6 June 2006

Concerning a possible Yen-Carry Trade Unwinding

Welcome to Jim Sinclair's MineSet: "One other thing - Gold did not fall $100/ounce because of fears of the yen carry trade unwinding. It fell because the Bank of England precipitated an attack on the price of copper to try to save the LME from collapsing due to the idiots who kept shorting copper in the middle of a roaring bull market. They had to do something to stop the price of copper from rising or risk watching their members default. They could not obtain surplus supplies of copper which with to flood the market BECAUSE THERE ISN’T ANY! So why not attack the gold price which can be done by mobilizing Central Bank gold supplies and using that extra supply to temporary knock the floor out from under the gold market. Then you sit back and watch the financial press and the same old top callers in gold make the case that the commodity boom was over sending the speculators who were wining the battle heading to the hills in a mass selling panic of commodities across the board. Voila - Mission Accomplished!
In spite of the selling barrage copper is still trading at $3.50 pound. How many people in 2001 would have said that it was possible for copper to run to $4.00 pound and then drop sharply in price and still be trading at ONLY $3.50? Not 1 out of a 100 I would venture to say.
In conclusion, the commodity boom is no where near over and the current talk about a rout in the commodity sector is nothing more than the usual chatter that always surfaces whenever a market is experiencing a correction in a long term bullish trend."

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