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-- Posted Thursday, 26 February 2009 | Digg This Article | Source: GoldSeek.com
April Gold: Open= 953.6 High=957.6 Low=932.2 Last= 946.5 -19.7 A regional California newspaper included four full page advertisements yesterday, for purchasing, gold and silver, in coin, ingot, and even jewelry form. This is a decidedly different take on precious metals when lately all the advertising seen has been for selling old jewelry and scrap for cash. Public interest in gold has been increasing in the past four months, or so. While not headline news, reports came out that the US Mint was backlogged on filling orders for the American Eagle. Some theorized that the US government was running out of gold. In reality, the Mint was simple unprepared for the constant rush of orders it was receiving and needed to bring up more inventory. Often, in commodities trading, a massive amount of public interest generally is a signal that the market is in its last legs. What typically brings the attention of the public to a certain sector is the media. Since gold prices bottomed in late October ’08, the media has been fairly quiet on the gold front when compared to the rally past $1,000 in early ’08. The general quietness in the media leads one to believe that this break in prices is merely a correction, that despite the overbought status, the high Bullish Consensus, and the promise of a US budget deficit reduction by 2012, a host of potential money is sitting on the sidelines. The Obama Administration is talking tough about halving the federal deficit and acting responsible when it comes to spending. Oh, they admit that they first few years of their budget will come with a large price tag, but that the economic recovery and their smart spending over the years will help them pay down the deficit. The unveiled multi-year budget, however, assumes that GDP growth will rebound to a positive 3.3% and then up to 4.0% over the next three years. This would put the economy back on par with the Dot.com boom of the 1990s. This highly improbable assumption will wreck any possibility of halving the $1.75 trillion deficit in only 4 years. The Administration would like to create some optimism in the American public, but honesty and integrity would go much further in restoring faith back into government. The US is asking for a lot of trust, i.e. money, from the American taxpayer and foreign investors, be they governments or private bond purchasers. President Obama stated in his speech to Congress that his Administration would demand accountability and responsibility, yet this proposed budget lacks an honest assessment of the economic times we are in. Obama’s own Treasury Secretary has drawn up a far more adverse economic scenario over the next few years in order to assess the balance sheets of the nation’s largest banks. Professor Jeremy Siegel of the University of Pennsylvania's Wharton School, conducted some great research on the investment return of stocks, bonds, bills, gold, and cash, from 1801-2002. Over that period, $1,000 worth of gold purchased in 1801 would be worth roughly $1,000 nearly 200 years later. It turns out to be a good placeholder of value. Cash on the other hand, suffers terribly from inflation since the creation of the Fed. $1.00 in 1801 would be worth roughly $0.06 today. It is little wonder that in the midst of one of the largest expansions of government spending in US history that investors are flocking toward a determined safe haven of value and away from cash.
One should note that investing in any product for the short term may not be a safe investment and is always subject to wide swings in volatility. That said, having some exposure to gold in one’s portfolio may be a smart hedge against possible inflation in the near future. Initial support comes in near today’s lows; in the low $930 range. Chart analysis shows that not only is $930 the top of the last consolidation range, but it was a price peak back in October of ’08, providing a horizontal support zone across the chart. Given the volatility of gold, a pullback could encompass a price range to as low as $880. Buyers should view this correction as a buying opportunity but may want to include some sort of put protection. Review charts on these markets here www.britefutures.com. Remember that futures and options can be used for bullish or bearish positions; 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 us at info@altavest.com. Visit www.altavest.com to request a Free Trading Kit. Keep in mind that there is risk of loss in all trading.
Thank you, Thomas Hartmann Altavest Worldwide Trading, Inc. 800 994 9566 x109 949 488 0545 x109 Fax 949 488 7625
-- Posted Thursday, 26 February 2009 | Digg This Article | Source: GoldSeek.com
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