Elliott Wave Gold Update XIX There is a strong probability that the correction in the gold market from the $1033 peak of 17 March 2008 is complete. This view is based on (i) the fact that the anticipated decline of 16% in this correction has been achieved and (ii) that all the minor waves required to complete the correction are now in place.The low in the cash gold market on 30 April 2008 was $861.8, a decline of 16.6% from the peak level of $1033.90 on 17 March 2008. In the Comex active month, gold declined from $1015.5 to $868.2, a decline of 14.5%. In the London PM fixings the decline has been from $1011.2 to $871.0, a fall of 13.9%. In Update 18 it was postulated that the current ongoing financial crisis might result in a slightly smaller decline than the anticipated 16% in the PM fixings, which seems to have occurred.
US Mint Accepting Higher Premiums for Bullion Coin Sales As precious metal prices fall, United States Mint bullion coin premiums rise. The differences make the proposition of purchasing the latest US Mint American Eagle bullion coins nearly overwhelming. The United States Mint appears to be happy to accept higher premiums in many of their bullion coin sales. While the Mint was quick to suspend and then readjust bullion coin prices upward when precious metal prices increased, the same quick but reverse adjustment has not been seen with key Mint bullion coins as precious metals decline. As one example highlights, the Mint announced the pricing of 2008 American Eagle Gold Uncirculated coins on March 19, 2008. The one ounce eagle coin was set at $1,119.95. The day of that announcement London gold closed at $958.50 an ounce.
Investment in Commodity Indexes Soars to $250 Billion Money in funds tracking the two most popular commodity indexes jumped 48 percent so far this year, showing investors have may have influenced record energy, food and metals prices, according to Sanford C. Bernstein & Co. Investments following the Standard & Poor's GSCI index and Dow Jones-AIG Commodity Index have risen to $250 billion from $169 billion at the start of the year, Ben Dell, an analyst at New York-based Bernstein, wrote in a report published yesterday. ``The role that financial funds flow plays in setting the price of commodities remains one of the most hotly debated topics,'' Dell said. ``While the debate was originally centered on the oil market, it is now spreading to the world of corn, wheat and rice, as soft commodities now surge.''
Job losses moderate in April Job losses decelerated in April, suggesting that the nation's economic downturn may be short and shallow rather than long and severe. Nonfarm payrolls fell by 20,000 -- far fewer than the average 80,000 jobs per month lost during the first quarter of the year, Labor Department data showed. The decline was much less than expected. Economists surveyed by MarketWatch expected job losses of 78,000. April's jobless rate inched down to 5.0% from 5.1% in March. Economists had been expected the jobless rate to tick higher to 5.2%. The report suggests that the U.S. labor market didn't continue to deteriorate in April. It may bolster the case that a pause by the Federal Reserve is in order following its aggressive campaign of lowering interest rates. But there will be another jobs report before the next Fed meeting at the end of June.
Fed expands funding, to accept more securities The Federal Reserve, along with other central banks, said Friday that it was increasing the funding it provides to banks and that, for the first time, it was willing to accept bonds backed by auto loans and credit cards. "In view of the persistent liquidity pressures in some term funding markets, the European Central Bank, the Federal Reserve and the Swiss National Bank are announcing an expansion of their liquidity measures," the Fed said in a statement. Three-month London interbank offered rate -- a benchmark for lending between banks -- was 2.78% Thursday, well above the 2% Fed funds rate. The Federal Reserve announced an increase in the amounts auctioned to eligible depository institutions under its biweekly Term Auction Facility to $75 billion from $50 billion, beginning with the auction on May 5.
U.S. Dollar Rally Not Based on Fundamentals "Commodities fell the most in six weeks as a rally in the dollar eroded demand for energy, metals, crops and livestock as alternative investments," reports Bloomberg. We take issue not with the facts-commodity prices have fallen-but with the analysis. The price of energy, metals, crops, and livestock are rising because the supply of those things is rising less fast than the supply of dollars (and U.S. government debt). The Bloomberg analysis casually suggests that investors rotate their portfolios out of greenbacks and into herds of Black Angus...and then back again when confidence in the dollar returns. Inflation, though, begins with the money supply. We reckon that as long as it remains the strategy of the U.S. government to inflate away its long-term debts, commodity prices will rise and the dollar will move lower toward its intrinsic worth.
Linens 'n Things files for bankruptcy protection Linens Holding Co., the operator of Linens 'n Things home furnishings retail chain, said Friday it filed for Chapter 11 bankruptcy protection with plans to shut 120 underperforming stores, becoming the latest retailer to fall under the weight of declining housing markets and other economic worries. The chain, which private equity firm Apollo Management LP bought for $1.3 billion in February 2006, will continue to operate without interruption. It also expects to be well stocked ahead of the back-to-school and holiday selling seasons as it secures $700 million in debtor in possession financing from General Electric Capital Corp.
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