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-- Posted Wednesday, 19 April 2006 | Digg This Article
METALS: OVERNIGHT CHANGES THROUGH 4:00 AM: GOLD +4.20, SILVER +25.50
London Gold Fix $623.75 +7.00 LME COPPER STKS 119,050 ml tns +7,750 tns
GOLD stks 7.623 ml oz, Unchanged COMEX SILVER stks 124.7 ml oz,
Unchanged OVERNIGHT ACTION: Rather healthy follow through buying interest was seen overnight. GOLD: OUTSIDE MARKET DEVELOPMENTS: With the Dollar gapping down and reaching the lowest level since the mid January lows, it would seem like the currency impact on gold will remain supportive in the action today. It also appears like action in other metals markets will facilitate the bull case again today in gold. However, oil prices are a touch lower today ahead of critical oil inventory data this morning and possibly because a diplomatic meeting in Russia regarding Iran, failed to yield a consensus on a course of action. On the other hand, global equity markets are positively positioned again this morning, following favorable interest rate developments from the US Fed meeting minutes yesterday afternoon.
GOLD MARKET FUNDAMENTALS: With a number of well known market players predicting either record prices in gold or simply calling for a rather significant extension of the current run, it is clear that expectations remain very bullish. With one well known mutual fund manager suggesting that the all time highs in many base metals markets is laying the ground work for all time highs in gold prices, it is not surprising that the gold market comes into the action again today with an impressive follow through bid. According to some analysts, higher prices still haven't prompted aggressive attempts to increase gold production and with the process of opening new mines, a rather extensive undertaking, the significantly higher price projections do appear to have fundamental reasoning. On the other hand, a number of operating mines have managed to post record or expanding production tallies but given the rapidly rising investment and physical demand for gold, those gains in supply are marginal at best. With another new high in gold overnight and the rest of the metals showing follow through gains, we have to think that June gold is poised to rise to $630 on the current pulse up. In fact, with the Dollar gapping downward and the stock market up again overnight, about the only outside development not playing into the bull hands is the energy complex. However, we would not expect the energy price action to drag on gold prices for long, as there appears to be a number of major supply issues still confronting the energy markets. However, the spin from the FOMC meeting minutes (that were released yesterday afternoon) were perhaps the most bullish development in gold for the past two months. In other words, the prospect of not seeing the Fed tighten in June means that the US and world economies have a better chance of seeing accelerated growth, which means the environment for investing in gold and for strong physical demand for gold is improved. We doubt that the CPI report this morning will have that much of an impact on gold, unless it reiterates the idea that the Fed will go on hold and that will in turn lift gold further. The trend continues with $630 and $635 targeting for the June gold today. SILVER: OUTSIDE MARKET DEVELOPMENTS: There would appear to be no stopping silver as it is getting another solid dose of fresh investment interest and is also seeing the macro economic benefits of a dovish Fed and a rising stock market. It should also be noted that copper price action continues to facilitate aggressive spec and fund buying interest toward all the metals. In fact, some players seem to think that soaring base metals prices mean that precious metals prices are significantly undervalued on a historical basis.
SILVER MARKET FUNDAMENTALS: So far there hasn't been much of a change on the supply front in silver, possibly because there really hasn't been enough time for producers to effect change following the compacted price run-ups. While most of the Press is suggesting that investment or paper demand is the main catalyst behind the current run-up, there doesn't seem to be much concern that the investment flow is soon to "tapped out" of buying capacity. Those looking to historical levels for the next key psychological resistance points on the charts might point to the June 1982 high of 15.43, otherwise the trade will be left to consider closer-in even number benchmarks of $14.50 and $15.00. With the May silver contract overnight managing to climb directly above the critical psychological price point of $14.00 without pause, it is clear that the bulls are seeing little resistance early today. Apparently the fear of silver margin increases haven't discouraged many buyers as silver charged above another psychological resistance point on the charts overnight and would seem to have residual buying capacity on the sidelines. Certainly a number of short term technical indicators are into overdone status, but with favorable leadership from gold and more importantly the equity market we have to think that nearby silver has a chance to reach $14.50 in the near term. Who would have thought that a muted inflation report from the PPI yesterday would be cause for a significant upward extension in silver, but as we have said a number of times over the last 6 months, the best development for the bull camp, is the view that the economy is going to continue to expand. Certainly concerns over Iran and oil are also supporting prices, but in silver, the need for growth and higher base metals prices is the real key to the bull case. Near term support is seen at the recently gained $14.00 level and close-in resistance is pegged at $14.20. METALS TECHNICAL OUTLOOK 4/19/2006 COMEX SILVER (MAY) 04/19/2006: A new contract high was made on the rally. Rising stochastics at overbought levels warrant some caution for bulls. A positive signal for trend short-term was given on a close over the 9-bar moving average. Since the close was above the 2nd swing resistance number, the market's posture is bullish and could see more upside follow-through early in the session. The next upside target is 1411.9. The 9-Day RSI over 90 suggests the market is extremely overbought. The next area of resistance is around 1400.3 and 1411.9, while 1st support hits today at 1356.8 and below there at 1324.9. COMEX GOLD (JUN) 04/19/2006: The rally brought the market to a new contract high. Momentum studies are trending higher but have entered overbought levels. The market's short-term trend is positive on the close above the 9-day moving average. It is a mildly bullish indicator that the market closed over the pivot swing number. The near-term upside objective is at 629.4. The market is becoming somewhat overbought now that the RSI is over 70. The next area of resistance is around 627.2 and 629.4, while 1st support hits today at 619.4 and below there at 613.7.
To those of you who have emailed or commented on the daily commentary regarding price manipulation: our daily comments are strictly to provide our customers and subscribers with news, which may influence the markets marginally on a day-to-day basis. This is not the forum to address price manipulation.
There are multitudes of ways in which one can participate in a bullish or bearish perspective in the metals complex. Mining shares as well as purchasing bullion are just a few. Another investment of choice is through futures and/ or options on futures contracts. If you have traded, then you will be able to appreciate the brokerage service that Nell Sloane and Group can offer. If you have not, and wish to learn more about it, please feel free to contact her staff so that they can forward you some educational literature for your review. Please contact Nell Sloane or a member of her team at 800 238 2610.
-- Posted Wednesday, 19 April 2006 | Digg This Article
***This report includes information from sources believed to be reliable and accurate as of the date of this publication, but no independent verification has been made and we do not guarantee its accuracy or completeness. Opinions expressed are subject to change without notice. This report should not be construed as a request to engage in any transaction involving the purchase or sale of a futures contract and/or commodity option thereon. The risk of loss in trading futures contracts or commodity options can be substantial, and investors should carefully consider the inherent risks of such an investment in light of their financial condition. Any reproduction or retransmission of this report without the express written consent of Hartfield Management, Inc. is strictly prohibited.
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