Metals melt, financial markets drop

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Jun 21, 2013

Here is this week’s edition of Futures File, our weekly commodities wrap-up:
 
Fed’s words melt metals
 
The US Federal Reserve continued indicating in an announcement on Wednesday that it was going to end its stimulus program. Although a definite timeline has not been set, Federal Reserve Chairman Ben Bernanke has begun talking about an end to the $85 billion per month stimulus program.
 
Investors had previously piled into the gold and silver markets on the expectation that Fed stimulus would cause inflation, pushing prices to record high levels. Over the last year, as inflation remained low and stimulus’ end was in sight, prices have dropped sharply. Wednesday’s announcement caused another plunge in the metals, with gold falling over $100 per ounce (-7.6%) and silver sliding as much as $2.38 per ounce (-11.0%) in the aftermath. Both markets fell to the lowest price in over two years.
 
As of midday Friday, gold for June delivery was worth $1,293. Worse yet, silver stood at $19.96, down a staggering 60 percent from its all-time high made in 2011. Going forward, some analysts believe that gold and silver will be traded more like industrial commodities and less like investment assets, possibly making them much more reactive to industrial demand than central bank actions.
 
Financial markets lose
 
Alongside gold and silver, other financial markets tanked as well. Stock markets, foreign currencies, crude oil and US Bonds all plummeted this week on the expectation that diminished stimulus would slow economic growth.
 
Crude oil, which rallied last week on Mideast concerns, had the largest percentage move, dropping as much as $5.50 per barrel (-5.6%) in the wake of the Fed announcement. Crude prices were also dragged lower by rising stockpiles and weak economic data from China.
 
As of midday Friday, crude oil for delivery in August was worth $93.30 per barrel, the lowest price since early June. In coming weeks, geopolitical concerns may begin driving the crude oil market again, especially if the conflict in Syria spills across borders.

Comments

Contango

Re: "my ex's bank account"

Reads like TWO poor performing "investments." :)

2cents

LOL, that was good.

Contango

"Rising Interest Rates – Bullish for the Market":

"Consequently, artificially low rates set the stage for shortages in cash that manifest is rising interest rates.

What we will see going into 2015 will be that the Fed raises rates trying to stop what they have set in motion the next inflationary bubble."

http://armstrongeconomics.com/20...

The Big Dog's back

Isn't this the 5th year now you said this would happen? Keep repeating it and maybe after 20 years when a Repub gets in it will be true.

Contango

Re: "...after 20 years"

The next financial crisis will occur on Pres. Obama's watch.

Other than "Bonz" and chew toys, what do dogs invest in? :)

The Big Dog's back

So when it doesn't, and it won't, then what?

Contango

Re: "then what?"

With inflation, your "Bonz" & chew toys will be more expensive. :)

2000 & 2008. Two financial crises within the 21st Century. They're coming more frequently than in the past.

Your pal Mr. Krugman is upset with Mr. Bernanke:

http://krugman.blogs.nytimes.com...

Guess that the "experts" don't always agree huh? :)

Contango

Re: "then what?"

So when it does, and it will, then what?

BTW: Finance and commerce are GLOBALIZED. The U.S. is NOT insulated or isolated.

For one: The Asian financial crisis of 1997 rocked our markets.

Europe is a mess. Japan is a mess. And an economic slowdown is occuring in China.

shucks

The next financial crisis will occur BECAUSE of a Republican.

Thanks Republicans !... for screwing up the present Economy.

grumpy

The only thing the self-proclaimed experts on here agree on is it was the other guys fault. Funny thing is they are correct.

shucks

The world is bigger than this Comment section.

Real experts also agree on who the quilty party is.

Fromthe419

So Clinton passing the Modernization Banking Act didn't have a hand in this 4shizzle. I say both parties have a hand in this, the bankers who support both parties bought and paid for this legislation and it took them a mere 8 years to nuke the economy. You can believe the Democratic leadership is your friend and cares about you, but I have come to the realization that neither party care for any of us, they care about getting re-elected and bow to their masters (Banksters and Multi-National Corporations). I do believe the next bubble will occur under Obama's watch, but it doesn't matter who is in office, monetary policy has consequences.

shucks

"I do believe the next bubble will occur under Obama's watch..."

You do huh? Just because contago says so?
What "bubble" are you speaking of?

"...but it doesn't matter who is in office"

No, you're wrong.
Democratic monetary policys leave America in the black.
Republicans leave America in a big mess mess

Contango

Re: "Democratic monetary policys (SP) leave America in the black."

How so?

Contango

Re: "Republicans leave America in a big mess mess"

"Mess, mess"? :)

Fromthe419

@4shizzle are you watching CNBC? The next bubble is beginning right now. There is a global market meltdown beginning to happen right now. I'll admit I didn't think it would happen this soon, but the 10Y is up over 100 basis points in the past month and a half. Stocks futures are down, oil is down, precious metals are down. As the 10Y rises financing our debt will become more difficult, imagine if it gets to 5 percent, the interest alone on the 17T we owe will eat up most of the revenue our government brings in.

shucks

Helloooooo?... I'm talking about America?

Fromthe419

I never said it was Obama's fault, I said it was the fault of monetary policy which is controlled by the Federal Reserve, which is independent of either political party.

shucks

Yeah, I changed it.

Fromthe419

RE: Democratic monetary policys leave America in the black.

The Fed controls monetary policy, neither party controls our monetary policy, Congress gave up that responsibility in 1913 with the Federal Reserve Act. Banksters run it, 4shizzle, answer me this...do you know how a dollar is created? I'm not joking, can you tell me how money comes into existence.

shucks

Do you want to quibble like the other "financial genius"?
What party borrows and spends and doesn't want to pay taxes?

Answer this-
What media of currency will you turn your gold and silver into?

Fromthe419

Both parties spend and borrow, you really think Clinton balanced the budget? Social Security and Military were excluded from his budgets, look it up. I am not defending either party. I've decided to take a neutral approach to politics, neither party is looking out for you and me. As far as what currency I will turn my gold and silver into is the last one standing, gold and silver has never been worth zero, but just about every fiat currency in history has collapsed (just ask the Germans, Brits, Argentinians, etc).

shucks

^^^^^
Poor answer.

How about into a mark?

Fromthe419

Are you referring to the German currency in WWII? The Germans got paid twice a day during the war because the cost of a cup of coffee changed twice a day...LOL. Seriously 4shizzle, we are at a very interesting time as far as monetary policy is concerned, never in history has Central Banks been on a printing spree like this. You can bash me, Contango or anyone you want but you can not deny that this experiment in monetary policy will have unknown (for now) consequences.

shucks

Mark of the Beast, that is.
You WON'T be able to use your precious gold, silver, "fiat" money without it.

Fromthe419

Mark of the Beast, that is.

I'm not sure what you meant, but if you are saying that the creation of money as debt to the public is bad then we are in total agreement. I've always been of the belief that money should be created for the general good of the population. That's why I have been bashing Nixon for taking us out of the Bretton Woods agreement. If you look at our deficit spending since 1971 it has been out of control, the loss of control was because our currency in a is sense worthless. Without the constraint of gold on hand to back it up, they can print and devalue and you and I end up working harder for less.

Contango

Re: "it doesn't matter who is in office, monetary policy has consequences."

Fed Chair Volcker hiked interest rates - early 1980s Recession.

Fed Chair Greenspan hiked interest rates - 2000 Tech Wreck

Fed Chair Bernanke hiked interest rates - 2008 Financial Crisis.

Mr. Bernanke has been fighting DEFLATION.

Eventually, unless the next Fed Chairman can pull a magic act, all this money printing will cause INFLATION.

U.S. 10 yr. at 2.63% this morning. The "bubble" in bonds is bursting.

"Don't fight the Fed," tends to be good advice.

Laszlo Birinyi believes that stocks are headed for a break-out.

When this guy talks - I listen.

http://www.bloomberg.com/news/20...

Contango

Re: "who the quilty party is."

"Quilty party"?

Is that a get-together for making a quilt? :)

Fromthe419

Maybe it is a new third party that will challenge the D and R parties in the next election. Maybe the Quilty Party will end the Fed :)

shucks

Moderators have removed this comment because it contained Off-topic comments.

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