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« Severstal Gold IPO imminent? | Main | Never Mind What The Fed Thinks, The Markets Have Decided QE2 is Coming »

Gold Prices: On Days Like This

There are days when you pitch up for work and you really don't want to login, this is one of those days. No matter how much we warn you about volatility in our tiny sector of the market it still comes as a shock to the system for some of us when silver and gold prices undergo a sharp pull back. If our mail bag is anything to go by there are a few of you with a finger on the sell button ready to react to any news bite that hits your screen.

If your long term strategy includes a core holding then nothing has changed. Your trading account may have positions that have matured and reached the targets that you set, in that case you stick to your game plan and take the appropriate profits. Otherwise there is no need to panic as the current drop in gold prices, of around $36.00/oz to $1332.00/oz, is only 2.7%. If a stock fell by 2.7% we would pay no mind to it. This move is not a deal breaker or a trend buster, so keep your head and remain calm.

Taking a quick scan of the economic landscape we can also see that the DOW is down around 200 points, WTI Crude is down around $3.00, the HUI is down around 25 points, standing at 495 as we write. So, what is the driving force behind todays volatility, not too hard to detect as the Chinese have announced that it will raise rates as per this snippet from The New York Times:

China’s central bank unexpectedly announced Tuesday that it would raise interest rates for the first time in nearly three years, apparently in the hopes of dampening inflation and cooling off this country’s hot property market.

The move had an immediate effect on markets worldwide, sending stocks lower on exchanges in Europe and the United States as investors weighed the effect on China’s continued economic growth and its ability to serve as an engine for a global recovery.

Just in is this missive from Jim Sinclair:

Today is the height of nonsense for those that understand what is in fact taking place.
The .25 increase in Chinese money costs are symbolic and their use of MOPE.
The following statement by the US Treasury is simply an answer to China's position that the US is involved in more than benign neglect in the collapse of the dollar rally.
Gold is going to and through $1650. Today is just another day of drama in gold, full of noise and fury signifying nothing whatsoever in terms of the trend.

In conclusion all we can say is let the day roll on by, the dust settle and we will see just what the trends are telling us. We are not too far away from the next meeting of the Federal Reserve where QE2 would appear to be baked into the cake. The effect of such actions will play a major role in the direction of gold prices.

Back to our latest venture which was the launch of an Options trading service we are pleased to report that it is going very well so its a big thanks to all those who have signed up for it and the supportive emails that you have sent us.

Our premium options trading service, OptionTrader, closed 5 trades last week, banking profits of 100.00%, 101.34%, 101.49%, 85.05% and 81.43%

SK Chart 17 October 2010.JPG

The above progress chart is being updated constantly. However, to see exactly how it is going, please click this link.

Stay on your toes and have a good one.

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