Tension

July 17, 2014 - 4:50pm

 by Gary Wagner

Apparently the Malaysian Airline plane that crashed in Ukrainian territory was shot down by persons unknown at this point.

This signaled the precious metals markets to go higher. It also prompted U.S. Treasuries to hit higher prices/lower yields. Oil also zoomed.

Indicating that Russia has let the situation get out of their control, that countries two major airlines, Transaero and Aeroflot, canceled flights in the region as did a host of other international carriers. (Of course, this could be a case of the Russians wiping their fingerprints off the murder weapon, so to speak.

As the Canadian Leader-Post said today on its website:

"Traders were already cautious after the U.S. announced broader sanctions against Russia, targeting two major energy firms, a pair of powerful financial institutions, eight weapons firms and four individuals. The increased U.S. economic pressure is designed to end the insurgency in eastern Ukraine that is widely believed to be backed by the Kremlin."

The Russians better hope that the missile was not supplied by them. That would certainly lead to the E.U., spineless till now, jumping on board the harsher sanctions regimen.

This kind of geopolitical tension naturally leads observers to focus on other hotspot. And that helped gold and silver too. The other hotspot is the Gaza border where Israel has commenced its expected ground offensive. 

Additionally, the pace of homebuilding in the U.S. and the issuance of new permits slowed significantly in June. That data drove the dollar the dollar down modestly.

All of these factors weighed on equities as money stampeded to safety born of disaster.

A word of warning, though. One-off events like the downing of the airliner tend to fade quickly from the minds of investors and traders. Be aware of this instant amnesia factor.

As always, wishing you good trading,

Gary S. Wagner - Executive Producer

Sentiment Indicator:

Gold Forecast: Proper Action

This morning we issued a buy signal in both gold and silver.
Traders that took that call entered positions at the market.

Traders should be long gold at approximately 1316 and long silver at approximately 21.23.

Therefore:

Maintain your current long position in gold at 1316,
maintain stops below 1298.
Maintain your current long position in silver at 21.23,
maintain stops below 20.64.

Gold Market Forecast

Yesterday we spoke about a candlestick pattern, which if completed and confirmed, would trigger a buy signal in gold and possibly silver. Of course this trigger was technically based as it looked at a pattern labeled a "piercing line."

During yesterday's show as well as in our written commentary we spoke about the criteria and parameters needed to create the pattern, as well as the criteria needed to complete the pattern and trigger a buy signal.

Based on tragic events today this signal was triggered when this pattern was confirmed with a dramatically higher price in both gold and silver. Rather than wait for the day's trading to complete, which is typically when we would issue this signal, following the dramatic spike and a small retracement off the highs of 1324, we issued the signal when gold was trading at 1316.

Today's video will review the pattern as well as our signal and speak briefly about our exit strategy and price points that we are looking to achieve.