Metals Momentum
After not really having much to write about over the past few months as shorts have been the working trade, now that I am seeing a potential market shift with room for a profit to the upside, and all my shorts are now closed, I wanna map out the reasoning for taking a risk going long right now. There is always risk in any open market position you take and it is important to be aware of all risks in whatever investment vehicles you choose, and manage those risks accordingly.
The metals have been chopping around after the recent downside break. Gold has been hovering around 1550 and silver pressing towards it's previous support/low of the range around $27.15 (spot) hit in the last week of 2011. Yesterday, as gold was hanging around right below $1550 resistance, as soon as the NYMEX closed, gold easily moved above $1550 shooting almost $15 higher in 30 min & easily staying above it today.
Concurrently, silver hit an intraday low of $27.12 (spot) and bounced off the low end of it's range and has been steadily increasing
I started going long at $28.35 and put stops in at $26.85. I figure if silver breaks the low end of it's range, I'll give it a little bit of a cushion and pushed it back about .30 to $26.85. If it breaks then it's probably going lower and that's about as much risk as I'm interested in taking on this trade. I see upside potential of $30 resistance, and we'll see how the market responds when it gets there.
Not that I usually pay much attention to the fundamentals in too much detail, but I think this thing with Greece possibly leaving the European Union has the potential to have a huge effect on the US Dollar and in turn on the precious metals which are priced in dollars. Maybe I'm not understanding the situation as the analysts on TV because they all seem to think the opposite of what I'm about to say.
I'm speculating, that with all the toxic debt on Greece's books, if the European Union were to rid itself of that debt then there would be a major strengthening of the Euro currency, which having an inverse relationship with the US Dollar would result in a lower dollar and an overall strengthening of precious metals. Seems like a pretty basic logical series of cause and effect right? If I'm missing something here, someone please inform me. Anyways, I think we've got a lot of volatility on the horizon and that's a beautiful thing! Best of Luck!
Adam Laigo
Semper Pacific Wealth Strategies
metalsmomentum@gmail.com
