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-- Posted Tuesday, 1 April 2003 | Digg This Article
June Gold: Close = $335.2, -$1.7
There are many variables weaving their way through the world markets. Stocks, financials, energies, the US dollar and gold are taking their cue from the daily war related headlines. Yes, the outcome of the war is certainly assured, but meanwhile investors remain concerned, and of course there are always other hotbeds of turmoil that could overflow anytime and anyplace and add further volatility and buoyancy to gold. With the war on terror far from over, with Iraq likely to be a hotbed for some time, with nervous consumers nervously tightening their wallets, with the US dollar coming back to earth, with corporate earnings continuing to mostly disappoint, with major airlines teetering on bankruptcy, with little room left for the Fed to ease, with Congress arguing over taxes, war costs, etc., it's easy to see how higher gold prices remain in the cards. A month or so ago there was an article in Forbes that I meant to share but it slipped through the cracks. Here are a few comments from “Golden Girls” by Nikhil Hutheesing, an interview with Mary Ann and Pamela Aden of the “Aden Forecast”, their portfolio realized a 23% return in 2002. “Other factors influence it, but the main force is the dollar. For a real bull market in gold, it has to rise against all major currencies, and that is what is happening now. It's exciting. What we are seeing is a change in the landscape that happens once in a generation. These moves usually go on for a long time. Right now, no major country wants a strong currency because they need to increase exports to get their economies going. That is great for gold.” “Besides the potential war, the weak U.S. dollar, the Fed's monetary policy, tax cuts, and inflation pressures are all good for gold. Gold rises during uncertainty. We have over 300 indicators that we have created to help us make our investment decisions. The message right now is very bullish.”
It's not possible to predict the daily change of tide regarding the war or what else may erupt on the geopolitical landscape, just as one can't always correctly forecast market direction on a short-term basis. In fact, many times we’ve said how important it is to do your best to follow a trend, initiate a position with a favorable risk/reward ratio, and ask questions about “why” later. Here is another interesting tidbit relating to this, it seems we’re not the only ones operating under that premise:
“But it's true and we learned the hard way in the 1980s that you can't forecast gold. You have to take the gold market one step at a time. It's uncanny how cyclical it is. We determine where gold is going by following steps that are solidly in place. This is different from forecasting. Its patterns repeat. So you take one step, and if everything is in place, you go ahead to the next step. Major support is at $310 now. We need to see the dollar break and the stock market fall. That's important for gold to sustain its rise.” Yes, over the last couple of months, gold has retraced to the $330 area, but could this be a simple correction in an otherwise bull market? With war continuing the dollar and stocks remain weak, and under those circumstances, one can expect gold to continue to attract attention from buyers. Prices are not yet above the 5, 10 and 20 period moving averages, but when gold closes consecutively above those averages look for continued strength. 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 = 443.7, -2.8-cents
Technical indicators were oversold, now they have turned higher. If long, exit on a close below 438. The next resistance area is now 451 or so. Here’s a quote from the Forbes article referenced above: “Silver has yet to take off. It's been lackluster, though the major trend is up. Silver can sleep for years but when it wakes up, it goes.” Certainly there is 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 April 4 an average of about 11-cents. So far this seasonal has played out, but there is still some time left. 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 Tuesday, 1 April 2003 | Digg This Article
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