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boont · 06-13-2006, 03:09 PM

"Gold for August delivery plunged $44.50, or 7.28%, to close at $566.90 an ounce. It was the worst single-day percentage decline for gold since January 1991, according to brokerage Miller Tabak.

The selloff was even more pronounced for silver, with the July contract losing $1.44, or 13%, to $9.62 an ounce. Copper for July delivery dropped 21 cents, or 6.8%, to $3.01 a pound. Both routs were the worst percentage declines in more than a decade. "

cute fuzzy bunny · 06-13-2006, 03:12 PM

Given that almost everything has been dropping lately, it just shows how poorly correlated some of these supposedly safe and uncorrelated asset classes actually might be. At least in the short term.

The folks predicting $1000 gold sure have disappeared.

Bet its back in the 350-450 range in no time.

brewer12345 · 06-13-2006, 03:14 PM

I think it means that the market finally believes that Helicopter Ben will be a serious inflation fighter at the same time all the other central banks have decided to do the same thing. *Gold shot up because people were getting scared that inflation would get away from the Fed. *Opinion has apparently turned, and now the equity market is plotzing because market participants are terrified that the Fed will raise rates high enough to choke the economy.

Buy some pearls amongst the porkchops while they are temporarily cheap. *Eventually things will calm down/go back up and you will wonder why you didn't take more advantage of all those fantastic bargains.

Nords · 06-13-2006, 03:14 PM

Quote:

Originally Posted by Diaper Bunny

Bet its back in the 350-450 range in no time.

Yeah, but what a screaming good deal that'll be!!

wabmester · 06-13-2006, 03:19 PM

Quote:

Originally Posted by Diaper Bunny

Given that almost everything has been dropping lately

Everything except for oil. I expected some of the speculative gains to burn off, but nothing has happened. If you're chomping at the bit for commodity exposure, I think oil is the new gold.

justin · 06-13-2006, 03:21 PM

Gold was just the latest "best investment evar". Then it went down. How much longer till oil does the same thing?

wabmester · 06-13-2006, 03:22 PM

Quote:

Originally Posted by justin

How much longer till oil does the same thing?*

I think a better question is why didn't oil do the same thing as central bankers took monetary liquidity out of the market.

brewer12345 · 06-13-2006, 03:24 PM

Quote:

Originally Posted by justin

Gold was just the latest "best investment evar".* Then it went down.* How much longer till oil does the same thing?*

Probably won't have the same dynamics. Every idiot with a few hundred bucks could buy some coins and stash them in the sock drawer. Can't do that too easily with barrels of oil...

audreyh1 · 06-13-2006, 03:27 PM

Seems to me the sudden drop in gold just goes to show how much speculative money was in metals. *Sure, it started out as an inflation hedge, but then the johnny-come-latelies and momentum players drove it up to dizzying heights.

Amazing how fast things can whiplash when the speculators run for the exits en masse.....

This whole thing (commodities, foreign, market averages) has been quite a spectacular selloff. *

Wow - I guess Fed jawboning can be very effective!

Audrey

audreyh1 · 06-13-2006, 03:30 PM

Will such a sharp selloff the last two days, unless the CPI is an absolutely miserable number, we may be set up for a rebound tomorrow.

Audrey

wabmester · 06-13-2006, 03:42 PM

Quote:

Originally Posted by brewer12345

Probably won't have the same dynamics.* Every idiot with a few hundred bucks could buy some coins and stash them in the sock drawer.* Can't do that too easily with barrels of oil...

What's so hard about buying an ETF?

brewer12345 · 06-13-2006, 03:45 PM

Quote:

Originally Posted by wab

What's so hard about buying an ETF?

I don't think that's how gold was sold to Mom& Pop. Listen to the untermensch that calls in to radio shows like Goldline. They want to hold it in their hand and see how purty and valuable it is. Newfangled eeeeelectronic brokerage accounts are risky, dontchakow. And what in tarnation is a futures contract? Nosir. I wants me some physical gold. After all, its the "people's money."

Plus I think it is a lot easier to pump more oil than it is to mine and smelt another ounce of gold. Since gold appears to have a supply elasticity than oil, the swings can be bigger and faster than in a bigger, more liquid market like oil.

audreyh1 · 06-13-2006, 03:57 PM

Actually, Brewer, I think the big recent run in gold corresponded to the newly introduced gold ETF. Seems like that let a lot of new folks in.

Just remembered recent discussion of this after the run up, but before the big selloff - wasn't looking at the numbers myself.

Audrey

Alex · 06-13-2006, 07:56 PM

Quote:

Originally Posted by brewer12345

I think it means that the market finally believes that Helicopter Ben will be a serious inflation fighter at the same time all the other central banks have decided to do the same thing. Gold shot up because people were getting scared that inflation would get away from the Fed. Opinion has apparently turned, and now the equity market is plotzing because market participants are terrified that the Fed will raise rates high enough to choke the economy.

Buy some pearls amongst the porkchops while they are temporarily cheap. Eventually things will calm down/go back up and you will wonder why you didn't take more advantage of all those fantastic bargains.

I think you are spot on.