I like the headline about gold from Bloomberg today; Gold futures decline as oil slump sparks deflation concern. As many of you know, I have been warning of deflation for quite some time, and I also predicted it in Chapter 4 of my book Buy Gold and Silver Safely. At some point this deflation will turn into inflation, but simply look at the 10 year treasury yield and you can see that people would rather invest money for 10 years at 2.17% rather than put it into other risky assets. Money velocity is still nil but I will say this, the VIX has perked up on this stock market retreat.
Some recent headlines in the U.S. and abroad:
America’s Manufacturing Trade Deficit Just Set Another Record http://www.businessweek.com/
U.S. manufacturing cools, but underlying momentum remains http://reut.rs/1A8XEio
Gold opened up in Asia higher hitting $1,240 but fell ever since finally closing at $1,229.40 and is down a couple dollars in after hours trading. Silver gave up a little today too but is still above $17 and looking to try and cross its 100 day moving average at $17.95. The dollar continued its slump since breaking higher to 89.40 and closed today at 88.20. But gold couldn’t get anything going. If the dollar continues this temporary slide, then I would want to be long some gold and silver and some of the miners for a trade, perhaps a good one. If the dollar falls below 87.80 the December 1st low then it might just get gold going. If the dollar bounces off of the 88 mark, then that may not be good for the gold trade. We’ll see tomorrow if gold has some catching up to do. I would think the risk reward is there. Would love to see JNUG open lower under $3 and possibly enter a long with a stop.
TZA had a nice day up 6.34% but still hasn’t broken through resistance around $14.
UGAZ was up 4.94% today. Would like to see it climb some more, but expect some volatility with the Natural Gas supply report coming Thursday. The last 3 reports should have been positive for UGAZ but market makers had a little fun with longs and took UGAZ to new lows. Natural Gas will rebound and UGAZ will fly.
USO did what it has been doing, falling, and hit a fresh 52 week low at $22.94 before rebounding at bit to $23.28. Because of this “oil slump,” Asian markets have opened up down big and the Nikkei is already down over 300 points on a worse than expected drop in machinery orders. Some of this selling in the markets has continued from yesterday when “China’s clearing agency for exchanges said that bonds rated below AAA or sold by issuers graded lower than AA are no longer allowed for use as collateral in short-term loans. An estimated $76 billion of outstanding debt can no longer be pledged in repo agreements. The announcement by the China Securities Depository and Clearing Corp caused the Shanghai Stock Exchange to plunge 5.4%, its biggest drop in five years. China’s benchmark equity exchange collapse carried over to other global bourses.” (as quoted from out trading desk)
Not much changed with the triangles below.
GLD CHART 12-10-14
SLV CHART 12-10-14
GDX CHART 12-10-14
GDXJ CHART 12-10-14
NUGT CHART 12-10-14
JNUG CHART 12-10-14
UGAZ CHART 12-10-14
TZA CHART 12-10-14
USO CHART 12-10-14
DGAZ CHART 12-10-14
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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.