Oil Up, Gold Up, Dollar Down
August 21st, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
The business media is saying that geopolitical tensions between Russia and the U.S. and the ongoing credit/banking crisis are the drivers here. Maybe.
To me, these moves look like very technical plays. I’d be extremely careful chasing gold or oil long here. These look like textbook DCBs (Dead Cat Bounces) so far. A better gamble might be to look for good entries on long dollar plays as USDX consolidates and daily oscillators pull back from extremes.
Gold has a VERY hard resistance overhead at $850. As I said, I haven’t sold one gram of my gold through any of this recent nonsense, but when it comes to taking on new positions, I wouldn’t want to try to fight that $850 resistance here.
It’s very blurry out there, but I’m thinking that these moves are technical (off extreme oscillators).
I’m just glad that I’m hedged now. This volatility is insane.
Via: CNN:
Oil surged more than $6 a barrel on Thursday to touch $122 a barrel, as a falling dollar and renewed concerns over the credit crunch motivated investors to move their assets back to commodities.
U.S. crude for October delivery rose $5.66 to $121.22 a barrel, having reached as high as $122.02. Wednesday’s $114.98 settlement price ended active trading for the September contract.
The last time oil traded above $120 was Aug. 8, when it touched $120.08. Oil settled at $120.02 on Aug. 7.
“The investor class is buying back oil as a hedge because the value of the dollar is weak,” said Phil Flynn, senior market analyst at Alaron Trading.
Another analyst echoed the same sentiment. “All else equal, people would think that in a stable commodity market and a negative financial market – people would have more faith in the commodity place,” said Neal Dingmann, director of equity research at Dahlman Rose.
Weaker dollar: Oil prices were supported by the declining value of the U.S. dollar. The dollar was down against both the euro and the yen on Thursday.
Ahh the “investor class.” “The investor class is buying back oil as a hedge because the value of the dollar is weak,” said Phil Flynn, senior market analyst at Alaron Trading.
Yes, and that “investor class” also thought that property values would never decline and invested in all of the mortgage Ponzi schemes.
I have to say about now that the “investor class” are about to get sent back to school for some remedial learning.
Gold and silver are no longer commodities but are becoming “REAL MONEY.”
Only problem is that the “investor class” and their chasing of returns is having an impact on PEOPLE who NEED TO EAT and HEAT THEIR HOMES.
The chasing of returns is going to kill off a lot of people. I don’t think its right that X, who can’t pay their heating bill, electric bill, or has to juggle those against EATING should be the one who has to die for Y to “make a return.”
Maybe I’m a communist and believes that there is more that can be done with wealth than chasing returns.