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Submitted by Konrad Urbanowicz on Monday, May 13, 2013 - 18:03.
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Predictable Friday 5/10/2013
You're a big-time day or other short-term precious metals trader. It makes no difference whether you're in the spot, futures or ETF side of the game. Friday approaches. You know a number of things.
You can short and rest easy for 72 hours or more until Asian markets open on Monday night New York time.
You know that any buying of physical gold that might take place in China, India, and other gold-crazy countries and its effect on prices won't show up at least until Monday, noon, New York time. Yes, there will scattered reports about the "Chinese housewife," or "Mrs. Watanabe," Japan's counterpart. But tabulations won't be folded into exchange prices for many hours.
You also know that next week is a slow news week, so you might even have more downside room if you're risk friendly.
Tied to any of the above is a desire by people - investors - to feel calm and have an anxiety-free weekend.
Today Fed Chairmen Ben Bernanke addressed an issue that we have touched upon briefly in the fundamentals portions of our newsletters previously: "reaching for yield." We name names - the equities markets - whereas Bernanke leaves the "most wanted" names off the poster. (What else might it be, Ben?)
The high degree of speculation involved in the stock markets should be frightening to anyone even casually watching the financial news. The speculation is a result of ultra-low interest rates set by the Fed that have no strings attached - that is, banks need to have fetters put on them that will force real investment in American enterprise, not in speculative investments that chase, say, a 3.2% yield when growth in a certain stock simply is not producing enough profit to really cover such a yield.
Particular culprits in this growing pyramid scheme are insurance companies who, let's face it, must produce a certain amount of income via investment to cover their various liabilities.
Regardless of which quarter this speculation comes from, it has the ancillary effect of wringing money out of other instruments, such as precious metals, where the "yield" may take longer to develop but is on firmer footing.
We stop short of saying outright that there is a speculative bubble in equities, but more evidence is mounting every day telling us that one is imminent. (This is not to say that there aren't very steady stocks that produce yields in line with actual bottom lines.)
That is not good for the country as a whole, but it may be quite good for gold and silver traders - eventually. Once the shakeout occurs, that money will seek a safe haven.
On a more specific and less theoretical note, look for physical buying to blast off again if gold stays below 1450 during the early part of next week. Never underestimate the "Chinese housewife."
As always, wishing you good trading,
Gary S. Wagner - Executive ProducerMarket Forecast: Today’s trading activity and its wild swings come as the dollar extends its upside rally and comments by Federal Reserve chairman Ben Bernanke. On a technical basis although gold broke drastically below major support found that 1430/1440, it did manage to recoup much of its losses today closing off only $11 at 1447. Although it is clear that there is major support down in the low 1400s, it is the strength of the US dollar along with economic data that should influence the price of gold next week. The fact that gold could not close above 1470 lends support to the bearish faction in gold. Still the verdict is not in as to whether or not the lows reached when gold hit 1320 signaled a key reversal and end to the corrective phase in gold.
Proper Action:Awaiting signal
5.7.13: long gold @ 1452 out @ 1460 + $ 8.00 ||| silver @ 23.60 out @ 23.75 + .15
From the week of 05.03.2013COT LINK See previous weeks in Historical Commitments of Traders Reports. |
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Gary S. Wagner - Executive Producer