In yesterday’s Gold and Silver Outlook I said we may experience a volatile time before the Fed meeting and we weren’t disappointed. This is what market makers love to do in shaking the short term traders out of their positions. Days when the Fed meets or releases the minutes of the meeting are best left to professional traders. Today was no exception to this rule.
Gold had a serious smackdown of $20 in just a few minutes today and then an almost immediate move $16 back up. A poll came out showing that Swiss voters were thought to vote against the gold referendum at the end of the month. You can see the volatility in the chart below.
Those who own physical precious metals really don’t care about the whipsaw we saw today. They buy and hold and patiently wait for this bottom to occur and their hardest future decision when prices are much higher will be only this; when to sell.
All the mining stocks got hit hard today as gold struggled to move past the $1,200 resistance level.
When the Fed came out with the minutes there wasn’t a real shock to the market. They are still concerned with “low inflation” which is ironic to me because they don’t use the word “deflation” which I wrote about in an article yesterday, Is Deflation Still a Threat to Gold?
What was interesting is the Fed didn’t seem to think what is going on in Japan or Europe is an issue for the U.S. Well, I wrote in that article yesterday that I do think this will carry over to the U.S. at some point. For now all the problems with the Euro and Yen have been dollar bullish and this has added to the pressure on gold and silver prices.
There have been more people who are calling bottoms in miners again I see. I’m just not there yet. If I am right about where gold will go or more to the point, where market makers will take gold, then I see the miners taking it on the chin some more. A trade to contemplate once gold breaks to lower lows, assuming it does, is JDST. But the trade long with GDX, NUGT or JNUG is also still on the table. Today, it’s a wait and see and look for entries at higher highs over the prior days prices. The risk versus reward is always there to make a good trade this way. If you get a gap up like we did today, and then a reversal, then look for the opposite (like JDST today breaking out).
The scores on all miners fell a bit with this downturn. Really tough trading for most when you get these moves in both directions.
UGAZ did have a great day up over $2 at one point. Tomorrow’s report will give it further momentum if the supply is down. With cold sweeping the nation I am sure many are looking at this from a long versus a short point of view. If you are playing it long, move your stops up.
USO faked out a lot of traders today after breaking to a new 52 week low and rallying but the wind behind its back calmed down and it only ended up 5 cents. Still on the sidelines with it.
TZA had a nice day. Still watching.
11-19-14 GLD CHART
11-19-14 SLV CHART
11-19-14 GDX CHART
11-19-14 JDST CHART
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About Doug EberhardtDoug 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
Disclosure:
Commodity Futures Trading Commission Futures and Options trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don’t trade with capital you can’t afford to lose. This is neither a solicitation nor an offer to Purchase/Sell futures or options. No representation is being made that any account will or is likely to achieve gains or losses similar to those discussed in this outlook. The past track record of any trading system or methodology is not necessarily indicative of future results.
All trades, patterns, charts, systems, etc. discussed in this outlook and the product materials are for illustrative purposes only and not to be construed as specific advisory recommendations. All ideas and material presented are entirely those of the author.