Gold and silver took a little breather today finishing up a bit but the trend is still negative. Draghi and the ECB kept rates unchanged but his comments about the future weren’t taken too well and the dollar which I mentioned yesterday would test 88 broke above that level. It may now be due for a pullback, but will gold benefit from this if it does some short term retracing?
Catching a Falling Knife
Joining the gold bashing party late with me is ABN Amro NV who wrote that lower prices in gold are coming. ABN Calls Gold a Falling Knife With Prices at $800 Next Year It’s so easy to play Monday morning quarterback and pick on the metals when they are already beaten down. It’s like the consumers that push up the consumer confidence index. Always the last to know. Where were these gold bashers a year ago? When gold bottoms they will still be bashing it. I won’t. I am VERY bullish long term.
Others bashing gold are; “David Wilson, an analyst at Citigroup, said he expects gold to trade between $1,100 and $1,200 in the short term. Michael Widmer at Bank of America Corp. in London predicted a drop to as low as $1,100, and Barnabas Gan, an economist at Oversea-Chinese Banking Corp. in Singapore, forecast $1,150 by yearend. Goldman’s Jeffrey Currie said he expects $1,050 by the end of December.”
From the Trading Desk
Due to “tremendous demand” over the last several weeks, the United States Mint announced yesterday that American Eagle Silver Bullion Coins are currently sold out. The US Mint is trying to produce more 2014-dated coins but there is no set time table on when they will be available. The Austrian Mint is low on inventory and will be switching to 2015-dated silver coins in the not too distant future.
Silver dropping over 12% in the last seven trading days has caused silver demand to skyrocket. The absence in the market of US Mint and Austrian silver coins at a time of elevated demand has meant premiums and delays for non-sovereign mint fabricated products have increased as well.
From Yesterday’s Dow Theory Letters
The bump in the dollar is causing more pain for gold which is currently trading down over $20 per ounce to below $1150. As I mentioned Monday, the break below 1180 leaves the next major support level near 1,000. The other item I wanted to point out on this chart is that we experienced a triple bottom breakdown back in early 2013 that was quite similar to what we just experienced last Friday. Notice in the chart that after the first breakdown, prices never recovered. Let’s hope that we don’t see the same price action play out after this most recent breakdown.
UGAZ
I think with the supply report today being positive this trade is about done and I would be out. It was up 16.50% today and is up about 60% since I first mentioned it. Closed today at $17.93. What a ride!
USO
Still not attractive.
JDST
Might become attractive if we see miners break to lower lows. Might become really attractive.
Miners
I wouldn’t trade miners long yet as they started off big today but fell back. I would wait till they break today’s highs and then jump in with stops.
Only silver’s score improved today from -100 to -90.
11-6-14 GLD CHART
11-6-14 SLV CHART
11-6-14 GDX CHART
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.