Video January 24 2013 Archives-Daily-Show

April 26, 2013 - 9:16pm

 by Gary Wagner

 

Analysts are offering up a host of reasons that attempt to explain gold's tumble the last two days.

 

1) Safe-haven demand falls off because of the trick play in the U.S. House regarding the debt ceiling. (That news was well-known Monday and Tuesday.) 2) The drop in jobless claims to a five-year low might have had an impact on precious metals, but seriously, the trend has been there all along, and people in the know pretty much had the numbers under their hats last week. 3) And then there is the - yawn - India import tax on gold, something that's been pulling into port for a year now.

 

So, we are left with technical sell-off action (see below for an elaboration); the upcoming ending of options; and general "feelings" that traders sometimes get that the market is overbought or oversold. "Gut instinct."

 

We opt for bits and pieces of "all of the above" but more critically would cite the International Monetary Fund's report issued yesterday on the world economy's growth probabilities and a description of the continuing crisis hounding us all. It is far more crucial to our strategies as precious traders.

 

Over all, the fund projects global growth of 3.5 % in 2013 and 4.1% in 2014, up from 3.2% in 2012. In the years immediately preceding the global downturn, economic growth ranged from 4.5 to 5.5% per year.

 

That is sobering enough for those of us who like to peg the idea of precious metals price rises to growth and inflation, risk plays and portfolio diversification, which normally comes in good times. More sobering, though, are the IMF's warning, especially about the United States.

 

To the deficit hawks, the IMF said bluntly, "If crisis risks do not materialize and financial conditions continue to improve, global growth could be stronger than projected." Sounds all well and good, doesn't it? The fund report adds, ""However, downside risks remain significant, including renewed setbacks in the euro area and risks of excessive near-term fiscal consolidation in the United States. Policy action must urgently address these risks." "Fiscal consolidation" means budget cutting and an end to monetary easing.

 

Chief Economist for the fund Olivier Blanchard put a fine point on this warning, saying, "Financial market optimism should not lead to policy complacency." He also said that the United States must make it a priority "to avoid excessive fiscal consolidation in the short term, promptly raise the debt ceiling and agree on a credible medium-term consolidation plan."

 

As always, wishing you good trading,

  

Gary Wagner 

  
Executive Producer
The Gold Forecast

gary@thegoldforecast.com 

On Skype Gary.S. Wagner

 

  

 

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Proper Action

 GOLD & SILVER:

 Trades should have been closed yesterday or this morning.

 

 Long gold @ 1659 out at  1678 + $19 

 Long silver @ 30.23 out at 31.80  + $1.57  

 

 

 

Yesterday we spoke about the possibility that the current impulse wave we were in was coming to an end. The distinction between whether or not a market is simply consolidating or correcting is a very difficult projection at first, but becomes clear as it unfolds. Such was the case in both gold and silver. In the case of gold our first clue was the fact that recent attempts to trade at and above $1700 were unsuccessful. Our second hint was the softening of prices after gold was unable to take out 1700. My recommendation yesterday was to cover positions on any real sign of weakness, and we certainly got that through trading yesterday as well as into this morning. Traders that took that warning most likely exited their gold trade last night when it was trading off about 8 to 9 dollars lower on the day. That being said, you would've exited the trade with approximately $15-$20 and profit. On today's video we will look at a potential A,B, C corrective wave model that we now appear to have entered. We will speak about different scenarios and ways you can look to work within the confines of this corrective wave.

 

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