From the Trading Desk
As far as US equities are concerned, the fallout from Britain’s referendum to leave the European Union is already ostensibly an afterthought. Following a two day plunge for the Dow, it has now spent the last three days recovering nearly all of its losses from the Brexit decision. Even with US equities recouping losses, the precious metals have not lost any ground. Gold is consolidating above $1,300 and continues to attract safe-haven bids. Despite gold not yet reaching the $1,360 level that it touched on the night of the Brexit vote results, silver is outshining gold and is currently at highs it hasn’t seen since September of 2014. The next major target in silver is $19 while $18.50 is short term support. Physical demand for fabricated coins and bars in the US remains subdued and it appears that institutional money is the driving force behind the move higher in the metals.
When you have a trend, you can jump on it and ride it for a good time, but the trick is knowing when to know the ride is coming to an end. You’ve seen surfers in the ocean or on TV and as much as they would like to ride the wave for a good long time, like forever, it never can happen. A trend also doesn’t continue on forever in one direction. There are micro, mid and macro trends that can play out and while we are still in the macro trend of a bull market, the micro trend has been higher also along with the last week of a micro trend.
All seems well for the metals market when things are going in your favor until that trend changes. When I wrote my article, Enjoy the Gold Bull While You Can, I had $1,400 as the target high in the chart for gold and so far we have hit $1,362 on Friday but we are still lingering around $1,320 range, currently $1,323.20. Silver has broken out higher than the chart from 2 months ago, above $18 and is still in bull mode. I was bullish then and still bullish now till gold hits that $1,400 mark. From there or up until we get closer to that level, I would begin to cost average out of mining and metals, unless you are part of the macro, buy and hold and never sell” crowd, which means you view gold as true wealth and no matter what happens you have an asset that will maintain it’s purchasing power. For those of you, you realize it is money sitting in your possession and you can cash it in anytime you want for the scrip of the day.
I do note that the dollar did bounce up over 96 again today, but ehn fell 50 cents in a rather volatile and confusing day for traders. There is more faith being put in the Pound of late which has boosted the Euro again on a micro level. We are pretty close to where we started the day, just under 96. Watch for the dollar to continue to fall short term and push metals higher.
I’m going to call July the crazy month for everything. My book Illusions of Wealth will be out and the fun will begin for all. Be prepared!
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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.