Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: NOW who wrote (38534)	10/5/2005 4:16:12 PM
From: mishedlo	Respond to of 116555

Heinz on copper and gold Date: Wed Oct 05 2005 15:26 trotsky (@gold backwardation) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved i'm not sure if knapper's or my memory is faulty, but i don't recall to have seen gold in backwardation ever. at most there might have been cases where the contract month immdiately after the front month traded at a slight discount for a day or two, but that's more likely due to temporary liquidity issues than any 'real' backwardation. as mentioned, gold is not a normal commodity sporting JIT inventory. its large above ground stocks make a shortage practically impossible, and thus no backwardation should occur. i note Reg Howe's comments on the topic never veer from the hypothetical either. Date: Wed Oct 05 2005 15:19 trotsky (@XOI) ID#248269: now that's quite a massacre...down the equivalent of about 430 Dow points. Date: Wed Oct 05 2005 14:42 trotsky (James) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved there have been cases of backwardations artificially induced via market manipulation. many copper users are currently charging that some sort of manipulation is in fact occurring in copper right now. the charge is that hedge funds have stockpiled physical to keep official warehouse stocks tight, in order to cash in on the rally in futures and call options. however, no proof of this has been offered thus far. Date: Wed Oct 05 2005 14:39 trotsky (knapper) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved as far as i'm aware, gold has NEVER been in backwardation, and probably never will be. this is because gold is a form of money, with a large above ground stock ( so there can never be a 'shortage' of gold ) and actually paying interest. further out gold contracts reflect the interest differential between the gold lease rate and LIBOR, plus storage costs. Date: Wed Oct 05 2005 14:35 trotsky (James@metals) ID#248269: Copyright © 2002 trotsky/Kitco Inc. All rights reserved yes, of course it has happened, but usually a big correction announces itself by the market moving back into contango first. i certainly sympathize with the idea that copper is looking very stretched here - there are some warning signs insofar as OTHER base metals have failed to move into new high ground, so one could argue that this is a bearish non-confirmation. on the other hand, we don't know how high it could eventually go. today's prices are high in the context of the prices prevailing throughout most of the 90's, but they're still a good way from the previous nominal all time highs, not to mention the inflation-adjusted ATHs. what it will take, from a fundamental PoV, is demand destruction via a recession. otoh, a big price correction engendered by a recession would push the addition of fresh supplies further into the future, as new mining ventures currently planned would likely be delayed. not sure what shape this bull market will take, but i note that the 1970's commodities bull was in fact interrupted by a major correction on account of the mid 70's oil shock recession.

To: NOW who wrote (38534)	10/5/2005 4:23:21 PM
From: mishedlo	Respond to of 116555

Insurers´ record first-half profit to aid Katrina costs Wednesday, October 5, 2005 6:45:26 PM afxpress.com Insurers' record first-half profit to aid Katrina costs SAN FRANCISCO (AFX) -- Record first-half profits generated by U.S. property and casualty insurers this year will help the industry cover the costs of Hurricane Katrina, the Insurance Services Office said on Wednesday. P&C insurers' net income jumped 29% to a record $30.9 billion in the first six months of 2005, according to ISO, which crunches data for the industry. That helped push the industry's surplus up 5% to $412.5 billion, also a record, ISO said in a report compiled with the Property Casualty Insurers Association of America. That big pot of money will help pay for Katrina, which hit Louisiana, Mississippi and Alabama on Aug. 29 and could end up costing U.S. insurers $34.4 billion, ISO added. It did damage in Florida days earlier "The industry's strong performance in first-half 2005 could not have come at a better time for insurers now facing billions and billions of dollars in insured losses," ISO said. Insurers' underwriting performance was also spectacular during the first six months. The industry's combined ratio came in at 92.7%, the lowest first-half result since ISO's records began in 1986. The combined ratio, which measures claims and expenses as a percentage of premiums, is a common gauge of an insurer's underwriting profitability. A figure at or below 100% indicates an underwriting profit "Insurers' record net gains on underwriting in first-half 2005 were all the more remarkable given that, prior to 2004, insurers suffered net losses on underwriting during the first half of every year," said John Kollar, ISO vice president for consulting and research. The industry's return on average surplus reached 15.3% in the first half, up from a cyclical low of 1.8% in the first half of 2001, ISO said. Losses from Katrina and September's Hurricane Rita could knock full-year 2005 returns by seven to eight percentage points if U.S. insurers end up shouldering all the losses from the storms, ISO added