From the Trading Desk
On the heels of the US Federal Reserve signaling that it will be even more cautious than expected in the shift towards monetary policy normalization, gold rallied to three week highs today. Traders had positioned themselves on the short side of gold recently based on positive US data but they were caught off guard with yesterday’s FOMC statement. Short covering was a clear aspect of gold’s positive price action today in which the yellow metal gained nearly 2%. While the move was encouraging, gold wasn’t able to break through the key technical resistance level of its 200 day moving average at $1,206.50. This is the near term figure to keep an eye on with $1,230 the next major area above it. Silver had a more disappointing day than gold and demonstrated how it is not considered in the same class of inflationary hedge as gold. Silver made an intra-day high at its 50 day moving average of $16.48 but lost steam and retreated to close its session at $16.20.
Was interesting to see the more monetary metal do better than the dual monetary/industrial metal today. Gold outperformed silver with the dollar falling below 94 on the index. If you are trading or buying gold, it’s always good to see what the dollar is doing to get an idea of where we may be with gold as they typically move opposite of each other.
I am including a chart below of the technicals on various commodities, currencies and markets so you can get a better feel on where we are in the bigger picture right now. Please note are still red on the monthly for gold.
An interesting monetary change is coming to Federal Reserve Notes soon. They are going to be putting a woman on the $10 bill beginning in 2020. We don’t know who this will be as of yet, but I have to note something I saw on CNN today.
CNN put out a visual “Evolution of the $10 Bill” on their website today. I suggest you follow that link and take a look at the pictures and the captions underneath.
If you look at the word “evolution” you get the following definition; the gradual development of something, especially from a simple to a more complex form.
CNN included in that 1929 $10 note the words “Will pay to the bearer on demand” at the bottom. Also note it says “Redeemable in gold on demand” in small print which you couldn’t make out on the CNN website.
But preceding this there was a $10 bill that said at the top that “this certifies that there have been deposited in the treasury of the United States of America” and at the bottom “Ten Dollars in gold coin payable to the bearer on demand.” This was also called, as can be seen on the bill, a “gold certificate.”
They would give you at your local bank a $10 gold coin for your gold certificate until 1934 when the government confiscated all the gold and made it illegal to own more than $100 worth. They then raised the price of gold from $20.66 to $35 thus depreciating the value of Federal Reserve Notes by 40%.
They now have removed any language associated redeeming currency in gold.
And now you know, the rest of the story.
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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.