Wednesday, April 4, 2007


Iran to Release 15 Britons Seized at Sea in March

And you thought the Oil and Precious Metals would tank as a result... Surprise, Surprise...they did NOT. Why not? In a nut's the fundamentals stupid. Oil traders are beginning to focus on the supply/demand fundamentals. Gold and Silver traders are focusing less now on the "safe haven" tag so often hung around their Precious Metals necks, and beginning to understand these metals "investment demand" as the economic horizon in front of us grows ever darker.

I cannot comment any better on today's metals action other than to suggest reading the following that I found perusing the following three articles on

Gold Jumps As Peace Breaks Out!
So what did drive gold higher at the US open? Oil dropped 1.3% on the news from Iran. Spot gold prices, on the other hand, leapt as the US Commerce Dept. and Institute for Supply Management both reported much weaker than expected economic data.

US factory orders for Feb. came in way below expectations. Wall Street was looking for 1.9% growth versus the 1.0% we got. And outside manufacturing, the ISM purchasing managers index also disappointed, coming in at 52.4 for March versus 54.3 expected.

Gold Seeker Closing Report: Gold & Silver Rise Over 1%
The gold market proved with its action that the market is focused on the prospect of ongoing physical and investment demand instead of on flight to quality demand. Certainly a slightly lower US Dollar provided some buying incentive but it is also possible that soaring copper prices and an economic exhale in the wake of the hostage release provided the bull camp with a new bullish angle on gold prices. While crude oil prices were weaker because of the resolution of the hostage crisis and an increase in weekly crude oil inventories, the gasoline market saw another significant decline in stocks and that in general propelled a number of energy markets higher. In the end, we suspect that the gold market was indirectly lifted by the gains in unleaded but also because of massive gains in the copper market.

With all the metals rising in sync and some metals managing extremely stellar gains in the face of slumping US economic information and a downshift in the level of geopolitical anxiety it would seem like the true focus of the silver market was measured on Wednesday. In other words long interest in the silver market is mostly being derived from good old fashioned physical and investment demand prospects and the whole hostage situation was apparently seen as an unnecessary impediment to global economic growth. Certainly the silver trade has been emboldened by the massive gains in copper as that indirectly hints at strong Asian demand for a host of commodities.”

International Forecaster
We are moving into the strongest period for physical gold demand with the start of the monsoon-wedding season later in the month. This is what the central banks will face when they try again to manipulate gold downward. We will bet on the brides and against the criminals. Gold is headed higher.

Copper has been on a tear. It's influence on Gold and especially Silver, should not be underestimated. Copper took out it's 50 week moving average this week at 3.20. A pause here in copper could put the breaks on the Gold and Silver breakouts witnessed today. Both metals cleared significant hurdles today. Gold closed over $670. Silver closed significantly above it's 50 day moving average at 13.43 and finally closed the top of the March gap down at 13.54.

Tuesday's Reversal Day in both Gold and Silver is proving that much more significant with today's powerful moves forward. Our Rat Traps have got dem Rat Bastids on the defensive now. They tried vigorously to steal our Precious Metals from us, but we held firm. We must remain vigilant. Never forget NO market goes straight up. Any dips now should be used to add to your positions. Tomorrow I hope to discuss short and medium term targets for "profit taking" should today's breakout result in a new rally leg up.

Silver Resistance: 13.67 / 13.80 / 14.04

Silver Support: 13.54 / 13.43 / 13.30

Gold Resistance: 674.50 / 677.20 / 682

Gold Support: 670.30 / 668.50 / 664.70

An interesting side note:

...what is even more remarkable in gold's capacity to breakout once more is the fact that once again central banks have been hammering the metal.

Blanchard & Co report that last week again saw heavy selling from European banks - some 17.5 tonnes to be precise - bringing the three week total to 45.5 tonnes.

When central banks sold 50 tonnes into the market in September 2006, the gold price fell nearly US$30/oz. When 75 tonnes were sold in May 2006, the price fell more than US$100/oz.

Blanchard suspects France is the major seller, given Germany has indicated it will not sell and Spain and Portugal have shut up shop following massive sales last year. If so, France will be coming close to fulfilling its sales allotment for the year (ending September) under the Washington Agreement. With that obstacle removed, market observers believe there will be little holding back the gold price given Washington Agreement sales are expected to fall short of the 2007 total as they did in 2006.

Blanchard further notes we are heading into another peak demand season for the metal.

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