- Chart of interest - Gold
- Charts of Interest - Copper & the USD Index
- Hopeful for Gold and Silver
- Stunning Gold Chart - Gold on the Cusp of a Strong Rally?
- Physical Gold - the major new trend
- New Account - Physical Gold & Silver
- EUR poised for higher
- Silver Trader - he's back!
- Gold & Silver
- USD Pairs - an intriguing week
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Viewing entries tagged with 'Silver trading'
The decade long rally in Gold has been in a wide ‘flat bottom triangle’ consolidation for nigh on a year now. My main premise has been that the Gold market is sitting ‘long’ and that there would be very little oomph from any further Fed action. As such I have been looking for a potential shake out to the downside.
My view is in jeopardy as the precious metals have put in very good performances over the last few days. Recall Gold and Silver were amongst the biggest beneficiaries of the U.S.money printing programs previously.
Given developments the Gold charts are particularly interesting.
Fig 1) – 10 year Gold chart
Fig 2) – A closer look. US$1,660.00 looks a key level.
In the wake of the FED’s FOMC announcement this morning these charts bear close scrutiny.
The FED have pledged to keep the money spigots wide open, to pay for their US$85 bio per month of various securities purchases, until the labour market improves to 6.5% unemployed goal. i.e. the song remains the same.
We know that the majority of data from around the world, last night’s U.S. GDP excepted, has been strongly on the improve lately so is Dr. Copper (recall Gartman says it has a PHD in economics), ready to break higher just as the USD Index drops below support?
With the EUR/USD rampaging higher, Gold and Silver again looking strong I suspect these support/resistance areas will be broken in due course and create very tradable moves.
Recently Gold and Silver have been bucking the trend of a weaker USD, failing to rise despite the moves up in NZD, AUD, EUR and Copper etc.
I find this action rather strange given the background of the FED’s supportive action but you never know if, say for example, the IMF are selling Gold to send bailout money somewhere or if a large gold miner has to put on a hedge due to their treasury policy.
So with the above situation I have been stalking a reason to resume being long Gold and Silver. The action overnight hints that the precious metals may be worth a buy here with stop loss orders below the overnight lows.
1) Gold daily – recall the big picture. Gold has been in a brilliant uptrend since 2001 and in August broke higher out of a multi-year consolidation triangle
A closer look at Gold – support apparent now at the overnight low
2) Silver has a number of similar technical attributes including stopping at the important Fibonacci number, 61.8% decline of the last rise. Also Silver probed below, but closed above, the 4 month major trend line support.
For a very long time Gold has been considered a commodity, however since the GFC and the massive money printing conducted by the world’s central banks, the modern view is to consider Gold as money i.e. that classic store of value when everything around it is being debased. To whit Gold has been rising steadily as Copper (the Dr with the PHD in Industrial Activity) has been declining just as steadily.
Given that Gold was one of the main beneficiaries of the first few rounds of QE and the world’s central banks have again, over the last few months, embarked on another easing frenzy one could expect that Gold will begin to rise again.
In that context this long term chart of Gold, as measured against its 55 week moving average, makes for very interesting reading.
Since the 2001 low of US$255.00 oz the 55 week moving average has done a simply amazing job of defining the major trend. Now the recent sharp drop to US$1.672 oz very much looks like the low made in April 2009 before Gold embarked on a massive 122% rise. (This was the same period that my Mr Silverballs rode NZ$1,500 to NZ$1,000,000 in Silver using the leveraging capabilities of the BBY Online system).
Further hardening my resolve that Gold may be on the cusp of another strong rise after a 13 month consolidation, the weekly bounce off the 55 week m.a. was a ‘bullish engulfing week’.
Chart 1 – The 55 week m.a. documented.
Chart 2 – A closer look at the recent bounce.
I think that this could be one of those very rare occasions where an truly stunning opportunity exists. I have multiple ideas on how to capture any ensuing move should you be interested.
Much has been written about Gold’s dramatic rise in price over the past decade or so and it certainly appears that this trend is set to continue for some time yet.
However within this trend of increasing demand for Gold a new trend, and probably the most important development yet, is starting to take hold and this is the demand for investors to hold actual physical gold.
The significance of this development is that in the early part of Gold’s rising trend the market was to a very large degree driven by the paper market with the introduction of Exchange Traded Funds which tracked and were backed by gold. Investors flocked to these funds and as a result more and more of these types of funds were brought to the market. Such has been the proliferation of these funds that many in the market are starting to wonder if indeed these funds actually hold the amount of gold they profess to hold. There may not be anything in this concern and perhaps these funds do indeed have the amount of gold they say they do but the very idea of being ‘pooled’ with other investors is certainly losing its attractiveness.
According to the World Gold Council purchases of gold bars and coins have increased nearly 100% since 2009, whereas additions to Exchange Traded Funds are down by nearly three quarters in the same time period.
Investors are becoming increasingly concerned about developments in the financial markets and they know that throughout history gold has been a safe haven for their wealth, the more the value of paper currencies are eroded by such things as QE the more valuable their Gold becomes. Now accompanying this increasing fear is the increasing desire to hold their gold in a secure vault in their own name or for some burying it under the floorboards at home is the way to go (not something I would particularly recommend but everyone to their own).
The matter of secure vaulting has also been much highlighted recently as many holders of physical gold have their gold stored in Bank vaults and Banks are notorious for leasing out the gold that they have in their vaults. There have been many cases recently of significant gold investors requesting delivery of their gold, that is supposedly being held in a Bank’s vault, only to be presented with delay tactics from the Bank while the Bank struggles to obtain the Gold to deliver back to its client.
In recognition of this increasing trend in the desire to actually own physical gold in your own name and in a secure commercial Non- Bank vault (no leasing to worry about or pooling of ownership) we at Edge Capital Markets have obtained access for our clients to a Gold purchasing service that was previously only available to wholesale clients, with the accompanying very attractive precious metal prices, of course actual delivery of the metals is available for those who want to provide their own storage at home (spade and extra floorboards not included).
We have been asked by a number of you to see if we can locate a physical precious metals product, to enable you to add physical gold or silver to your portfolio, alongside the gold and silver CFD account we currently provide.
It is with great pleasure that I am able to announce that through one of our counterparties we have been able to do this.
Prior to offering this facility to our clients we wanted to do some due diligence to ensure it was competitive and answered a lot of the questions posed to us when asked to locate such a product. Precise details are set out in the account terms and conditions available to you on enquiry.
Please find responses to some of your questions below:
Q: Can I take delivery of the gold or silver if I want to?
A: Yes, we can purchase gold and silver for delivery through this account.
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A: Through what is publicly available we have determined that the buy/sell spreads are tighter than mints throughout Australasia, but not as tight as the CFD product.
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A: Yes, the bullion is stored at non-bank vaults, and can be bought and stored in a non US location.
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A: You have a direct beneficial interest in the gold. For purchases over US$1m, the gold is held directly in your name, under this amount it is held on your behalf by our counterparty at their account at the vault.
Q: Is my holding pooled with others?
A: No, the holding is allocated, not pooled.
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These were some of the key questions you asked. This link profiles the product in more detail - Click Here .
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Base case is that the (almost co-ordinated) central bank actions of the last few weeks support the market like the previous QE programs have.
Under that scenario we would then expect to see ‘risk’ higher.
EUR/USD moved strongly higher in anticipation of the FED and ECB programs so I view this 8 day pull back since the announcement as nothing more than a profit taking correction (buy the rumour, sell the fact).
Yesterday the EUR/USD appears to have reversed (key day reversal – lower low, higher high and close) and the 8 day gentle downtrend appears to have been broken to the top side.
This should be an important indicator for all pairs against USD suggestive that we will see NZD, AUD, GBP, Gold and Silver all (significantly?) higher in coming weeks.
Fig 1 – Daily EUR/USD chart
Fig 2 – A closer look at the downtrend line via the hourly chart
The last confirming level to cement my view will be if/when the EUR/USD lifts above my model level which is currently falling mildly at 1.2965.
Longstanding clients will of course know the story of the epic run in Silver that this trader had with us between Sep 2009 and May 2010. There has been no better client trade in my 11 years here.
Interestingly he appeared back on the radar last week buying 4 tranches of Silver over the course of the week. Then came Friday’s Jackson Hole announcement and well, as the youngsters say,……..Boom!
I must say the chart looks pretty damn attractive and if PIMCO’s Bill Gross believes that the FED WILL ACT at their next meeting (today he said they will) then that’s good enough for me. Gold and Silver have been the biggest beneficiaries of the FED’s programs in the past. Can we dare to believe that Gold and Silver are destined for new highs?
1) Weekly long term chart of Silver. Multiyear triangle consolidation now broken. (Gold looks very much the same)
2) Daily chart. A closer look at Friday’s action. A technically gorgeous jump off the 10/20 day m.a. band (coincided with my short term model too…) after breaking, then retesting the break, of the mega triangle earlier in the week. Bollingers have splayed and will now make a nice channel higher.
The precious metals just look irresistible right now and are likely the only store of value as we approach what looks like a renewed, and somewhat co-ordinated, global central bank monetary easing campaign (read ECB, FED and probably China too over the next few weeks).
We are specialists in risk management and good broking practice. Call for suggestions on appropriate sized trades for your risk capital.
I have had a bearish view of Gold and Silver recently. With that in mind I note Dennis Gartman of The Gartman Letter today.
Firstly regarding the metals traded on the CME, margins are to be cut for Silver, Copper and Palladium as of the close of trading today (overnight). The announcement came last week and normally this would be a reason to take metals prices higher. Instead, prices are weaker, and markets that do not respond to bullish news are not bullish. It is at times that simple and in this case very so. All things being equal, a cut in margin requirements, even a modest one, is bullish although cuts are not nearly as bullish as increases are bearish. Nonetheless here is a demonstrably bullish bit of news and the market’s reaction is manifestly bearish.
In layman’s terms the suggestion here is that if you are bullish of say Gold and the margin is cut allowing you room on your account to buy more then you would do so. To not buy more suggests the bullish view is at best weak, and at worst no longer in favour.
I used the term ‘intriguing’ in my headline but I could just as easily substituted ‘nasty’. My sell recommendation in the AUD/USD was in the money by 100 points the very next day but two days later the AUD/USD was 220 points higher. Only the nimble made money.
Overnight the world seemed to go mad on embracing ‘risk’ but the world economies that I read about look decidedly troubled. Personally I am a bear on global growth which is suggestive of equities going lower and presumably ‘risk’ being shunned. However the charts as I interpret them do not support my view for the moment. That leaves me side-lined.
A few charts of interest that I am watching.
Dow Jones Index – I interpret this chart as the beginnings of a new bear market. The 7 month up-trend has been broken and the rally of the last two days I believe is just a re-test of the break down. Also bear markets are noted for their volatility and where you can see the grinding nature of the last few months up, the latest moves have been very ‘noisy’ (big down, big up).
NZD/USD – The kiwi is historically VERY highly correlated to the performance of U.S. shares. And yet this chart absolutely contradicts my equity market view right now. Right now, if the kiwi closes the week above 0.8261 then a ‘bullish engulfing week’ would be suggestive of higher ahead.
Not only is the kiwi showing ‘bull’ signals but EUR, AUD, GBP, Gold and Silver are all displaying positive signs on my short term models. Usually I’d just follow them but for some reason I can’t shake the ugly feel I get from reading about the prevailing fundamentals.
Personally I’ll be sitting the week out and looking for more clues come Monday.