What If They Gave A War And Nobody Came?
The problem with viewing the precious markets through the lends of possible military action is that politicians, diplomats and potential belligerents are more unpredictable than the weather.
In advance of the G-20 meeting in St, Petersburg, Russia, President Obama, while speaking at a joint press conference in Stockholm Sweden, denied that he set a red line in Syria. Refusing to pick up the burden the president said, "First of all, I didn't set a red line, the world did." What he really meant to say is that the U.S. Senate set the red line back in 1997 with a resolution written up by Senate Democrat Barbara Boxer and then-Senator Rick Santorum, a Republican, that dealt explicitly with Syria and weapons of mass destruction.
This had the effect of soothing world tensions and forced gold off its perch as a safe haven should the military action become more than an expensive wrist slap, which is what almost everyone now expects.
Of course, one can't predict what a renegade country like Iran might do - attempt to close the Straits of Hormuz, for instance - although Russian bluster seems to have simmered down for the moment. Russian President Vladimir Putin again warned the West about taking unilateral action in Syria but also said Russia "doesn't exclude" supporting a U.N. resolution on punitive military strikes if it's proved Damascus used poison gas on its own people.
He also said, "We work, we argue about some issues. We are human. Sometimes one of us gets vexed. But I would like to repeat once again that global mutual interests form a good basis for finding a joint solution to our problems." It sounds as if everyone is trying to find common ground. While in this email we look for clues as to how events affect gold, we are glad there is no rush to judgement concerning how, when or what scope the punishment of Assad and his gang will take.
U.S. economic news may have factored in quite a bit more strongly to the fall in gold today than war news. The Fed reported that the American economy expanded at a modest to moderate rate. This gives comfort to those who are looking for tapering of QE3 to begin sooner than later, which may put downward pressure on gold and silver.
U.S. auto sales were tagged as having reached their highest rate in 6 years. That, too, helped traders decide to move money back into equities, which have been faltering of late. U.S auto sales were on pace to move up by around 17% year on year.
"If these sales numbers are the best in six years, that points to an improving economy and that's helping the market," said Stephen Massocca, managing director at Wedbush Equity Management LLC in San Francisco.
U.S. chain-store sales rose by significantly more than expected in August. Separate reports detailed increased U.S. demand for imported goods in July (increasing the trade deficit) and showed continued growth in business activity in the New York City area, most notably in tourism, finance, and advertising and marketing.
On the economic downside for the U.S., businesses cut back on orders for long-lasting manufactured goods in July and into August. Additionally, U.S. consumers barely increased spending, held back by weak income growth. This adds up to less inflation. Wage stagnation is a problem for precious metals bulls because without higher wages, we will find it hard to find an inflationary trend.
The most critical report left before the Fed's Federal Open Market Committee on September 18th is the August employment report, due out Friday. This will give us the clearest indication of what the Fed might do with QE3. If the number is even slightly above 175 to 177K new jobs, the sense will be one of great relief: summer doldrums are over and the big fall business season is beginning.
Let's keep our eyes and ears open for inflation news. News on the "war" with Syria will just have to be taken with a grain of salt.
Wishing you as always good trading,
Gary S. Wagner - Executive Producer
On technical basis our current minor fourth wave is unfolding in a classic textbook manner, as a A,B,C corrective pattern. Within our current model we were looking for our minor wave three to be about equal in length and price move to the minor wave one. In fact the third minor wave concluded roughly 45 dollars from our initial target. Having entered a corrective wave four we have seen the sub count begin to unfold as wave A, and wave B have completed. In regards to wave B our model forecasted a rise in price roughly 50 to 75% that of wave A. Gold hit an intraday high of 1417 just two dollars shy of our upper band target of 1419. Today’s trading was the initial beginnings of what I believe will be our final concluding “C” wave. Having traded off roughly $20 on the day it is my sense that our current C wave will have at least a three count, and we are playing the current bounce of that middle wave.
Today’s video will highlight details of our current trade as well as our targets and strategy for exiting. This will be a very short-term trade at best, as I currently believe that this C wave will provide more downside in the days to come.
Proper Action :
Medium to High Risk trade
short term trade: Go long both gold and silver
Silver @ 23.51 Stop JUST Below 23.20
Gold @ 1393.50 stop JUST below 1384
This will be a short term trade as we are just playing the short cover bounce and stops must be TIGHT below daily lows
From the week of 05.17.2013
COT LINK See previous weeks in Historical Commitments of Traders Reports.
Gary S. Wagner - Executive Producer