skip to main |
skip to sidebar
Yesterday was options expiration and the precious metals were clubbed mercilessly and clumsily, with little attempt to hide it.
Today the metals markets rebounded strongly after a somewhat weak start and some late Comex headfakes.
As I had mentioned I had come out of cash and bought the dip in the precious metals sector yesterday, rather heavily, running cash levels to effectively zero. There was even some picking from the fallen stocks among those wild tigers, the silver miners, and in some size at end of day. Their beta is pretty impressive, and nice when it runs your way.
The buys in the stocks that had fallen to long term support were big fat targets. And they bounced with a vicious flourish today, going up even faster than they had fallen, gaining momentum steadily after the FOMC announcement.
I flipped the hedges early, and just let the metals run into the afternoon, trimming back into the close to raise some cash back again for more opportunistic buys. I like to get my money off the table and let the profits run.
So what next? The formation on the gold chart looks good, and the support on the correction helped to draw the cup of the inverse head and shoulders a little more firmly. Yes there will be draw downs and corrections along the way, but gold looks headed for 1590 and probably beyond, but one leg at a time.
Silver is a juggernaut. I had to force myself to buy beta heavily in that rugby scrum of a market yesterday and it paid off extraordinarily well.
If they want to be really Machiavellian they'll hit the metals tonight and tomorrow again, but its getting so old it might not work, and they'll have to retreat to try and defend another level higher.
And thanks Blythe. You're the best, baby.
Zicke zacke zicke zacke hoi hoi hoi
Ben and the Fed did almost exactly what I thought that they would do, especially given the statements that I highlighted yesterday in the piece from Eisenbeis.
The Fed is not going to do anything at all to roil the markets unless their back is absolutely against the wall.
It will be interesting to see if we get confirmed breakouts from the potentential inverse head and shoulders formations in the stock indices.
Highlights
Gold’s long-term supply and demand dynamics and several macro-economic factors ensured gold remained a sought-after asset in Q1 2011. Following a consolidation in January, gold ended the quarter on a firm footing.
The gold price rose by 2.4% during Q1 to US$1,439.00/oz by 31 March 2011, on the London PM fix, a more modest rise relative to average gains of 6.2% per quarter over the past two years.
By the end of Q1, ETFs held a total of 2,110.3 tonnes of gold worth US$97.6 billion, compared with the high of 2,167.4 tonnes at 31 December 2010, or US$97 billion – a modest net outflow in the quarter.
Central banks continued to be net buyers of gold in Q1 2011 with emerging market countries, including Russia and Bolivia, being among the key net buyers. As a group, the official sector holds 18% of all above ground stocks of gold.
Investor activity in the gold market during Q1 2011 differed by region. ETFs in the US and the UK experienced net redemptions on the back of year-end rebalancing and some profit-taking, while continental European and Indian investors increased allocations. Recent data shows a resumption of net inflows in the latter half of March and early part of April. Coin and bar purchases remained high, while activity in the futures and OTC markets was buoyant.
You may download the entire report here: Gold Investment Digest - World Gold Council
