Tuesday, May 22, 2007

Over, Under, Sideways, Down

Headlines from the PPT mouthpiece Bloomberg:

Copper Rises in London as Stockpiles Decline; Aluminum Gains
May 21 (Bloomberg) -- Copper rallied in London after its biggest weekly decline in more than three months, as a drop in stockpiles signaled growing demand.

Copper Drops in New York on Speculation Chinese Demand May Slow
May 22 (Bloomberg) -- Copper futures fell in New York on speculation that demand may slow in China, the world's biggest consumer of the metal used in pipes and wires.

Okay, let me get this straight...yesterday copper was up because there wasn't enough to meet demand. And today it was down because of speculation that demand in "China" may slow.

China's government last week increased the amount its currency can appreciate, raised interest rates and curbed bank loans to rein in the economy, which expanded 11 percent in the first quarter.

``If China cools off, the blazing rally we've seen in copper is sure to end,'' Frank McGhee, head metals trader at Integrated Brokerage LLC in Chicago, said on May 18.

LOL! "IF" China cools off... Where has this dumb ass been the past 3 years? China has made countless token gestures to rein in it's economy, and all have been fruitless. Why? Because China does NOT want to rein in it's economy...What China wants to rein in is the excessive speculation overwhelming it's stock market. China, India, and most of the other 50 countries whose economies are ALL growing faster than the United States will together make sure the demand for copper now and into the future does not "slow". The two headlines you read above are an example of trying to "talk a market down". Good luck. My guess is that some big investment house is short Copper around 290 and is dying to get out of that mess. I'll make the bet here and now that Copper is over 400 by Labor Day.

Oil Prices Fall More Than $1 a Barrel
May 22, 2007, 5:53PM NEW YORK — Oil prices dropped below $65 a barrel as investors sold contracts before their expiration Tuesday, and before the government's weekly inventory report.

You have got to have a screw loose to trade Oil. If you want to be in Oil, buy the ETF PowerShares Dyn Energy Exploration (PXE) and sit tight. Summer begins this weekend and the annual three month rise in Oil prices begins with it. I expect to see Oil prices at a minimum up 20% from here by the middle of August. For those of you struggling with your math that would be $78.

US Hears Blunt Trade Warning From China
Tuesday May 22, 6:54 pm ET
Chinese Official Warns U.S. Against Making Trade Disputes Political
WASHINGTON (AP) -- The Bush administration pushed for concrete results in high-level trade talks with China that began Tuesday, but the head of the Chinese delegation bluntly warned against confrontation.

NOTHING Dollar positive will come out of this meeting between Trade Representatives from China and the USA. The spin following the close of these talks may suggest otherwise, but the moves China made last week at home mentioned above, to "rein in" their economy, are and will prove to be Dollar negative.

IMO the "smart money" right now is loading the boat on Gold and Silver as all the fools sell their bullion and stocks out of frustration with the Metals consolidation over the past year. The draw down in Gold Stocks in the Gold ETF last week were not big investors selling their shares...this was a lot of little people dumping their positions and using the funds to "foolishly" chase the daily record highs in the stock market. I feel sorry for them... Rule #1 in the Metals markets: NEVER sell into weakness.

Yes today's "action" in the Precious Metals was a bit disheartening, but this action was on some of the lightest volume over the past three months. We gave back 666 Gold and 13.03 Silver to dem Rat Bastids, and now we're going to have to fight with them again to get it back, much as we did in mid March. Remember, the longer the Metals are held down, the higher they'll go when they bust out.

Silver Resistance: 12.95 / 13.03 / 13.11

Silver Support: 12.88 / 12.84 / 12.80
_______________________________All prices SPOT

Gold Resistance: 661 / 664 / 666

Gold Support: 658 / 656 / 653

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