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IF 200 -- August 29, 2011 -- 6/20

COMMODITIES AT A GLANCE  -  Close as of August 26, 2011
Index/Commodity
Last
Price
Year-End
2010
Year-End
2009
Year-End
2008
Year-End
2007
Year-End
2006
Short-Term to Long-Term
Technical Overview
C R B Index
Commodity Res.Bur.
335.25
332.80
283.38
229.54
358.71
307.26
Downtrend; failed 200-day MA support became a resistance; new L/T downside target 248; risk to 316
G o l d
NearbyFutureCont.
1797.30
1421.40
1096.20
884.30
838.00
638.80
Gold traded wildly; it plunged to 1705 low after surging to new 1917 high in Aug; downside risk to 1550-1480
C o p p e r
NearbyFutureCont.
411.75
444.70
334.65
141.00
304.10
286.15
Dr. Copper plunged to 381 from its 454 high; DMAs in negative crossover anew; potential downside risk to 300
Natural Gas
NearbyFutureCont.
3.931
4.410
5.572
5.622
7.483
6.299
Natural gas plunged on failed 200-day MA support; DMAs neg. crossover hint to further downside; risk to 2.5
Crude Oil - WTI
NearbyFutureCont.
85.37
91.38
79.36
44.60
95.98
61.05
Crude Oil plunged to 75 low; potential L/T upside-downside targets: 140-52; S/T clouded due to neg. DMAs crossover

History might not repeat itself, but it often rhymes! It is, therefore, insightful to look at historical evidence.    The following historical charts leave investors with little hope to recover soon losses accumulated in recent weeks.    The historical Gold chart on the left highlights that September has been the best performing month for the yellow metal since 1968.    Moreover, the Dow Jones Industrial Average historical chart (bottom right) highlights that September has been the worst month for equities since 1885!

IF200-GOLD-1month-1968-2010.png
IF200-DJIA-1month-1885-2010.png
Charts courtesy of www.thechartstore.com

The world appears locked into the misguided belief that economic prosperity can be achieved by encouraging speculation and by distorting the set of investment opportunities through government interventionism.    Enormous fiscal and monetary concessions, extended to financial markets and the banking system over the last three years, have failed to deliver the expected results.    Policy makers are postponing indefinitely the “day of reckoning” and continue to “rescue” bondholders through mechanisms that are increasingly distasteful to the broader population.    A major restructuring of debt would set again the world on long-term economic recovery path.    “Creative Destruction” (Schumpeter) is the clearest way forward for the global economy.    Will global leaders awake to this reality and act constructively in the future?

 

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