Video-August-14-2013-Archives-Daily-Show
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All That Glitters
Let's start with gold even though silver is the bigger story on the day.
The big sister precious metal found its legs on the news that U.S. producer prices were essentially unchanged in July. This softened the dollar for a while, but the greenback firmed and short covering and a bit of new interest in gold crept in. This allowed gold to recover practically all of yesterday's loss. This kind of volatility is indicative of just how sensitive gold is, and will be, to economic news and utterances from maverick Fed members until September's FOMC meeting.
However, there is also the slow dawning that Fed tapering is already baked into the price cake with gold. The after-effects of all the bond/mortgage buying will not disappear overnight either, so the promise of inflation hangs in the wind. One question to ask, though, is why analysts take so long to understand some very fundamental factors in the market. Ole Hansen, head of commodity strategy at Saxo Bank (Denmark) said today, "I think we need to see a print above $1,350 for at least a couple of closes and that could attract some more short-covering. We don't really need new buyers to come in and bring it back to $1,400. Short covering would be enough."
That certainly is optimistic and we fairly much agree except that we believe we will need some fresh participants to push the price over 1400 and hold it there.
Gold is up over 1% on the day.
Silver is continuing its climb, up almost 2%.
Silver futures have surged 18% in the current rally as brighter economic reports pushed investors who bet on lower prices to close out those positions. About 40% of silver usage comes via the production of items like circuit boards for computers and audio components, automobiles and solar panels. As a result, silver prices usually track economic-growth expectations.
Positive news out of the industrial sectors of China, Germany and France is keeping silver traders optimistic.
Of course there is also silver usage in jewelry-making. The metal has enjoyed a particular renaissance with Millennial generation kids (ages 18 to 32) who want to buy jewelry but can't afford gold. They also see silver as hipper, or hippy-er, as the youth of the 1960s did. Everything old is new again.
There is some talk, too, though that there is a bit of a silver shortage for industrial purposes and that is stoking a bit of fear and driving the price up.
It's great to see silver coming back.
Wishing you as always good trading,
Gary S. Wagner Executive ProducerMarket Forecast:On yesterday show we observed a price decline in gold which lined up with a 38% Fibonacci retracement from of the recent rally. It was my belief that this corrective wave was in line with our current Elliott wave count and I therefore made the following recommendation: “today’s corrective action has moved gold to a 38% retracement of that rally. In fact if gold can maintain a price point above 1316 (the 38% retracement), my recommendation is to add to your current gold position. ” One of the primary reasons for looking to add to our current long position in gold was that on our initial recommendation we did suggest reserving capital in case of a dip, because we were buying the breakout. It’s quite obvious that no dip ever unfolded, but yesterday’s lower price activity gave us an opportunity to enlarge our long position in gold. Over the next day we will be looking to trail our stops up. And on today’s video we will discuss our current exit strategy and target points for both gold and silver.
Proper Action: We will be raising stops in the next day or so
Maintain Long Gold @ 1313 Stop Below 1300 Maintain Long Silver @ 20.48 Stop Below 1965 .
COT LINK See previous weeks in Historical Commitments of Traders Reports.
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Gary S. Wagner - Executive Producer