From the Trading Desk
The euro losing ground against the USD caused gold to back off its four month high in the low $1,190s that it achieved last week. After an impressive multi-week run up, gold is still maintaining its footing at these higher levels and is consolidating around its 200 day moving average at $1,176. Coin and bar demand in the US has abated with the higher gold prices but this may be offset by physical demand in India improving ahead of the Diwali festival. Silver continues to struggle to stay afloat above the psychological level of $16, also its 200 day moving average. It has now trended modestly lower for three days.
I was asked today; “what would make you bring up the specter of a dollar move above 95?”
Answer:
Because we are in a deflationary credit contraction where the U.S. is viewed as the only real safe haven. U.S. treasuries are strong why? It’s not because of our great economic data. http://bit.ly/1IiZCQ3
The dollar will get stronger from here as the Euro (Germany data will begin to deteriorate with their auto industry fiasco) and Japan (bad economic data) struggle. I have written about this lately here: http://bit.ly/1t3eaCr
The Euro and Yen make up 71.2% of the dollar. They move down, by default the dollar moves higher and this can put pressure on the price of gold.
I was asked another question by someone who thinks people buy gold because the world is going to end, which I don’t ever write those kind of things.
My reply;
People think that those who buy gold/silver because they think the world is going to end or that would be dumb enough to put a 1964 quarter without checking it into a vending machine, don’t give those who buy the gold/silver credit for having a brain.
When gold and silver get to higher levels, you can always buy more guns and ammunition or what I’ll be doing is buying property as I don’t think we get to the zombie apocalypse that many think is coming.
Tomorrow’s Gold
Look to see if the dollar moves past 95 and gets us into this final leg down in gold or if we move a bit higher to that $1,200 to $1,220 level first. We’re getting close to the fall and yesterday was a glimpse on how fast things unraveled.
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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.