|
-- Posted Wednesday, 2 April 2003 | Digg This Article
June Gold: Close = $330.4 -$4.8
It’s no secret why gold sank a bit today. Progress in the war was viewed as quite favorable to the coalition and therefore the financial markets and US dollar rejoiced, which subsequently heaped selling pressure on the yellow metal. As you all know…stocks, financials, energies, the US dollar and gold are taking their cue from war related headlines. Yes, a win for the coalition is certainly assured, but there are still many, many, many surprises possible along the way. Any semblance of bad news regarding the war or the economy will drive gold higher. Investors also remain concerned about other hotbeds of turmoil that could overflow anytime and anyplace and add further distress to the financials markets and in turn offer buoyancy to gold.
With the war on terror far from over, 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 burgeoning trade and budget deficits, etc., it's easy to see how higher gold prices remain in the cards. In fact, just by coincidence I came across another article referencing the Aden Forecast. The authors focus on the macroeconomic trends, and I’d have to agree with their current outlook. It’s not anything earth shattering to most of you, but they see the US dollar heading for further weakness, and by default that infers gold will rally. Here are a few comments from the article “Cashing in on Foreign Currencies” on marketwatch.com:
Over the past two years, for example, the dollar dropped 23 percent against the euro. During that time, stocks have plunged and gold has soared along with the foreign currencies.
We believe these trends will continue.
The war with Iraq has been pushing the dollar down in recent months -- but the dollar was falling long before Iraq was headline news.
Record low interest rates, a sluggish economy, record trade and budget deficits, a deflating stock bubble and lower confidence have been the main culprits causing dollar weakness.
The war's added fuel to the fire and if it drags on, it'll keep downward pressure on the dollar. But even if it ends quickly, the dollar will have these other fundamental issues affecting it.
In fact, loss of foreign confidence alone could drive the dollar much lower.
Most people don't realize that foreigners hold $7 trillion in U.S. assets and they're not happy about watching their dollar assets deteriorate. They've already started moving out of dollars and into other currencies.
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. Do your best to follow the longer-term trends, initiate positions with a favorable risk/reward ratio and try to filter out the static. 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? In spite of today’s rally in stocks and the US dollar, the trend in those markets is lower, therefore 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.
May Silver: Close = 440.2, -3.5-cents
it’s awfully messy out there, technical indicators were oversold, then they turned higher, now they are indifferent. If long, exit on a close below 438 and look to buy at even lower prices. The next resistance area is now 451 or so. Certainly there is room to rally but only on the shoulders of a willing gold market, which means silver bulls will need the dollar to drop. Take note that 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, is almost over. 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 Wednesday, 2 April 2003 | Digg This Article
Previous Articles by Altavest Worldwide Trading, Inc.
|
