Patience Pays as Gold Prices Probably Set to Rise
NEW YORK (TheStreet) -- Gold has been in a consolidation mode since mid-September, trading in a range from 1,760 on the low side to just under 1,800 on the high.
With all the recent interest in gold, I thought it fitting to address this market. After all, it makes sense that a lot of people would want to get involved in the yellow metal.
We are now in the midst of our third round of quantitative easing, better known as QE3. Central banks around the globe have taken an "accommodative" stance when it comes to monetary policy. Just yesterday, in fact, China pumped additional liquidity into the banking system. The European Central Bank has said it is willing to make unlimited bond purchases of member countries in trouble. We have a national debt that becomes more and more staggering by the day, a number so large that I do not personally see how it could ever be repaid without debasement of the dollar. The list goes on and on.
One can make a compelling case for gold to go considerably higher. But will it? Markets do not always act as we think they should. This is no secret. When it comes to markets and trading, my goal is to make money -- not to be "right." I think that one has to let the market lead the way, and not try to be calling tops or bottoms. Leave ego out of the equation and eventually the market will tip its hand. I believe that someday soon that is precisely what gold will do.
So far, the strong band of resistance from 1,790-1,800 has kept this market in check. What makes this test a little more interesting is how the market has behaved here as it has stalled out.
On previous tests of this area -- going back to November and February/March of 2011 -- the market sold off a good degree following these failed tests. As a matter of fact, the market sold off both times to the tune of over a $200 decline. This time is different -- so far. And although the market has pulled back, the pullbacks continue to be shallow in nature. The market is building a cluster of closes just under this resistance area.
In effect, the market is setting the stage for either a powerful move higher through resistance, a move I think could run a few hundred dollars to the upside, or the rally is coming to an end, in which case it is only a matter of time before this market sees a pretty nasty drop once everyone starts to liquidate. The fact is we just don't know right now. That makes sitting on the sidelines a great choice.
I still favor the upside because the longer-term trend is up. Volatility in gold options has come in from recent levels, and for those who feel we are going to see a big run either way in this market, buying options seems like a much better idea than it did a few weeks ago. Patience is key. Wait out the market.
If you are looking for long options positions, make sure you are using options that give you enough time to be right (at least 60 days until expiration). There are a ton of different ways to try to play this market. As always, feel free to contact me for details on potential trade setups. And remember, patience is key!
Gold Decline Presents Massive Buying Opportunity
MarketWatch
The markets have been wild and volatile over the past couple of months. In fact, it's hard to remember a time when so many fast-paced events were happening at the same time, all over the world.
Investors are nervous and uncertain. In some cases, they're downright fearful and this is being reflected in the jittery market action, across the board. In knee-jerk fashion, markets have been quick to rise on good news and drop on bad news, depending on the day's story.
The weaker global economy, the deteriorating situation in the euro zone, growing U.S. debt, politics, Operation Twist, Greece, vulnerable banks, fears of another 2008 type debacle... they've all taken their toll in one way or another.
As a result, there's been a rush to safe havens. The key beneficiaries have recently been U.S. bonds and the U.S. dollar as they've risen strongly. On the other hand, gold, the traditional safe haven, dropped sharply along with global stocks. But this is now changing.
Things are beginning to settle down somewhat and some optimism is emerging. Stocks are rising and they could head higher in the weeks ahead. This would not be unusual following their steep declines and oversold levels.
The same is true of bonds and the dollar. As safe havens move to the back seat, these markets will likely take a breather and decline further, at least for the time being. Again, this would not be unusual since they've risen far and fast.
Gold is another story. It too is rebounding, along with stocks but it's traditionally done its own thing. Over the past decade, it's been the best investment in good times and bad. But it's now moving in tune with the other markets.
Nevertheless, the fundamentals show that it will again take center stage in the not too distant future. In other words, despite the likelihood of more volatility in the weeks ahead, gold is headed much higher over the long haul.
The stage is essentially set, but the markets have been running hot and cold. They're still quite emotional and anything is possible in the short-term. In other words, be prepared for more volatility, stay cautious and watch the markets.
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Gold Hits Record and Silver Soars on Dollar Decline
Reuters
Gold rose to a record high for a fourth straight day and silver surged on Friday, as a weaker dollar, the prospect of a U.S. government shutdown and inflation worries lifted precious metals in a broad commodities rally.
Gold was set for its biggest weekly gain in four months, drawing support from renewed euro zone sovereign debt fears amid Portugal's financial crisis and inflation jitters as crude oil and corn hit new highs this week.
Bullion broke above key resistance on technical charts and could target above $1,500 an ounce. The metal has risen more than 10 percent since late January when political unrest began to flare in the Middle East and North Africa.
"With the expected future inflation being higher in this low interest rate environment, investors are more inclined to have some contributions to commodities as an inflation hedge," said Hakan Kaya, commodities portfolio manager at Neuberger Berman, which manages about $190 billion client assets.
Spot gold rose as high as $1,474.19 an ounce and was later up 1 percent at $1,472.20 an ounce by 12:36 a.m. EDT. Bullion was on track to rise 2.5 percent this week for a fourth straight weekly gain. U.S. gold futures for June delivery gained 1 percent to $1,473.60.
Gold remained far below its all-time inflation-adjusted high, estimated at almost $2,500 an ounce set in 1980 as a result of heightened geopolitical pressure and hyperinflation.
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Gold Climbs to Record on Demand for Inflation-Hedge; Silver Price Tops $40
Bloomberg
Gold rose, setting a record for the fourth time this week, as a weakening dollar boosted demand for the precious metal as an alternative asset and an inflation hedge. Silver climbed above $40 an ounce to a 31-year high.
Gold rose to $1,476.20 an ounce in New York, the highest ever, after the dollar slid to the lowest level since December 2009 against a basket of six major currencies. Crude oil touched a 30-month high, and the European Central Bank yesterday raised borrowing costs from a record low to fight accelerating prices.
“The Federal Reserve isn’t anywhere near an inflation fight as the ECB,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Gold’s move is about the weakness in the dollar. Inflation is the buzzword, and it’s the impetus behind the trade.”
Gold futures for June delivery rose $13.60, or 0.9 percent, to $1,472.90 at 11:44 a.m. on the Comex in New York. Gold for immediate delivery in London climbed as much as 1.2 percent to a record $1,474.90.
Silver futures for May delivery advanced 89.8 cents, or 2.3 percent, to $40.45. Earlier, the price touched $40.48, the highest since January 1980, the year futures reached a record $50.35.
The difference between yields on U.S. 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for inflation, widened to as much as 2.62 percentage points, the most in 33 months. The ThomsonReuters/Jefferies CRB Index of 19 commodities rose to the highest since September 2008, led by gains in cotton.
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Silver Surges Over $37.25 On Way to Record At $50, Gold On Way to $5,000 in 3 or 4 Years?
GoldSeek
Gold and silver have rallied again today in all currencies but particularly the British pound, Swiss franc and the euro. The euro has fallen on concerns that the eurozone debt crisis may be entering a new phase (see chart below). Silver surged to $37.25/oz its highest nominal price since February 1980 and gold is just shy of its nominal record high of $1444.95/oz.
It would be hard to imagine a more bullish scenario for gold and silver given the real macroeconomic and geopolitical uncertainty and risk in the world today. Higher oil prices on geopolitical tension in oil producing regions and talk of QE3 is also strongly supporting the precious metals and leading to safe haven demand. So too is the deteriorating nuclear contamination situation in Japan.
The eurozone debt crisis had not gone away and has reared its ugly head again as Irish and Portuguese debt has been sold aggressively resulting in bond yields rising sharply. The Irish 10 year rose to an all time high of 10.185% on concerns of default.
Reuters reports that respected Rob McEwen, chairman of two gold mining companies, believes that gold will reach $5,000/oz in 3 to 4 years.
Telling the future remains impossible and we are always wary of specific time predictions. However, GoldCore stand by our prediction in 2004 (when gold was trading below $500/oz) that gold would reach its inflation adjusted high of $2,400/oz and silver would trade over $100/oz between 2012 and 2020.
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Gold Climbs Near Record on Middle East Tension, Europe Debt; Silver Gains
Bloomberg
Pham-Duy-Nguyen
Gold rose for the sixth straight session, nearing a record in New York, as unrest in Libya and the Middle East and Europe’s lingering debt crisis spurred demand for the precious metal as an alternative investment. Silver rose to the highest since 1980.
A U.S.-led alliance is preparing to direct more attacks against Libyan leader Muammar Qaddafi’s ground forces, as coalition members try to resolve disputes over who will take command. European leaders will meet this week to seek a permanent solution to the region’s debt crisis, amid concern Portugal’s government will collapse today. Gold futures reached a record $1,445.70 an ounce on March 7.
“There’s so much going on in the world that it’s hard to find a reason not to own gold,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “There’s a flight-to-quality to metals across the board.”
Gold futures for April delivery rose $10.40, or 0.7 percent, to settle at $1,438 at 1:34 p.m. on the Comex in New York.
Crude-oil touched a two week-high on concern that supply will be disrupted. A bomb exploded at a bus stop outside Jerusalem killing one person and injuring at least 30, and protesters clashed with the Syrian government. Stocks in Asia fell after Japan said there were traces of radiation in Tokyo’s tap water.
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Gold Near Record, Silver Tops $37 on Safehaven Bid
Reuters
Frank Tang
Gold rose to within a whisker of its all-time high on Wednesday, as record low U.S. new home sales stirred talk of extended central banks' accommodative policies, and a possible collapse of Portugal's government rekindled euro zone debt worries.
Bullion rose 0.6 percent to just short of its record $1,444.40 an ounce set on March 7, rebounding over 4 percent in the last eight sessions amid safe-haven buying and ongoing Western air strikes on Libya.
Political unrest in other Arab countries also underpinned gold as Yemen's president offered to step down by year end to appease mounting demands for his resignation.
Spot gold rose 0.6 percent to $1,437.55 an ounce by 2:29 p.m. EDT.
Gold accelerated gains to hit a session high of $1,440.90, its highest since March 7, after data showed the U.S. housing market slide was deepening as new home prices fell to their weakest since 2003.
U.S. April futures settled up 0.7 percent at $1,438 an ounce.
"The new home sales data inspired some to think that we may not see the demise of QE2, and we are going to see money printing continue past its potential expiration at the end of June," said Mark Luschini, chief investment strategist of broker-dealer Janney Montgomery Scott with $53 billion assets under management.
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Gold Futures Notch Record High
MarketWatch
Claudia Assis
Gold futures settled at a record high on Wednesday as a rally for crude reinforced fears of inflation and investors remained concerned about the Middle East and North Africa and Japan.
Gold for April delivery /quotes/comstock/21e!f:gc\j11 (GCJ11 1,439, +11.80, +0.83%) rose $10.40, or 0.7%, to $1,438 an ounce on the Comex division of the New York Mercantile Exchange.
That was enough to beat the previous record settlement of March 2, when gold closed at $1,437.70 an ounce.
“Instead of looking for a reason to buy gold, no one can find a reason not to buy gold,” said Adam Klopfenstein, a senior market strategist with Lind Waldock in Chicago.
Unrest in the Middle East and North Africa, the destruction in Japan, continuation of the U.S. Federal Reserve’s easing policy, and inflation are all working to support the metal, he added.
Gold is likely to challenge $1,500 sooner rather than later, especially if prices firm around $1,475 an ounce in the coming sessions, Klopfenstein said.
Gold gained momentum as the session progressed, leaving behind tepid early gains to rally as crude oil also jumped.
Investors are worried about food and energy inflation on the back of rallying crude, said Charles Nedoss, a senior market strategist with Olympus Futures in Chicago.
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Gold Prices Settle at Record High
MarketWatch
Claudia Assis and Wallace Witkowski
Gold futures settled at a new high Wednesday, rising on fears of inflation and worries about the Middle East and North Africa, while silver settled at its best price in three decades.
Gold for April delivery /quotes/comstock/21e!f:gc\j11 (GCJ11 1,431, +0.10, +0.01%) rose $6.50, or 0.5%, to settle at a record $1,437.70 an ounce on the Comex division of the New York Mercantile Exchange. It closed at $1,431.20 an ounce in the previous session.
“The bullish breakout to a fresh all-time high has put gold in an outstanding technical position to extend its advance into record territory,” said Richard Ross, global technical strategist at Auerbach Grayson. “The triple top breakout reinforces an already bullish picture and has opened the door to a test of $1,461 an ounce in the short term and $1,634 an ounce by year end.”
Ross said gold’s upwards, stair step-like advance over the past year indicates a solid bull trend rather than a bubble.
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