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!

Check out my new gold and energy blog at MoneyAndMarkets.com

Snapshots of the Commodity Supercycle

Bloomberg offers many functions on its terminals. One I've recently discovered is CRR , which allows you to make charts showing how different commodity futures perform. Here are some examples (NOTE: There is no uranium future, so it does not show up on these charts)...

Year to date ...
For 2007, natural gas is kicking butt! Notice how oil has actually lost ground -- it's interesting that natural gas is going up when oil is going down, isn't it? I expect sugar to be in the dumpster, and sure, copper has been getting plenty of bad news with the implosion of the US housing industry, but zinc? I am SO glad we took profits a while ago on Zinifex (an Australian zinc producer) in Red-Hot Asian Tigers.

Note also how silver is outperforming gold by a wide margin. It's nice to see these aren't just voices in my head saying this (LOL!)

Here is the 3 month chart ...I guess natural gas ended this past three months where it started, so it didn't end up on the best OR worst list. That means all of natural gas' gains have come recently.

Here is the 6-month chart ...
Nickel has been kicking butt over the longer term. Gold has been trading sideway in a range for the last six months, so it doesn't make the best or worst list (silver continues to outperform). Corn and soybeans continue to be strong performers.

One year ...

Man, zinc is one of the big winners over the longer-term, so that tells you its recent performance is absolutely horrendous! It's a worse pick than copper! Over one-year, natural gas is one of the big losers. That tells us that its recent rocket ride not only has momentum, but it still has lots of ground to make up.

Now what will outperform for the next year going forward? Well, if I knew that, I'd have my own island! But Red-Hot Canadian Small-Cap and Red-Hot Asian Tiger subscribers know what I suspect will outperform.

Check out my new gold and energy blog at MoneyAndMarkets.com

The Coming Fight For Oil

The Chicago Tribune has an interesting story titled: "The Coming Fight for Oil." It's part of a 3-part series called "China's Great Grab." You have to do the free-registration mambo to read the whole three-part series, but you can read "The Coming Fight for Oil" without registering.

The story is subtitled: "The roaring Chinese economy needs more oil. It's turning to America's friends to get it."

Here are some stats from the story...

* China had enough oil to sustain itself just 15 years ago. Now it is one of the world's thirstiest oil addicts, importing 40 percent of what it needs. Only the U.S. consumes more.

* This past summer, a power shortage forced China to ration electricity to its factories for the fourth year in a row.

* With its economy on pace to surpass that of the U.S. by 2050, China will have to find more places like this, just as it will have to find more sources of corn, pork, fertilizer, coal, steel, wool, copper, cement and timber.

* China has built a new 620-mile pipeline, hailed as "the new silk road," into Kazakhstan, home to one of the largest oil fields discovered worldwide in the past 30 years. The article explains this pipeline is "a milestone for the world's newest empire--one forged not in the name of destiny or God, but in pursuit of the planet's most valuable resources."

That's pretty good writing, eh? I'll have to look up more stories by Evan Osnos.

Anyway, the whole thing is a good read. You can find it by CLICKING HERE.

Check out my new gold and energy blog at MoneyAndMarkets.com

Energy Prices Ease, But Keep Your Eye on Iran

Natural gas stockpiles were in line with expectations this week, and the energy complex is flat-to-down right now. But keep your eye on Iran.

See, one reason that energy prices have eased since August is the geopolticial risk premium is going down. People aren't that worried about the Middle East, since Iran has eased off on its war of words.

But now, the New York Times confirms that "The United States and Britain will begin moving additional warships and strike aircraft into the Persian Gulf region in a display of military resolve toward Iran."

Later in the article we read: "Senior American officers said the increase in naval power should not be viewed as preparations for any offensive strike against Iran. But they acknowledged that the ability to hit Iran would be increased and that Iranian leaders might well call the growing presence provocative. One purpose of the deployment, they said, is to make clear that the focus on ground troops in Iraq has not made it impossible for the United States and its allies to maintain a military watch on Iran."

Does our government really think those paranoid mullahs running Iran will see this as anything but a set-up for an attack? Especially when, as blogger Glenn Greenwald points out, "President Bush has given speeches in the recent past in which he spoke of Iran exactly the same way he spoke of Iraq in late 2002 when, in his mind, an attack on Iraq was already a fait accompli."

Greenwald also notes: "Any military conflict with Iran would be so disastrous for the U.S. that it cannot be adequately described." Maybe so. I really hope it doesn't get that far. What I'm thinking is it's likely that we're about to enter a new cycle of escalated rhetoric between the US and Iran. And what do you think such an escalation in the war of words will do to energy prices? I'd say it could light a fire under oil prices.

But we shall see what we shall see. This conflict between Iran and the US is part of what I see as the global war for natural resources, a conflict that could define the 21st Century.

Check out my new gold and energy blog at MoneyAndMarkets.com

M&A Fun Factoids

• So far this year, mergers and acquisition deals in the mining industry have topped $113 billion US worldwide, according to figures from Bloomberg, as soaring commodity prices drive a takeover surge
• Total worldwide merger and acquisition activity so far this year has reached a record $3 trillion US.

Check out my new gold and energy blog at MoneyAndMarkets.com