JNUG is close to its 52 week low of 2.84 in pre-market trading. It will be doing a 1:10 reverse split soon and even though gold has not broke to new lows, it looks like the red triangles that triggered yesterday, along with gold breaking below $1,200, is setting us up for the march toward $1,000 that I have been predicting. Of interest is GDX is still a couple dollars above it’s 52 week low which really shows you the weakness of the junior miners represented by JNUG. JNUG kind of leads GDX. Ironically GDXJ is also $2 above its 52 week low. Anyone long individual mining stocks I know would be getting killed. But they will bounce soon enough. Unfortunately it might not be until next year. JDST is up 10% pre-market.
The dollar shot up again this morning to a new high of over 89.20 and the temporary bull run higher in gold that I was expecting didn’t come to fruition. What a pathetic attempt it was. If gold can’t get a move when the dollar fell over 60 cents like it did yesterday, then what will make it move higher now? Yesterday I advised that the weekly triangles turned red and if we didn’t get a bounce in metals today then gold was no longer in play. I mentioned a few reports ago that the Euro was ready to break down and you can see in the second chart below what happened to it overnight. It’s not good. If you are in Europe, or Japan for that matter, where would you put your money? Remember, these two currencies along make up a little over 70% of the U.S. dollar.
The job numbers came in better than expected by over 100k. Gold actually rebounded some and you can almost trade gold according to the dollar/Euro chart above. But yesterday was a fluke with the dollar down and gold not moving higher. I’ll take that risk any day though by going long gold. The job numbers are looked at by the financial markets as being a sign of a good economy, but the reality is U-6 shows a different story with the REAL unemployment rate that includes those not looking for jobs any longer at over 10%. In fact, it is 11.4%. You can look at the data here. The Fed ignores this figure.
With all the negativity with gold we may still get a bounce higher but look to the dollar strength still as a sign that gold is up against some tough resistance. Couple that with stock market strength and it’s a double whammy against gold. That’s why I try and give other plays that may be better trades. Deflation is still in control of the commodities markets despite what other may say.
I mentioned in yesterday’s morning report when UGAZ was $8.87 that it was still an attractive trade. In pre-market trading it was up to $9.22 or about 6% from yesterday’s close but is trading at $9.05 up 4% presently . I do expect this to get you a minimum of 25% by the first couple of months next year. How many investments do you have that can return that percentage? Even if you got in at the $10 range, it should still get you 20% or more. I’m assuming it will hit $12 but it may just hit $15 too (a move from $9 to $12 is a 33% return). I would sell half at $12 and keep a stop there and try for $15. A move from $9 to $15 is a 66% return. It is still weak though and the possibility of lower lows is still on the table.
TZA and USO are still weak but still on my radar.
Will be posting an article on the blog today about investing in silver with your IRA.
Next Gold and Silver Outlook will be on Sunday. Enjoy your weekend!
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.