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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: regli who wrote (9633)	4/24/2006 10:37:42 PM
From: Proud Deplorable	Read Replies (2) \| Respond to of 78416

Trader Dan Norcini’s Market Commentary Hold on to your hats as the ride is going to get interesting from here on out. We are moving into the phase of these bull markets in the metals where volatility is picking up and the intraday price ranges are increasing. This is going to lead to wide swings where the spread between the bid and offer is only going to get larger as we move forward. I was watching silver last Friday in particular and noticed there were times during the pit session where the tic was moving by 10 cents a pop. For those of you who trade the full sized silver contract that is a “mere” $500 at each price point. Multiply that by some 10 or 20 or more contracts and we are talking about $5,000 won or lost each time there is a trade taking place. That my friends is not for the faint of heart. It certainly is not for the undercapitalized small trader. My suggestion for all but the most deeply capitalized trader is to trade smaller in size or trade the electronic mini sized silver contract that the CBOT offers. Gold was knocked down today for a loss of nearly $12.00, closing at $623.50 on the CBOT. The downdraft in the neighboring silver market was just too much for it to ignore. They don’t call silver the “play thing of the funds” for nothing. After roaring back Friday from the beating it took Thursday, the bottom dropped out again today as it closed at $11.77/oz falling through the psychological $12.00 support level (As I write this short commentary it is already back over $12.00, up some 24 cents). Opportunistic shorts looking next door and watching the panic selling in silver pressed the short side of gold and managed to spook some of the weaker longs. I am expecting silver to continue this wide range as it attempts to consolidate its recent gains and takes a breather from its torrid rate of ascent. No market can head up almost vertically without eventually taking a pause of some sort. Play silver the same way you would play gold if you are a short term oriented trader. Buy the dips where TA appropriate and take some money off the table on price rallies. Also, load up on Antacids and Rolaids – you will need it. The excuse du jour given for the weakness in gold was supposedly “dovish” statements made by the Iranian President and the subsequent weakness in the crude oil market. I have to laugh at these witless comments we are forced to suffer through each day. The poor dupes at the wire services that have to write these commentaries for a living have to come up with something to at least give the appearance they are earning their salaries. Anyone who thinks happy talk is going to defuse the Iranian situation is a prime candidate for some ocean front property in Arizona. That is the way of these slaphappy markets nowadays as the proverbial “bull in a china shop” hedge funds do their thing. The really big news today was in the Forex markets where the dollar was crunched as a result of what came out of the G7 meeting over the past weekend. The gist of that meeting was that the dollar is overvalued and is contributing to global imbalances which are getting out of hand (read that as the humongous US trade deficit). There was also a clear call for the Chinese to once again allow the Yuan to float upward. To make matters worse for the beleaguered greenback, Russia’s Prime Minister Fradkov questioned the suitability of the dollar as the world’s “absolute” reserve currency due to its instability. That is an amazing statement and to me was perhaps the most shocking of any developments coming out of the G7. The final straw breaking the back of the dollar was the announcement by the Central Bank of natural gas rich Qatar that they had been buying Euros to shift their reserves away from the dollar. Their goal was to reach a point where 40% of their reserves would be in Euro denominated paper. All of this was clearly dollar negative and the markets wasted no time reacting appropriately. Look for more and more Central Banks going forward to do the exact same thing. This is a trend and it is only going to gather steam and it will not be reversed. The risks to the dollar are growing to unacceptable levels for more and more Central Banks. Under normal circumstances this dollar weakness would have been friendly to gold but the cross currents from silver and the energy markets were a bit too much. No doubt the perennial top callers in gold will be crowing again and singing ballads to their greatness. Yep, these are the same guys who had clients sitting on the sidelines from $550 telling them that a big correction was coming and to wait for a better entry point. They are still waiting! Gold stocks actually held up pretty well considering the action in metals as the HUI closed down 4.86 at 368.82. The XAU settled just a tad lower on the day closing down 1.46 at 153.86. We will probably have to contend with a bit of gold selling out of the Japanese on the TOCOM this evening. All of this is mere short term noise as gold is headed inexorably higher. We will look back on these years and marvel at how “cheap” $600 gold was and kick ourselves for not buying more of it. Isn’t hindsight swell? Tomorrow we have the consumer confidence numbers and the existing home sales for the month of March. Have a good evening. Dan jsmineset.com