Red-Hot Resources

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

Monday, March 31, 2008

Monday Is Chart Day

This morning, Larry Edelson describes the commodity markets as having a "lot of dust." In other words, we can't see the short-term clearly, even though we know where the trail is. I agree completely. We know the long-term trend is up, but in the short-term it's hard to find your bearings.

Personally, I'd love a big pullback, a second leg down to the sell-off we saw recently. THAT would make it easy -- the long-term trend remains up, so we could buy-buy-buy.

But it's never easy. If it was, everyone would be millionaires.

Let's look at some charts ...

Dollar Falls to Near Record Low Against Euro as Inflation Accelerates The dollar headed for its biggest quarterly loss against the euro since 2004 after inflation accelerated in the common-currency bloc, giving the region's central bank more reason to keep interest rates unchanged while the Federal Reserve lowers borrowing costs.
Gold headed for a third quarterly gain on expectation the U.S. currency would decline as reports may show that the world's largest economy is slowing, boosting the metal's appeal as an alternative investment to the dollar.
XX Sean's take -- the outlook on gold is particularly mixed. It seems to have failed its recent rally, and yet it is firmly above price support. Watch the US dollar closely for clues.
Crude Oil Declines a Second Day on U.S. Economic Slowdown, Iraqi Exports Crude oil fell for a second day in New York on speculation slowing economic growth in the U.S., the world's biggest energy consumer, will curb demand.
XX Sean's take -- US oil demand is at its lowest level since 2004, but geopolitical concerns -- which this morning are in Gabon and Nigeria -- keep pushing oil around. The short-term price range on this seems to be somewhere between $85 and $120, which is no help at all.

Soybeans in Chicago Rise on China Demand Expectation, Wheat, Corn Advance Soybeans advanced, heading for a sixth quarterly increase, on expectations China, the world's largest buyer of the oilseed, will step up purchases after damage to its rapeseed crop. Wheat fell and corn climbed.

XX Here is the crop report that everyone was waiting for.

Palladium Market May Have Supply Deficit Next Year, Societe Generale Says Palladium production will fall 65,000 ounces short of demand next year, the first deficit in at least five years, partly because jewelers and automakers will switch from more expensive platinum, Societe Generale SA said.

XX Sean's take -- palladium is the metal everyone has been using as a substitute because platinum is in short supply. If palladium has a shortfall as well, that's very bullish for BOTH metals.

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