|
-- Posted Monday, 19 May 2003 | Digg This Article
June Gold: Close = $364.4, +$9.5
Phew! Prices rocketed higher by over $10! Another collapse in the value of the US dollar, now at another new four-year low, was the catalyst for the spike in gold prices. Housing starts data revealed a big slow down, the stock market hit the skids (at one point today 29 of the 30 Dow components were in the red), and financials continued their uptrend. Crude has rallied $4 in the last month, and has now retraced 50% of the drop that began near 33.50 in early March. 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 economic growth are anemic, and consumer confidence is tepid at best.
According to Yahoo News, “In comments to reporters on Saturday at an economic summit in Deauville, France, Mr. Snow said the U.S. government no longer measures the dollar's strength by its market value against the other major currencies -- the long- accepted premise of that policy. Instead, Mr. Snow said "strong" refers to such aspects of the dollar as the confidence it inspires in the public and its resistance to counterfeiting.” This of course implied the US has no plans to intervene and support the dollar, and therefore the dollar sank again, losing over 100 points during the session. The continued weakness in the dollar has prompted a strong uptrend in gold. The Fed continues to inject liquidity into the system by purchasing treasuries, and they are doing this to stave off deflation, which they feel is currently a bigger threat to our economic health than is inflation. Of course, they could be correct, after all, they only need to look to Japan as evidence of the mire a country can suffocate in. 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 Mr. Gross is correct, if the Fed attempts to inflate our way to prosperity, if 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. The pullback we anticipated last week never fully materialized, only a pullback of small magnitude surfaced. Prices persist on running higher day after day, and this latest run is a good example of why we shouldn’t try to out guess or out time the markets. Sometimes you simply have to get on board and hang on. After all, isn’t the point of trading to cut losses and allow profits to run? We’ve now retraced more than 62% of the drop that began in early February, the next Fibonacci resistance is a 79% retracement near 371. The next support level is now 353. If you are long from the $324 area as per TradeScope and haven’t pulled some profits off the table already, you should, and be sure to keep stops tight! 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 = 482, +3.0-cents
While not as earth shattering as gold, action in silver did attract some attention today with prices jousting around in a 6-cent range. Gold is driving the silver market and with the yellow metal being thrust into the spotlight thanks to a weakening dollar, silver remains 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. 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 Monday, 19 May 2003 | Digg This Article
Previous Articles by Altavest Worldwide Trading, Inc.
|
