Gold and Silver Current Thoughts 2-26-2015

From the Trading Desk

Overnight data showed that net gold imports from Hong Kong to China jumped from a three month low in December of 71.4 tons up to 76.1 tons in January. This is a common occurrence in January as demand increases ahead of the Lunar New Year and the release of the data last night gave gold an initial boost to kick off its trading session.  Chinese gold imports through Hong Kong set a record in 2013 of 1,158 tons but fell in 2014 to just 813 tons.  Analysts expect Chinese demand to rebound this year after stocks have become depleted in recent months.

US Durable Goods Orders m/m and Core CPI m/m came out better than expected as the US session began today.  The USD index is up a full one percent while the euro is taking a beating and is down nearly 1.50%.  Gold is holding up surprisingly well given where the euro is trading and is still managing to stay in positive territory on the day so far.  It appears to still be supported by Yellen’s testimony earlier in the week which suggested that rates will not rise until later in the year.

Gold remains stuck in a recent range but the trajectory is still lower.  There is double bottom support at $1,190 while offers have materialized around the 100 day moving average of $1,216.50.  Silver made its way higher through its 50 and 100 day moving averages earlier in the day but has been unable to hold above them as the US session has dragged on. Near term support is at the psychological level of $16 and then below there at $15.55.

What a day for the dollar! It’s been on a roll since the end of October. Today’s big move sure didn’t help the price of gold move higher when it took off today, but gold still managed a move up pre-market and maintained at about $1,208 the rest of the day.

Will the Euro be at parity with the dollar at some point? I think so. There will be bounces bounces along the way with the illusion that all is well and the future is bright in Euroland, but it’s not. Like many countries that have followed in Japan’s footsteps, the “kicking the can down the road” with Greece rather than cutting the cord with them just allows a temporary period for those involved to catch their breath and “hope” something miraculous happens. For me, that’s just a myth.

Gold is still in a U.S. trading range and needs to make a move one way or another for anyone trading the ETFs. This is where patience is needed otherwise you just churn your account keeping stops for small gains or profits. What will be nice is when we get this confirmation of price for the metals, the miners may offer a good swing trade. While I lean towards JDST breaking higher because of my overall bias for lower gold and silver prices, I don’t discount what price action will tell me about going long the ETF miners for a trade should we break higher. We’ll see how much more pressure a higher dollar puts on the metals Friday and next week.

JDST did give us a higher high today at 8.70 and if you kept a stop at the low of the day you could have rode it as high as 9.25. It closed at 9.10. I would have went home flat today.

DWTI was the hero of the day. It broke to a higher high at 116.01 and first went to 118.66 then finally 126.76 before falling to close at 118.40, up 8.80% on the day. Technically you could have got from 2 to 10 points from it. UWTI had a bounce towards the end of the day. Look for that move to continue into tomorrow or play the higher high again on DWTI.

The green arrow up in DGAZ yesterday was confirmed by the supply report that came out today which knocked natural gas down sharply. DGAZ went from 6.74 to 7.34 in an instant and finally closed near the high of the day at 7.68. You might have caught a piece of that and profited. My guess is that trend will continue tomorrow, but DGAZ is down to 7.55 after hours despite natural gas being down a fraction. Trade the higher high of either tomorrow.

TNA did its thing and moved up another 1.03% today to close above 87. When you are hitting 52 week highs, its hard to step in front of it, but I will repeat, look for a higher high in TZA as when it finally does come, I would trade it and UVXY below for some very nice profit on a bounce. But I would also take that profit and see if we turnaround and ride the bull again higher.

RUSS moved over 12 again but it did so without a U.S. turnaround. Lets see if it marches now towards 13 or if Russia benefits from the U.S. stock market strength.

UVXY was a little weak today and we may still break lower by next week. It’s just under $18 now.  When it finally decides to move higher, jump on it for a nice ride. Alternatively, SVXY enjoyed a small move up. I wouldn’t have traded either of these today.

Next report will be Sunday. The reason I do the next reports on Sunday instead of Friday afternoon, is most of you won’t read it as it’s the weekend! I’d rather you prepare Sunday for Monday than forget what I wrote about on a Friday afternoon. Enjoy your weekend!

Gold and Silver Stock Mining Package

The mining package that we will be offering has been waiting for a release at a time that I feel would coincide with my overall view of gold and silver prices reaching the lower targets I think they can fall too. Many so called experts last year in July thought the miners would take off and next thing you know they broke to lower lows. Some called this latest run up the final fall for the miners. It obviously hasn’t been and I know that’s frustrating for many who are long or have been long for some time. There is a reason why I have been patient with the release of the mining package. There is also a reason why I chose the stocks I did and I’m excited about their potential. The mining package release date will be announced soon. I sent out an email to all who have subscribed on Friday with an update. If you haven’t signed up, read the following and express your interest.

We will be coming out with a mining package where we pick what we believe to be the best mining stocks to buy based on my research the last 8 months. We have been patient in releasing this because of the timing in purchasing these mining stocks can be tricky. We were one of the only one’s who recommended selling mining stocks in September of 2010 when the HUI was trading at 512.56. Much has transpired in the mining industry since that call with many companies disappearing or being taken over. Today many companies are struggling and if we do get a further pullback in the price of gold and silver, more companies will go bankrupt. Knowing which companies have the best opportunity moving forward will be key to you getting returns that we believe will be in the 100% to 500% range, and possibly much higher for some of the miners. This package will be released in the next few weeks and we will announce it on the site.

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Gold and Silver Stock Mining Package