Daily Speculations

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The Chairman
Victor Niederhoffer

3/22/2005
Some Serious Tail Wind Changes in Commodities

Some serious daily changes in the tails beyond two standard deviations from the mean daily change occurred in the following markets yesterday:

 
MarketLevelChange
Gold4318
Euro1.315-1.70
Platinum870.2-9.8
Copper148.9-2
Silver7.1-0.3
Corn2.14-5
Wheat3.42-0.14
Soybeans6.26-0.22

What does it all mean and what does it foretell?

As all these markets were near their highs, one can posit that it was a bad day for trend followers. Will the deflationary impact spill over, or is it a will-o'-the-wisp?

3/23/2005
Postscript: The Silver Fox

An interesting story with the aftermath of the Monday move in commodity prices, which shows that often a signal contains much information concerning its diffuse effects. On that note, Irving Redel had an interesting hypothesis. Noting the 7% decline in silver on Monday, I said it looked like silver knew what the fathers at the Fed were going to do.

"No," he said. "Silver is always the weakest metal. so it goes down first when there is something bad in the air, and then it follows very slowly when something good is in the air. Also, silver is a by-product of copper so with copper prices up so high, and thus, much supply (as high prices do elicit supply in economics and real life), there is much additional silver waiting for a home at the earliest opportunity."

This must be tested.

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