$DBA the #Agriculture #ETF Finally breaks out

We have been signalling since August (#Grains - Another #BullMarket in the making…),  and again in September (Rally in #Grains & #Agriculture Stocks Just Getting Started) and October (#Grains - #Wheat - The upcoming big bull market), that this "stealth" bull market in Agriculture is just Getting started. 

$DBA the AG ETF, has finally broken out of its LT Trend, confirming this nascent bull market.

$CORN has been rallying since August, up +50%, yet this is only the beginning!

#Commodities under pressure due to #Coronavirus $CRB $GCC

Commodities have been under pressure lately as the Coronavirus situation gives fears of a worldwide slowdown of economies.

A vehicle to play is the Wisdom Tree Continuous Commodity Index Fund ETF, symbol GCC, US$ 17.74. GCC tracks an equal-weighted index of 17 commodities.

It uses futures contracts averaged across the nearest 6 months of the futures curve to maintain its exposure and rebalances daily. Each commodity is weighted around 5.9%. (Attachments 5&6)

Attachment 1 displays the CRB Reuters/Jefferies CRB Index. The index comprises 19 commodities but is heavily weighted in energy with oil being weighted 23%. Together with natural gas and gasoline, the energy sector is weighted way over 30% (attachment 2).

How long will the resources we use last? #Infographic

http://aheadoftheherd.com/Newsletter/2012/The-Great-Sharing_files/HowLongWillitLast.jpg

HowLongWillitLast.jpg 1,141×699 pixels

Share

-- The MasterFeeds

It's Time To Start Freaking Out About Oil Prices

It's Time To Start Freaking Out About Oil Prices

Gold Price Set to Drop into Aggressive Accumulation Zone

Commodities / Gold and Silver 2011 Oct 09, 2011 - 09:30 AM

By: Clive_Maund

It now looks like we were a little too bullish in the last update, for the way gold has acted over the past week suggests that another sharp drop is imminent before the dust finally settles on this reactive phase, that it likely to take it to or some way below its recent panic lows.

On gold's 4-month chart it is now apparent that a bear Pennant has been forming since the panic bottom, with the weak upside volume portending an imminent breakdown and steep drop. A reader pointed out to me during last week that gold's panic lows occurred in thin trading on the Hong Kong market, and for this reason we do not have to factor in the tail of the hammer candlestick when deciding where to draw the boundaries of the Pennant. The measuring implications of this Pennant call for a drop at least to the vicinity of the intraday lows of the Reversal Hammer and possibly somewhat lower towards the $1520 area - at this point the decline should have completely run its course and we will be looking to buy aggressively. If we look carefully we can see that a small "bearish engulfing pattern" has formed in gold over the past 2 trading days, implying that breakdown from the Pennant and the expected steep drop that will follow is imminent. A reason why this next drop should end the decline is that gold is already deeply oversold as shown by its MACD indicator, and it will of course be even more so after this impending decline. Those interested in going long gold investments in the near future should "keep their powder dry" but stand ready to wade in big time if gold drops into the bright green "aggressive accumulation zone" shown on our chart.


Other reasons why the imminent sharp drop expected should mark the end of gold's reactive phase are to be seen on its 1-year chart. On this chart we can see that a decline to or below its recent panic lows will take it deep into strong support near to its rising 200-day moving average, the classic point for a major reaction in an ongoing bullmarket to end.


Still another reason for the reaction to terminate with this final drop are gold's now strongly bullish COT chart on which we can see that Commercial short and Large Spec long positions have dropped back to relatively low levels - the lowest for a long, long time.


There is certainly plenty of light at the end of the tunnel for gold over a longer time horizon, and not just that which arises from its own COT charts. The COT charts for the dollar are strongly bearish, with the Commercials going heavily short, and they are also going heavily long the euro. This implies that the current state of extreme crisis in the Eurozone should ease soon and the euro rally sharply, and the dollar fall heavily - which suggests that european leaders may scale back their bickering soon and cooperate sufficiently to ease the crisis with generous helpings of QE, which will of course be bullish for gold and silver. Our euro fx COT chart below shows the big long position in the that the Commercials have built up.


Although the big Commercial short position in the dollar is a harbinger of doom for the current strong dollar rally, it looks on its 3-month chart like it has a bit of life left in it yet. The long-legged doji candlestick that formed on Friday implies that it will turn higher again next week and maybe make new highs.


Bearish price action in both copper and oil on Friday suggests that they too will turn down this coming week.

By Clive Maund
CliveMaund.com

For billing & subscription questions: subscriptions@clivemaund.com

© 2011 Clive Maund - The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis.

Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.

Clive Maund Archive

© 2005-2011 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
Gold Price Set to Drop into Aggressive Accumulation Zone :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website

The MasterMetals Blog

Copper keeps bearish momentum

Copper keeps bearish momentum

CK_20110410115316.jpg (PNG Image, 940x652 pixels) - Scaled (88%)

The MasterMetals Blog

Inflationistas vs. Deflationistas: What Does CPI and PPI Tell Us?

Inflationistas vs. Deflationistas: What Does CPI and PPI Tell Us? 

July 18, 2011 06:46: CEST

Author: Econophile -  zero hedge

This article originally appeared in the Daily Capitalist.
Inflationistas are probably confounded by Friday's Consumer Price Index report that showed a decline of 0.2% in June. The report pins the decline, the first since June 2010, on falling energy costs. As a large component of CPI it:

declined 4.4 percent in June, the largest decline since December 2008. The gasoline index, which fell 2.0 percent in May, declined 6.8 percent in June. (Before seasonal adjustment, gasoline prices fell 5.8 percent in June.) Despite the recent declines, the gasoline index has increased 35.6 percent over the past 12 months. 

On the other hand, the deflationists are probably using the data to confirm their belief that we are in a deflation.
The data shows that "core" price inflation, all items less food and energy, was still +0.3%, and up 1.6% for the year. The broad CPI-U was up 3.4% for the year. Core was up 0.03% for the second month, the biggest back-to-back gain in two years.
Some key items:

[E]nergy dropped 4.4 percent, following a 1.0 percent decline. Gasoline fell 6.8 percent after decreasing 2.0 percent in May. Within the core new vehicles increased 0.6 percent, used cars and trucks jumped 1.6 percent, and apparel increased 1.4 percent in June. And owners' equivalent rent is no longer as soft as in recent months, rising 0.2 percent.

 

Food:  The food index rose 0.2 percent in June after rising 0.4 percent in each of the prior two months. The index for meats, poultry, fish, and eggs turned down in June, falling 0.4 percent after increasing more than one percent in each of the previous four months. The fruits and vegetables index declined for the third month in a row in June, falling 0.3 percent as the fresh vegetables index continued to decline. In contrast, other major grocery store food groups increased. The index for cereals and bakery products rose 0.6 percent in June, and the dairy and related products advanced 0.5 percent, as did the index for other food at home. The index for nonalcoholic beverages increased 0.3 percent as the coffee index continued to rise. The index for food at home has risen 4.7 percent over the last 12 months, with all the major groups increasing 3.2 percent or more. The index for food away from home rose 0.3 percent in June after rising 0.2 percent in May.

 

There are some things to take away from this report. Core is still trending upward, but oil seems to be declining and bringing CPI down. Oil is not based so much on market factors as it is by OPEC. Supply and demand has an impact on these prices, but as we all know, OPEC can influence prices by increasing or decreasing production. Thus when economist look at CPI they like to remove the impact of oil to see if they can get a better read on the data without the influence of OPEC.
I would not entirely agree with that. If demand was superfluous to OPEC, then prices wouldn't fluctuate as much as they have. As demand for oil grows, oil prices rise worldwide. But, I believe prices rise not only because of demand, but because of the impact of a devalued dollar. And we aren't the only country in the world that is devaluing their currency. So, I believe it is possible to look at oil much as any other commodity that impacts our cost of living, regardless of OPEC's impact. All I know right now is that demand is down worldwide because of falling industrial production, and prices have fallen. It shouldn't be excluded from CPI calculation and that is why CPI went down.
As my readers know, I believe "inflation" is an increase of money supply brought about by the Fed, and that price increases are an effect of inflation. To distinguish this from the common definition of "inflation," I will refer to price increases as "price inflation." The reason we are not seeing rapid price inflation is that money supply growth has been rather modest considering the Fed's attempts to pump the economy full of money and credit. Quantitative easing is an inefficient way to create price inflation, at least as compared to an expansion of money and credit by banks. And as we all know, banks aren't lending robustly these days.
But the Fed is indeed pumping money, and monetary inflation is the reason we aren't seeing deflation. True (Austrian) Money Supply (TMS2 - green line) exploded post-Crash until January, 2010, dropped like a rock until, late 2010, when it started growing again. See this chart from Michael Pollaro which I have amended with the dates of QE1 and QE2:

As you can see, the Fed has been pushing on a string, attempting to create price inflation and prevent "deflation." They think they have succeeded in the deflation part, but they are dissatisfied with their attempts at inflation.
The next monetary data report should show more growth in TMS2. QE1 kept TMS2 expanding for about 10 months after it stopped in March, 2009-- through January, 2010, when it collapsed again. I would expect the effect of QE2 to be shorter than QE1 because of the post-Crash chaos has been resolved to the extent that now positions are known and we are in a slow but steady debt liquidation process. This liquidation phase is much stronger than the Fed realizes and the resolution of malinvestment is going slowly, no thanks to them. This hampers the formation of new capital and discourages businesses from expanding as the economy remains in the doldrums. Thus more monetary steroids loses its efficacy as this process continues.
So, as an inflationista, why haven't we seen prices go crazy? Let me summarize my thoughts:

1. Inflation is a monetary phenomenon, and price inflation is a result of it.
2. Price inflation is caused by an expansion of the money supply.
3. There is no such thing as demand-pull price inflation, or that we cannot have price inflation because capacity utilization of factories is low.
4. In order for prices to really take off, money supply needs to take off.
5. We have had a roller coaster of monetary stimulus through QE, causing significant gyrations in money supply.
6. QE (helicoptering money into Wall Street) has a lesser impact on money supply than bank money and credit expansion. It works, it just doesn't have the multiplier bang for your buck.
7. Money supply growth has been historically lower as compared to prior inflations that expanded through bank credit (see 2001 on the chart above).
8. The monetary impact of QE2 is not done yet, but it will have a shorter impact on money supply than QE1.
9. CPI prices are increasing modestly. The producer price index (PPI) is showing much higher price increases and this is starting to squeeze wholesalers and retailers. They will attempt to raise prices.
10. A question arises as to whether or not price increases will be accepted by consumers since wage growth has been flat. I believe increases will be rejected by consumers who will further restrict consumption in response. Or, retailers will swallow the difference, see profits squeezed, and either way, the economy will be harmed from monetary expansion.
11. Ultimately the CPI will rise further, especially if the Fed does QE3, which I believe will happen. Flat-to-declining growth will put pressure on the Fed to act. A low CPI (or PCE) and stagnating employment will encourage the Fed to do QE3 to revive a moribund economy.
12. That will lead to continued stagnation.
13. The key to recovery will be the liquidation of malinvestment and its related debt. It is happening, but the process is slow and more money pumping will only slow it down further.
14. Stagflation.

Read more…

Commodities VaRy extreme right now

Commodities VaRy extreme right now

Posted by Tracy Alloway on May 06 11:14.

Hark — the standard deviation devils sing (again).

As Reuters columnist John Kemp pointed out yesterday, recent swings in the commodities complex have produced some impressive probabilities figures. The kind you can wheel out in dinner party conversation. For instance, front-month Brent crude futures sank almost $12 per barrel (or over 9 per cent) on Thursday, leading the market down from over $120 at the start of the day to under $110.

That's a price change of more than four standard deviations — which is a statistical way of saying it's something that should be seen on average only once in every 63 years, assuming a normal bell-curve distribution. Kemp also points out that at times on Thursday the move also approached five standard deviations — something which should only occur once every 7,000 years.

Now, who wants to bet that algorithmic trading models, or banks' risk management ones, don't extend to this kind of (rare-ish) movement? After all, these models tend to be based on recent history and banks rarely feel the need to take into account extreme events which have never happened. Such was most famously the case, of course, in credit risk management ahead of the subprime crisis.

It's certainly the thinking behind graphics like the below — from Reuters on Thursday:

That's Value-at-Risk (VaR) for major US banks. In words it would mean, for example, that there's a one in 20 chance that Goldman Sachs' daily commodities trading net revenues would fall below expected daily trading net revenues by an amount at least as large as the reported VaR — or about $37bn in the first quarter. Note that VaR predictions, however, tend to be a poor predictor of actual losses. And banks have the ability to ignore them somewhat, as Goldman Sachs did during the subprime crisis.

Here's Kenneth Posner in his book, Stalking the Black Swan:

The company shorted the ABX index just like the hedge fund in Chapeter 4, earning more than $1 billion in profits during 2007. During this period, senior executives were monitoring the value-at-risk … associated with the firm's mortgage position, as well as grilling the mortgage traders on the rationale for their bets. On separate occasions, the executives forced the traders to downsize their positions, even though the trades were profitable, in order to keep the VaR in check. At other times they allowed the VaR to rise to an all-time high.

Given Goldman Sachs called for Brent to return to $105 a barrel just three weeks ago — much to the amusement of some other banks (likeBarclays Capital) — we're guessing there won't be too much Goldman hand-wringing over size able commodities VaR. If the bank followed its own published advice, it should be well-positioned (once again).

Barclays, incidentally, is one of the few European banks that does not break out its quarterly commodities VaR.

Related links:
Fat tail of the day, oil edition - Felix Salmon
Commodities sell-off 2011: is this it? – FT Alphaville
Glencore has bigger risk appetite than Wall St – FT

This entry was posted by Tracy Alloway on Friday, May 6th, 2011 at 11:14 and is filed under Capital markets. Tagged with black swan,commodities, fat tails, goldman sachs, hedging, modelling, standard deviations, Var.

http://ftalphaville.ft.com/blog/2011/05/06/561671/commodities-vary-extreme-right-now/

Five reasons high oil prices are probably here to stay

Five reasons high oil prices are probably here to stay - Frank Holmes

   

The new geopolitics of oil, the continued decline of the U.S. dollar and increasing demand arejust some of the reasons why higher oil prices are likely to be with us for some time

Author: Frank Holmes
Posted:  Tuesday , 12 Apr 2011

SAN ANTONIO (U.S. Global Investors) - 

A number of forces continued to push oil prices higher last week, reaching their highest levels in the U.S. since September 2008.
One factor fueling the run has been the continued decline of the U.S. dollar. You can see from the chart that oil and the dollar historically are negatively correlated. This means that a rise in oil prices generally coincides with a decline in the dollar, and vice versa. The U.S. dollar has seen a dramatic decline since the beginning of the year as oil prices have moved some 30 percent higher. This could be due to fact that roughly two-thirds of the U.S. trade deficit is related to oil imports.

Despite the run up, oil's upward rate of change is still within its normal trading pattern over the past 60 trading days. Accordingly, this may imply that it isn't a spike and we haven't crossed into the extreme territory like we experienced in 2008 and 2009.
Conversely, oil prices are positively correlated with gold prices, which also saw a bounce this week. Looking back over the past one- and 10-year periods, oil and gold have roughly a 75 percent correlation. This means that three out of four times, when prices for one go up, prices for the other increase as well.
Another factor pushing prices higher is the seasonal strength that oil prices historically experience leading into the summer driving season. This chart shows the five-, 15- and 28-year patterns for oil prices. You can see that prices historically bottom in February before rising through the end of the summer.

We discussed in detail how these seasonal factors affect oil prices a few weeks ago. Click here to read "Oil's March Madness a Boost for Refiners."
Rising oil prices are also a result of what the Financial Times calls the "new geopolitics of oil." The FT says three elements creating this new environment are becoming clear:
Young populations with high unemployment rates and a skewed distribution of income are a volatile combination for the people in power.
To placate these groups, oil-producing countries are increasing public expenditures.
Governments are also to extend energy subsidies to shelter the country's consumers from rising energy prices.

A Deutsche Bank chart plots the share of population under the age of 30 for selected North African and Middle Eastern countries against the unemployment rate of this group. You can see that large oil producers such as Saudi Arabia have a high level of unemployment among youth populations.
This is why King Abdullah of Saudi Arabia has announced a total of $125 billion worth (27 percent of the country's GDP) on social programs for the public. For King Abdullah, this is the cost of keeping peace but has driven up the breakeven price for Saudi oil production to $88 per barrel, according to the FT.
Keeping these young populations happy and working is not only domestically important for these governments but for global oil markets as well. You can see from this chart that a significant portion of the world's oil production comes from the Middle East.

With the unrest in Libya-a top-20 oil producer-essentially knocking out the country's entire production, any further unrest in another country could threaten global supply. Upcoming elections in Nigeria have the potential to disrupt production for the world's fifteenth-largest producer.
But it's not just geopolitics that is threatening production. Natural decline rates from mature fields such as Mexico's Cantarell oil field are starting to make a dent in global production. Reuters reported this morning that Norway, the world's eleventh-largest oil producer, is experiencing a significant slowdown in production from the Oseberg oil field in the North Sea. Production is expected to be cut by 26 percent in May to only 118,000 barrels per day.
Meanwhile, oil demand has been picking up significantly in both emerging and developed markets. Oil demand in China and the U.S. has been rising since mid-2009, well before the uprisings began in the Middle East.
In China, a big driver has been growth in the Chinese automobile market. Auto sales increased 2.6 percent in February, and March data released by the Chinese Auto Association over the weekend shows auto sales grew 5.36 percent on a year-over-year basis in March.
The G7 economies have been in an up cycle since last year. In the U.S., employment rates and consumer spending have been steadily improving. Oil prices rising too fast remains a threat to this recovery but BCA Research estimates that oil prices need to rise above $120 per barrel before "significantly undermining consumer and business confidence."
Frank Holmes is CEO and Chief Investment Officer, U.S. Global Investors - www.usfunds.com 
Mineweb.com - The world's premier mining and mining investment website Five reasons high oil prices are probably here to stay - Frank Holmes - ENERGY | Mineweb

Share

_______________________________________

Check it out on The MasterCharts

Silver, it's turned positive in relation to gold

Silver, it's turned positive in relation to gold.
from Richard Russell:
March 29, 2011 -- Silver, it's turned positive in relation to gold. The chart below tells the story. Back in October 2009 one ounce of gold would buy over 80 ounces of silver. From that point on the ratio of gold to silver changed in favor of silver.

As of today, one ounce of gold will buy only 38.3 ounces of silver. Students of the precious metals are wondering how low the ratio might go. There was a long period when one ounce of gold would buy only 16 ounces of silver. The obvious professional play since late-2009 was to sell gold short and buy silver.

http://stockcharts.com/c-sc/sc?s=GLD%3ASLV&p=W&b=5&g=0&i=t52554751559&r=3769



Below is a chart of the ratio going back 19 years. You can see that the ratio has broken below the 1998 low. The conclusion -- stick with silver, but don't sell your gold.

Share

-- The MasterFeeds

You should always listen to the Dr.

Copper: the doctor’s prognosis

Published: March 10 2011 20:03 | Last updated: March 10 2011 22:50

It should come as no surprise that the strong, positive correlation between the world’s two leading industrial commodities has broken down over the past month. Oil has surged 15 per cent on supply concerns while copper is off 9 per cent from the record high of $10,190 a tonne it hit in London trading in part due to fears of what dearer and scarcer crude might do to the world economy. But developments in the Middle Kingdom, not just the Middle East, are affecting copper prices.

China, by far the world’s single largest copper consumer, already outstrips the appetite of what some decades ago was called the “industrialised world.” Its demand for the red metal overtook that of North America and Western Europe combined in 2008 and analysts at Credit Suisse forecast it will be double their consumption by 2013, soaking up a third of all supply.

Given its projected needs for copper-intensive infrastructure, those forecasts seem consistent with economic growth expectations. Even so, the copper market may be ascribing an overly smooth and upward-sloping trajectory for demand in the medium-term. Chinese imports of all industrial commodities took a tumble last month due to the Lunar New Year celebrations, but copper’s fall seems especially sharp. Shipments of 235,000 tonnes were the lowest since January 2009 when prices were a third today’s level.

For some months, local inventories have seemingly grown faster than underlying demand and the discount between local and international prices would have suggested. Some analysts, noting that a large part of Chinese bonded copper inventories have been used as collateral for loans, believe that this artificially stimulated the surge in imports. If so then this could make copper demand doubly-sensitive to Chinese government efforts to slow down credit growth.


Known as “the only metal with a PhD in economics” for its forecasting prowess, perhaps “Dr Copper” was warning us of speculative froth as much as expected growth when it surged earlier this year. If so, more weakness seems likely.

FT.com / Lex - Copper: the doctor’s prognosis

Share

CNBC Market Blah, Blah ..Friday Look Ahead: Tech a Focus for Stocks Friday, as Gold Dazzles Investors

Friday Look Ahead: Tech a Focus for Stocks Friday, as Gold Dazzles Investors

Published: Thursday, 16 Sep 2010 | 9:10 PM E

By: Patti Domm
CNBC Executive Editor

Some good news from the tech sector could be a positive for stocks Friday.

Photo: Oliver Quillia for CNBC.com Outside the New York Stock Exchange in lower Manhattan.

Both Oracle and Research in Motion reported strong earnings after Thursday's bell. Separately, Texas Instruments boosted its $0.12 dividend by a penny and said it would buy back another $7.5 billion shares. All three stocks were higher in after-hours trading.

Stocks Friday morning could feel the effect of the quadruple expiration of futures and options. Traders expect the expiration to be low key at the open, and if anything, the impact should be slightly positive.

CPI, at 8:30 a.m., is expected to show a 0.3 percent increase in August consumer prices. Consumer sentiment is expected to improve slightly to a reading of 70, from 68.9 last month, but economists say the strong performance of the stock market this month could push that number a bit higher. August's sentiment reading was the second lowest of the year. Consumer sentiment is released at 9:55 a.m.

Stocks drifted on both sides of the unchanged mark Thursday. The Dow ended up 22 at 10,594, and the S&P 500 was off less than a half point at 1124.  The dollar weakened against the euro, and dollar/yen was barely changed after the Bank of Japan intervened to curb the yen's rise Wednesday.

"This intervention might have higher chances of succeeding, assuming we continue to see relatively acceptable U.S. economic data. That's the critical thing," said Boris Schlossberg of GFT Forex. "...as long as the idea of double dip keeps receding, Treasury yields should stabilize and go back up and that will be critical to dollar/yen."

On the other hand, if we see the 10-year yield move to 2.5 percent, or dip below 2.5 percent, I don't think any amount of money will stem the (dollar) decline," he said.

Barry Knapp, chief equities portfolio strategist at Barclay's, said the initial stock market reaction after a big intervention is often a short-term decline. "For the first couple of days, the market goes down a little bit..the first reaction is to look at the dollar," he said.

The view is "if the dollar is going up, that's bad for earnings, so sell it. Dollar's going down, that's good. That's a very simplistic approach. I don't think it's right at all," he said. "If you look back at 2003, when the Japanese were intervening dramatically, the initial reaction was that the stock market sold off, and then it regained its footing."

Knapp said the intervention at that time was about $360 billion, and he estimated this round could total $250 billion. The BOJ was reported to have bought more than $20 billion Wednesday.

"If somebody puts $250 billion into the markets, event though that money won't be buying riskier assets, it can trigger an effect," he said.

The impact on Treasurys could also be noticeable, he said. Traders have been speculating the Japanese will park their dollar holdings in shorter duration Treasurys. "Initially the Treasury curve steepens, but then that tends to drive investors who were in 2s and 5s to extend out the curve and it starts to flatten. Then it triggers a whole position rebalancing."

All that Glitters

Gold continued to dazzle investors Thursday, scoring its second record settlement of the week. Investors are betting it could try to break the $1,300 level, maybe even as early as next week depending on the outcome of the Fed's meeting Tuesday.  Gold Thursday rose about a half percent to settle at $1273.80.

Gold has faced some high-profile criticism this week, including from investor George Soros who called it a bubble. "If you think about a world where every major country is trying to find a way to devalue its currency, gold looks pretty good in that environment. Personally I think the dollar is going down more. There's lots of reasons why gold will continue to rise. I don't know if I'd buy it, but I know I wouldn't short it," Knapp said.

 http://www.cnbc.com/id/39223276

Speculators Hike Net-Long Positions In GoldKitco News

Speculators Hike Net-Long Positions In Gold 23 August 2010, 11:27 a.m. By Debbie Carlson Of Kitco News http://www.kitco.com/

Chicago -- (Kitco News) -- Investor interest in gold jumped as prices held and advanced over $1,200 an ounce as safe-haven buying resumed. According to data from the U.S. Commodity Futures Trading Commission, the weekly commitment of traders showed speculators added to long gold futures positions in the week ending Aug. 17. Looking at the disaggregated futures and options combined data, the managed-money accounts added 16,233 longs are now net-long 182,276 contracts, the largest net-long for them since the week of July 13, when their net-long positions totaled 187,077. The peak for the year 2010 to date was 230,422 on May 18. Similarly, in the legacy futures and options report, funds added 19, 557 contracts to make them net-long 226,964. Commercials and swap dealers in the disaggregated reports added to their net-shorts, with the producer category increasing shorts by 10,271 contracts to make them net-short 172,129. Swap dealers hiked their short contracts by 11,878 to be net-short 100,750 contracts. Commercials in the legacy futures and options report raised 25,854 short contracts and are now net-short 272,879. During the timeframe the report covers, Aug. 10 to Aug. 17, gold prices on the Comex division of the New York Mercantile Exchange rallied $30 an ounce for the December contract. A trigger for the rally was holding over $1,200 an ounce. Prices started at $1,198, which was the settlement on Aug. 10 and settled at $1,228.30 on Aug. 17, and prices continued to rise that week. “This shows that financial investors have been a major force in this recent rally of gold prices. In the reporting week up to last Tuesday, prices advanced by 4%,” said Commerzbank in a research report on Monday. Barclays Capital said in a research report Monday, using the legacy futures-only data, that the rise in fund longs was the largest one week rise on a net basis since late April. The rally came on disappointing economic news, which spurred safe-haven buying of gold, as market participants worry about a double-dip recession. Traders also note, though, that volumes during the reporting period were light because of summer holidays. In addition to investment buying, Commerzbank said physical interest could support prices, noting Tuesday starts the festival season in India, when gold is traditionally given as gifts. They also cited central bank buying, with Russia increasing its gold reserves by more than 15 tons in July to just under 725 tons, according to its central bank. “Although the rise in holdings is likely to have come from the country’s own production, this absent supply will contribute to a tighter gold market,” Commerzbank said. In other precious metals data, there was little significant change in speculative holdings for silver, platinum and palladium. Managed-money accounts in silver added 29 long contracts, but cut 144 short contracts and are now net-long 28,429 contracts. Swap dealers are net-short 1,916 contracts, having added 692 shorts and cut 117 longs. Producers are net-short 52,773 contracts. In platinum, speculators trimmed slightly their net-longs by 299 contracts and added 97 shorts and are now net-long 16,103 contracts. Swap dealers cut shorts by 649 contracts and added 151 longs, making them net-short 6,599 contracts. Producers are net-short 12,804 contracts. The managed-money accounts added modestly to net-longs in palladium, increasing longs by 326 contracts to be net-long 10,230 contracts. Producers remain net-short 9,802 contracts in palladium and swap dealers are net-short 4,400 contracts. The data for copper shows managed-money accounts added to long positions, but increased their short positions by a greater amount. These accounts added 1,025 long contracts and 2,603 short positions, remaining net-long 19,180 contracts. Swap dealers and commercials remain net-short, at 44,550 and 56,432 contracts, respectively. During the time period, most-active September copper rose 2.6 cents a pound, so the swift price drop copper suffered toward the end of last week over global economic health was not included. From Tuesday’s settlement to Friday’s settlement, September copper prices fell 4.75 cents to $3.2910. Commerzbank said because of this: “net long positions have probably continued to fall since then. The still relatively high positions also hide a risk of new price corrections should market sentiment deteriorate further.” By Debbie Carlson, of Kitco News;dcarlson@kitco.com; Allen Sykora contributed to this story.

Kitco News

Share|

_______________________________________

Check it out on The MasterCharts