Gold surges with dollar weakness

We have been talking Gold up for over 18 months now. As the dollar goes weaker the gold price is correlated to it and so Gold prices must go higher. In addition to the dollar weakness, asset fund flow movement is easing out of cash and into precious metals like Gold and platinum resulting in the massive surge of prices for the commodities.


This does not mean that traders and investors should invest in the stocks relative to these precious metals. Traditionally, gold stocks dont follow the gold price. Platinum stocks tend to have a better correlation to their underlying metal's spot price. But it too should not be banked at present.

The best is to buy gold and Platinum spot price positions. That means you buy the actual price in dollar terms of an ounce of gold or platinum itself. It has nothing to do with a mine or a stock. You are speculating on the demand and supply of the commodity and either selling the precious metal or buying it accordingly.


With one of the major South African gold miners cancelling their hedge recently reasoning that the gold price is not expected to go below $1300 again it gives you a warm fuzzy feeling about the way gold spot price is going to go!
Our long time take profit level for Gold spot price was $1350 using a weekly chart for a medium term hold position... As it happens we hit this level in the gold price in October.

The dollar is at support now of the 161% extension against the EURO so caution is to be taken now in any long position. Move your stop loss into profit and keep an eye on it.

Trade well; not often.
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Trading Platinum from support

We recently took a short term trade in platinum going long as the commodity found support at $1531. Our profit target was $1610. As the dollar was expected to go weaker commodities generally go higher.

We held the short term trade in platinum until $1600 with a profit of $70 we were happy to close the long position.

For a bigger view of the above chart click on it.

Do you want to learn stock market trading?
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Global markets at resistance

"Global markets at resistance" was the main heading for my recent issue of Stock Market Outlook, a trading newsletter I write for a club membership database on a weekly basis.

This weekly investment newsletter and trader's update focuses on the global indices, global commodities and then local stocks in South Africa as well as the Resources index and FINDI index.

I spoke about trading KUMBA Iron Ore last week Monday when it opened at 23200 and ended up at 26600 yesterday. Only 8 days to achieve over 10% return! That's no playing around! It's also not geared either. My medium term target for Kumba is 32000.

I was long of S&P 500, Wall Street and DAX last week to close near the highs of the top of the channels on these indices.

This week, the focus was off the stock markets and onto gold again. After sitting on $1000 it rallied back to my target of $1150within a very short space of time.

Now I wait for the global markets to settle at or near their support levels on the channel. Once this happens which should be by early next week I will be taking short term trades in the stock market again.

As the dollar weakens, commodities will rise. It is a patient game waiting for the dollar to turn, find resistance in its decline and then continue its downward movement. It is the opportunity to take longs on commodities again and stocks that mine those commodities.

It's fascinating but there's always something to learn.

Short term trading is't all its cracked up to be. People have a romantic disbelief about how exciting it is. The reality is that trading is mostly boring and repetitive.

It's a great hobby for retired persons and people who have wads of money. It is NOT for someone trying to replace their job.

Some people however, can find the happy medium of having a job and being patient while waiting for the trades to come. Building confidence in their trades but also mental discipline. Lastly growing their portfolio size over time like a professional golfer.

Support levels on the S&P 500 are 1093 in the short term. For the DOW it be 10100. The DAX is around 5400. KUMBA support is 24900 but could extend to 24400 odd intraday before closing on a hammer candle formation as example.

Watch the dollar. Keep an eye on the Baltic Dry Index. Copper is also a good early indicator as prices start to edge up.

Have a great trade,
Warrick








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