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-- Posted Thursday, 20 March 2003 | Digg This Article
April Gold: Close = $333, -$3.2
The inevitable started…the war has begun. However, in an interesting twist, before the main thrust of the attack, Saddam himself was attacked! It’s still unclear what his condition is, but his supposed TV appearance shortly afterwards has raised doubts that perhaps it was an imposter or the appearance was prerecorded. The notion that Saddam could have been targeted so quickly and precisely initially sent a wave of optimism through financial and energy markets. In reaction to this, the gold market sunk as investors fled the traditional safe haven. The war premium has been sucked out of gold for now. Yes, there is lots of optimism regarding the speed at which Saddam could be taken down, and lots of it is well founded. However, just as with trading, there are certainly no guarantees and volatility should always be anticipated. The US dollar and stocks are having a difficult time absorbing the minute-by-minute updates on the war. Oil fields are now apparently on fire and Iraq fired missiles at U.S. forces with the missiles first thought to have either biological or chemical warheads. All hell could break lose anytime now. War action hour-by-hour will determine the direction that equities, the U.S. dollar and therefore precious metals will take. It’s virtually impossible to predict these types of gyrations.
With gold prices off about $55 from the recent high, are bulls ready to get back into the game? Fear is feeding these markets at the moment, but if gold prices dip much more one might expect bulls to try to pick some up at what they might perceive as bargain prices. On the chart, prices are below moving averages, the low near 334 was finally cracked, and support for April gold is in the 330 to 325 area. One way to play gold in this environment might be with futures options. With options you have predetermined risk, yet a sharp market move in your favor can offer substantial rewards. Aggressive traders could enter longs in this area, but as always, limit losses. Perhaps exiting on a close below 332 would be prudent, you can be around to trade another day instead of holding onto the rails of a sinking ship! What really matters is implementing a position with a favorable risk/reward ratio. Be sure to watch TradeScope daily. Remember, with futures and options one can be short or long, feel free to contact me to discuss trading strategies. Each contract/option = 100 ounces, a $1 move in a futures contract = $100.
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 = 441.5, -.05-cents
With all eyes on the war, financials, energies and gold, the silver pits found themselves lacking a captive audience of traders. Silver traded quietly in a meager 5-cent range. If you are long near 445, don’t fall in love with a loser, you might want to exit below 440 and take a small lump rather than risking further losses. The next resistance area is now 451 or so. Certainly there is a load of room to rally but only on the shoulders of a willing gold market. Finally, take note of the bullish seasonal, 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 Thursday, 20 March 2003 | Digg This Article
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