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« The UK Budget: The Party is finally Over | Main | UK gets a Regulatory Face Lift »
Thursday
Jun172010

Dollar Loss is Golds Gain

USD Chart 18 June 2010.jpg

A week or so ago we suggested that the US Dollar may well have run its course and will now look to take a breather. That breather appears to have arrived so we now expect the USD to take tea with the 200dma before eventually heading even lower. Without another blast of bad news from the eurozone expect the dollar to weaken as the printing press has already inflicted much damage.

As we said recently, sooner or later the focus will return to the dollar as the investment community becomes immune to the constant stream of bad news emanating from the fatally wounded eurozone. Europe is still up against the wall of unrest being brought about by the politicians, rightly or wrongly implementing austerity measures in order to reduce debt. Many will have to forfeit state benefits including wage reduction, delayed and reduced pension payments, job losses, etc. These measures will not be accepted easily as we have already witnessed in Athens and other major cities across the world as demonstrators let their feelings be known. And as we also know, the politicians will try and print their way out of trouble as they have now clearly demonstrated. At one time we harbored the thought that Germany might hold the line and be the country to stand firm and uphold the European Unions own rules on fiscal responsibility, silly us!

As bad as this picture looks, it is putting in a performance that will ultimately support gold prices and eventually have people running around like headless chickens in their attempts to get their hands on real money. A way to go yet but you can feel it building up as gold gathers strength for a push through the $1250/oz level into unknown territory.

Over the next week or so we will be taking another look at our portfolio and weeding out the laggards and re-deploying the funds into vehicles that we believe can move a little faster. So, while you are waiting for the new all time high take some time to do a critical review of own stocks and be prepared to make some tough decisions. When the mania stage finally gets here you need to have positioned yourself to the best of your ability in order to maximize your profits. Talking of which our purchase of some Call Options in Silver Wheaton Corporation over on www.silver-prices.net is now showing a paper profit of 37.79%, getting us off to a reasonable start.

Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address. (Winners of the GoldDrivers Stock Picking Competition 2007)

For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter.

For those readers who are also interested in the nuclear power sector you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.




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Reader Comments (5)

I think Agnico Eagle may just hit $70.00 a share. It's a lead pipe cinch with this break out. Usually when a fungible like gold hits a 52 week high on a Friday, the next Monday and Tuesday are up days. I can't be 100% where I found this out. I believe I saw a presentation on Market Club about it.

June 18, 2010 | Unregistered CommenterDavid

I am timing another top now. Not sure if we will get 1266 or not, maybe not, but on long term gold is still within the boundaries of large 1250 support/resistance space. Rising wedge on the daily is bearish. If we don't close sunday or monday higher than today, next week is gonna be the break out of wedge down. We'll see.

June 18, 2010 | Unregistered CommenterDi

what is there in this yellow metal that world see it as a safe haven?Why do people like to invest in it especially the INDIANS. If gold price rises too fast then Indians might liquidate gold. as they have done in the year 1981 regarding SILVER.

June 19, 2010 | Unregistered Commentervirendra

imho, no asset will hide from the depression. so, the whole gold trade is just a speculation against clueless investors who don't want to accept our sad reality. there is no way they could hold such a high prices on their own when the average population and governments are going another direction, like cutting on their spending, saving money and so on. it is a question of time when gold will start its long term downtrend, commodities can bounce from one extreme to another and it is a regular pattern, not something weird you have to be amazed of, i am expecting below 2000 prices in silver, same in copper, oil, and etc...

June 19, 2010 | Unregistered CommenterDi

You called that right, Di. I was in the July 65 AEM option, and I saw a hangman forming on the chart. I got in at 2.22 on Friday and felt lucky too get out at 2.05 today. Last I checked the option was trading in the 1.20's. Whew! I have never been so happy to take a small loss. That was one big cow patty.

June 21, 2010 | Unregistered CommenterDavid

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