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-- Posted Thursday, 15 May 2003 | Digg This Article
June Gold: Close = $352.8, +$.30
Economic data revealed the PPI dropped 1.9% last month, which is the largest dip in almost ten years. Labor numbers showed the average of weekly jobless claims fell a smidgen, but were still within expectations. All and all, the PPI was the main topic of conversation, and in connection with it, the term “deflation” was tossed around like a hot potato. Equities flip-flopped, the US dollar bounced 80 points and gold rode a roller coaster. The gold market started out with a gap higher, hit another fresh nine-week high, sank into the red, then caught its breath and closed above the waterline.
Keep in mind that the slide in energy prices likely accounted for a big portion of the PPI decline. Even so, the economy is anemic, after all, retail sales and consumer confidence are quite weak, so perhaps the specter of deflation will haunt us for sometime. Financials such as US T-bonds and notes continue to hit new highs, as the expectation is for rates and the dollar to continue to fall. If this happens, gold prices will remain supported. The US 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 else is there…Germany with near 10% unemployment? Regarding economic competitiveness, there’s a great article at economy.com that I once again 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, 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. As “Market Wizard” Jim Rogers recently pointed out, no country has 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 (the DX rallied almost 70 points today), and that would infer gold is too…and who am I to disagree with a wizard? Some technicals remain overbought, but the RSI is not yet overcooked. Remember though that all indicators have their flaws and are never foolproof. We’re in an undeniable two-month uptrend, but I’m still looking for a bigger pullback tomorrow. Prices did drop on an intra-day basis today, but only about $1 or so. We’ve retraced 50% of the drop that began in early February. Fibonacci resistance is near a 62% retracement of $360, with support at $345.30. If you’re not already long, perhaps you should wait for a period of consolidation before jumping in. 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. TradeScope remains long, but our stops are in terrific position. If you are long from the $324 area as per TradeScope and haven’t pulled some profits off the table already, you should. 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 = 478, -9.2-cents
Apparently the bulls had the day off, as they allowed the bears to fully infiltrate the pits and drive the market into the ground. As gold slumped, silver also did, but as gold recovered, silver remained in neutral. Gold is at a nine-week high and silver is near a three-month high, with silver prices almost forming a bearish engulfing line candlestick today. 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. A price of 487.5 was the high today, is that going to be the zenith for a while? 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, 15 May 2003 | Digg This Article
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