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-- Posted Monday, 7 April 2003 | Digg This Article
June Gold: Close = $322.2 -$3.8
With coalition troops charging into Baghdad airport, Saddam’s palaces and much of Baghdad, gold sank. With the outlook for the conflict now appearing less protracted than originally anticipated, financials rejoiced and stole the show from gold. Interest has shifted back to paper related assets for tangibles such as gold. Early today the US dollar and equities opened enthusiastically higher, driven by positively construed news regarding operation Iraqi Freedom. However, perhaps they got ahead of themselves, and perhaps some profit taking set in. Financials reversed off their peaks and this allowed gold some breathing room and it was able to bounce about $3 off session lows. After gold had closed equities had given back all their gains.
Gold is moving inversely to the progress in Iraq. Investors are also concerned about other hotbeds of turmoil that could overflow anytime and anyplace. With the war on terror far from over, with employment numbers sour, with major airlines teetering on bankruptcy, with nervous consumers nervously tightening their wallets, with the US dollar coming back to earth, with corporate earnings continuing to mostly disappoint, with little room left for the Fed to ease, with burgeoning trade and budget deficits, etc., one can make a good argument that gold will rally. But, having said that, it has dropped about $70 in the last couple of months! Day-by-day and week-by-week, gold could drift anywhere in sympathy with the war or a terrorist act. Regarding macroeconomic trends, the US dollar remains weak and by default that infers gold should rally. Of course what markets “should” and “shouldn’t” do aren’t necessarily reality. 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. In the long run, one can expect gold to continue to attract attention from buyers, and with prices having fallen somewhat consistently, one has to wonder how low we need to go before bulls lace up their buying shoes. 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. Meanwhile, prices are a choppy mess. 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 = 443.7, +.80-cents
It remains 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. 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, 7 April 2003 | Digg This Article
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