Gold is trying to bounce and hit $1,100 Friday only to close just above where it was Thursday. I sold my JNUG for a profit and bought back again at the end of the day and am still holding. Maybe I get a break come Monday and if gold can get past $1,100 I will hold onto it and add to it. Yes, I am waiting patiently for this trade to develop as I am sure many of you are too. But we have to keep stops when wrong.
In Asian trading both gold and silver have opened down slightly. As for me, this move to $1,100 and down still signals that gold wants to move higher. It just needs a catalyst of some news to push it past $1,100 or the dollar breaking down and moving under $97. The employment report on Friday didn’t do much technical damage to gold and that to me is a little bullish. The dollar moved up and quickly down to the 97.60 level where it ended the day. Let the dollar still guide you from a micro level, but know that it is not a perfect micro indicator.
The 10 year rate is still falling. Volatility has creeped up a hair, but seems to be settling down. Gold and silver sales were still brisk last week. Suppliers are still delaying deliveries out to 4 weeks for some products. Stock market is losing steam a bit. All of this points to a bounce for me from a micro perspective.
Of course the Fed has no fear as they think we are on the way to a booming economy again. They may want inflation to return, but they can’t force inflation to return by threatening to raise rates with the assumption that all is well.
I find this game of pin the tail on the Fed fascinating. I view them as the donkey in this mix and I try and outthink what they are really trying to accomplish. I see signs of deflation everywhere and they are looking at raising rates? There can be no reason for this except to tell the rest of the world that hey, we over here in the U.S. are doing just fine. Dollar is up, unemployment rate is down, the economy is strong and we are going to raise rates.
We will break out of this range in gold soon I feel. Perhaps this week and I think we break to the upside. But we need the dollar to break down in my opinion and that may come as we simply are not hearing about Greece and Europe (therefore the Euro) of late, even though nothing has been resolved there. From one side of the sinking currency ship to the other we go so keep an eye on the Euro for some strength which by default will be dollar negative.
If we do indeed push past that $1,100 resistance in gold I do still think we get another major dip below $1,000 as no one can convince me that inflation is anywhere to be found in commodities and money velocity is going nowhere.
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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