Market Wrap - Commodities, Gold and Silver
Commodities / Forecasts & Technical Analysis Feb 06, 2007 - 12:45 AMBy: Douglas_V_Gnazzo
For the week, the CRB index gained 1.8% - still down just under 2% for the year. However, pay heed to the second chart below that paints a whole different picture regarding commodities.
Wheat prices fell 0.5%, the fifth decline in six weeks. However, do not be mislead, as the price of wheat was up 48% last year, reaching a 10 year high of $5.57 in October. We view this as just the beginning of a long term trend.
Corn has exploded upwards 82% from a year ago, supposedly because of demand in ethanol production.
The Department of Agriculture reported that U.S. soybean exports are up 21% in the last year, while soybean prices are up 35% in the past four months. Hmm - seems like stuff we eat is getting more and more expensive.
Copper fell 8.2% to a 10 month low. February Gasoline was up 3.9%. Zinc fell 12%.
The first chart below is of the CRB Index. The second chart is of the CCI Index, which weights all 17 commodities equally. Do note the difference in price and chart patterns.
Gold
Gold closed the week out up .80 cents at $651.50. There was a lot of volatility with prices ranging from intra-weekly lows of $646.60 to intra-weekly highs of $667.20. When all was said and done - it was gold's highest weekly close since July 14, 2006.
Let's get right to the charts. The first one is the daily chart of gold (continuous contract). It shows another false break out, which on the face of it is disconcerting, however, note it was the highest weekly close since July 14, 2006; and remember that there has been a lot of technical damage done by the recent correction - damage that does not get fixed over night.
Time is as important as price. It takes time to work off the overhead supply (resistance) of stock that people bought at higher levels and can't wait to sell out and break even. This is standard bull market counter trend correction behavior, as gold moves from weak hands to strong hands. Patience will be rewarded.
Next is the weekly chart of gold. Here the data is more bullish then on the daily chart, which suggests that this is the last test of the lows or last wave down before the new upward phase begins. Time will tell.
The following chart is of streetTracks gold etf. It too has been performing well. Note the almost identical similarity with gold's chart above.
Silver
Silver closed the week unchanged at $13.38. It had a weekly range of $13.83 to $13.11. It was silver's highest weekly close since December 8, 2006. Below is the daily chart of silver. It is approaching its upper trend line, which is going to offer a good deal of resistance and overhead supply to be worked off. Once again - patience is required.
Douglas V. Gnazzo
Honest Money Gold & Silver Report
Douglas V. Gnazzo is the retired CEO of New England Renovation LLC, a historical restoration contractor that specialized in the restoration of older buildings and vintage historic landmarks. Mr. Gnazzo writes for numerous websites, and his work appears both here and abroad. Just recently, he was honored by being chosen as a Foundation Scholar for the Foundation of Monetary Education (FAME).
Disclaimer: The contents of this article represent the opinions of Douglas V. Gnazzo. Nothing contained herein is intended as investment advice or recommendations for specific investment decisions, and you should not rely on it as such. Douglas V. Gnazzo is not a registered investment advisor. Information and analysis above are derived from sources and using methods believed to be reliable, but Douglas. V. Gnazzo cannot accept responsibility for any trading losses you may incur as a result of your reliance on this analysis and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. This article may contain information that is confidential and/or protected by law. The purpose of this article is intended to be used as an educational discussion of the issues involved. Douglas V. Gnazzo is not a lawyer or a legal scholar. Information and analysis derived from the quoted sources are believed to be reliable and are offered in good faith. Only a highly trained and certified and registered legal professional should be regarded as an authority on the issues involved; and all those seeking such an authoritative opinion should do their own due diligence and seek out the advice of a legal professional. Lastly, Douglas V. Gnazzo believes that The United States of America is the greatest country on Earth, but that it can yet become greater. This article is written to help facilitate that greater becoming. God Bless America.
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