Oil dropped like a stone yesterday. Nope, it dropped like a 2-ton boulder. This fact has the financial punditry buzzing. Was it a computer glitch, a “fat finger” human error, or a simple matter of speculators dumping? If it is the latter, is it the threat of a global release from strategic reserves that caused the drop? That seems unlikely since the geo-political situation is not pretty right now, and the heart of the problem is the angst in the Middle East – Israel, Iran, and just about every other Muslim country around the globe. Why would speculators jump ship in this environment? The carry spreads on oil remaining relatively stable suggests speculators did not jump ship. If not, then, what exactly happened? Keep your eyes open …
Bank of America Merrill Lynch said gold prices could climb as high as $2,400 per ounce by end of 2014 citing aggressive policy easing by the U.S. Federal Reserve and European Central Bank.
I have decided that I could become an oracle. After all, how hard is it to say, for example, that gold will be higher by a third in 2-plus years? It seems pretty easy, and to cite quantitative easing as a reason seems pretty easy as well. Of course, predicting the price of gold is a tricky business, since the price is based on …
The question of gold’s real value has assumed public policy importance as the Republican Party flirts with the idea of returning to the Gold Standard. I can understand the lure of gold in countries with weak currencies or unstable governments. I can also appreciate that hoarding by investment vehicles like exchange traded funds applies upward pressure on gold’s price because, after all, gold has a limited supply. And I can do nothing about doomsayers who buy the stuff out of simple fear. And yet, none of this explains fully why gold is some 47 times more expensive than in my youth.
Philip McBride Johnson, Futures Magazine
The above quote from a respected financial magazine speaks to this issue – how can anyone know what the price of gold will be two years from now? I wonder, do average investors actually pay attention to these fat cat bankers and their predictions? Me? I will always remember Goldman Sachs screaming loudly in 2008 that oil was going to $200 (it never got close). I will also remember them as one of the big speculators driving the price of oil toward that mark, so it made sense then that they would do what they could to push the price higher. This is what they do. Keep your eyes on the facts, folks …
FedEx lowered its guidance through May 2013. A primary consideration for this is a drop in its “express” services. Businesses are electing to pay less for shipping, yet they are still shipping. Cost cutting is not a reason to panic about the economy, at least not yet. A larger issue for market players to consider right now is Spain’s pride.
Spain’s short-term debt yields remained high at auction on continuing uncertainty over when, or if, Spain will apply for aid and trigger an European Central Bank bond-buying program.
Actually, Spain’s short-term yields are down from their highs. Nevertheless, Spain needs to forget its long and rich history as a world player, if that is what is keeping it from achieving financial stability. It might act as if it does not need the money, but it will take it, eventually.
Trade in the day; Invest in your life …
