Sunday, December 19, 2010

Itz Week End Review 12-19-10

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Over the last several weekend reviews Itz has focused on gold, silver, copper & oil. In a recent speech by Commissioner Chilton before the High Frequency Trading World USA 2010 Conference NYC CFTC he  signaled that he was fed up with JPMorgan manipulation silver. >>READ  The CME is so concerned about speculation in copper and silver they raised the margin requirements for future contracts by 19% at the close on Friday. The reason gold continues to climb is because it is seen as an inflation hedge and a defacto global currency. Copper and silver are more a pure commodity play on the global recovery. Silver demand is rising in electronics and manufacturing of all types and its gains have been on the back of China's manufacturing boom. Copper has the same fundamentals but also widens out into building and home construction. There are some that feel we could run short of copper in 2011 if the recovery continues to accelerate. Copper prices have risen +50% since June as speculators added to positions. One major speculator is a client of JP Morgan. Speculation is that JP Morgan has reduced its silver position and has now entered the copper sector. >>READ They have bought $1.5 billion in copper in December alone. Analysts believe they are front running the two ETFs currently in the application process. One of those ETFs will be sponsored by JPM. The bank claims it has not bought any copper for its own account but I have a hard time believing they are not related to that single investor in some way.

President Obama signed the tax compromise into law on Friday taking some uncertainty out of the market, note how complacent the Volatility Index is. The last time the $VIX was down under the 16 level, it marked a topping in the S&P500.

In the energy sector, Crude Oil Bumped up against the $90 level again. The EIA report Wednesday showed that inventory levels for oil declined by 9.85M barrels. >>EIA link On Friday the Commitment of Traders Report showed that Non- Commercials declined long position by 9,420 contracts while Commercials net short position declined by 8,801. >>LINK

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