-- Posted Friday, 28 February 2003 | Digg This Article
April Gold: Close = $350.3, +$4.1
The tug-o-war between bears and bulls ended with gold lower about $1.5 from last Friday. Early in the week it appeared gold bulls might win the race, but late this week the bears fought with a vengeance, only to be fended off one more time today by the bulls.
Fourth quarter GDP growth came in at about 1.4%, which was mostly benign. Neither event was altogether unexpected, so the financial, currency, equity and precious metals markets were somewhat indifferent. The terrorism alert downgrade yesterday helped to lift the spirits of the US financial markets, and during the session the lure of gold as a safe haven wore off a bit and prices slid lower. What this really illustrates is how emotional markets are right now, including equities, financials, currencies, metals and energies.
Iraq is now coming to the party with a last minute attempt to comply with the disarming of certain missiles. Is it too little, too late to avoid a conflict? Russia is hinting that they'll veto the second U.N. resolution to disarm Iraq. How long this will drag out is anyone’s guess, but day-to-day, the shifting geopolitical winds are going to jerk the markets around to and fro.
Did you notice that April Crude futures almost hit $40, their highest level in 12 years. The US is mulling over the possibility of dipping into the Strategic Petroleum Reserves. Considering Venezuela remains off line, considering heating oil prices are about double from last season, and with the threat of uncertainty hovering over the Iraq situation, a decision regarding the SPR's should come soon.
The Dow is flirting with the nearby low of 7600, and with consumer confidence at a 10-year low, the bellwether index could sink below support. But, as Larry Kudlow points out, there is no statistical correlation between consumer sentiment and economic and stock market performance. Nonetheless, sometimes what matters in the short term is perception, and to most people, stocks right now are about as attractive as the plague!
With the economy and stocks struggling, with higher energy prices bound to strangle growth, where are investors to stash their wealth? Surely gold has benefited from poor equity performance as evidenced by the run to the $390 area this month. Will gold finally become a popular financial alternative among retail speculators and investors? If so, and with seemingly many bullish variables lined up in a neat row, perhaps the environment is ripe for gold to once again shine brightly. Heck, if you ask GATA they’ll tell you that gold HAS to go higher, but not for any of the reasons we’ve mulled over.
Even with gold off recent highs near $390, and with the drop of over $7 yesterday, it’s difficult to imagine that in this geopolitical environment a bear market in gold will begin. It’s much more likely that nervous sentiment is inclined to provide buoyancy to gold. The trend in gold remains up, and there’s no reason why we can’t be near $400 shortly.
The gold chart now appears indifferent and sloppy at best, but the trend for the year is still higher. The pullback from the $380 area seems to have been healthy for gold bulls. A close over $360 on consecutive sessions is likely to target $400. Support is the recent low near $343. Meanwhile, hang onto those gold puts as a hedge to the long futures. 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.
May Silver: Close = $460, +2.5-cents
this week we went from a high of 474 to a low of 455, but with gold ending on the black today, so too did silver. Without fresh fundamentals surfacing, silver is finding direction from gold. The corrective dip in gold and silver was just a bit deeper than we anticipated. Nevertheless, gold might end up picking up some additional support, and if so, silver will appear as a good buy in the 450 area. Indicators such as slow stochastics and averages are no longer pointed higher, but mostly neutral. On a close above 475 look for new highs. 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 Friday, 28 February 2003 | Digg This Article
