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February 20, 2006

Oil rally sparks the precious metals, Mon., Feb. 20, 2006, 7:25 AM

Last Thursday afternoon (Feb. 16), Crude Oil prices took off like a rocket, seemingly sparked by civil war in Nigeria. There was an immediate impact in the market for precious metals, as they rallied too, both markets reaching short-term cycle lows and then reacting to geopolitical events simultaneously.

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With all markets closed in the U.S. today for President's Day, the precious metals cash market is still open, and so too is the Toronto Stock Exchange where most of the goldminer stocks trade.

Already this morning, there is evidence that the rally in precious metals that started Thursday afternoon is continuing. Here are the spot prices from INO.com as of 7:20am ET today. After 9:30am I will closely monitor the XGD (Toronto Exchange goldminer ETF) and its components.

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Posted by Posted by Bill Cara on February 20, 2006 07:28:58 AM | Category: Cara Today in the Market

Discourse

Bill, anyone... did you get a call? Was it late Thursday afternoon?

"The Treasury has been sounding out Wall Street investors" ???

"Now, the U.S. Treasury, which has so far sought to avoid confrontation with Beijing over the currency issue, is preparing the ground for a possible decision to label China a "currency manipulator," in a regular review scheduled for April, although the semiannual report often is issued well after the scheduled release date. The Treasury has been sounding out Wall Street investors about such a move, which would require the U.S. to open formal talks with China on the issue."

http://online.wsj.com/article/SB114039276807178136.html?mod=mkts_main_todays_mkts_tac

Posted by: stockman [TypeKey Profile Page] at February 20, 2006 9:04 AM [link]

Gosh, I'm not a subscriber, WS won't let me in. Kinda like what you said in Week #7 review about your other sources Bill, they want your $ first.

Posted by: C.Note [TypeKey Profile Page] at February 20, 2006 10:42 AM [link]

I am not sure about this oil rally due to Nigerian crises considering shoulder season (Mar/Apr) ahead for oil. It may be a bull trap. What will happen if this Wed storage report shows higher than expected buildup like last week.

Posted by: govind [TypeKey Profile Page] at February 20, 2006 1:43 PM [link]

Can we really believe the storage amounts reported? Or do they really mean anything. Over the weekend Colorado reported major natural gas shortages resulting in outages and the NG inventories reported during the week said we had plenty. Is Enron still alive?

Posted by: C.Note [TypeKey Profile Page] at February 20, 2006 3:35 PM [link]

C.Note-

I was giving the link more as source than anything. It just struck me that when the Treasury is sounding out Wall Street they are in essence giving non public information to firms that are positioning a lot of their own dollars in the markets. The public is clearly not getting 'sounded out' so we don't get that heads up.

govind-

What is 'shoulder season'? Seasonals on crude appear to suggest lows in the last week of Feb and strength through mid-May. Energy sector fund seasonals appear to confirm that pattern.

Posted by: stockman [TypeKey Profile Page] at February 20, 2006 8:23 PM [link]

Stockman,

After winter, oil demand picks up again in summer, so storage will increase next month or 2 due to less demand which is bearish for oil prices and oil sector. But cut in production by OPEC next month, Nigerian crises, demand pickup in Asian countries may derail this assumption. Oil prices are always came down or range bound during these months for last couple of years. See $WTIC for ex.


Posted by: govind [TypeKey Profile Page] at February 21, 2006 1:25 AM [link]