Andrei Pehar, Sr. Currency Strategist, fxKnight.com
Known as the "Black Knight" in trading circles, Andrei is a private fund manager, consultant to management, and a sought-after speaker, trainer, and coach for professional traders and individual investors alike. He played in professional chess tournaments at a young age, earning a rating in the U.S. Chess Federation, and went on to further hone his strategic skills by studying Japanese martial arts, bringing with him a unique perspective to the financial markets.
His client list includes prestigious names such as UBS, Tower Asset Management (named by Bloomberg as top asset manager), Clifford Associates (investment counselors since 1915, officially acknowledged as the oldest in the United States), and several other high profile firms specializing in investment and wealth management for musical artists, sports celebrities, and other ultra high net worth individuals and trusts. He is currently working on a book which will, for the first time, introduce retail traders to institutional trading strategies and techniques.
Click Here to view videos by fxKnight
Known as the "Black Knight" in trading circles, Andrei is a private fund manager, consultant to management, and a sought-after speaker, trainer, and coach for professional traders and individual investors alike. He played in professional chess tournaments at a young age, earning a rating in the U.S. Chess Federation, and went on to further hone his strategic skills by studying Japanese martial arts, bringing with him a unique perspective to the financial markets.
His client list includes prestigious names such as UBS, Tower Asset Management (named by Bloomberg as top asset manager), Clifford Associates (investment counselors since 1915, officially acknowledged as the oldest in the United States), and several other high profile firms specializing in investment and wealth management for musical artists, sports celebrities, and other ultra high net worth individuals and trusts. He is currently working on a book which will, for the first time, introduce retail traders to institutional trading strategies and techniques.
Click Here to view videos by fxKnight
The Long−term Outlook for Gold
Posted 10-15-2008 at 10:26 PM by fxKnight.com
The Long−term Outlook for Gold
Traditionally thought of as a safe-haven during periods of high inflation or market uncertainly, this shiny yellow metal has been moving by over $100 per ounce on some recent days. But there's more to the story than just the recent market panics.
The day prior to the first "no" vote on the US bail-out package, gold made it's bottom at 736.18, a level projected nearly 2 months in advance by Fibonacci studies. But besides the technical indicators, there is a genuine fundamental supply and demand issue unfolding. The truth is most every bank, bullion, and coin dealer out there is out of stock. And some have even ceased accepting waiting lists and back orders. Try it yourself - just call one.
So in a period of growing demand amid uncertainty about both the markets and inflation, the supply is virtually non-existent. Except perhaps on eBay, where will find some $10 silver coins selling for 25 to 30 Euros (and an ounce of gold for over $1000). Considering the situation, perhaps eBay is a better market thermometer than the London spot fix rate?
So why isn't the rate rising sharply as a result?
The other half of the equation are all of the funds currently being forced to liquidate assets. Those assets include gold and silver. And when a fresh supply suddenly hits the markets, we see the dramatic one-day drops like we've been seeing. A fund essentially waits for the best price they can get (often a technical level), then takes advantage of the selling opportunity. The newly available gold is then quickly snatched up by the biggest bidders, creating the sudden reversals back to the upside.
The result has been the current range of 830.93 to 926.70. If 852.52 continues to hold as resistance, then we may well see more selling. After all, the funds are not quite finished liquidating yet. The IMF has also been raising cash by selling roughly 1/5th of its gold reserves (about 400 tons worth) in small gradual amounts in order to avoid disrupting the markets. Any further drops will likely find support in the form of eager buyers at 808.31 and 735.13
If we can get above 853.52 and that level successfully holds as support, then another run to 926.70 seems likely, with some sellers waiting at $900. A break of these levels brings secondary targets into view at 1044.44 and 1117.22
Overall, it would not be surprising to see gold somewhere around $1250 to $1300 per ounce within the next 12 to 18 months ($15.99 for silver). However the ride up there is likely to be anything but smooth.
Traditionally thought of as a safe-haven during periods of high inflation or market uncertainly, this shiny yellow metal has been moving by over $100 per ounce on some recent days. But there's more to the story than just the recent market panics.
The day prior to the first "no" vote on the US bail-out package, gold made it's bottom at 736.18, a level projected nearly 2 months in advance by Fibonacci studies. But besides the technical indicators, there is a genuine fundamental supply and demand issue unfolding. The truth is most every bank, bullion, and coin dealer out there is out of stock. And some have even ceased accepting waiting lists and back orders. Try it yourself - just call one.
So in a period of growing demand amid uncertainty about both the markets and inflation, the supply is virtually non-existent. Except perhaps on eBay, where will find some $10 silver coins selling for 25 to 30 Euros (and an ounce of gold for over $1000). Considering the situation, perhaps eBay is a better market thermometer than the London spot fix rate?
So why isn't the rate rising sharply as a result?
The other half of the equation are all of the funds currently being forced to liquidate assets. Those assets include gold and silver. And when a fresh supply suddenly hits the markets, we see the dramatic one-day drops like we've been seeing. A fund essentially waits for the best price they can get (often a technical level), then takes advantage of the selling opportunity. The newly available gold is then quickly snatched up by the biggest bidders, creating the sudden reversals back to the upside.
The result has been the current range of 830.93 to 926.70. If 852.52 continues to hold as resistance, then we may well see more selling. After all, the funds are not quite finished liquidating yet. The IMF has also been raising cash by selling roughly 1/5th of its gold reserves (about 400 tons worth) in small gradual amounts in order to avoid disrupting the markets. Any further drops will likely find support in the form of eager buyers at 808.31 and 735.13
If we can get above 853.52 and that level successfully holds as support, then another run to 926.70 seems likely, with some sellers waiting at $900. A break of these levels brings secondary targets into view at 1044.44 and 1117.22
Overall, it would not be surprising to see gold somewhere around $1250 to $1300 per ounce within the next 12 to 18 months ($15.99 for silver). However the ride up there is likely to be anything but smooth.
Total Comments 0
Comments
Recent Blog Entries by fxKnight.com
- Crude Oil: A Key Level to Watch (11-20-2008)
- Has the Aussie Found Bottom? (10-22-2008)
- The Long−term Outlook for Gold (10-15-2008)
- Next Levels to Watch for the EUR/USD (10-09-2008)
- US Senate Passes Bailout Bill − Markets Unimpressed (10-02-2008)
