China Rate Increase Sends Oil Lower

Source: Associated Press, Jonathan Fahey and Chris Kahn (10/19/10)

"It took the wind out of the sales of the oil market."

Oil prices fell about 2% after China surprised markets by raising interest rates to cool its red-hot economy.

Benchmark oil for November delivery was down $1.78, or 2%, to $81.38 a barrel on the NYMEX.

Investors had been pushing oil prices higher since the U.S. Federal Reserve indicated in late August that it's prepared to pour more money into the economy to spur growth. That prompted further weakness in the USD, because oil—priced in dollars—becomes cheaper for foreign currency holders, so they buy more oil and send prices higher.

China's rate increase of 0.25%—its first such move in nearly three years—effected strength in the dollar and investors sent prices of crude oil, gasoline, and heating oil lower. They also bailed out of other commodities like gold.

"It took the wind out of the sales of the oil market," said Phil Flynn, senior energy analyst at PFGBest in Chicago. "It gave the dollar some momentum and commodity traders moved for the exits."

The dollar rose 1.34% against an index of foreign currencies.

Oil has traded in concert with the U.S. stock market recently, and that trend continued. The DJIA lost 114 points, or 1%, in morning trading.

Investors have pushed oil prices higher in spite of abundant supplies in the U.S. in part because of expected demand from China's growing economy. "If you start to raise interest rates in China and their economy slows, then global inventories suddenly look higher," said Flynn.

An oil supply report from the Energy Department's Energy Information Administration - will be out on Wednesday.

"High oil inventories combined with sluggish demand conditions in most advanced economies are expected to keep the oil market in surplus over the rest of 2010," said National Australia Bank, which forecasts crude will average $78/barrel in Q410.

Announcing Streetwise Live! Events
Source: Streetwise Reports (07/13/2020)

Streetwise Reports is offering 100 investors—at no charge—the opportunity to meet via Zoom with executives of precious metals companies as they discuss recent developments at their companies and upcoming catalysts.

"China's export quota could be opportunity for Canadian miners"

Latin America: Six Gold Juniors Amass 100M+ Ounces
Source: Marc Davis, BNW News (05/25/2010)

Latin America, the world's last great mineral frontier for prolific gold discoveries, is proving a godsend for some lucky investors.

Mexico: Gold's Next Powerhouse Player
Source: Marc Davis, BNW News (11/03/2009)

As the world's key gold producing nations struggle mostly in vain to replenish dwindling below-ground supplies, Mexico is bucking the trend in a big way.

Where Have All the Gold Mines Gone?
Source: Brent Cook, Exploration Insights (04/14/2009)

Given the declining global gold production, mining companies’ demand for reserve replacement and the acute dearth of new gold discoveries, there is no doubt that real economic discoveries will be exceptionally valuable. . .the opportunity for stellar profits is the best it has probably ever been. Identifying the few successes, however, will require vigilant and constant technical assessment of geology and drill results, always with an eye to mine economics.

Congo Completes Mining Review, Says Majors Quit Talks
Source: Reuters (12/20/2008)

"Review process is extended an additional 45 days to allow six companies to return to the negotiating table for direct talks with government ministers."

I haven’t spoken to my old mining stock friend, noted and universally respected gold stock guru, Bob Bishop, about Rare Element in a year, but I hear he is still a supporter and very large shareholder. I don’t believe he will hold it against me to remind you that this was one of his favorite holdings when he left the newsletter writing business. . .

It's Only the Beginning for Uranium
Source: www.financialinsights.com (06/03/2005)

Dr. Richard S. Appel, author of Financial Insights, first became bullish on uranium in mid-2003, when it appeared obvious that its supply versus demand equation was fated to seriously drive higher its price. Since then, a series of events in the uranium industry has led Appel to believe that uranium prices will reach never before seen levels.

(00/00/0000)