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-- Posted Tuesday, 29 April 2003 | Digg This Article
June Gold: Close = $334, -$.80
I was out of the office for a few days, and maybe that’s ok, because it seems gold hasn’t done much except trade between 330 and 335 over the last week. After all, if equities can’t make up their minds, if financials are range bound, if the US dollar has been indecisive this week, it’s no wonder the yellow metal played it cool.
The SEC slapped the hands of several large Wall Street brokerage firms this week, including a few prominent past Internet stocks/snake oil salesmen…uhhh…I mean “analysts”. Several years ago during the go-go dotcom halcyon days, I recall some co-workers and I ruminating in disbelief how these Wall Street “analysts” could get away with saying all the things they said considering the rampantly glaring conflict of interest inherent in their compensation structure. Well, several years later it appears we weren’t the only ones who noticed. But, with a couple of the prominent gurus being fined this week…I think the figure is about $4 million for one guy and $15 million for another…I’d say they are getting the last laugh as it’s highly likely they pocketed tens and tens and tens of millions, if not hundreds, during their glory days. What’s a few million in fines to them? A few Wall St. firms are also required to pay fines, amounting to about $1.5 billion, but what I don’t understand is why are these fines tax deductible! Nonetheless, at least the regulators made some headway on this issue, at least there is still a modicum of transparency in our capitalistic and democratic society, and at the very least, a symbolic message has certainly been put forth, so perhaps consumers will view this in a positive light and come out from hiding. What isn’t clear, and rarely is, is how markets will ultimately digest such news. The equity markets rallied yesterday, and are up today, but they lost some steam today. Consumer confidence data swelled, surely due to the sigh of relief regarding the war in Iraq. If consumers start putting their wallets to work, we could see optimism spread, earnings reports come out better than anticipated, stocks move higher along with the dollar, and gold would have a difficult time moving dramatically higher. Gold hasn’t done much to attract the attention of even those with severe cases of gold fever, and if all cylinders of the US economic engine start to fire on high octane again, gold will struggle. Keep in mind that energy prices have dropped about $15 since their peak a few months ago, and we’re seeing gas prices drop as well. If crude continues to slide, this will be a HUGE boost to the economy as it amounts to what is essentially a tax cut for everyone. Also note that the Bush administration doesn’t seem to be giving up on the tax relief component of their economic stimulus plan. If a substantial and meaningful relief bill were to make it to Bush’s desk soon, it’s more likely than not that equity markets will see that as beneficial, and so will consumers. It seems the people who disparage the effectiveness of tax cuts as part of an economic stimulus plan are either those who don’t pay taxes, ultra rich and out of touch elitists, socialists or politicians. With the combat phase of the war behind us, with the Bush administration pursuing a meaty tax relief and economic stimulus plan, with consumer confidence apparently increasing, with interest rates still low, with inflation not out of control, with the SEC clamping down and fining Wall St. firms, with energy prices dropping, there is much to be optimistic about in regards to the US economy. Of course there is no way to predict if we’ll be hit by another huge terrorist attack which could undermine any economic progress, but it seems more likely than not that the economy will move ahead, as will stocks, and gold will have limited upside potential. This isn’t to say gold can’t move $30 or $40 higher at even given week, month, year, but we’ll really need to see the monetary/financial/equity environment spiral almost out of control before we see gold near $1,000 again. Prices are still above the 5, 10 and 20 period moving averages, if still long with TradeScope, be sure to follow along and keep stops tight. Daily charts show an inverted head and shoulders formation, which is bullish, and will target the 347 area. Support is near 329. 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.
July Silver: Close = 456.5, -3.0-cents
After running to a high near 469 late last week, prices have since stalled and shed about 13-cents. All the buying that drove prices higher doesn’t appear to have been buyers with a strong bullish conviction. The chart shows technical indicators have slumped and are now headed lower, and prices are also starting to sink below moving averages. 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, 29 April 2003 | Digg This Article
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