Fear But Not Enough To Drive Haven Demand

February 11, 2015 - 4:40pm

 by Gary Wagner

Today’s market can be characterized as cautious, rather than fearful. Money went to the sidelines ahead of a meeting by European finance ministers to discuss the future of Greece, and in all likelihood devise a plan to keep the struggling country with no visible means of support from exiting the euro-zone.

That is no walk in the park. Greece is a troubling region within the generally vibrant economy of Europe. The fear factor could easily arise if he trouble spreads to Italy (its southern half is like Greece except more corrupt), Spain, Portugal and even Ireland.

The conflict in Ukraine is not adding any certainty to the volatile ouzo being poured by Greece. The one bright spot for Europe in the crisis is that France and Germany are taking the lead and leaving the U.S. out of it for the nonce. Although this is a time when everyone in Europe wishes Great Britain were more tied in to the continent geo-politically.

The U.S. dollar was stronger today, but it had little important effect on gold’s price. The Dow and the S & P were down and NASDAQ up, all marginally. It seems investors are re-appraising the markets as we push deeper into the new year and not terribly worried about the crisis or two militarily. They are worried again, though, about the price of oil. That distinctly weighed on the Dow.

West Texas crude is closing under $50 today unless some big buyer steps in. Inventories are high, demand is slack, and waiting in the wings are big producers in the U.S. and Canada should the price get back up to roughly the $65 range. Demand may be stimulated by a late onslaught of winter in the northern climes of North America. But, our understanding from reading about automobile driving behavior is that even the 20-t0-30-cent rise in gas prices is keeping people off the roads more. Consumers are tough birds to figure out.

The yield of the10-year U.S. Treasury note popped over 2.00% earlier in the day after a successful sale on the open market. It has since slipped back below that mark. What this means is that there is a good amount of confidence in the country’s prospects. Even though paper’s yield is up off late 2014 lows, 2.00% is still impressively low.

The U.S. Powerball jackpot has hit $500 million. Apple is valued at $700 BILLION. Imagine if a person had taken his weekly “investment” in Powerball and kept plowing it into Apple stock, say, 20 years ago. Watch your pennies and the dollars take care of themselves.

Wishing you as always, good trading,

Gary S. Wagner - Executive Producer

Gold Forecast: Proper Action

Our protective sell stop was hit today when gold prices went to 1227

We are flat with no open positions in either gold or silver

Long gold @ 1240 our @ 1227  -$13.00 on trade ($1300 per 100 oz contract)

Gold Market Forecast

Gold today traded dramatically lower, actually breaking to a four-week low on the day. More importantly gold prices broke below the 61% retracement of this most recent rally when prices went below 1221 per ounce. This Fibonacci retracement is drawn from the most recent rally when gold ran from 1168 up to 1308. This puts gold prices at a crossroads, and a very critical price point on a technical basis. Obviously the bullish models that we have looked at in the past will need to be addressed, which is exactly what we will do on today’s report.

Interestingly. the fundamentals that are currently at play historically have moved gold prices higher, as increased uncertainty in the euro-zone and Ukraine continue to dominate the news. It seems as though any safe haven effect has moved into the dollar and not so much into gold. Whether gold prices can muster any support at this price point will be key in our strategy moving forward.