If you only follow one asset class…ie…gold or bonds…or stocks via the SP 500 or Dow – you really need to consider opening your eyes a little wider to get a true understanding of where things are going. The financial blogoshpere is ablaze this morning with freaked out investors and traders – crying the blues that gold has “fallen off a cliff” and that the dollar is headed for the moon. This couldn’t be further from the truth.
Indeed gold has taken a dip ( and for many…30 bucks may seem more like a crater) but looking at a daily chart, and drawing a simple trendline – one finds that this is as normal a pullback as any, and that the up trend in gold is very much intact.
Currency wise – the commodity related currencies (or CommDolls..including AUD, NZD and CAD) are more than holding their own, and continue to gain ground against the dollar – as oil likely finds support here as well. The only “real loser” here today is the EURO – and even at that, is no lower vs the dollar than it was a month ago.
Looking at the larger picture across several asset classes, this looks like a buying opportunity to me, and as much as I understand how difficult it may be – you really do need to open your eyes ( and possibly hold your nose) “buy the blood” and take comfort in commodities.
told ya gorilla is about to get spanked..
Well this is truly special…..
I so appreciate your comment 1inbluemoon – and encourage you to look closer at the LIVE TWITTER FEED on the right hand column of the blog.
Gold and silver options where purchased TODAY – and all currency pairs are well in profit with stops moved to break even – and 100% completely free money trades from yesterday moving forward. The options have moved perhaps 20 cents or so…he.he…hardly what one might consider a spanking. Im thrilled with the entry!
Perhaps, as I continue to improve/work on my trading – you too can do the same………. with your incredible powers of observation.
do you have a target for GDX ? (related to your option trade ?)
thanks
Hi hf – and thank you for your comment.
My trade plan requires that I extract money on a weekly level/bi-weekly level – in that I do this for a living so – “buy and hold” is not something that I generally practice, considering the current environment.
However, I am optimistic that the PM’s (“precious metals” for those newcomers) should perform very well from here on out – based on the Fed’s current plan to continue its devaluation of the dollar.
After entry – commonly I will move down to smaller time frames (4 hour/1 hour…or even a 15 minute chart) and take profits/re enter at defined levels of support and resistance…locking in profits along the way – and continuing to “ride the wave”…until said levels (on these smaller time frames) show signs of weakness / chance of reversal.
Generally speaking – I see every reason for GDX and the metals in general, to take out near term highs (GDX up around 65.00)….but unfortunately -the “how” and “when” remains to be seen.
Hope it helps – and thanks again for stopping in.
Ooooops..one more thing with respect to the options trade. I don’t look to hold options very long (ever) so…….these being March dated….I could easily look to dump them / sell and re buy – as soon as Dec / Jan.
Forex…..I asked you a question on SMT but you may have missed it. Can you elaborate on your comment about “risk on” environment due to the fact that CAN $ strengthened against US $ today. Also, why do you think that was the case when both oil and gold were down big today which would lead you to believe that the CAN $ should have weakened against US $??? Interested in your thoughts…thanks!
Regardless of Canada and the U.S having such close geological / trade ties – the FX community at large views the two currencies differently.
In times of “risk on” behavior – moneies flow “from safe haven’s” and “into” risk related currencies.
As the U.S dollar is the worlds reserve currency (regardless of its current “ugly fundamentals”) it is still very much seen as a safe haven….where as (and again….oddly considering its strong fundamentals) the loonie is a commods related currency – and still falls into the category of “risk related”.
In general “risk on” = Cad , Aud , Nzd up….and U.S (a safe haven) down.
Let me know if it requires further explination.
That makes perfect sense to me yet the US dollar was up too! Thus, it is not entirely clear to me how in the midst of confounding variables you could see a “risk on” for commodities. I am interested as it would seem to me that if there was a way to properly identify it may provide an edge?
36Devon.
I see “risk on” for commodities from a couple different angles – and yes…..at times it is difficult (especially these days) to discern which direction things are headed with so much information, and so much of it conflicting.
1. From a purely fundamental view – world populations are growing, and resources are diminishing (things we all need/use are getting harder to find) = commodities up
2. The simple fact that as the world’s current reserve currency (the U.S dollar) is firmly being targeted for devaluation, the cost of these “things we need” should rise – as they are priced in U.S dollars. Dollar worth less = commodities up
3. From a currency point of view – long term trends in AUD and NZD (like..a weekly chart at least) are clearly in very well defined up trends despite recent volatility and the daily action. Commod currencies up = commodities up
Zooming out to a larger picture often helps frame shorter term trade decisions (or at least provides a solid background) when the day to day volatility gets difficult to handle. The “edge” can be found here – in having the confidence in your decisions, knowing you are trading in the right direction from a larger point of view – and not letting the “daily squiggles” bump you off the log.
Lemme know how things are going here moving forward.