-- Posted Friday, 6 March 2009 | Digg This Article
| Source: GoldSeek.com
April Gold: Open= 934.2 High=945.5 Low=930.6 Last= 938.2 +10.4
Weakness in the dollar and continued deterioration in the stock market provided a nice boost for gold today. Clearly, stock traders are very concerned that the government does not have a reasonable plan in place to encourage economic growth. There is more and more talk of waiting to see capitulation occur in the markets, when the masses tell their brokers to just get out at any cost. Some are not waiting for the other shoe to drop and are buying gold as a hedge.
While yes, stocks are trading at fire sale prices and eventually will be a good buy, there is no rule that stocks cannot grind lower for months. There is no rule that says that even when unemployment numbers flatten out, the market must rally upward. The example of the Japanese should bear that thought out. We have wandered into a thick Briar Patch and there may be no easy way out. What could be next?
There's a nice story on Bloomberg today, chronicling the moves of the hedge fund 36 South Investment Managers. This New Zealand based fund will close its Black Swan Fund, which gained 236% in the past twelve months by buying long term puts in a number of different sectors, from interest rates to stock indices and commodities. What is the next move for 36 South? The hedge fund is planning a move to London to raise more money and start an inflation hedge.
The US government is pumping out trillions of dollars in an effort to battle this recession. The EU and other European neighbors are making billions of euros. Most of this money has simply been taken and put on the sidelines. There will be a rush to use that money when the time comes and it is doubtful that the Obama Administration and the Fed have what it takes to act aggressively enough to raise interest rates severely enough to limit the glut of money that awaits. That is a scenario that scares people but many are eventually preparing for buy buying gold futures, gold mining stocks, gold shares (ETFs), and gold coins.
The correction in gold prices may be over. Gold had trouble gaining any traction above $943 today, despite six separate attempts to make headway. Aggressive traders can look to buy weakness in gold and use a stop below Wednesday’s lows ($900.4). The chart pattern looks little in the way of a top formation and merely that of a sharp correction as seen during the first two weeks of this year.
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.
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Thomas Hartmann
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-- Posted Friday, 6 March 2009 | Digg This Article | Source: GoldSeek.com
