Bill O’Neill, managing partner of New Jersey-based LOGIC Advisors, said that asset-diversification demand for gold and other precious metals by jittery investors amid shaky equities markets propelled gold’s rally.

Spot gold hit an intraday peak of $992.55, which marked the highest price since Feb. 24. It was at $989.10 an ounce at 12:07 p.m. EDT (1607 GMT), against $976.60 an ounce late in New York on Wednesday.

U.S. December gold futures were up $10.70 at $989.20 an ounce on the COMEX division of the New York Mercantile Exchange.

Fears that U.S. payrolls data may disappoint sparked a flight to quality among investors on Wednesday. The metal broke out of its previous $930-$960 range as a move through technical resistance above $960 sparked a rally.

VTB Capital analyst Andrey Kryuchenkov said gold’s immediate move had been largely technical, with the dollar offering little support and physical demand weakening as prices rose.

Gold will need to hold its current levels to build a base for further gains, he said. “If we close above $980, we will retest $990, and probably stay in this range,” he said.

The dollar index <.DXY>, which measures the U.S. currency’s performance against a basket of six major currencies, initially softened early on Thursday, boosting interest in gold as an alternative asset and driving prices to fresh highs.

The market was awaiting fresh clues on the economic outlook from Friday’s payrolls numbers. Investors were spooked after a U.S. employment report released on Wednesday showed more private sector job losses than expected.

The data will be closely watched for its impact on the dollar, and its subsequent effect on gold. The metal is set to benefit from renewed demand if the U.S. currency slips further.

STRONG INVESTMENT

“Investment demand for gold is still very strong, and that is going to help drive the price higher over time,” said Helen Henton, head of commodities at Standard Chartered. “We think it’s going to break $1,000 by Q4, mainly driven by a weakening U.S. dollar.”

Silver tracked gold higher to reach its highest level since June at $15.92 an ounce, and was at $15.84, against $15.34 on Wednesday.

It outpaced base metals such as copper, with which silver, as an industrial as well as an investment metal, often moves.

“Silver has fully participated in this (rally) and yet, while base metals have picked up a bit in the last 18 hours, they were definitely on the defensive,” said Stephen Briggs, an analyst at RBS Global Banking & Markets.

“Silver has managed to ignore that, which is interesting.”

Among other precious metals, platinum was at $1,244 an ounce against $1,229, while palladium was at $288.50 against $284.50.

Impala Platinum, the world’s second largest miner of the metal, said on Thursday some workers at its operations had returned to work after a strike, but said no wage deal had been reached with the union.

Sept 3 (Reuters)

Strength in the U.S. unit kept most dollar-priced commodities under pressure as it made them more expensive for holders of other currencies, analysts said.

Spot gold was bid at $921.20 an ounce at 1507 GMT, against $932.30 an ounce late in New York on Friday.

U.S. gold futures for August delivery on the COMEX division of the New York Mercantile Exchange fell $9.70 from Thursday’s close to $921.30 an ounce.

“There is a sell-off with the dollar strength,” said Standard Bank analyst Walter de Wet. “Gold is holding up quite well, compared to the other commodities. At these levels, we might see some physical buying.”

He said while this may lend support to prices, a break of the $920-922 level could lead to a retracement back to $900.

The dollar, along with the yen, gained broadly on Monday amid fears over the economic outlook, which led investors to shun riskier assets in favour of currencies perceived to be safe.

Investor confidence across the market has been subdued since weaker than expected jobs data from the United States last week. While gold often benefits from uncertainty in the wider markets, it is currently taking its cues chiefly from the dollar.

Traders are awaiting fresh direction from the outcome of the G8 meeting later in the week.

“The market will certainly be cautious ahead of the G8, (and) that nervousness could further limit the metal in the range,” said Pradeep Unni, senior trader at Richcomm Global Services.

“It’s ideal to be on the selling side, and the slide in oil prices may keep the prices subdued.”

PROSPECTS

Oil fell to below $65 a barrel on Monday, having touched a five-week low earlier in the session, pressured by doubts over prospects for a recovery in the global economy and energy demand.

Other industrial commodities such as copper and aluminium also fell.

Elsewhere, the Bombay Bullion Association said demand for gold and silver from India, the world’s biggest bullion consumer, is likely to be pressured further this year by an increase in import duty in the budget for 2009/10.

“As it is, business was bad,” said the association’s head, Suresh Hundia. “This will make it worse.” Indian gold imports tailed off last year as prices rose.

Bargain hunters emerged in India as prices fell on Monday, but other Asian buyers are awaiting a further price correction, dealers said.

Among other precious metals, silver tracked gold lower, falling to a near nine-week low of $13.00. It was later at $13.21 an ounce against $13.39.

“Interestingly, the gold to silver ratio surged higher in the past week, pushing above 69 on Friday,” VTB Capital analyst Andrey Kryuchenkov said in a note.

“Gold prices were almost unchanged in volatile trading last week. However, silver suffered not only from weakness on the (platinum) market, but also from a slight increase in risk aversion and resurfacing economic concerns.”

Platinum eased to a low of $1,138.50 an ounce, its weakest since late May, before recovering to $1,142.00 an ounce against $1,185.00, while palladium was at $241.50 against $248.50.

LONDON, July 6 (Reuters)

Spot gold stood at $931.70 by 1510 GMT, up from $928.65 late in New York. Earlier it rose to $933.90.

After a week of tracking a volatile dollar, gold is on course for a 0.6 percent fall on the week — retreating further from a four-month high near $990 hit in early June.

The precious metal found support above $931 after falling on Thursday, when weaker-than-expected U.S. non-farm payroll data sent investors piling into the relative safety of the dollar.

The U.S. currency  lost some ground against a basket of six currencies but remained broadly positive on Friday, with U.S. financial markets closed ahead of Independence Day.

Dollar moves have proved influential of late in determining immediate interest for bullion from foreign investors.

But the bleak jobs data and other mixed economic indicators have highlighted gold’s core appeal as a harbour from risk.

Analysts said gold was being supported by increased demand from retail investors, but also persisting questions about the world economy’s ability to right itself in coming months.

“This is typical of the situation which you get when the economy is bottoming out: the data is mixed, there is no clear trend, and you have questions about the pace and sustainability of economic recovery leading some investors back into gold,” said Peter Fertig, analyst at Quantitative Commodities Research.

“Retail investors are most likely spooked by what they read in internet forums, that inflation is around the corner and they should buy gold, but that would only be a risk if the economy gained momentum very quickly,” he added. Bearish sentiment in the wake of weak unemployment data from the United States and Europe weighed on other commodities, dragging crude below $67 per barrel.

DOLLAR BLUES

Analysts said a combination of persistent worries — from quantitative easing to Chinese remarks about currency reserve diversification — would keep the dollar under pressure in months ahead and provide a backbone of support for gold.

“Part of the reason gold’s retreat was tempered really has to do with the limited upside to which the dollar is gaining,” said Ashraf Laidi, an analyst at CMC markets.

“This is partially due to worries about quantitative easing and these Chinese rumblings about diversification,” he added.

U.S. gold futures for August delivery rose 0.1 percent to $932.60 per ounce, compared with $931.00 on the COMEX division of the New York Mercantile Exchange.

While investor interest in gold appeared stable, physical demand was lagging.

The world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust , said holdings were 1,120.55 tonnes as of July 2, unchanged from the previous business day.

Holdings in gold by ETF Securities, which reflect retail appetite for bullion, dropped by 12,543.53 ounces as of July 2, according to a daily report from the company.

Indian data showed the country’s gold imports stood at about 59.8 tonnes in the first six months this year, down 57 percent from the same period last year. India’s gold imports in June were likely around 8 to 10 tonnes, down 24 tonnes from the same month a year ago, a senior official from Bombay Bullion Association said this week.

In other precious metals, spot silver inched up to $13.43 per troy ounce versus $13.41 previously, platinum stood at $1,186.50 from $1,181.50, while palladium was at $248.00 from $249.00.

LONDON, July 3 (Reuters)

Oil prices and stocks around the world tumbled on Monday after a jump in troubled loans at Bank of America and renewed signs of economic weakness cooled investors’ optimism the worst of a global slowdown was over.

The U.S dollar rallied broadly to trade at one-month highs as the slide in worldwide equity markets boosted safe-haven demand for the greenback, U.S. and European government debt and gold.

Bank of America stock shed 17 percent after reporting its purchase of Merrill Lynch & Co helped to more than double first-quarter profit, but credit quality deteriorated sharply, hurt by a flagging economy and growing unemployment.

Also weighing on sentiment was a key gauge of future economic activity, which fell for the third month in a row in March, showing the U.S. recession may persist through summer.

In another sign of weakness, Germany fell deeper into recession in the first quarter, the Bundesbank said, fueling expectations of a record contraction in gross domestic product.

Most major European and U.S. stock indexes fell more than 3.0 percent as analysts questioned the prospect for corporate earnings.

Shares of Citigroup Inc fell 16 percent after Goldman Sachs said credit losses at the bank continued to grow at a rapid rate, putting a damper on earnings expectations.

“People are starting to peel the results back and say wait a second,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey. “Can (the results) continue in the next quarter?”

At 1 p.m., the Dow Jones industrial average was off 219.04 points, or 2.69 percent, at 7,912.29. The Standard & Poor’s 500 Index was down 28.93 points, or 3.33 percent, at 840.67. The Nasdaq Composite Index was down 54.10 points, or 3.23 percent, at 1,618.97.

Banking shares took the most points off an index of leading European companies, sparked by Bank of America results.

The FTSEurofirst 300 index of top European shares closed 3.5 percent lower at 786.12 points, the biggest daily percentage drop since March 30.

Deutsche Bank lost 8.6 percent, Barclays fell 7.9 percent and BNP Paribas 6.6 percent.

The DJ STOXX Banks Index fell 5.5 percent.

Oil slid more than 8.0 percent to about $46 a barrel, depressed by a rising dollar and growing caution about the pace of any economic recovery and its impact on oil demand.

U.S. crude for May delivery was down $3.95 at $46.38 a barrel. Brent crude for June fell $3.09 to $50.26.

President Barack Obama said on Sunday the U.S. economy remained under strain and his top economic adviser tempered hopes for a speedy recovery that have driven Wall Street to six straight weeks of gains.

Managing Director Dominique Strauss-Kahn of the International Monetary Fund was quoted Sunday as saying the IMF would cut its global economic forecasts this week and that he did not expect a recovery to start unitl the first half of next year.

“Near term, we don’t see any supportive factors for the oil market,” said Harry Tchilinguirian, oil analyst at BNP Paribas in London. “We have not yet turned the corner on the economy, oil demand is very weak and inventories are high.”

The U.S. dollar rallied, boosted by volatility in global equity markets and expectations the U.S. economy will rebound from recession sooner than other regions.

“There’s no doubt among investors that the U.S. will be the first to get out of this recession,” said Matt Esteve, a currency trader at Tempus Consulting in Washington. “As stocks around the globe move lower, we are seeing a re-emergence of risk aversion and the dollar gets a boost.”

The dollar rose against a basket of major currencies, with the U.S. Dollar Index up 0.82 percent at 86.604. Against the yen, the dollar fell 1.20 percent at 97.94.

The euro fell 0.83 percent at $1.293.

Gold rose about 2.0 percent, with spot gold prices rose $17.25 to $885.15 an ounce.

U.S. and euro zone government bonds rallied as a steep fall in equities helped underpin appetite for less risky fixed-income assets.

Fears about the financial sector were also stoked by a blog which said it had obtained the results of “stress tests” on the health of the top 19 U.S. banks. A spokesman said the U.S. Treasury Department has not received results.

“It’s a pure risk aversion type day today … it’s all about the bond market reacting to very weak equities,” said John Davies, fixed-income strategist at West LB.

The benchmark 10-year U.S. Treasury note rose 26/32 in price to yield 2.86 percent. The 2-year U.S. Treasury note rose 3/32 to yield 0.93 percent.

Asian stocks edged higher. The MSCI index of Asia-Pacific shares outside Japan was up 0.7 percent and Japan’s Nikkei average drifted up 0.2 percent.

April 20 (Reuters)

Our old friend, Marc Faber, says he expects a 10% drop in the stock market before the rally resumes.

Maybe. This rally is going to end sometime. But it probably has a ways to go. There are still a lot of suckers who haven’t been drawn in.

Another old friend, Rick Ackerman, thinks the problem with this rally is capitulation…or rather, the lack of it. There’s been no capitulation, says he. And you can’t have a real bottom without it. No capitulation, no bottom.

The news from the economy is bad and getting worse.

Credit card debt has just taken its biggest plunge in 32 years…maybe ever. Credit card balances fell at a 9.7% annual rate. And the number of open credit card accounts is going down too.

What happens when people can’t pay down their loans?

“Mortgage delinquencies soar in the US,” says a Reuters article. Remember, delinquencies are the beginning of the process. Then come foreclosures and auctions – all eventually driving housing prices down further.

And when property prices fall, so does the collateral behind the banks’ and other financial institutions’ assets. So, their troubles aren’t over. The worst is still ahead of us, not behind us.

But despite the bad economic outlook, investors think the worst is past for the stock market. Markets look ahead, they say, beyond the immediate economic forecast. True, but they have an adorable habit of seeing only what they want to see.

“In January 2008, when the S&Ps were in the early stages of what was to become a devastating collapse,” explains Rick Ackerman, “domestic equity mutual funds were worth about $6.5 trillion. Lo, a little more than a year later, in February 2009, we see that the value of these funds had fallen by about 48%, to $3.4 trillion. But guess what: Over that time, net redemptions totaled only 2%, or about $100 billion! What that means, explicitly, is that mutual fund investors have stuck with this bear market throughout the decline.”

Investors didn’t give up on stocks – despite the huge decline in stock market prices. What that means is that there’s still a lot of selling to be done.

“This bear market will end,” he continues, “like every other bear market in history, with a wholesale dumping of stocks at prices that will make current values seem exorbitant in comparison.”

That’s why you use trailing stops. You want to be sure that when the selling begins your stocks get sold first – long before most investors finally capitulate.

More news on how to play this bear market from Addison and The 5:

“If you’re shorting stocks, this might be of use,” writes Addison Wiggin. “Now that the easy targets are long gone (big banks, homebuilders, AIG) and the bear market rally is in full swing, short sellers are setting their sites on some more diverse organizations.”

“Hmmm… pretty all over the board, eh?” Addison notes. “There’s a mobile tech biz, several real estate players, home healthcare, a bank and a popular chain of sandwich shops. What’s the connection?”

“Most of the stocks on this list,” answers our resident short seller Dan Amoss, “are characterized by at least one of these three facets: Shorting the stock is a current fad, the company is using ‘creative” accounting methods that traders think is fraudulent, or the company is a high risk for insolvency.

“Regardless, bulls beware… when you see short interest that high (as a % of outstanding shares), you rarely see sustainable short squeezes.”

And back to Bill with more thoughts:

It’s amazing how much credibility some people have. Seems almost infinite. No matter how bad their advice…or how little they understand…people still ask their opinions.

Or, to put it another way…it’s amazing what most people will believe.

You’d think – after $50 trillion in losses – that people would be careful whom they listened to. Who would take Alan Greenspan’s thoughts seriously, for example? Yet, the newspapers still report his remarks with a straight face.

And what about all the economists who claimed that since the “U.S. has the world’s most flexible, dynamic economy” you couldn’t go wrong buying U.S. stocks? And what about the market timers who urged investors to buy “bargains” when the Dow was only 10% below its peak? And how about the regulators – such as Tim Geithner – who completely missed the biggest Ponzi scheme of all time, taking place right under their noses? And the economists who thought derivative debt made the financial world safer by “distributing risk more widely?” And those, such as Hank Paulson, who thought the sub-prime crisis was “contained” at $100 billion in losses? (Current cost of the bailouts – $12.8 TRILLION!)

As our friend Nicholas Taleb says, it’s as if these guys had wrecked a school bus – while they were driving drunk.

But instead of putting them in jail – they’re given a new school bus to drive!

Kevin Phillips, author of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism warned of a the pending explosion of a 25-year “multibubble.”

The bubbles began in the 1980s, he says, when the financial sector accounted for 10 percent to 12 percent of the U.S. economy had grew to an “arguably crippling” 20 percent to 21 percent of GDP by the middle of this decade.

Who’s to blame? Henry Paulson, he says…and Ben Bernanke…and Alan Greenspan.

The Reuters report: “Phillips calls Paulson a Wall Street insider who was looking out for his own, and Bernanke an academic misguidedly trying to refight the 1930s Great Depression. Together they formed the wrong team at the wrong time whose ad hoc approach threw away hundreds of billions of dollars and more than doubled the Fed’s balance sheet, he says.

“What you’re seeing Bernanke do is he’s trying to create a bailout reflationary bubble, which he can’t describe as a bubble, just as Greenspan couldn’t describe the housing mortgage bubble as a bubble. What we’re seeing by Bernanke is a covert attempt to rebubble,” Phillips told Reuters.

Meanwhile, Nouriel Roubini – who’s been mostly right about the crisis – says that [Jim] “Cramer is a buffoon.”

“He was one of those who called six times in a row for this bear market rally to be a bull market rally and he got it wrong. And after all this mess and Jon Stewart he should just shut up because he has no shame…He’s not a credible analyst. Every time it was a bear market rally he said it was the beginning of a bull and he got it wrong.”

Roubini warned two years ago that the United States faced its worse recession in four decades. He points out that the current rally on Wall Street merely follows the pattern of other major downturns.

“Once people get the reality check than it’s going to get ugly again,” he says.

Finally, as promised in yesterday’s issue: What can we learn from Argentina?

In the ’30s, Argentina suffered along with the rest of the world. Until then, it was roughly as rich as Europe and rivaled America in some ways.

“As rich as an Argentine,” was an expression in England. Marrying one’s daughter to an Argentine planter was the dream of many down-at-the-heels English aristocrat.

But something went very wrong on the pampas. Instead of Franklin Roosevelt’s New Deal, the Argentine’s got a raw deal from Juan Peron. Both programs were frauds. Both made things worse. But Peron’s program stuck. Americans soon came to their senses and forgot Roosevelt. Between Franklin Roosevelt and Barack Obama were Eisenhower Republicans and Carter Democrats. But Peronist politicians have dominated the Argentine political landscape since the ’40s.

Every problem demands a government solution. And every Peronist solution makes things worse.

Source: A ‘Rebubble’ Attempt