Archive for the ‘Precious Metal Commodity Futures’ Category

The recent drop in gold (futures) is said to have divided central banks perception and debate whether it is of low enough value to increase investment.  The gold futures plunge these last three trading sessions is unlike anything seen in the gold market for the last 30-years.

Central banks in Australia, Korea, South Africa & Sri Lanka have all made public statements regarding the recent gold (futures) drop in price, but not all are agreeing that this is an opportunity.  Central banks are said to own almost 20% of all the world’s gold ever mined, and many have boosted their holdings the most in the last 50 years.

Gold futures steep drop has changed the daily trend from up to down.  I felt the need to exit gold futures in my trading yesterday after a $196 per ounce price change in gold profit.  I realized if/when bounce in price occurs, it can go right through our protective stop at night while “sleeping.”  Even the electronic markets kick-out orders when the markets jump through prices – something I don’t wish to risk…

Here comes talk of the next wave higher for gold futures.  Just today, a London-based precious metals trader for Deutsche Bank publicly stated his opinion of gold futures rallying to an extended record of above $2,000 per ounce into next year.  He believes centrals banks will continue to pump cash into stimulus to sustain a recovery.

Currencies are expected to be negatively affected by Europe’s debt crisis, and inflation is expected to soar, so governments and central banks are taking necessary steps buy obtaining gold bullion assets to thwart any fallout.  Actual gold bullion is on its 12th annual gain this year, and just last week holdings in gold-backed ETF’s became the largest ever.

“Fear of a weaker dollar has traders looking to the gold market for a potential safe haven for investment.  Adding credence to the bullish side of the market is continued strong demand out of China and India for the (precious) metal,” said Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, regarding the current gold futures situation.

Gold futures have been in a down-trend since mid-October, but has found strength at lower prices since.  I am looking for signs of a trend reversal to go long gold futures for the next leg up.

Gold futures is seeing a bounce today – possibly the biggest gain since the highs made on October 4th.  It was reported both Brazil & Turkey’s central banks are adding to their gold inventories, and there are signs India (the world’s biggest buyer of gold) is even buying more of the precious metal.

Data on the IMF’s website has indicated the Brazilian gov’t has added to their gold reserves for the first time in almost four years, as well as Turkey increasing their holdings.  Just yesterday, gold futures dipped below $1,700 for the first time since early last month, which might have been a psychological level for buying.

Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, stated today regarding the current gold futures situation, “Countries are printing money at record pace, governments are securing large amounts of gold, investors can no longer rely on fiat currency.  In my opinion, this all points to higher prices in gold (futures).”

Gold futures is in a well defined down trend at this time.  I am only interested in the “long side” of gold futures as long as the global gov’t debt crisis still exists.

A recent survey – from the folks at Bloomberg – suggests gold (futures) are poised to climb another leg higher on the outlook another fed-stimulus here and in China adds to demand and provides an inflation hedge.  Gold futures ended the day lower most likely by profit taking.

The survey also included a prediction for gold (futures) to reach $1,800 per ounce by the end of the year.  This is a much more reasonable outlook than the $2,000/$2,500 & even $5,000 per ounce predictions we have heard in the not-so-recent past.

“The problems in the Euro Zone have not gone away even though things have been quiet for the last two weeks,” stated Chris Hildebrand, vice-president of trading at HighGround Trading Group in Chicago, regarding the current gold futures situation.

Gold futures are in a newfound technical uptrend with this last leg up.  I am looking for a pull-back to get get aboard the long side.

Evidentially Europe’s debt crisis is perceived as deepening, and investors there are increasing the demand for gold as a form of wealth protection.  Gold futures rose today in it’s fourth straight session – the longest duration rally in three weeks.

The focus is on Greece, once again, and the restructuring of it’s debt.  One of Europe’s central banking figures actually was quoted as referring to the Greek financial crisis as a “horror story.”

James Lombardo, a trading advisor and broker with R.J. O’Brien Futures in Chicago, said today, “…Greece, it’s a mess and European policy officials are at odds on how to contain the crisis.”  Lombardo added, “When debt issues arise over countries and regions, investors (prefer) flocking to gold.”

Gold futures are up for the year just over 25%, and the trend barely remains up at this time.  The current volatility of gold futures, and the profit-taking after these short rallies still continue to be a challenge for short-term trading.

Gold futures continue to test its highs on the combined outlook costlier raw-materials and low-inflation rates are just the right recipe for inflation, and owning the precious metal is the right move as an inflation hedge.  Gold futures closed just under Monday high of $1,478 per ounce.

Today the Department of Labor announced domestic wholesale costs up .7% last month with energy costs leading the way.  The significance is wholesale prices are up almost 6% from this time last year, whilst gold futures are up a whopping 27% compared to this time last year.

Jordan Luckey, commodity trading broker at R.J. O’Brien in Chicago weighed in by stating today, “Inflationary pressures continue to weigh on the markets.  Today’s PPI number showed a modest increase in core inflation with an unexpected increase in jobless claims, which drove gold (futures) prices higher.  With the ongoing inflation concerns and QE2 coming to an end in June, gold (futures) has pushed near its all-time highs and will likely continue to newer and higher highs.”

Although the trend for gold futures remains up, the volatility in this market prevents me from recommending the “lower-risk” trades that I have normally been accustom to.  I will continue watch both precious metals market for the best opportunities.

Just as the turmoil in North Africa, Japan, and Europe continued today, gold futures set another record high as investors seek alternative investments.  Gold futures are rapidly approaching $1,500 per ounce at the New York Commodity Exchange.

The Japanese stock market took another tumble, Moody’s credit rating service lowered the rating of over a couple of dozen Spanish banks – plus Portugal’s PM offering to resign, and the Libyan “altercation” all have helped boost gold futures today. 

“Gold (futures) was very volatile today…It appears as if this was end of the quarter profit taking from a nice run-up we have had in the last week,” said Jordan Luckey of R.J. O’Brien Futures Group in Chicago from an e-mail interview today. Luckey went on to say, “Geopolitical issues and a falling dollar should continue to be supportive of gold (futures) on its long-term uptrend.”

The trend is clearly up for gold futures with absolutely no market “top” yet in sight.  Gold futures is not “climbing a wall,” however – it’s making new highs in choppy market conditions.  Trade with protective stops always!

Last month was the biggest slide lower for gold futures and silver futures in over two years, but investors are still said to still have $102B in the market looking for higher precious metals prices.  There is just as much gold being hoarded than the world’s central banks (in the US, that’s the Federal Reserve), and supposedly more silver than the US can mine in 12 years time!

Silver (futures) experts expect silver to rise in price practically 25% by the end of this year, and gold at least 20%.  Swiss experts are predicting the strongest demand for silver in over 20 years, and the second-most sales of exchange traded gold ever recorded.

Fund-manager Michael Cuggino, from San Francisco, said today “Some investors have taken money off the table after a significant run-up in 2010.  If you look at the macro-environment, the instability around the world, the world-wide currency devaluation, these factors all bode well.”

I actually have the trend for both gold futures and silver futures as “down” at the moment, but am only interested in trading the long side when the market “proves itself” strong once again.  Let the gold & silver futures markets come to us…

Look for immediate changes to our precious metals futures trading.  Although we are not trading any precious metals tomorrow, you will notice changes in the trading plan starting today.

It’s happened twice in just the past couple of weeks – our protective stops are getting “passed over” by the LIFFE commodity exchange in London when trading mini-gold futures and mini-silver futures contracts.  Just this past Friday we had entered the trading session long the mini-gold futures with a protective stop at 1366.4, but the market filled only few of us at 1366.0 and filled me and others at/near 1351.0.  This is not acceptable by me, and should not be for you either (especially in the electric markets).

One of my commodity trading brokers at MF Global in Chicago, Kevin Riordan, said today in e-mail correspondence when we were considering switching over to the CBOT mini-gold futures contract, “The CBOT mini-gold futures is just awful (with just) 29 contracts of volume, so that’s not the answer.  One alternative is to trade the big gold futures contract for clients already on the books trading two-lots (or more)…otherwise, we need to end it.”

I agree.  I will not continue to trade the LIFFE products with their “progressive rules” that seem to change too often for my liking…always in their favor.  Starting today, please know we will be trading big-gold futures and big-silver futures for clients trading $50K & $100K portfolio’s (or higher) prospectively.

According to Commerzbank AG if recent gold prices remain above $1,135 per ounce, then we can expect the rally to continue to $1,162 – according to technical analysis. Gold prices have generally traded range-bound for the past three months, but in my experience the more its been range-bound, the more we can expect a sustained breakout one way, or the other.

We appear to be in the mid-price ranges of the Fibonacci historical retracements with today’s settlement near the 50% level – between the December gold high, and last month’s low. Year-to-date the precious metal is up a scant 3.6%.

Technical strategist, Axel Rudolph, in London sees it this way, “The fact that last week’s correctly anticipated fall only took the gold price to $1,088 before giving way to another leg up shows underlying strength. This is why we will become short-term bullish if, and only if, the $1,135.50, 50% Fibonacci retracement is overcome.”

In my work, the trend for gold (and now silver) has rolled over to the UP side. In past posts, gold is expected to climb to $1,500 per ounce this year, $2,000 per ounce next year. All we can do is trade with the trend!