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-- Posted Monday, 3 March 2003 | Digg This Article
April Gold: Close = $349.3, -$1.0
After initially fading as much as $5 lower, the gold market got off the floor and brushed itself off to end the session respectably, only a buck lower. It was apparent that gold did not act on its own accord, but was boosted as the US dollar began to slip against the Euro. Remember, gold is denominated in US dollars, and with the dollar losing value relative to other currencies, gold is becoming cheaper to holders of those currencies. An Al Qaeda ringleader was captured in Pakistan, which many are calling a major victory in the war on terror. Iraq has provided proof that they have destroyed several of the banned missiles that just a week or so ago Saddam told the world didn’t exist. Both events may have curbed the appeal of the need for gold as a haven in times of turmoil. However, terrorism has not totally been squelched and it’s doubtful that the destruction of a few missiles out of a stockpile of possible thousands was what the UN had in mind regarding Iraq disarming. It could be too little, too late, as there are reports that a military advance on Iraq is only a couple of weeks away and that the Nimitz carrier group is steaming towards the Arabian Sea. Crude oil sank a bit today, likely on a bit of profit taking in overbought technical conditions, and likely due to Iraq’s recent “cooperation.” However, oil is so high now that OPEC may not have much power to do anything about it, nor may they be compelled to. Supplies are tight and there is very little, if any, unused capacity. In fact, there is a great article on this subject in this weeks Barron’s. In any case, a bullish crude environment will also likely be buoyant for gold. As gold closed today, the major stock indices were lower and financials were higher. The Dow is flirting with the nearby low of 7600 and appears sluggish to bearish at best. All the markets are certainly emotional right now, including equities, financials, currencies, metals and energies. With the economy and stocks floundering, with higher energy prices bound to strangle growth, where are investors to stash their wealth? As equities have plummeted gold has garnered newfound attention as evidenced by the run to the $390 area. Will gold finally become a popular financial alternative among retail speculators and investors? It’s difficult to imagine that this tense geopolitical environment could foster a bear market in gold. It’s much more likely that sentiment is inclined to provide buoyancy to gold. The trend in gold remains up, and there’s no reason why we can’t be back near $400 shortly, and beyond. The gold chart now appears indifferent and sloppy at best, but the trend for the year is up. The pullback from the $380 area seems to have been healthy for gold bulls. A close over $360 during 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 = $467.2, +7.2-cents
With gold dropping during mid-session it seemed as if silver too should have tested the depths of beardom. But, for some reason silver bulls maintained control during the entire session. The silver market can sometimes act on fundamentals relating to its industrial use, and other times more like an investment or speculative metal. In either case, lately it as followed gold higher, but has not rallied with the same degree of enthusiasm. Silver didn’t quite make it to the 450 area, but those of you long in the 460 area as per TradeScope should be able to lock in profits. 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 Monday, 3 March 2003 | Digg This Article
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