Oil and Gold Prices

[dan_s]

April 30, 2011 in 'The Commodity Wire'

'The Commodity Wire' by Al Abaroa"

Energies: April’s close marks the eighth consecutive monthly gain for oil. The robust consumer spending figure released is suggestive that demand won’t wane. Many worried (self included) that oil’s price rise would stifle demand. So far, this has proved to be false. Looking forward, demand in the U.S. is forecast to climb over 1% to 19.4 million barrels per day as projected by the Energy Information Administration. Technically, the next resistance for Crude is the top of the channel resistance near the 120-123 level. The channel consists of the 2009-2010 lows drawn with a parallel trend line over the 2009 high. On the continuous contract, the long term Fibonacci resistance is the .786% retracement of the 2008 decline near 122.85. Key support lies at the 4/13 low of 105.31. Critical support rests just below at the 3/14 low of 96.22.

Metals: Gold set new record highs 4 out of the 5 days this past week, closing at $1,565.80. My colleague, Matt Zeman, in our Chicago office shares my opinion that the dollar weakness is helping push gold to new highs. He shared his thoughts with Bloomberg on Friday saying, “The dollar will continue to lose ground for the foreseeable future, so it only makes sense to be invested in precious metals.” Clearly this doesn’t mean the market will only rise, but argues for higher prices to come. In the short-term, I see 1576.60 serving as the next resistance. This is the 200% extension of the move from 1413.5 to 1476.4 as measured from the 4/12 low (1445.0). If an early week pullback occurs, those looking for a long entry may consider support at 1545.00 and 1525.00 as possible trade location. The upside short term target remains 1601.00-1628.00. Implied Volatility on Gold options has spiked over the past few sessions as the metal broke out of its recent channel. Traders with a bullish mindset may consider selling covered put premium in the July or August option. Look for trade illustrations, along with more detail explaining risk and reward, in this week’s issue of the Kingsview Financial Options Pro Report.

[dan_s]

Oil price down today because U.S. dollar is stronger. What in the world makes the dollar stronger today than it was yesterday? Did China agree to forgive some of our debt?

IMO this is a response to getting Bin Laden, which will fade quickly.

This country is going deeper and deeper into debt. Nothing is going to stop that. The gang we have in Washington simply cannot stop spending money. Result: U.S. dollar will continue to decline in value.

[k1f]

The problem isn't just govt spending. Tax revenues are down from the recessionary effects of the massive Wall Street binge of 2008-09, and taxes are much lower than they've been historically, as Reagan's budget director David Stockman just reminded us over the weekend. In addition, the finance juggernaut has expanded to dangerous proportions in the economy (40% by recent calculations), with effects like this outlined here:

<<http://artvoice.com/issues/v10n17/news_feature
and here:

<<http://www.investorvillage.com/smbd.asp ... d=10024615

Don't me why savvy businessmen keep overlooking the demonstrable distortions, damaging to business, that these new "free market" developments have introduced.