Gold Commentary

Good Morning,
The bottom line is no one knows if the gold "bubble" will continue or if it will collapse. There are two key factors that will go a long way in helping us to decide whether one or the the other will happen.
The first is fuhdamentals. The biggest fundamental is the USD and the Federal Reserve's accomodative policy. As long as we don't raise interest rates and other countries do, the dollar will suffer and commodities, including gold should be more expensive. A harder fundamental to determine is supply, but I think that is a much longer term factor.
Shoter term, we can look to the facts. There are more buyers then sellers and that clearly drives the price higher. Gold continues to make higher highs and higher lows, which signals an uptrend. Until we have a technical change in that pattern, then the old adage sticks: the trend is your friend.
Furthermore, technical fundamental and technical analysis helps us to use the uptredn to our advantage and using the various financial markets provide opportunity. That is a major point. Traders focus on opportunity, not discussion.
How do we profit? One way would be to use leverage and buy the Australian dollar. Fundamentally, there lending rate is 4.75 compared to .25 in the US. Fundamentally, they export lots of gold. Technically, the USD is in a downtrend against the AUD.
How else can we use the Gold move to profit? We can sleep better at night by using GLD in the stock and option markets to hedge our holdings/business assets or go long the dollar to protect our downside risk in our gold holdings.
Either way, profit and protecting our profits is the name of the game, not "what will happen way down the road".
Finally, and just to put this out there, what happens if the rally in the economic markets fail. Will that cause deflation and/or stagflation? If that happens, the traders who know how to trade sideways to bearish markets will be having a ball as we won't be talking about supply/demand or anything else, just the failure of quantatative easing to help secure jobs and ultimately, growth.
Brian J KahnGood Morning,
The bottom line is no one knows if the gold "bubble" will continue or if it will collapse. There are two key factors that will go a long way in helping us to decide whether one or the the other will happen.
The first is fuhdamentals. The biggest fundamental is the USD and the Federal Reserve's accomodative policy. As long as we don't raise interest rates and other countries do, the dollar will suffer and commodities, including gold should be more expensive. A harder fundamental to determine is supply, but I think that is a much longer term factor.
Shoter term, we can look to the facts. There are more buyers then sellers and that clearly drives the price higher. Gold continues to make higher highs and higher lows, which signals an uptrend. Until we have a technical change in that pattern, then the old adage sticks: the trend is your friend.
Furthermore, technical fundamental and technical analysis helps us to use the uptredn to our advantage and using the various financial markets provide opportunity. That is a major point. Traders focus on opportunity, not discussion.
How do we profit? One way would be to use leverage and buy the Australian dollar. Fundamentally, there lending rate is 4.75 compared to .25 in the US. Fundamentally, they export lots of gold. Technically, the USD is in a downtrend against the AUD.
How else can we use the Gold move to profit? We can sleep better at night by using GLD in the stock and option markets to hedge our holdings/business assets or go long the dollar to protect our downside risk in our gold holdings.
Either way, profit and protecting our profits is the name of the game, not "what will happen way down the road".
Finally, and just to put this out there, what happens if the rally in the economic markets fail. Will that cause deflation and/or stagflation? If that happens, the traders who know how to trade sideways to bearish markets will be having a ball as we won't be talking about supply/demand or anything else, just the failure of quantatative easing to help secure jobs and ultimately, growth.
Brian J Kahn