-- Posted Tuesday, 8 April 2003 | Digg This Article

June Gold:  Close = $322.9 +$.70

Was Saddam vaporized?  Maybe, maybe not, but the uncertainty regarding whether or not the strike against him was successful caused currencies, equities and precious metals to loiter near even.  For the moment it seems tangibles such as gold are being viewed in a suspicious light.  The assumption is war will soon be over, all the worlds’ problems will be solved and therefore stocks can finally breathe a sigh of relief and rally.  Of course this is a highly unrealistic and overly optimistic outlook.  Gold is moving inversely to the progress in Iraq.  With coalition forces almost in complete charge of Baghdad there is some legitimate rationale behind the recent buoyancy in stocks and the dollar.  However, many issues still need to be addressed and investors are also concerned about other hotbeds of potential turmoil.

Looking at the larger macroeconomic trends, the US dollar remains weak and by default that infers gold should rally.  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. 

Monthly gold charts show the market still remains in a longer-term uptrend and one can expect gold to continue to attract attention from buyers.  With prices having fallen somewhat consistently over the last couple of months, 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, but aggressive bulls could buy in this area risking a close below the $320 area.  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 = 449.2, +5.5-cents

In comparison to gold, the silver market hasn’t traded with as much vigor.  Silver hasn’t been quite as volatile as gold, which means it didn’t rally as much or drop as much as gold did over the last year or so.  The chart remains awfully messy, with technical indicators oversold, then turning higher, and now they are indifferent.  If long, exit on a close below 444 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 Tuesday, 8 April 2003 | Digg This Article

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