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-- Posted Wednesday, 5 February 2003 | Digg This Article
April Gold: Close = $377.2, -2.7
Buy the rumor and sell the fact! Early on gold had climbed over $5 to another contract high, and did so in spite of a strong bounce in the US dollar. As Powell was speaking to the U.N. the gold market was as jittery as a long tailed cat in a room full of rocking chairs, and after the presentation gold bugs seemed unimpressed and prices collapsed. Do note that after posting a 373 low with several minutes remaining, gold rallied to end off the lows. Tension regarding Iraq has had a direct relationship on gold, the US dollar, equities, energies and the economy. Now, it appears we’re very close to disarming Iraq with force, as Blix said the other day “we’re 5 minutes away from midnight.” Powell unveiled a bevy of documentation to prove that Iraq has violated the security resolution and has ties with terrorism and Al Qaeda. He told the U.N. that they would render themselves irrelevant if they do not take action as per the security resolution. This damning evidence was anticipated by the gold market and helped propel gold even higher the last couple of weeks. Therefore, when it was actually made public, the move most would expect had already occurred. This left a situation ripe for some profit-taking going. Over the year however, gold has attracted newfound attention and will likely continue so. In fact, let’s take a look at the recent Reuters article, “FUND VIEW-Gold, oil stocks still undervalued, says JPMF”, by Justine Trueman, here are a few excerpts:
"It's only over the past few weeks that people have begun to pay attention to the fact that this area is doing very well," Ian Henderson, manager of the 34.1 million pounds ($56.4 million) JPMF Natural Resources Fund, told Reuters.
"We're so far away from (the end of the run in gold prices). I can find companies on PEs (price to earnings multiples) of four times in the mining sector. As long as I can find these companies hopelessly undervalued, (prices) will keep going up," he said.
Henderson, who has been investing in commodities for JPMF -- which has about $500 billion of assets under management worldwide -- for the past 10 years, believes gold has broken firmly out of a bear market range and could rise further.
"People had become very set in their opinions and it takes a long time for them to change their minds. That is the plus as far as I'm concerned, that people haven't recognised that this has been a bull market and therein lies the opportunity," he said.
On that same bullish note, there is another terrific article in Forbes, “Gold Bugs Look to History” by Robert Lenzner, in which a comparison with gold and equity prices are evaluated: (If you’d like the full copy of these articles let me know)…
“Christopher Wood, emerging markets analyst for CLSA, a unit of Credit Lyonnais, who supplied us with the numbers, believes strongly that "gold is at the very beginning of a multiyear bull market that will take the yellow metal many times higher than its present level." The reason Wood gives: "Gold is the only real hedge against the massive financial excesses that still prevail in the western world."
Until the war on terror and the issue with Iraq quiets down a bit, it’s not likely consumer confidence will strengthen enough to breathe new life to stocks. Therefore, gold remains one of the few viable alternatives. Over the last month or so we’ve been looking at the $400 area as a target, and we’re still anticipating such a thing by the end of the month. Perhaps one should look for pullbacks of $10 or so as buying opportunities. Be sure to watch TradeScope daily for order adjustments on those April calls that have appreciated tremendously. Remember, futures and options offer much flexibility as one can just as easily be short or long any market. Each contract/option = 100 ounces, a $1 move in a futures contract = $100. Contact me anytime to discuss strategies to fit your needs.
To open an account and receive trading recommendations on gold futures or options contracts (also stock indices, energies, currencies, etc.), or to use PaperTrader Online contact me at erik@altavest.com. Visit www.altavest.com to request a Free Starter Kit. Keep in mind that there is risk of loss in all trading.
March Silver: Close = $476.8, -15-cents
Phew, that was close, after hitting a high of 494.5 and almost reaching our 500 target, gold sold off and dragged silver underwater with it! There are some who are purporting that a silver/gold spread is in order because silver is undervalued in relation to gold. Well, maybe and maybe not, after all, what is “undervalued? Had you done the spread today you’d have made $750 on silver and lost $270 on gold, so it surely would have been beneficial today. There has been a lack of fresh internal fundamental news for some time; action has been led by gold. I’d still anticipate the uptrend in gold will persist and carry silver to the 500 area, but there is a bearish seasonal around the corner wherein from approximately 2/5 to 2/25 silver has fallen an average of about 18 cents. Should we look to buy pullbacks, just as with gold? Each contract/option = 5,000 ounces, a 1-cent move in a futures contract = $50. Contact me anytime to discuss strategies to fit your needs.
To open an account and receive trading recommendations on silver futures or options contracts (also stock indices, energies, currencies, etc.), or to use PaperTrader Online contact me at erik@altavest.com. Visit www.altavest.com to request a Free Starter Kit. Keep in mind that there is risk of loss in all trading.
-- Posted Wednesday, 5 February 2003 | Digg This Article
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