Gold continues to languish as we enter the new year, which is not surprising with all the first quarter optimism generated. But the technical side will focus on last years’ lows holding, eventually promoting a test of 4th quarter highs, and then $1800. Whether we can take out the monthly highs on gold or not this year is the question. Ultimately, we think that $1800 comes out, propelling this market into the $2300-2500 area, but it may take until next year to get the markets going to that degree. In any event, accumulating on weakness still appears to be a solid long term technical approach.
Better inflation alternatives than stable silver
Gold, silver, and copper are all about the same price as a year ago. The base of trade in silver is significant; but it will take inflation or something dramatic to come out to the topside. There are other markets that might be a better fit for that type of thought process, though. At $30, silver is no bargain and does not have the inflation support that gold does, which would look to be the potential driver for higher prices. We prefer long positions in gold and like the spread of gold to silver.
Consider Owning Copper Calls
Copper may hold more of a key to the markets for 2013 than usually is the case. Tech support at $3.50 is pretty solid and the base of trade established on the Weekly charts should hold up. Given a turn in the internal indicators to the bull side, a challenge of $4.00 and possibly $4.50 is not out of the question. Users should move to extend coverage on weakness. Traders should look at $400 calls in the summer months, rolling forward if you need to in order to maintain the long position.
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