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Politics : Welcome to Slider's Dugout

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To: SliderOnTheBlack who wrote (4225)	12/17/2006 11:53:28 PM
From: Fun-da-Mental#1	Read Replies (3) of 50705

The question is not why is gold still down. The question is why are all metals down. I think when you look at it that way the answer is pretty clear. The cycle has run its course. Look at this chart of copper: tfc-charts.w2d.com Seldom have I seen a chart that screams "Sell if you haven't already!" like this one. Note that copper peaked in May, same as gold, same as most metals. Why? A surplus of metals drove prices down in the 90s. Then came the 2001 recession. That was the cyclical bottom. Money supply was expanded to compensate for the recession. That set the stage for the commodity boom. A reviving economy combined with expanded money supply caused inflation in hard assets such as real estate, energy, and metals (but not in finished goods and services because of the expanding supply of labor from China, India, etc.) But nothing goes up forever. Any market that runs up as much as metals have in the past few years will start to become very nervous about any sign of weakness. The yield curve inverted in February and next thing you know we're talking about whether it will be a hard or soft landing for the economy. Smart players who have made these kinds of gains in the past few years are not waiting to find out, they're taking their money off the table now. This explains why metals are going down, but what about gold? Isn't it different and special somehow?!? We all know that gold moved together with other metals on the way up. Why should it be surprising that it moves with other metals on the way down? Sure gold is a hard asset that can be used as a store of value or even a currency, but so are other metals. Gold is rarer and more valuable than some, more common and less valuable than others. I could go on, but I don't want to provoke the gold bugs too much. Fun-da-Mental

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