-- Posted Monday, 14 August 2006 | Digg This Article

INSIGNIA CONSULTANTS
Precious Metals Market Update for 14th August, 2006
GOLD	SILVER
COMEX GOLD DECEMBER FUTURE -- $640.80	COMEX SILVER SEPTEMBER FUTURE -- $1188.50
EXPECTED TRADING RANGE
GOLD -- $618.40 -- $656.50	SILVER -- $1138.0 - $1256.00
COPPER AND CRUDE OIL -- EXPECTED TRADING RANGE
COPPER SEPTEMBER -- $352.40 - $378.30	NYMEX CRUDE OIL AUGUST  - $72.65 - $78.10
MULTI COMMODITY EXCHANGE OF INDIA (MCX)
GOLD OCOTBER FUTURE/10 GRAMS	SILVER SEPTEMBER FUTURE/KG
Rs.9,520- Rs.9,840	Rs.17,900 - Rs.19,050
COPPER AUGUST FUTURE	CRUDE OIL AUGUST FUTURE
Rs.339.00 - Rs.372.50	Rs.3,320 - Rs.3,540
GENERAL MARKET CONDITIONS
Gold and silver opened the week on a weaker note as gold December future fell to a low of $637.10 while silver September future fell to a low of $1176.00 on news of cease fire between Israel and Lebanon. Crude oil also fell after British Petroleum said that it will keep half of its Alaskan oil. Crude oil prices include a risk premium of supplies disruptions and storms in the Gulf of Mexico and if either of these factors do not happen over the coming weeks crude oil as well gold and silver will fall further.   It’s all about hedge funds and high money as far as metals are concerned. Over the weekend I had a word with some of the London Metal Exchange (LME) brokers and copper traders in India. The price movement in copper as well as other commodities is a nexus between mine owners and hedge funds. The strikes in copper mines across the globe which we hear day in and day out is all fudged in order to manipulate the prices. Retail investors are increasing their portion of investments in commodities especially precious metals and base metals which have less variety like copper, zinc, aluminum etc. The hedge funds hoard these commodities and create artificial shortage, play with the  London Metal Exchange (LME) stock piles and manipulate the prices. The end result is retail investors making losses. Copper prices in India are below international prices and some physical dealers have stopped their trade due to ever increasing volatility or exporting their current stocks.   After the slide in gold, silver and base metal prices after May 2006, retail investors have brought gold, silver and copper on rallies and sold on any hint of a fall. The end result is that a great deal of them have invested at the highest prices and sold at the lowest prices, only for the stop losses to be hit or open position getting squared off due to a margin call. Once retail investor incurs a loss, they increase the trading lots in order to recover the loss and enter the vicious circle of constant losses in trading. This is scenario in India as well as other parts of the world as far as retail investors are concerned. I have traveled to different parts of India and also spoken to investors over the phone in places I was not able to go. Indian retail investors have incurred huge losses in not just in metals but in agri commodities as well after March 2006. As far India is concerned retail investors trade in rumours, copy their brokers/punters and never uses stop losses.   Commodity markets are such that it is very easy is to double the investments in a few months but at the same times the losses can be even five hundred percent. In every speculative activity, one person’s gain is the other person’s loss. Speculative markets do no create wealth. It is just a transfer of wealth from one person to another. My advice to investors in gold, silver and other commodities is that they should use strict stop losses even on the long term investments (other than gold and silver), make informed decisions and do not trade in every market movement.   Gold and silver fell the previous week as the US dollar gained on expectations that the Fed will raise interest rates next meeting. Economic numbers from US are showing that growth is here to stay as retail sales increase. Foiled terror attack failed to have any impact on gold and silver. Crude oil prices fell as tighter airport security norms may prevent people from traveling. This is a summer market and volumes are nowhere near the peak and volatility will rise for the rest of August. Better to use a combination of bull and bear spreads.   Geopolitical risks are not impacting any markets as traders know that they are here to stay. Newton’s third of law of motion that every action has an equal and opposite reaction is the reason for the rise in global terror threats. Here is a look at the events for the same. US supplies weapons to Osama Bin Laden and Saddam Hussein in Afghanistan and Iraq in order to remove Russian from Afghanistan during the last phase of cold war, supports Saddam Hussein in order to defeat Iran. Osama bin laden which was cat in the 1980’s became a tiger in the 1990’s with the help the US supports, the same with Saddam Hussein. Later US attack these countries and their troops oppress the people of these countries. USA is following the British policy of “Divide and Rule” among the Islamic nations. The key reason is to control crude oil as well as maintain the supremacy of the US dollar. Due to the US oppression on Islamic nations, their people have united and the rise in global terror which is outside the control of US and its allies. Gold and silver will rise due to uncertainties in geopolitical risk. One should use the August dips as an opportunity to invest for the medium to long term.
GOLD
Gold has an initial support at $634.00 and key short term support at $621.00. On the higher side $645.50 and $652.50 are the initial resistance with $652.50 as the key short term resistance.
SILVER
Silver needs to hold $1192 to prevent a fall to $1138 and $1071. Silver September futures are expiring and with every fall in prices the spread between September future and December future will rise. On the higher side $1237 is the initial resistance with $1257 as the key short term resistance.
Happy Profitable Trading
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Disclaimer : Any opinions as to the commentary, market information, and future direction of
prices of specific currencies, precious metals, base metals, or equity indices reflect the views
of the individual analyst, In no event shall Insignia Consultants or its employees  have any liability
for any losses incurred in connection with any decision made, action or inaction taken by any
party  in reliance upon the information provided in this material; or in any delays, inaccuracies,
errors in, or omissions of Information.

-- Posted Monday, 14 August 2006 | Digg This Article

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