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-- Posted Thursday, 1 May 2003 | Digg This Article
June Gold: Close = $342.4 +$3.0
The dollar just can’t get a grip and continues to slip downwards, much to the delight of gold bugs. Once again, the June US dollar index sank to a fresh contract low against the EC and this provided buoyancy to gold. Financials also saw action with T-notes hitting new highs for the month. Stocks were backed into a corner mostly trading in the red, but technologies later came up for air, all the while energies relaxed a bit today. Weak manufacturing, productivity and employment numbers disappointed the equity markets in the early part of the morning, (be sure to keep an eye on the release of the April employment figures tomorrow). This morning, Greenspan threw some smoke onto Bush’s tax stimulus plan. On the one hand he said that increased deficits could cause interest rates to rise, but he also said that a reduction in spending in conjunction with tax cuts would be favorable. Sounds good to me. In any case, consumers are still afraid to spend, stock investors are still licking their wounds, businesses remain hesitant to seek capital for growth and hire new employees, and the two-year downtrend in the dollar is persisting. Until those scenarios reverse, we’ll see gold supported. The good news is that energy prices have declined, a tax cut may be on the way, the Home Affordability Index hit a 30-year high, mortgage rates are at 40 year lows, the war with Iraq is behind us, some dotcom stocks are doing well (eBay and Amazon come to mind), and the SEC is doing some house cleaning which will hopefully instill confidence back into the minds of investors, etc. Admittedly though, one does have to wonder what type of stimulus is needed before consumers get into action again, and one also has to wonder if there’s much more room for Greenspan to lower rates this summer in an effort to kick start the lethargic economy. Meanwhile, gold can easily move $30 or $40 higher any given week, and even if the economic landscape doesn’t fully deteriorate anytime soon, gold could still find the legs to break $400. However, if gold is to run to the moon and beyond like so many continually promise it will, the monetary/financial/equity environment will first have to spiral into a dark abyss. As you can probably tell, I’m really not one of those in the “doom and gloom” camp. At some point those folks could be vindicated, but it could be one week from now, or one century from now. If you’re bearish or bullish on XYZ market long enough, your prophecy is likely to be fulfilled at some point. As they say…even a broken clock is correct twice a day. On the chart, prices remain above the 50-day moving average and technicals are headed higher, although they are approaching overbought levels. If long with TradeScope, be sure to follow along and keep stops tight. Two days ago we said “Daily charts show an inverted head and shoulders formation, which is bullish, and will target the 347 area”, which has so far worked out well, we’re still looking to 347. Support is now 334. 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 = 477.5, +12.3-cents
We gapped higher once again and emphatically broke the recent high, now we’re knocking on 480’s door. Silver is making a nice run up on the coattails of gold. Prices already broke through 470, now look to the low 480’s as congestion and resistance, with 462 the next support level. However, do take note that there is bearish divergence on some technicals…they are not following prices higher. 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 Thursday, 1 May 2003 | Digg This Article
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