-- Posted Monday, 16 November 2009 | Digg This Article
| | Source: GoldSeek.com
Dec Gold: Open= 1119.6 High= 1144.2 Low= 1119.5 Last= 1139.5 +22.8
Gold prices touched new highs today, which is a phrase that perhaps will be worn out in short order. A number of factors helped push gold higher today, with perhaps the main reason coming from the announcement out of the Asian Pacific Economic Council, which represents 23 nations, that the group will maintain economic stimulus measures until more signs of durable growth are found. This announcement comes on the heels of the Group of 20’s decision, of the same accord. Decisions to maintain easy-money policies will keep the U.S. dollar weak.
With President Obama traveling to Asia this week, the Federal Reserve Chairman and Treasury Secretary went public about the dollar, perhaps a mea culpa of sorts to placate some scorn the Chinese are surely dishing up about the importance of its trillion dollars worth of assets it holds.
While Geithner took the tired approach of repeating the ‘we believe in a strong dollar’ mantra, Bernanke took an interesting step in even talking about the dollar’s value, which is a matter generally reserved to the Treasury.
He noted that the dollar’s decline has played a part in the rise of commodity prices, but believes that “inflation [is] likely to remain subdued for some time.” At least the Fed is admitting there is a potential problem with the dollar. Bernanke and co. were on the wrong end of forecasting commodity prices in 2007, misreading the backwardation of crude oil as a bearish indicator when in fact the market was preparing to explode higher.
The U.S. dollar has fallen 16% since mid-March and roughly 40% since 2002. The savvy traders will note that gold prices bottom around the time the U.S. peaked. As the dollar appears headed towards re-testing the 2007 index lows around 70.00, investors are fearful of holding cash and so are buying stocks, buying commodities, buying art, etc. What is of declining value is the dollar and the winning strategy over the past eight months has been converting those dollars into tangible goods.
The first major correction we see in gold and stocks will come when the Fed makes its decision to raise interest rates. At that juncture the market will understand only one known fact: times are changing. After that decision, and the winding down of easy-money policies, will the economy have recovered enough to sustain growth? Will the economy head towards a double-dip if real-estate crumbles again? Will the U.S. continue to under-perform versus other major economies?
Or will confidence return to the U.S. and the dollar finds renewed faith amongst investors? These questions, or more correctly, the answers to these questions will be key in determined the trends of markets in the second half of 2010.
Until then, the game is fairly straight-forward. The U.S. dollar will remain weak until the necessary forces are acted upon it to halt its slide. Commodity prices, in general will positively respond to a weaker dollar, though traders need to still key-in on supply/demand fundamentals. Not all markets are trending higher, i.e. natural gas, feeder cattle, so do due diligence.
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 our online paper trading service BriteTrak, contact me at tom@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 Monday, 16 November 2009 | Digg This Article | Source: GoldSeek.com
