-- Posted Thursday, 19 March 2009 | Digg This Article
| Source: GoldSeek.com
April Gold: Open= 928.7 High=963.5 Low=926.0 Last= 959.9 +70.5
After-hours movement in the gold market yesterday helped make today’s gain seem extraordinarily large, thought prices are really about $15 higher than late yesterday afternoon. Due to the advent of electronic trading, gold can be traded roughly 23 hours a day. The most import fact to take away from today is a continuation in the reversal that took place yesterday at 11:10AM PST, with the Fed’s announcement of committing further to opening up the printing press to help recovery this economy.
The net effect felt on the commodity sector was inflationary. Gold was up 7.5%, silver up nearly 13%, copper up 5%, crude oil up 6.0%, natural gas up 14%, and foodstuffs up 2 to 5%. Some of these moves may be exaggerated due to the nature of short covering but many traders are saying that this brings back inflationary fears to the forefront.
The US dollar index suffered another terrible day as confidence collapsed in its unit of value. The US Treasury announced it would be guaranteeing up to $5 billion to auto parts suppliers in case any of the US automakers go under. Again, the answer to many of our economic problems appears to be throwing money at it. How this will inspire foreign creditors to continue buying US debt will be put under severe pressure.
However, FDIC Chairman Sheila Blair is carving out some personal space today, stating that the government's strategy of deeming companies 'too big to fail' must be ended. It is not simply a matter of allowing huge institutions to fail but preventing the companies from becoming so large in the first place that their collapse would threaten the financial system, she said. The FDIC, of course, is not charged with any such regulatory authority, but it must deal with the aftermath of a financial crisis by backing deposits in the banking system.
It is this type of thought process we need to see more of out of the government that may instill some confidence in foreign creditors that we truly will not allow this type of crisis to reach such levels again, at least not for another 70 years, or so. Unless the US dollar can find strong buyers, the bias is upward for gold, and for many commodities. There is still much general economic weakness that we must deal with before rampant inflation can surface, but the deteriorating value of the dollar can certainly keep commodity prices from further plummeting.
The move back above $944 now puts bulls back in control of this market for the time being. The next upside objective becomes $1070 to $1094. As of this morning, the market was being to look more and more bearish in the short term, but when the facts change, one must change, as well.
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
Altavest Worldwide Trading, Inc.
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-- Posted Thursday, 19 March 2009 | Digg This Article | Source: GoldSeek.com
