If you haven’t read it already, I posted an article to the site today called; Data is Dead; All Hail the Fed! It is an insightful look into the data we have had the last month and what impact it should have on the Fed’s decision tomorrow.
From the Trading Desk
The US dollar index hit a 12 year high this week and, unsurprisingly, the precious metals are feeling the pain. Gold is making four month lows while platinum has fallen to a five and a half year low. Investors and traders appear to be wary ahead of tomorrow’s Federal Open Market Committee press conference. The general concern heading into tomorrow’s FOMC is that there will be language suggesting a rise in interest rates as early as June. Besides a brief short covering rally in today’s trading session where gold shot up $15 in three minutes on 11,000 lots (1,100,000 ounces), USD strength and pre-FOMC anxiety have gold pressed into negative territory.
Physical demand out of Asia is picking up in gold as it trends lower. Shanghai Gold Exchange gold has become more expensive versus spot/London pool gold recently. Refineries in North America and Europe are picking up their production of kilo gold bars in order to feed the existing and anticipated demand in India and China at these lower prices. Gold lease rates have picked up a tad as refineries borrow gold from banks which is contributing to the spot price trading at a premium to futures (known as backwardation).
In typical trading during the week of the Fed meeting we got what we expected; volatility. Take a look at the extreme down and then up and back down again moves in gold today. The same was true for the chart of silver.
TNA started the day down big but actually ended green but the DOW lost 128 points by the close. The big talk with the Fed is whether or not the word “patient” will remain in their language. If they take it out, it’s a joke based on the real data that I wrote about in my article today. If they leave it in, the market will jump for joy and unfortunately gold should break to new lows. I don’t know if this is priced into gold so the way I would play it tomorrow is as follows:
1. Be patient and wait for Steve Liesman from CNBC to tell you what the Fed says.
2. Why gamble with an early trade thinking you know which way the market will go? Wait for the first move in one direction and then a possible reversal. Let the market play itself out. There may be a trade that develops.
3. If a trade doesn’t develop, go fishing or watch a movie.
4. The next move will develop within a few days. More than likely a pattern will develop and you can trade the higher high of gold, silver, JNUG and the other mining ETFs or JDST/DUST.
Guess what DWTI did today? If you have been following along, every day the last 5 trading days you could have taken many points from a trade without taking the ETF home. Better yet if you took it home though as it is up 66% in just a couple weeks. While a higher high could have been played today for about 4.5 points, you may have got stopped out once we broke below the low after the open. But DWTI then bounced from there to close near the high of the day at 165.40. It’s actually up to 170.51 after hours.
I will say that UWTI, which is trading at 1.84 after hours is due for a reverse split and could fall further while DWTI may split. But like gold once it bottoms, UWTI will offer some great returns at some point in the future. Just don’t jump the gun because you think you know where oil is going next. DWTI can head up another 20 points to its January 28th high of 193.10. From there, it’s unkown. Simply look for a higher high to trade UWTI when it comes.
RUSL joined the TNA style party today and was a play on the break of 18.28. You almost got shaken out but never would have had your stop hit and you could have held it all the way to 19.20 for a scalp. I say to take profit on these quicker as it is going against current trend.
UGAZ and DGAZ had another day of not much action worth trading. If you attempted it you would have got stopped out more than likely. We like to play what’s moving and I have said of these there hasn’t been much to play of late.
SVXY didn’t break to a higher high until the afternoon and you might have got something from it. It did end the day green to continue yesterday’s bullish trend.
One caveat I will throw out there for the bulls in gold from Dennis Gartman today;
We do not one thing in favour of gold itself this morning that we find compelling: the level of bullish enthusiasm for gold as measured by the Market Vane’s Bullish Consensus number has fallen to a new multi-month low. Only 28% of those ‘polled” are bullish of gold at this point. Even more interestingly, only 20% of those polled are bullish of silver. These very low levels of bullish support are interestingly co-extensive with increasingly smaller net short positions on the part of the “commercials” in the gold futures market, which in the past have marked major bullish turning points for gold and have done so in an uncannily prescient manner. They marked the bottom in the summer of ’13 just before gold rallied nearly $250/oz.; they marked the bottom again at the turn of ’14 when gold rallied about $150/oz.; they marked the bottom in in the early summer of last year before gold’s $75/oz. rally; they marked the bottom again late last year before the last rally that carried gold from approximately $1150/oz. to nearly $1300. Now, after the recent sharp break, the commercials are once again holding inordinately low levels of short positions and our bullish interest is piqued as a result. Tues March 17, 2005
Take a deep breath tomorrow and make smart moves and keep stops while trying to get a profit from what will be a very fast move after the Fed decision.
Gold and Silver Stock Mining Package – Release date shooting for Friday 3/20/2015 – If you are signed up, look forward to an email announcement this week. If you haven’t signed up, read below.
The mining package that we will be offering has been waiting for a release at a time that I feel would coincide with my overall view of gold and silver prices reaching the lower targets I think they can fall too. Many so called experts last year in July thought the miners would take off and next thing you know they broke to lower lows. Some called this latest run up the final fall for the miners. It obviously hasn’t been and I know that’s frustrating for many who are long or have been long for some time. There is a reason why I have been patient with the release of the mining package. There is also a reason why I chose the stocks I did and I’m excited about their potential. The mining package release date will be announced soon. I sent out an email to all who have subscribed recently with an update. If you haven’t signed up, read the following and express your interest.
For those who haven’t signed up; We will be coming out with a mining package where we pick what we believe to be the best mining stocks to buy based on my research the last 8 months. We have been patient in releasing this because of the timing in purchasing these mining stocks can be tricky. We were one of the only one’s who recommended selling mining stocks in September of 2010 when the HUI was trading at 512.56. Much has transpired in the mining industry since that call with many companies disappearing or being taken over. Today many companies are struggling and if we do get a further pullback in the price of gold and silver, more companies will go bankrupt. Knowing which companies have the best opportunity moving forward will be key to you getting returns that we believe will be in the 100% to 500% range, and possibly much higher for some of the miners. This package will be released in the next few weeks and we will announce it on the site.
If you are interested in this Gold and Silver Stock Mining Package let us know by clicking this link below and completing the form.
Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534
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