RE: Black Monday - ConcernThis was an intersting commentary i read yesterday after the 'eventful' day. Although it focuses on copper and zinc the reasoning remains the same. The supply and monetary issues are still there and the stock markets adjustment yesterday has done little if any to dispel that. Just check to see what Gold was trading at 1 year ago and the little hiccup yesterday will be put in perspective.
My only regret is i didn't have much left to pick up more than another 10,000 Auq shares.
May 16 (Bloomberg) -- Metals such as copper and zinc may resume their rally to record highs as hedge funds and other investors return to buying commodities after price declines.
Copper plunged as much as 9 percent in London yesterday before paring its losses and ending the day down 3.2 percent. Zinc, at one point down 12 percent yesterday, the most in 16 years, finished down 6.7 percent. The partial recovery from bigger losses gave bullish traders and investors more confidence that prices may rise again to new peaks.
``It's a lot of small players selling and the big funds are still in,'' said Jan Johansson, chief executive officer of Stockholm-based Boliden AB, a copper and zinc producer, in an interview yesterday. ``People following the market aren't worried at all.''
Some investors who poured money into commodities grew concerned the rally was over and that rising global interest rates may slow economic growth. Copper almost tripled in the past year and aluminum jumped 82 percent as China increased its use of raw materials and investment funds bought commodities seeking better returns than stocks and bonds.
Robert Shiller, an economist at Yale University in New Haven, Connecticut, and author of ``Irrational Exuberance,'' said last week commodities markets resemble the technology-stock bubble of the 1990s.
``A bull market is not a bubble,'' said Michael Purdy, vice president of metals trading at ABN Amro Bank in New York. ``We've had every reason in the world for these markets to rally. The fundamentals have been rock solid -- good, solid demand and supply problems. It's not a bubble by any stretch of the imagination.''
`Over-Extended'
Speculators were ``over-extended,'' said Bob Parker, vice chairman of asset management at Credit Suisse in London. Prices won't fall further ``unless we get some radical change in the underlying supply-demand situation.''
China, the world's fastest-growing major economy, will keep bolstering demand while labor disputes and a shortage of new mining investment put a squeeze on supplies, Parker said. China has become the biggest user of copper and zinc as it constructs more apartments, factories and roads. The Chinese economy expanded 10.2 percent in the first quarter.
``The creation of a bubble by hedge funds and other speculators doesn't alter the basis of the rally,'' Ron Cameron, an analyst at Ord Minnett Ltd. in Sydney, said in an interview. ``There's a lot of demand out there and supply is very limited.''
----------Original Message Posted 5/16/2006----------
First off I'm not a basher. I'm just concern about a trend, call me paranoid. I'm looking more for opinions as I'm a newbie to stock markets.
Then
https://www.stock-market-crash.net/1987.htm
-June 1987: Nominated by President Ronald Reagan as Federal Reserve chairperson, to succeed Paul Volcker. Takes office in August, after Senate confirmation.
-October 1987: Stock market crashes on "Black Monday". Greenspan's cool handling of the crisis earns the new Fed chairperson profound respect.
-Just before the panic, statements by the U.S. administration seemed to imply that the U.S. dollar needed to fall faster and farther to correct their widening trade deficit. On October 19, newspapers were filled with stories regarding possible U.S. military action in the Persian Gulf.
-Just before the crash, the markets had an amazing bull run
-Housing market near the end of the bubble
-Gold from the beginning to the end of 1987 rose by 16%
NOW
-Ben S. Bernanke has been recently been elected as Fed Chairman
-The markets have been on a bull run
-US dollar is sinking
-US Trade deficit is ballooning
-House markets are near the end of the bubble
-Gold is on the rise
Is history going to repeat itself??? Are we safe in the Gold market as many investors look for a safe haven? Opinions welcome.