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« Option Trading Strategies | Main | Pessimism in the gold space »

Political Turmoil Takes Center Stage

As we see it, political turmoil is still the major determinant for the price of precious metals.

Also note that on a day when both gold and silver prices moved higher, the producers lost ground, which once again raises the question of are they recognized as connected to the metals or are they still being considered as a 'stock' and will be bought and sold as a stock? The DOW lost 258 points today, so out went the miners with the bath water.

We crossover for an interesting comment from jsminset as follows:

Here are some words from Master Kenny:

If December does NOT correct with lower closes over the next one or two days, but instead closes above $1695 over the next several days, then our figures would consider this corrective action as finished – albeit the normal back and forth widening action to come, notwithstanding. The other option (still in play), is a continuation of a V bottom and a spike rally moving very quickly up to the second resistance level at $1800/$1850, with very little widening along the way.”

and now across to Marketwatch for a quick summary of today's play:


SAN FRANCISCO — Gold and silver futures rose Monday as another round of worries about the euro-zone crisis helped shift more market attention into safe-haven investments. Gold for December delivery GC1Z +0.39% rose $35.40, or 2.2%, to settle at $1,657.70 an ounce on the Comex division of the New York Mercantile Exchange.

After steep losses for gold last week, the metal’s rebound started on Friday as U.S. stock indexes hit new lows, said Adam Klopfenstein, a senior market strategist with MF Global in Chicago. And Wall Street’s main stock averages fell sharply on Monday too, with the Dow Jones Industrial Average closing down 2.3%.

With equities not falling off a cliff, “flight-to-quality (buying) is back on for gold,” with investors once again looking at the metal to diversify their holdings, he added.

During the recent sell off, investors felt the pressure of margin calls on other investments and rushed for cash, precipitating a fall for gold and other commodities.

Gold ended the previous session up 0.3%. It “gathered steam as no new good news” emerged from the euro zone, said George Gero with RBC Wealth Management in e-mailed comments.

Other metals traded lower, however, with copper feeling the pinch of the continued worries about the global economy and “the stimulus not yet working miracles in two continents,” Gero said.

December copper HG1Z -2.14%  settled down less than 1 cent, or 0.1%, to $3.15 a pound.

Copper pared losses and even traded in the black briefly after a gauge of U.S. manufacturing activity came in better than expected along with data showing U.S. construction spending rose in August.

Copper is used extensively in home construction as electrical wiring material.

Silver for December delivery SI1Z +0.28%  gained 71 cents, or 2.4%, to end at $30.80 an ounce.


The gains for gold and silver came as stocks dropped in Europe and Asia, and the U.S. stock market traded lower.

Analysts cited news that the Greek government said it will fall short of its deficit target this year and agreed to additional austerity measures ahead of a meeting of euro-zone finance ministers on Monday. Read more about Greece falling short of deficit target. 

Analysts at Karvy Commodities Broking said both gold and silver are likely to remain volatile in the coming days as traders look for clues on both the global economy and the euro-zone debt crisis.

Any positive signs from the debt-beleaguered euro zone will cheer up investors, and money may flow out of gold into stocks and other asset classes,” the firm said in a note to clients.

Over the weekend Qatar Holdings, a division of Qatar’s sovereign wealth fund, said it would pay $775 million for a stake in European Goldfields UK:EGU +18.47% , including providing $600 million to finance operations in Greece.

The Daily Telegraph reported that the deal is part of a broader strategy at the sovereign-wealth fund, under which it will spend up to $10 billion acquiring stakes in gold producers.

The newspaper said that the fund wants to invest in a range of commodities, but that access to physical gold is its top priority.

The gains for gold and silver didn’t translate into same action for platinum and palladium, which fell even as most car makers posted strong gains in September sales.


So there we go.


Regarding We currently have a number of open trades at the moment however, we do not update the charts until the trade is closed and the cash is back in our account. 

Our model portfolio is up 407.38% since inception

An annualized return of 113.83%%

Average return per trade of 42.43%

86 closed trades, 83 closed at a profit

Average trade open for 45.85 days

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Stay on your toes and have a good one.

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