From the Trading Desk
Chinese equities made headlines yet again overnight with the Shanghai composite index selling off by more than 6%. The commodity space as a whole was dragged lower and copper and crude made six year lows. Gold managed to hold on surprisingly well given the broader pain commodities were feeling. Gold was trending lower heading into the NY trading day but found bids to lift it back near session highs immediately following the PM fix. It’s been a quiet week of consolidation for the yellow metal with resistance at $1,130 and support coming in right above $1,100. Silver demonstrated its base metal trading properties by selling off with copper by more than 3% today. After ultimately failing to maintain a sustained move above $15.50 for three days in a row, it looks like silver will test lower to $14.50.
Keep any eye out for the FOMC minutes tomorrow at 11 AM PST.
Gold fell hard early and recovered a bit by mid-day. Silver simply got hammered and has been weaker of late. Things don’t look rosy for the precious metals at present. As I said in Sunday nights report, what a pathetic attempt at a reversal.
I have described many times that the week of the Fed meetings and release of minutes are typically very volatile weeks. This is where the market makers (the professionals) will try and move traders out of their position by moving the price up and down to extremes. You can see this in the chart of SVXY today which is below.
You can see from this chart that SVXY went down a little at the open, then moved higher immediately, then lower immediately and then proceeded to break to a higher high, only followed by a pullback that eventually led to a lower low and then lingered the rest of the day. How would you have made any real money today with this type of movement?
While gold and silver do look weak with the early smackdown, I would still look to what the dollar does tomorrow and even though they don’t trade perfectly inverse of each other, I would jump on gold long if dollar stays below 97 and gold short if it keeps moving above. This is deja-vu to where we were a couple weeks ago.
Hedge Funds Buying Gold?
There are stories floating around of hedge funds buying gold. Might I remind you that hedge fund managers on average couldn’t beat a dart throwing monkey at picking investments. I reveal more of this in my next book, “Illusions of Wealth.” You want to lose money, invest in a hedge fund.
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
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.