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-- Posted Wednesday, 12 February 2003 | Digg This Article
April Gold: Close = $353, -$10.0
Gold traded lower for the 6th consecutive session, and down over $30 from the recent high of $384.5. Why the seemingly sudden collapse in prices? Who can say for sure, but with so much media hype being showered upon the yellow metal recently, many unseasoned investors leapt in to press prices higher. However, these speculators had a "weak grip" and therefore weren't able to stomach any setbacks. When prices stalled a bit the weak longs bailed out causing additional weakness, and to make matters worse for bulls, sell stops exacerbated the selling pressure, therefore causing more longs to raise the white flag. This type of action is common during uptrends, as conditions become overbought, meaning that most of the willing and able buyers were already in the market. After all, if everyone has already bought, who is left to buy and press the market higher? Is it now going to be all bad news for gold bugs? Doubtful.
Faith in the might of the US economic engine has dimmed as trepidation regarding the outcome of a war with Iraq builds and the war on terror continues. The bickering among the U.N., NATO, and the U.S. over Iraq is not likely to subside soon. The emergence of Bid Laden's voice, the weakness of U.S. equities and dollar, and simply a lack of viable investment alternatives are likely to keep gold on the bullish radar screen. After all, global conditions do not appear ripe for peace anytime soon. According to the article “Immobilized by Fear”, on money.cnn.com:
”In his 16-minute message, aired late Tuesday, bin Laden called for solidarity among Muslims in support of Iraq and against the United States and its allies. The terrorist leader also offered battle strategies aimed at causing the highest number of U.S. casualties.
The message, which U.S. government officials said offered proof of bin Laden's ties to Iraqi president Saddam Hussein, escalated Wall Street's concerns that a war in the Middle East is all but inevitable and is to start very soon.
Intelligence sources told CNN that Saddam Hussein's military has moved Scud missile launchers next to mosques and historic sites to make them less vulnerable to attack. Meanwhile, dissent among U.N. Security Council members continues, with the United States urging a hard line and France adamant that weapons inspectors be given more time.”
Also take note that gas prices hit a 19-month high, and intelligence reports claim that massive amounts of conventional explosives are being moved around in Iraq, and some near oil fields. The inference is that of another scorched-earth policy should Saddam be forced into exile, killed or disarmed. We had anticipated a technical pullback to fill in the chart gap, but the magnitude of the correction was a bit more than expected. But, that’s also why we purchased those puts as a hedge, so that we don’t have to be perfect when initiating positions. Perhaps the lower prices will now serve to attract fresh buyers into the market. Be sure to watch TradeScope daily, and remember, futures and options offer 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 = $450.7, -6.3-cents
Sliding down the slippery slope along with gold, the silver market has released some air from its tires. Gold has sold off the last few sessions and really got hammered today, and this served to drag silver down. There has been a lack of fresh internal fundamental news for some time; action has been led by gold. The dip in gold that we expected was deeper than we thought, and this might serve as a more effective means to attract buyers into the yellow metal and infers that the white metal will appreciate as. Remember the bearish seasonal, wherein from approximately 2/5 to 2/25 silver has fallen an average of about 18 cents? Well, it appears to have worked like a charm this year. 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, 12 February 2003 | Digg This Article
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