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-- Posted Wednesday, 19 February 2003 | Digg This Article
April Gold: Close = $350, +$5.7
The battle lines have been drawn. After hiding in the thrushes the last two weeks, gold bulls finally found an opportune moment to launch a counter offensive, coaxing prices above the $350 area. The $120 rally that began over a year ago isn’t likely over, but the recent heavy sell off certainly spooked many longs onto the sidelines. The gold market had rallied on anticipation that we'd be closer to military action in Iraq. We just experienced an example of "buy the rumor and sell AHEAD of the fact". Gold bulls have watched prices move over $120 higher in just about a year, but given the stagnation in regards to the Iraq situation, bulls took an opportunity to bank some profits and bailed out. Now, with a second UN resolution fermenting in the pipeline, it seems that momentum towards disarming Iraq has stalled. This is not what gold bugs wanted to have happen, perhaps they should be groaning to Chirac and his fellow compatriots for causing the evaporation of their gains? The Euro is holding the dollar against the ropes and today the dollar cowered once again under the strength of the Euro. Stocks across the board plummeted and the financial markets such as bonds and notes rallied. Upon further equity and dollar weakness it may be that gold could end up as one of a few alternate and viable investment ideas in the spotlight. Oil prices remain near two-year highs, and unleaded prices are now at 19-month highs. One has to wonder how much more prices can move up before economic growth is truly stifled by the higher costs of this energy “tax.” The anticipation of war has spooked the energy markets higher and prices now have a built in war premium, the question is how much more premium remains and if a conflict does arise, will supplies actually be interrupted. Venezuela is also just about off the radar screen in terms of when they’ll be a global player in crude again. With energies finding good cause to remain buoyant, gold too will likely remain well supported. As a side note, new home starts hit a 16-year high, and 39 of the 120 housing markets tracked saw double-digit gains between late 2001 and late 2002. Of course this appreciation is thanks to low interest rates, but with median home prices near $450,000 in Orange County, CA for example, one has to wonder how many folks are stretched to make their payments, and how the additional energy “tax” will adversely impact every individual in the country. Seems to me that incomes aren’t keeping up with the increase in the cost of living, and somewhere down the continuum these will have to converge. What will give, will wages balloon in this tepid job market (not likely), or will living costs sink (also not likely given the high cost of energy and current currency trends)? The cloud of uncertainty regarding Iraq and the war on terror will be entrenched in the headlines for some time, all the while keeping gold nervously supported. Look for the $400 area as a target. RSI levels are no longer overbought. Meanwhile, thank goodness we have those gold puts as a hedge to our futures contracts. 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 = $462.5, +7.0-cents
Silver has trailed gold but relationships between markets aren’t always perfect correlated. Overall however, with few fresh internal fundamentals surfacing to press the silver market one way or another, silver is finding direction from gold. The dip in gold that we expected was deeper than we thought, but such was also the case in gold. These lower prices might serve to attract buyers into the yellow metal and infers that the white metal may have found support as well. Is that a candlestick doji, perhaps a reversal signal, a few sessions ago? 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, 19 February 2003 | Digg This Article
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