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-- Posted Wednesday, 14 May 2003 | Digg This Article
June Gold: Close = $352.5, +$2.3
We hit new nine-week highs on unexpected poor retail sales, which suggested the lethargic economy is perhaps more anemic than many had thought. This sent stocks wallowing lower and propelled financials such as US T-bonds and notes skyrocketing. The expectation is for rates and the dollar to continue to fall, which would support gold prices. The prospect for further easing by the Fed is becoming more and more probable, or at least that is what the markets are telling us. This obviously infers the US dollar will remain sliding lower, and that mean gold is likely to maintain its bullish posture. Today, the dollar slumped just a few points and is hovering near four-year lows, while the yellow metal hit fresh 9-week highs.
In the last few days we’ve heard Treasury Secretary Snow seemingly waffle a bit on his outlook for the dollar, but ultimately his ruminations can’t overpower the entire global marketplace. Remember, the “market” is “you and I”, not just the government. Also, like we referenced a few days ago, the dollar weakening isn’t necessarily a terrible occurrence, as “weakening” is relative. Through the early 90’s and into the early part of the 00’s perhaps the dollar was overextended. Also, when you consider the alternatives to the US economy, what is there…Germany with near 10% unemployment? Regarding economic competitiveness, there’s a great article at economy.com that I would encourage you to read, it’s called “Don’t Count on Europe”, here is the URL http://www.economy.com/home/article.asp?aid=2215. If the article ends up being correct, in relation to the Euro, the dollar will soon stabilize and recover, and in relation to the EU, the US economy will outperform…all of which suggests gold bulls may run out of fuel. It’s also interesting to note that global investor and “Market Wizard” Jim Rogers recently said that Greenspan is making a terrible mistake (actually, I think he called him a fool!) by printing money, as no country as ever debased their currency and successfully sparked their economy into prosperity. He said he’s been long Euros, but he also cautions that the recent spate of action is frenzy, and he wouldn’t be buying them now. So, for the near term, the inference is that he feels the DX is due for a correction, and that would infer gold is too! Time will tell if the Investment Biker is correct. Technicals remain overbought, with slow stochastics over 90, but do realize that indicators are never foolproof and prices can persist in spite of overbought/sold conditions. We’re in an undeniable two-month uptrend, but near term the market appears top-heavy and odds would suggest a pullback by the end of this week. If prices continue to skyrocket and I’m proven wrong, so be it, all I’m saying is that if you’re not already long, perhaps you should wait for a technical pullback. Taking a look at the XAU, notice the uptrend that began near 42 in late 00 is still in place. A large symmetrical triangle has formed beginning in late 01, look for the 60 area as support. If long with TradeScope, keep your stops close, pull some profits off the table and prepare for a swing lower to add at better prices. The $346 area reveals some support, with $360 as resistance. With futures and options one can just as easily go 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 = 487.2, +4.7-cents
The silver and gold markets might as well be conjoined as silver just can’t seem to march to it own beat. Gold is at a nine-week high and silver is near a three-month high. The latest Refco research regarding the World Silver Survey 2003 says that silver is likely going to remain in a wide range through the remainder of the year. Look for 468 as the next support level and the nearby high of 491 as resistance. Volume and open interest both jumped higher yesterday, but offer little directional clues right now. 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, 14 May 2003 | Digg This Article
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