Red-Hot Resources

"Luck is not chance, it’s toil; fortune’s expensive smile is earned.”

Monday, May 21, 2007

Monday Is Chart Day

Here is some news.

Gold Declines as Rallying Stock Markets May Erode Demand; Silver Advances Gold declined as rallying stock markets eroded investor demand for the precious metal. Silver declined.

Gold Prices May Peak Next Year on India and China Demand, Westpac Says Gold prices may peak in the first half next year driven by rising demand for luxury goods in India and China, according to Westpac Banking Corp.

Crude Oil Rebounds, Climbs Above $65 on U.S. Gasoline-Inventory Concerns Crude oil climbed above $65 a barrel in New York amid concern the U.S. won't have enough gasoline when the summer driving season starts next week.

Corn, Soybeans May Rise as U.S. Crops Fall Short of Demand, Survey Shows Corn and soybeans may rise in Chicago on speculation production in the U.S., the world's largest grower and exporter, will fall short of record demand for livestock feed and crop-based fuels.

S&P/ASX 200 Stock Index Rises to Record, Led by BHP on Metals; CSL Gains Australia's S&P/ASX 200 Index rose to a record high, led by BHP Billiton Ltd. and Rio Tinto Group, as prices of copper and nickel climbed.

Energy Metals Discloses Talks That May Lead to Sale of Uranium Explorer Energy Metals Corp., a developer of uranium deposits in the U.S., said it is in talks that may lead to the sale of the Canadian company. The shares earlier surged to a 12-year high before trading was halted in Toronto. [XX Sean's note – yes, I recommended this! Sweet]

China Growth, Not Paulson, May Force Government to Accept Yuan Revaluation China faces growing pressure to increase the value of the y1uan, and Henry Paulson has nothing to do with it.

And now, on with our show (the charts) …

Last week (on my blog, anyway), I talked about how Chinese gold demand is soaring. That's the good news. The bad news is this (from Resource Investor):

Gold ETF bullion holdings drop substantially The substantial drop in bullion holdings by StreetTRACKS gold shares, the world's largest gold-backed exchange traded fund (ETF), could be signalling reduced exposure by investors due to weaker prices.

Analysts cautioned that a continued outflow could be an indication that further liquidation in the gold market might be on its way.

Bullion held by StreetTRACKS fell 16.6 tonnes, or more than 3%, to Thursday's 469.15 tonnes, which marked the level last seen in mid-February, compared with 485.8 tonnes on Tuesday. The decline came after the bullion ETF saw its metal holding peaked at a record 500.7 tonnes just on April 19.

All in all, I think it's best to wait and see what happens when gold hits its next level of support before buying again.

Silver looks more bullish …

It's hard to imagine silver going up when gold goes down. So maybe this support silver is finding is bullish for gold as well.

Next, let's look at a metal we don't look at as often as we should – copper.

This is a classic decision point, and it should happen this week. Kind of exciting, unless you're long copper, in which case it could be brown trousers time.

So what's the news today …

Copper Advances After Largest Weekly Decline in Three Months; Nickel Falls Copper rallied in London after its biggest weekly decline in more than three months, as a drop in stockpiles signaled growing demand. Aluminum and zinc rose.

So don't buy those adult diapers yet!

Enough metals. On to the energy complex …

Oil could break out. If it doesn't, we could see more indecision as it bounces along in a range. What does gasoline have to say about this? …

Gasoline is accelerating. This is mainly due to lack of refinery capacity. Personally, I think gasoline prices have gone up too far, too fast. When I hear endless bitching about gasoline prices in line at the grocery store, it tells me people are ready to cut back on driving (as I detailed on my blog last week, so far consumers haven't changed driving).

A downward change in driving habits should ease back the throttle on gasoline prices. Indeed, that's part of why I think ALL US corporations should go to mandatory telecommuting twice a week. It would kick al Qaeda right in the wallet.

But let me put that soapbox aside for a minute while we look at one more chart – natural gas …

It looks like a setup for a major breakout. If hurricane season comes early and hard, look out!

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