Gold retreated today giving back much of what it gained yesterday and falling again below the $1,200 resistance. It tried to move over but just couldn’t stay there. Silver fell to $16 before rebounding and has been slightly stronger than gold. Both GLD and SLV remain with the weekly triangles green dictating that buying the dip risk versus reward is still there. Can they turn red quickly? Sure they can. That’s why you keep stops.
In yesterday’s Outlook I said “The dollar was lower earlier in the day which gave gold a boost but has rebounded some and isl right at the 88 mark. A continued move higher will put pressure on gold so keep an eye on it.”
This is exactly what occurred today. The dollar moved well past 88 on the index and finished the day at 88.61. Please keep an eye on the dollar if you are attempting any longs and if it continues moving higher, then JDST is the smarter ETF to play.
Miners
Today’s it would have been tough to go long any of the miners as the major move in gold occurred after yesterday’s New York close and in Asia/Europe. It was a pretty choppy trading day overall.
Anyone that went long gold today would have got stopped out. Silver possibly too in the morning. The reward comes when you hit these 3x ETFs for a nice trade. They are always there.
The miners are all still in the red. Bounces always come and are playable. I would like personally to see a short term bounce here but my bias doesn’t mean anything. Price action tells you what to do.
For holders of physical metal and those looking to buy, I still say buy the dips. They always come. Expect more and expect a really nice one which may be the last big dip we get when it comes.
From the Trading Desk
What a wild few days for the precious metals…
Over the weekend, Swiss voters rejected a referendum that would have required the Swiss central bank to hold 20% of its assets in gold. While the referendum wasn’t expected to pass, its definitive rejection set a bearish tone to the week for gold. Once crude oil started to plummet because of OPEC’s decision to maintain output in an oversupplied market, gold crumbled as well and made an intraday low of $1,142.50.
The dramatic sell-off was short lived though. Moody’s cut Japan’s credit rating and US holiday spending slowed, fueling fear that global growth will stumble. Then with crude oil reversing and causing shorts to scramble, gold ended up trading all the way back up to $1,222.50. Gold traded in an $80 range and volume for the active February gold contract was over 34 million ounces. Silver had an even wilder trading day than gold. It had an intraday percentage move of nearly 19% from lows to highs. Both gold and silver put in key reversals yesterday. This means that they opened below the previous day’s close, made a new low, and then closed higher than the previous day’s high. From a technical perspective, the key reversals are bullish. Fundamentally, there are still some obstacles working against gold though. The USD remains strong while crude oil is still weak.
UGAZ is right where I like it for the patient traders to attempt a long. I would go long here at $10.50 and look to keep a stop. Stops will vary with each person. UGAZ can break the 52 week low and if it does, will be a loss if you keep a stop just below the 52 week low price of $10.02. But the risk versus reward I like at this point. All commodities are still experiencing the deflationary trend and natural gas is no exception. Which brings us to oil.
USO never took off as oil never moved higher with it. Oil fell overnight so wasn’t worth a long at this point.
TZA I said to buy if it broke yesterday’s high of $14 and it never got there losing 3.57% for the day and closing at $13.49. Still one to watch.
12-02-14 GLD CHART
12-02-14 SLV CHART
12-02-14 NUGT CHART
12-02-14 JDST CHART
12-02-14 USO CHART
12-02-14 JNUG CHART
12-02-14 GDXj CHART
12-02-14 GDX CHART
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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.