|
-- Posted Friday, 14 March 2003 | Digg This Article
April Gold: Close = $336.6, +$.60
Whether bullish or bearish, this was a hectic week, with gold gyrating in a $23 range, with stocks in a frenzy, with the dollar soaring and with crude sinking. Today consumer sentiment numbers were released, they reveal a 10-year low. Retail sales announced this week were also terrible, the worst since late 01. With the entire world holding its breath over the Iraq issue, it’s no wonder consumers are keeping their wallets buttoned up. A weekend summit off the coast of Portugal hopes to salvage the U.N. resolution on Iraq. This is perhaps a reminder that we're a long way from a diplomatic or military solution regarding Iraq. If the issue doesn’t get solved soon, the sell off in gold could actually become a great buying opportunity as gold could nervously ratchet higher again. As usual, watch the US dollar, and if it weakens look for gold to rally, and vice-versa. It won't be a tick for tick relationship, but it's still worth noting. The buzz this week regarding the possibility of some in the Iraqi military surrendering sent a bit of an optimistic shockwave through the US equity markets, with the Dow positing its biggest one-day gain of the year. The US dollar also pulled itself up off the mat and soared, and meanwhile the gold and energy markets declined in extreme volatility. The tone was no longer such that a flight to safety (gold) was necessary, but rather that the issue of Iraq would be settled without much fanfare. Gold bears were therefore able to seize upon the weakened market and temporarily take the reigns. Volatility is due to fear and greed, and an emotional metal such as gold is susceptible to the whims of day-to-day rumors. The prospect of a relatively easy showdown with Saddam seemed to have gained credibility late this week, and this optimistic tone sent prior trends on their ears. The gold rally and subsequent sell off clearly indicate that gold remains a psychologically driven metal. Bullish energy traders took another bath today, with crude sloughing off over 200 points per barrel today! Obviously crude has been stronger in anticipation of a long and drawn out war with Iraq. However, even if war doesn’t occur or if the war effort goes smoothly, don’t anticipate crude back down to $20 anytime soon, as inventories are still low. And of course, the unexpected should still be expected from Saddam, and a costly drawn out conflict could cause crude and gold to accelerate higher on a dime and many unknown variables relating to a war still weigh on the economy. Overall, the EC still has the dollar pinned against the ropes. The inverse relationship between gold and the dollar isn’t perfect, but it does still seem to exist. The dollar is still trending lower, the economy and stocks are floundering, and higher energy prices are tightening the noose around the neck of the economy. Prices stabilized a bit today, will the low near 334 hold? We can forecast and assign all sorts of reasoning or rationale to market movement but what really matters is to position ourselves and be certain we have a strategy with a favorable risk/reward ratio. The floor below $345 was breached and certainly cleared out many weak longs, prices have now corrected over $50 from the highs near $385. Aggressive traders could enter longs in this area. 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.
May Silver: Close = 453.8, -.20-cents
The bearish head and shoulders formation panned out this week, but did so only with the help of a declining gold market. The volatility is quite high as everyone is on edge over Iraq. We can’t get too cute in assuming we can predict prices daily. Overall, there is plenty of potential for this market to rally and get through 500, but only on the shoulders of a willing gold market. But with prices now chugging along the low road, look to the 443 area as major support. As with gold, perhaps aggressive bulls might want to buy, maybe near 445 or so, but as always be sure to exit if wrong. On a close above 475 look for new highs. Finally, there is a bullish seasonal starting, where in 12 of the last 15 years May Silver has rallied from approximately March 18 to May 4 an average of about 11-cents. Of course, history isn’t guaranteed to repeat itself. 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, 14 March 2003 | Digg This Article
Previous Articles by Altavest Worldwide Trading, Inc.
|
