From the Trading Desk
At the end of April, gold was trading at $1,190 and silver was at $16… not too much has changed since then as these markets continue to bore traders and investors. US equities remain right near all-time highs and until there is a dramatic sell off, precious metals will find it difficult to move higher. Even with the euro gaining 5% over the last few weeks, gold still hasn’t been able to break out of its current entrenchment below the psychological area of $1,200. Immediate overhead resistance is coming in at $1,200 but then above there at the more significant technical level of the 100 day moving average (currently at $1,210.40). Silver held impressively above $15.50 a few weeks and has consolidated nicely around $16.50. The 100 day moving average has perfectly capped silver for the past four consecutive trading days though. A clean break through here would project silver to its 200 day moving average at $17.05.
The dollar did break below 95 and it gave gold a boost today moving down to 94.25 before settling at 94.60. It has to break to just below 94 for gold to have a little run.
Interest on the 10 year got to 2.36% before giving back .11 basis points in the afternoon. Maybe investors didn’t believe Fed member chairman when he said that he expected the Fed to raise interest rates sooner this summer. I have to say this member is on crack or something and just looks at the unemployment numbers and no other data. Or it could be he was told to say one thing, giving investors the “illusion” that the Fed would raise rates under the guise of a healthy economy. To that I say, hahaha Fed!
I’m not a naysayer on the economy. I call the data the way I see it and post it here and in my articles. I’m also not a naysayer on the stock market. The stock market has a life of its own and acts more like cheerleader Fed member Williams doing its own thing and sky’s the limit rather than being data dependent. The stock market is Fed related, not value or data related. Simple as that for me. This is not reality and won’t last. But you also can’t ignore price action and short this kind of market thinking you are right based on what the data says and the market is wrong. The market is never wrong. Lower rates, which is where I lean, should stimulate the stock market higher.
Mining stocks got a boost today with the rise in the price of gold. I said yesterday that I want to see the dollar below 94 and today we got the first move down and gold up. Now I want to see gold above $1,200. We’ll see what tomorrow brings.
It’s tough, I know, to be in a trading range. Investors prefer action. We just have to be a little patient for it.
Doug 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
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