Following a serious hammering thus far in August, Chinese stocks finally had a good day. A very, very good day. The Shanghai index rose by 4.5% - the largest amount since March. This, one day after the index touched bear market territory and looked very poor.
Along with Chinese equities, the usual suspects joined the party; base metals advanced on growth expectations that appeared iffy just 24 hours ago. Such is speculative emotion. Today, it was a difficult task to find a pundit who still sees the contraction in lending or the bubble-like nature of the pre- August Chinese stock market as something to worry about. Two days ago, there was an abundance of cautionary punditry.
The dollar and the yen lost some ground following the party in Shanghai, but oil prices did not pick up where they left off on Wednesday. Which, was lofty enough, indeed. Black gold still finds itself at $72.25 this morning, notwithstanding a loss of a few pennies here and there. The greenback actually climbed a small notch on the trade weighted index ahead of the NY metals markets' opening. It was quoted at 78.55 at last check.
Bullion trading started with a small, $1.60 per ounce gain for gold this morning. The yellow metal was quoted at $943.10 an ounce and the trade was still seen as trying to make sense of yesterday's statistical picture in the market. As our good friend Nell Sloane over at NS Futures writes: It is possible that the headline news of a 9% decline in overall global gold demand will be the figure that the gold trade embraces. In short, the bear camp is likely to trumpet the headlines of falling demand and rising supply, while the bull camp will be left with only the old standby claim of sturdy investment demand.
Silver bullion opened with a 16-cent gain this morning, quoted at $13.97. Along with it, we tracked a $4 rise in platinum and a $1 gain in palladium. White metals looked to the Chinese White Knight this morning, that much was clear. Not much in the way of serious trading was done prior to the release of the US labor statistics this morning, however. The US dollar held up to the news, thus far.
Those figures indicate that initial jobless claims rose by 15,000 to a weekly total of 576,000. Continuing claims fell to 6.26 million. It was the 15,000 figure that was unexpected in this morning's roundup of numbers from the labor front. Gold turned negative shortly after the release at 8:30 NY time. Support is now seen nearer $932 but odds of a sub-$925 trade in Oct. gold are still there. The size of the longs would say so, opined another trader.
Looking ahead, we have the Jackson Hole meeting over the weekend. Punditry is scrutinizing the alleged disunity among central bankers, and is expecting currency volatility should the elite of the official sector not come to a common vision in the manner they did just one year ago. But, hey, things looked very spooky one year ago. The sky had fallen, in fact. Show disunity then, and perhaps you will be relegated to a dark corner of the room this year.
Anyway, we will await announcements from wonderful Wyoming without inhaling. No, not the one about the putative 'fix-it all banking holiday' of August 24. You know, the one that is floating around on the urban myth sites, the one that is supposed to finally give you the chance to barter your stash of silver Eagles for some Wonder bread down at the mini-mart. C'mon Harry Schultz followers, turn down the noise. It sounds too much like Y2K minus 1. Dollar devaluation, chaos, Mad Max, and all.
Meanwhile, a dollar mortician is not exactly putting his money where his mouth is: PIMCO's Bill Gross is trading up to an 11,000 sq. foot $23 million 'tear-down home' in Newport Beach, CA. Wait a minute, shouldn't that house be on Sentosa Island, somewhere next to Jim Rogers? What kind of an anti-US /anti-dollar purchase is that? Good thing it is a gated, heavily-guarded enclave, this. The dollar-ravaged masses cannot get in. Someone can see some irony, no?
Pssst! Want to still make money in gold? You still can. In gold mining shares, that is. They -according to Bloomberg's Commodity Roundup this morning, should beat bullion as declining costs bolster margins and higher dividends signal confidence. So says Evy Hambro, who helps manage about $17 billion in natural resource stocks at BlackRock Inc. Gold has gained 38 percent from a 13-month low of $682.41 an ounce on Oct. 24, compared with a doubling of the 21-member FTSE Gold Mines index. Could this be the return of the legendary leverage that shares offer vis-a-vis gold?
The index fell 20 percent last year while gold rose 5.8 percent. ``Moderation in operating costs across the resource sector combined with a good gold price should be beneficial to profit margins,'' Evy said by phone from London. Gold mining shares should outpace bullion ``until they recoup all of the lost relative return during the last few years.'' Holdings in the SPDR Gold Trust, the biggest exchange-traded fund backed by the metal, dropped 6 percent from a record 1,134.03 metric tons on June 1. reports Bloomberg. This, after we learned yesterday that gold production rose 6% on Q2 of this year. Perhaps happy times are indeed coming to the miners. Now, all they have to do is to find ready, willing, and able purchasers for their product.