-- Posted Monday, 9 July 2007 | Digg This Article

EXPECTED TRADING RANGE
GOLD AUGUST  -- $651.20 -- $667.00	SILVER  SEPT   -- $1256.50 - $1320.00
GENERAL MARKET CONDITIONS
This is one of the dumbest way of trading which I have ever come across. One of my clients in the Rajkot (Gujarat, India), brought 2 lots of MCX gold August future on 5th July, 2007 (Thursday) at INR 8640 and INR 8612 per ten grams. When gold started falling the same day he sold 2 lots of MCX silver September future at INR 17,225 per kilogram as an hedge. The next day on 6th July, 2007 (Friday), when gold started falling just after the June payroll numbers he squared off/sold his 2 lots of gold longs at INR 8547 per ten grams (low of the day INR 8542). Since silver started rising he exited his silver short positions at INR 17280 per kgs. In both the transactions he made a loss. Total loss of INR 19100.   Lesson from the above The hedging done would have minimized the loss had gold if silver short positions was squared off at the same time when gold long positions was squared. When MCX gold august was at 8547 silver September was at 17070. The profit from silver would have reduced loss to INR 9800 instead of INR 19100. 1)     Please do not try to speculate while hedging. 2)     Silver always does fall more than gold. In a rising market, silver always gains more than gold. 3)     In the event of a trade going against you, minimization of loss should be the first priority. 4)     Trading/profitable opportunities comes every day, one needs to be patient and identify the same. ( This is just an excerpt from the weekly report).     Silver showed true form after a long time as September future fell to $1242 only to race to $1286.50 quickly. I have been yearning for silver to show its true colour and Friday’s I got a glimpse of it. Historically silver has been the most volatile metal after nickel and copper. However over the past one year silver has been more or less predictable. Silver makes a breakout (up/down), thereafter consolidates in a range thereafter for a week or ten days and once again creates a new trading range. This has been observed over the past one year. Therefore it has been very easy to make profits in silver using stop losses in 2007. Infact in 2007, I found gold more volatile than silver and that stop losses are bound to be hit in gold. But Friday’s move will change everything for silver. Fundamentally silver is so bullish that I dare not go short in silver. The underperformer of 2007 will be the best performer in 2009. However in the short term, it is in neutral zone and still not completely out of the bear grip.
COPPER -- SEPTEMBER FUTURE
Copper can target $369.30 and $378.20 as long as it floats over $360. Only a consolidated fall below $347 will result in $337.60.
NYMEX CRUDE OIL -- JULY FUTURE
Crude oil needs to hold $71.25 for $73.67. On the lower side $69.76 is the initial support with $66.80 as the key support.
Happy Profitable Trading
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-- Posted Monday, 9 July 2007 | Digg This Article

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