in the pm market that just a small increase in "flight to safety" and investors interest will raise the prices dramatically higher. And given our current situation still not out of the woods and a growing economy in many major countries, I'm betting on growing pm prices through 2010.
I see Gold around $1200 and silver $24 by years end. >>
Perhaps even a bit higher.
I'm betting on PM prices to continue to increase through 2011, at the least.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
it is curious that the euro's teeny tics seem to affect gold so much...first it was oil and the dollar, now it's just the dollar..er euro (it is 50+% of the dollar index) ..soon it will be inflation driven, ...way up.
some predict a 2 to one dollar to euro....don't think that will happen or can happen (would like an explanation of how it can)...unless the FED just continues to fund black holes.
i see NO rate cut, everybody (talking heads) says it's all over, then an a month or two....
<< <i>it is curious that the euro's teeny tics seem to affect gold so much...first it was oil and the dollar, now it's just the dollar..er euro (it is 50+% of the dollar index) ..soon it will be inflation driven, ...way up.
some predict a 2 to one dollar to euro....don't think that will happen or can happen (would like an explanation of how it can)...unless the FED just continues to fund black holes.
i see NO rate cut, everybody (talking heads) says it's all over, then an a month or two.... >>
If the FED doesnt cut rates, I hope you have DZZ on your trading screen. I know I will.
Mark Cuban, billionaire blogger and basketball fan writing on his eponymously named website has a possible answer:
"You can't turn on CNBC or Fox Business without them cheer-leading the market to go up. Every man, woman, child, fund, index or interested party who buys the stock is doing everything they can to get the stock of the company to go higher. They don't really care how you run the company and they care less about the results of the company than they do about the performance of the stock."
As Cuban explains in his blog, it's almost a dead certainty that a CEO in America can easily raise their net worths to 10, 50 or 200 mn. dollars simply by awarding themselves more options, warrants and stock.
It's basically a counterfeiting scheme with CNBC bubble vision, or Fox Business' scantily clad strumpets (and Neal Cavuto) 'pumping and dumping.'
I guess it's one way to look at the stock market. Well if it weren't for strumpets would Fox Business get the same viewership?
Gold has retouched the $870 point again. It could go either way. The market feels like the FED pummelled it prior to expected gold-positive rate news on Wed. Based on that I sense that they will cut 1/4 point. Only an "unlikely" 1/2 pt cut would be gold-positive today. At this point the news is neutral at best which can easily be spun gold-negative and dollar-positive.
<< <i>Spending by the government was another factor helping out GDP in the first quarter. That spending rose at a 2 percent pace for the second quarter in a row. >>
The nerve of the market manipulator's, saying the hope there is no rate cut. The truth is fed chairman is a bone head. Just the sight of him will cause the dollar to fall. any strengths would be considered short lived by me, and a few other traders. .25 was predicted, no reason the fed changes its views overnight. the swiss frank to rally IMO.
Humblepie
I have found power in the mysteries of thought.
It is always a question of knowing and seeing, and not that of believing.
Our virtues, and our failings are inseparable, like force, and matter. When they separate, man is no more.
I cant remember seeing so many indices/indicators at either support or resistance. Gonna be a lot of money to be made in the next 2 weeks if you are on the right side.
<< <i>I like his opening statement regarding the recession :
"This is not a field of specialty for me..., >>
But of course, the media will ignore that and run with the rest to sensationalize about how the sky is falling and it's the end of the world as we know it.
<< <i>I like his opening statement regarding the recession :
"This is not a field of specialty for me..., >>
But of course, the media will ignore that and run with the rest to sensationalize about how the sky is falling and it's the end of the world as we know it. >>
Well Ziggy here's another view. I fell sorry for the sheep is all I have to say
I think Mr. Buffet is being modest which is a trait he's known for. Obviously a guy with that much money knows more than a little about macroeconomics. He's not an obnoxious hype machine like Donald Trump.
The Fed said the economy "remains weak" and that "uncertainty about the inflation outlook remains high.".... You gotta love how the Fed feigns ignorance about inflation.
I don't trust the Pollyannas or the doommongers, frankly.
There are serious challenges, but our economy and society are more resilient than some think. And if we just put our head between our knees and assume we're screwed, we certainly will be.
The Fed said the same "expect inflation to moderate" stuff even with commodity prices melting up. Every times these fools speak or act I feel much better about not having much in US dollars.
Comments
different refiners have different crack spreads. Valero can handle the "heavy oil" such as Canadian tar sands and Venezuelan crudes. Heavy oil can sell for $90-$100/brl vs the near $120 for West Texas Intermediate quoted by CNBC and most media outlets. WTI is "lighter" and easier to refine.
So if Valero buys crude at $90 and creates gasoline for $2.75/g, they can undermine the "crack spread" for other refiners. Refined gasoline is refined gasoline. So Valero can profit and others can't. That's why some refiners can actually sell for a loss and thus they shut down. Which is why refinery utilization is very low right now causing gasoline to shoot even higher.
The world has plenty of heavy crude but a shortage of light crude. Most refiners can only handle the light crude. OPEC is right in that it is not a crude supply problem.
And a whiff of change of the change in demand sinks the entire computer model.
Not to mention the New Sheriff we'll have in town next November. How should the computer model her?
crack spread
Knowledge is the enemy of fear
Along with Hazlitt’s declaration comes the opening line in Carl Menger’s path breaking 1871 edition of Principles of Economics: "All things are subject to the law of cause and effect. This great principle knows no exception, and we would search in vain in the realm of experience for an example to the contrary." The key issue here is understanding the difference between cause and effect.
I write this because we are seeing a lot of supposedly intelligent people confusing cause with effect and declaring that the effect is the cause, and government must act upon that "cause" immediately. That, not surprisingly, is a recipe for disaster.
Must Government Inflate Home Prices?
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
I'm not aware of any U.S. refining operations that have shut down recently (in the past 10 years), other than for plant turnarounds or for Katrina. It's true that some refineries are not equipped to handle heavy crudes and must pay more for the lighter crudes, but those who can handle heavy crudes have also had to amortize the equipment needed to process the heavy crudes. But I agree with your point that there are different cost structures associated with different crude oil feedstocks and different refineries in general.
The U.S. also implemented an EPA mandate a couple years ago which requires low sulfur fuels, and which also cost the refineries major capital investment in order to make the plant modifications. Not all of them made those modifications, so they are paying higher prices for low-sulfur crudes or their outputs are limited by the amount of low sulfur products that they can blend off from high sulfur crude stocks.
Add to those factors, that the U.S. and the states require seasonal adjustments to the volatility of various grades (boutique fuels) of gasoline, and you have extra costs being incorporated into the production and distribution of gasoline, fuel oils, and aviation fuels, that didn't exist a few years ago. Nobody mentions how the government and environmentalists have put the industry in a full nelson which keeps it from functioning efficiently. And then there is the question of drilling. China will be drilling off the Gulf Coast (in conjunction with Venezuela) where U.S. companies are prohibited. How much sense does that make?
I knew it would happen.
4/16/2008 2:39:00 PM
OIL FUTURES: Crude Settles At Record On Gasoline Supply Fear
HOUSTON (Dow Jones)--Crude oil futures ended higher Wednesday on product supply fears sparked by a government report showing a big draw on gasoline inventories and low refinery runs.
Light, sweet crude for May delivery closed up $1.14, or 1%, at $114.93 a barrel on the New York Mercantile Exchange. June Brent crude on the ICE futures exchange closed up $1.02 at $112.60 a barrel.
May crude had three record-breaking runs Wednesday, the first during morning electronic trading after the dollar hit a low against the euro, and the second following the release of U.S. oil and product inventory data by the Energy Information Administration. The data, showing a surprise draw in oil stocks and a large decline in gasoline inventories, quickly sent the front-month contract to $114.95 a barrel. Traders and analysts also noted that refinery runs hit a more than two-year low, which combined with the gasoline draw created fears that the products market would not be adequately supplied heading into the summer driving season.
The refining figure was what ultimately sent futures shooting up for the third and final time, to the intraday high and current record of $115.07 a barrel, said Peter Beutel, president of Cameron Hanover, a trading advisory firm.
"A lot of people are looking at this utilization number and just trying to figure out how on earth we can be (so far) below the 7-year average for this time of year," Beutel said. "We're going to need the gasoline this summer."
I'm not sure that I fully understand how there was a "surprise draw" in oil stocks while refinery runs hit a 2-year low. That implies that the oil is being physically hoarded, somewhere. That's not out of the realm of possibility, if prices are expected to continue up.
Low utilization isn't the same thing as a (permanent) refinery shutdown, although there might be several plant maintenance turnarounds going on as we speak.
I knew it would happen.
So even with record high prices and oil men in the White House, the US is buying more oil than ever before for the SPR. Can you say "Global Peak Oil"?
A friend sent me this post from another gold thread on a Yahoo forum, sorry I do not have the authors name, but pretty interesting read.
Enough Gloom Already 27-Apr-08 06:05 pm I see from Bloomberg today
that the derivative market STILL exploding. Not surprising as this is the
only way the big boys can keep the money rolling in. Selling little
mortgages to Mr. Average is not going to do it.
In December 2007, the Bank for International Settlements reported
derivative trades tallying in at $681 trillion - ten times the gross
domestic product of all the countries in the world combined. Institutional
investors have lost a good deal of money in all this, but the real calamity
is to the banks. The institutional investors that formerly bought
mortgage-backed bonds stopped buying them in 2007, when the housing market
slumped. But the big investment houses that were selling them have billions'
worth left on their books, and it is these banks that particularly stand to
lose as the derivative Chernobyl implodes.
AMBAC is covering (and I use the word very loosely) the banks which
originated these bundles of mortgages. Now that the mortgages are failing
and the banks are stuck with them, AMBAC cannot possibly pay even a tiny
part of this debt and has no intention of doing so as the money is ear
marked for legal bills. So this deficit is just NOT covered and we are
supposed to be in the final quarter of this mess. Oh, anybody thought more
about munis?
This is not even the worst of it!!! For example:
In CA for March, there were 27,541 FORECLOSURE FILINGS and 42,704
NOTICES OF DEFAULT for a total of 70,246 early/mid stage foreclosure
filings. This is the killer that nobody reports...in CA in Feb, ALL HOMES
(New & Existing) SOLD WERE ONLY 20,513. ALL NEW HOMES SALES for the ENTIRE
10-STATE WESTERN REGION in Feb were only 13k and ALL EXISTING HOME SALES for
the ENTIRE 10-STATE WESTERN REGION were only 55k. One more thing...the
MAJORITY of the Notice of Default surge is not from subprime loans. Not even
close. I can't specifically tell you which program types are defaulting to
the greatest degree, as that is part of a paid service rolling out soon, but
I can say they are not subprime and they are not fixed .actually they likely
are subprime but the ratings agencies just haven't got there yet! This means
that March CA foreclosure activity is greater than all THE HOMES PURCHASED
IN THE WESTERN REGION the month prior and nearly 350% GREATER than all the
homes bought in CA alone! This is a not subprime problem. This is a disaster
on top of subprime.
Anyways back to the banks. They refuse to mark these CDOs to market or
even to any reasonable model because they are probably at best worth 50
cents on the dollar. How much is a commodity worth that no one wants to
buy?, These CDOs are still being held by the banks on balance at roughly par
despite the mark downs. Even a 30 percent haircut is enough debt to sink
EVERY bank involved in this situation including the Treasury Dept who has
only about $500 billion or so left which staggeringly enough is becoming
pocket change.
Remember my constant postings that this remains the King Kong of
credit crunches. Despite incredible amounts of liquidity injected into the
system nothing has changed. Remember when the Treasury Dept goes bust or
loses its ratings then wither goes bonds and what else do people buy? Indeed
for all intents and purposes if marked to market banks are now totally
insolvent. In January I posted the whole system is busted and my view has
not changed one inch. My estimate of the INCREASE in the global derivative
market this month alone is greater than the US GDP (15 trillion or so). THE
SYSTEM IS BUST - NOW. Yet here we are bemoaning the gold market. I'm buying,
I don't care if I take 10% haircut from here. The dollar is gone.
Now they want me to short gold???????
to banks by .25?
gold is taking a hit and that is a sign many are betting that they will not?
my guess is that they will, since the president just had a news conference explaining
that he knows people are anxious and he will do everything possible to make it better ;-)
i expect gold to bounce right back up. am i alone in these thoughts?
Bush said he has not been informed on GDP # coming out tomorrow. How can this be?
I have already been briefed, the # will come in OK.
the yen will come in better, and out perfom.
your prediction, you have been briefed.
Your president is a bold faced Lier!
I have found power in the mysteries of thought.
It is always a question of knowing and seeing, and not that of believing.
Our virtues, and our failings are inseparable, like force, and matter. When they separate, man is no more.
.
From a technical standpoint both silver and gold are at critical inflection points. A break below current levels will jeopardize the recent uptrends and lead to decline. Firmness at these levels will support the recent runup. Its make or break time.
Knowledge is the enemy of fear
Uh, yes. They do want you to act contrary to your own self-interest, in order to support their interests.
i expect gold to bounce right back up. am i alone in these thoughts?
I don't expect anything. If I harbored expectations, I might be more prone to do something stupid at exactly the wrong time. I have become a terrible money manager with respect to maximizing my return on investment. I can sleep at night, though.
I knew it would happen.
The ffr doesnt mean much anyway now that the fed takes garbage for treasuries.
Tomorrow will be a "see, we want a strong dollar" statement. That is my guess at least. I could be wrong.
I have been shorting all of my mining stocks for quite some time now, and I expect gold to steady in the 830's for much of the summer...
I am also buying long term (early 2010) calls on mining stocks....so you can see my long term thoughts.
siliconvalleycoins.com
<< <i>
your prediction, you have been briefed.
Your president is a bold faced Lier! >>
Heck, most people figured that out after a few months of the Iraq war.
Not too sure if it will bounce back up before summer is done. Here are my thoughts:
I would think that most of the speculative plays are already in place and those plays are in food commodities with any left overs being diverted to oil/oil futures. That leaves little for the players to bet on metal activity.
The trend for metals is conspicuously downward over the last few weeks and from what I noticed on another forum, $850 looks like a bottom target for now but everyone has an opinion so it would be hard to bet the farm on that but lower is not hard to believe in.
The people that bought on the metal run up at the end of last year and the first qurter of '08 are too long now and have to give up their metal, they are bleeding out there so surely they are trying to get that pig out of their portfolio.
I suspect the miners are bleeding as well. GLD was 100 in Mar, 86 in Apr, SLW was 20 in Mar, 13 in Apr. That probably translates to not as much metal buying going on.
The dollar is much stronger against the euro though only tenths of a cent but somehow that seems to make a big difference on people that buy gold for a play (just an observation).
My thinking is that gold will find it's bottom and it might even be below $800 but it would be very hard for it to hold below there. The strategy is still the same, accumulate through peaks and valleys and the average will work out.
Over all, I'm looking for gold to continue to settle into something reasonable, like 850 or so, that seems reasonable to me but not being a player, just an accumulator, this gives me a nice opportunity to watch for a near bottom. But, that has to be tempered with the observation that nothing has changed, the dollar is still being challenged, people have little cash to play with (including the banks), the credit and housing markets are in the cellar, we are at war in Iraq and looking down our gun barrels at Iran/N. Korea/Syria, China still has our treasuries in a strangle hold, we are in an election year so no big plays should be anticipated, and this is not an expansion period for the U.S. economy or job market or international trade other than shipping grain. Status quo and holding. Right now, everybody is looking at gas and oil but if one of the top 20 refineries in the world (we have 3 and they are in/around Houston) goes down, you're paying multiples of $3 for unleaded.
JMHO, since you asked.
Enjoy
Over the past month, there appears to be a major monies rotating through many markets (bubbles??), trying to achieve a very short term high return. It's been rotating through many commodity markets. Now with the dollar (temporarily??) strenghtening, the commodity prices are dropping. These fast monies are now trying to find another home. The bottom line seems to be there is a lot of noise out there but there is an underlying value to precious metals. It's just that the pm prices just got ahead of the value.
I am looking to continue to add when pm's reach lower prices for a longer term run. Right now, it appears to be very painful to buck the market trend of falling commodity prices.
I believe that the pm market is currently showing a correction from an amazing run (wish I would have listened to my intuition a few years ago) and is forming a base for the upcoming run. I can't believe we'll see much more of a down trend in the metals.
There are so few investors in the pm market that just a small increase in "flight to safety" and investors interest will raise the prices dramatically higher. And given our current situation still not out of the woods and a growing economy in many major countries, I'm betting on growing pm prices through 2010.
I see Gold around $1200 and silver $24 by years end.
<< <i>mhammerman -- You make some good points.
I believe that the pm market is currently showing a correction from an amazing run (wish I would have listened to my intuition a few years ago) and is forming a base for the upcoming run. I can't believe we'll see much more of a down trend in the metals.
There are so few investors in the pm market that just a small increase in "flight to safety" and investors interest will raise the prices dramatically higher. And given our current situation still not out of the woods and a growing economy in many major countries, I'm betting on growing pm prices through 2010.
I see Gold around $1200 and silver $24 by years end. >>
Perhaps even a bit higher.
I'm betting on PM prices to continue to increase through 2011, at the least.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
I don't see any downtrend
I think gold goes a bit lower toward the 200 day average and puts a bind on those who invested at $950+ because it was fashionable.
When those cats can't stand their pain, THEN will be a fantastic time to buy.
some predict a 2 to one dollar to euro....don't think that will happen or can happen (would like an explanation of how it can)...unless the FED just continues to fund black holes.
i see NO rate cut, everybody (talking heads) says it's all over, then an a month or two....
China leasing farm land
waiting for the smoke to clear, before
moving back into stocks. I might not
become a millionaire, but I sleep at night.
Camelot
<< <i>it is curious that the euro's teeny tics seem to affect gold so much...first it was oil and the dollar, now it's just the dollar..er euro (it is 50+% of the dollar index) ..soon it will be inflation driven, ...way up.
some predict a 2 to one dollar to euro....don't think that will happen or can happen (would like an explanation of how it can)...unless the FED just continues to fund black holes.
i see NO rate cut, everybody (talking heads) says it's all over, then an a month or two....
If the FED doesnt cut rates, I hope you have DZZ on your trading screen. I know I will.
Knowledge is the enemy of fear
Already up $1.23 and broken out of it's 52 wk range. Looks like a crowd is gathering.
"You can't turn on CNBC or Fox Business without them cheer-leading the market to go up. Every man, woman, child, fund, index or interested party who buys the stock is doing everything they can to get the stock of the company to go higher. They don't really care how you run the company and they care less about the results of the company than they do about the performance of the stock."
As Cuban explains in his blog, it's almost a dead certainty that a CEO in America can easily raise their net worths to 10, 50 or 200 mn. dollars simply by awarding themselves more options, warrants and stock.
It's basically a counterfeiting scheme with CNBC bubble vision, or Fox Business' scantily clad strumpets (and Neal Cavuto) 'pumping and dumping.'
I guess it's one way to look at the stock market. Well if it weren't for strumpets would Fox Business get the same viewership?
Gold has retouched the $870 point again. It could go either way. The market feels like the FED pummelled it prior to expected gold-positive rate news on Wed. Based on that I sense that they will cut 1/4 point. Only an "unlikely" 1/2 pt cut would be gold-positive today. At this point the news is neutral at best which can easily be spun gold-negative and dollar-positive.
roadrunner
I vaguely remember Dan Dorfman from the FNN days got some press on this
very issue. Then the problem quietly went away.
siliconvalleycoins.com
siliconvalleycoins.com
<< <i>Spending by the government was another factor helping out GDP in the first quarter. That spending rose at a 2 percent pace for the second quarter in a row. >>
siliconvalleycoins.com
<< <i>Gold will be in the 830's this afternoon... >>
what time (EDT) is the FED announcing (if anything)?
<< <i>
<< <i>Gold will be in the 830's this afternoon... >>
what time (EDT) is the FED announcing (if anything)? >>
2:15 EDT.
The truth is fed chairman is a bone head.
Just the sight of him will cause the dollar to fall. any strengths would be considered short lived by me, and a few other traders.
.25 was predicted, no reason the fed changes its views overnight. the swiss frank to rally IMO.
I have found power in the mysteries of thought.
It is always a question of knowing and seeing, and not that of believing.
Our virtues, and our failings are inseparable, like force, and matter. When they separate, man is no more.
.
siliconvalleycoins.com
Knowledge is the enemy of fear
<< <i>Buffett says recession may be worse than feared >>
I like his opening statement regarding the recession :
"This is not a field of specialty for me...,
J
siliconvalleycoins.com
<< <i>I like his opening statement regarding the recession :
"This is not a field of specialty for me..., >>
But of course, the media will ignore that and run with the rest to sensationalize about how the sky is falling and it's the end of the world as we know it.
<< <i>
<< <i>I like his opening statement regarding the recession :
"This is not a field of specialty for me..., >>
But of course, the media will ignore that and run with the rest to sensationalize about how the sky is falling and it's the end of the world as we know it. >>
Well Ziggy here's another view. I fell sorry for the sheep is all I have to say
One Guy Who Has Seen It All Doesn't like what he sees now
Tyler
<< <i>Well Ziggy here's another view. I fell sorry for the sheep is all I have to say
One Guy Who Has Seen It All Doesn't like what he sees now >>
I don't trust the Pollyannas or the doommongers, frankly.
There are serious challenges, but our economy and society are more resilient than some think. And if we just put our head between our knees and assume we're screwed, we certainly will be.