Another day and gold along with silver move higher. But an interesting thing occurred today. Gold never broke it’s pre-market level hitting a higher high. Gold’s high was $1,376 this morning and it got as high as $1,370.90 during market hours and waited for a higher mark of $1,327.50 after hours. Silver future’s high was $21.20 and it is presently $20.25.
Since we have not broke the highs of the overnight trading, and if we don’t overnight this evening, we may be headed for a dip soon. Either way, the jobs numbers on Friday will dictate what’s next for gold.
The dollar tried to make a move higher today but it was short lived. The dollar is still consolidating in a range since June 23rd and Brexit. It has NOT broken down as seen in the chart below. The dollar could very well dictate again the direction of gold from a micro perspective and a move over that 96.50 level should take gold down along with silver.
In fact, I went long with a first tranche of DUST today in preparation for a pullback, with stops in place of $1,380 in gold. I’m willing to take a jab at something beaten down like this a few times, with stops, when I am fighting a trend, because the reversal on it can be a 10% to 30% move quickly. I can make a few 1% loss trades to gain 10% to 30%.
Holders of physical gold may not care about day to day price movements, but I have been saying for those holding mining stocks that they should be cost averaging out of a position as we move towards $1,400. I see $1,400 as major resistance and pointed that out in my April article, Enjoy the Gold Bull While You Can.
Some good information for you on how gold fits into a diversified portfolio;
Financial advisors don’t understand gold, for the most part, because they are taught to sell mutual funds and bonds and REIT’s and claim that is diversification and if you want an inflation hedge, TIPS. Gold never once came up as an asset class and as many know, sits at the top of their pyramid as the most riskiest asset to own.
Here’s some reasoning that disagrees with most advisors as to what gold can do for a portfolio;
Gold in the Investment Portfolio
How Gold Improves Alternative Asset Performance
It doesn’t hurt that it also counters, much of the time, the U.S. dollar based risk of one’s portfolio, the things that U.S. advisors mostly put U.S. investors in; U.S. Mutual Funds, U.S. Bonds, U.S. Treasuries. This typically makes up 75% at least of one’s portfolio and this U.S. dollar risk is never addressed as advisors worship Markowitz’s Modern Portfolio Theory and the “risk free” asset, the dollar.
http://www.investopedia.com/articles/06/mpt.asp
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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.