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: "I should take YOUR advice ?"

Never personally gave YOU advice and never would. You’re too financially ignorant.

Enjoy trying to survive on the crumbs that the govt. and charities will 'hopefully' give you in your old age.

shucks

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

Fromthe419

The best advice I can give for those that have 401k's right now is to call your financial adviser (not your HR person, but the company that controls your 401k) and tell them "you want your investment in cash and to sit on the sideline while the sell off continues." This will protect your investment from losing value and you can tell them to jump back in when the sell off ends. Too many people sit by and watch their retirement erode when a simple phone call can be made and stop the losses.

The Big Dog's back

winnie should be happy with Capitalism/Globalization. One in the same.

KURTje

I'm rich because my health is good. Have many friends that also help if needed. Have most of my own food that I produce. Have reliable transportation that I can maintain & said vehicles are paid for. Don't need no stinkin gold.

Fromthe419

That's a good start, being debt free and having a food source you produce on your own is also very good. Do you can your veggies? I started doing that about 2 years ago (my grandmother taught me how to when I was young). You may not need gold, but in the event of a monetary crisis having a skill that you can barter would be good. I'm not all gloom and doom but there are things going on with our monetary policy that has me concerned. If the 10Y continues to rise and money gets pushed into it and stocks fall there will be more layoffs, more unemployment expenditures, more foreclosures, more inflation, etc. As I said earlier, we are in a very interesting time in history. No one knows the outcome of all of the Central Bank printing, we shall see in the next few years.

shucks

Moderators have removed this comment because it contained Personal information.

shucks

You guys already know- I'm "preaching to the choir".

Contango

Re: "How about into a mark?"

Deutsche Marks don't exist. Euros. :)

http://en.wikipedia.org/wiki/Deu...

You're a financial illiterate.

shucks

You tried to silence my comments again.

Contango

Re: "No one knows the outcome of all of the Central Bank printing, we shall see in the next few years."

A world-wide phenomena with the Fed Resv., the ECB and the BOJ all participating in money printing.

Those who are solely focused on only the U.S. are too narrow in their viewpoint.

The Great Depression was a world-wide phenomena which was precipitated with the failure of Austria's second largest bank.

http://www.businessweek.com/maga...

World-wide patterns of malinvestment are being woven again.

Contango

Re: "...sit on the sideline while the sell off continues."

Market timers tend to buy high and sell low.

IMO, better to have an asset allocation strategy. I use 60/40 - 60% stocks, 40% bonds.

Rebalance when either gets out of whack by 5% or more.

A good investment book:

http://www.amazon.com/Winning-Lo...

Fromthe419

My advice was for people to protect what they have, at least sitting on the sideline in cash prevents a loss, I watched many of my friends have their 401k's drained because they didn't know they could use this option, I agree moving allocation into bonds would be good during a sell off, but as I stated earlier in this tread, if you move them into gov't bonds I doubt the ability of them to pay the principle and interest.

Contango

Re: "...at least sitting on the sideline in cash prevents a loss,"

"Cash" are money markets - short term loans.

Lousy yield, managememt fees and inflation risk.

If you use 'em IMO, use them ONLY for a short-term.

Contango

"17 Signs That Most Americans Will Be Wiped Out By The Coming Economic Collapse":

http://www.zerohedge.com/node/47...

And the "hopium" smoking Obamabots are singing: "Don't Worry, Be Happy." :)

The Big Dog's back

Fool.

JudgeMeNot

Yes you are big dog.

It’s startling sometimes to realize just how

much self-delusion is necessary to make it possible to believe in

someone as inept as Obama.

OBAMA KOOL AID

Relax -- Drink Up -- No Worries

44846GWP

I collect silver in bars and coins, some gold. I agree with Winnie, 5%-10% of your portfolio should be in gold and silver. I bought a one oz. gold coin for $934 in 2008, sold it for $1,718 two years ago, not a bad profit at all. Buy low, sell high. But some silver now, it will go up again.

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