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-- Posted Friday, 16 May 2003 | Digg This Article
June Gold: Close = $354.90, +$2.1
On the last day of the trading week, gold hit another fresh nine-week high, and closed up about $6 from last week, with the boost provided by the continuing weakness in the US dollar. Economic data this week 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. Today’s consumer confidence report shows that numbers did perk up for May, but they still aren’t too optimistic. Equities went absolutely nowhere this week, but the US dollar hit fresh four-year lows. Energy prices have plummeted in the last month or so and this accounted for a big portion of the PPI decline. Even so, retail sales and the economy are anemic. Financials 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.
Bill Gross of PIMCO, the world’s largest Bond managers, says that the economy will grow perhaps 2% per year and that interest rates will remain low for at least several years. In this environment he feels investors should be pleased with 5 to 6% returns on their money, and that they shouldn’t anticipate double-digit gains from stocks or bonds as they were so accustomed to just a few years ago. If he’s correct, if the Fed attempts to inflate our way to prosperity and rates stay low or get lower, if the dollar drops more, if equities meander, it’s highly probable that gold will stay in an uptrend. Yes, I know I’ve referenced the below article a few days already, but it’s worth referencing to gain a better global perspective. 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? 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. 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 had anticipated a large pullback this week and didn’t get it. 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 = 479, +1.0-cents
It appeared as if trading activity was tame, with little volume, but nonetheless the silver market slipped off the high above 484 only to settle just 1-cent higher at 479. Gold is at a nine-week high and silver is near a three-month high, and the bearish engulfing line candlestick is so far working. 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 recent high, 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 Friday, 16 May 2003 | Digg This Article
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