From the Trading Desk
Yesterday, US retail sales figures disappointed and the USD index hit lows it hadn’t seen since February. With stops being triggered at the psychological level of $1,200, gold was able to explode upwards before making a high on the day at the 200 day moving average of $1,217.80. Weak US PPI figures this morning have provided extra legs for gold and it is now firmly above its 200 DMA. The disappointing US data over the past few days indicates less of an incentive for the Fed to tighten rates which is bullish for the precious metals. Gold’s near term target above the market is $1,240 while dips will likely be supported around the 200 DMA.
Silver has had an even better run than gold and is up over 7% in the last three trading days. It achieved a close above its 200 day moving average yesterday, a level it hadn’t cleanly broken since August of 2014, which has encouraged traders to add to long positions today.
Gold continued it’s move higher today along with silver. Yes, the phone has been ringing more and people are buying in larger quantities. I still tell buyers my opinion on where gold and silver are going to go, and most are simply dollar cost averaging into a position, making sure they don’t miss any run up in prices.
I talk about the dollar a lot and many who call me think the dollar will crash. I’m not in that camp but rather view the dollar as just a representation of what it really is; a counter to the currencies from Europe, Canada, UK, Japan and Switzerland. For the dollar to crash, then by default, all these other currencies would have to skyrocket. Have you seen these countries balance sheets (outside of Switzerland)? They are a mess too, along with the U.S. balance sheet. This is the “illusion” that currencies are.
The bottom line for you as a gold investor, is that over time, it will take more of all these currencies to buy you gold. This is a fact. It is about purchasing power and gold and silver both maintain their purchasing power over time. Pricing currencies in each other is just the game the wizard plays behind the curtain, making sure you and Dorothy follow the brain dead scarecrow all the way to the bank and keep the Fed’s game going. If everyone hoarded gold, it would actually expose their game and gold would skyrocket. The problem is, most don’t know much about our monetary system, or gold’s role in it. In time they will.
Tomorrow we get manufacturing index, industrial production, consumer sentiment as the market movers.
Related posts
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.