Trading Resource » Commodities

Gold All-Time High Coming?

admin — Tue, 13 Apr 2010 17:17:13 +0000

Is gold ready to challenge its all-time high?
by Adam Hewison

The bull market inched higher during Sunday night trading, subsequently pushing gold to its best levels since December of last year. The sudden move down on Monday was a reminder that the 1160 area is an area of resistance for this precious metal.

Watch the video

In this new video on gold, I’ll show you some of the indicators that you may want to look at in this market.

As always, our videos are free to watch and there are no registration requirements, but we invite you to please share your thoughts on gold on our Traders Blog:

Why gold will not make new highs or lows this year

admin — Tue, 30 Mar 2010 17:43:27 +0000

by Adam Hewison

Gold has had some dramatic moves in the last eighteen months and we expect it will have some equally dramatic moves in the future, but not right now.

Watch the free video here: Gold going higher?

While I recognize that gold is one of the few commodity markets that people are really passionate about; the purpose of this article is not to take sides either with the gold bugs or those who reject the argument that gold is forever. Rather, I want to discuss my interpretation of the markets cycle.

After spot gold made an all-time high against the dollar on December 2 at $1,226.37, gold has been in retreat mode. For the for the past several months gold has been in a broad trading range, seemingly unable to move one way or another. This process has created frustration from bulls and bears alike.

Here is the dirty little secret about the gold market. It can be a horrible investment and here’s why:

Gold first started trading in the 80s while I was on the floor of the Chicago Mercantile Exchange in Chicago as a member of the International Monetary Market, (IMM) which was at that time a division of the CME now the CME Group. When gold opened up the public clamored to buy into the gold futures market and guess who sold it to them? Thats right it was the pros- the guys who made their living trading. As a result, gold hit an all-time high of around $850 an ounce back then and it took almost 25 years for gold to move over that level, at least in dollar terms. I dont know what your timeline is, but 25 to 30 years is an awful long time to get even again.

So what is really happening in this market?

Everyone is aware of the problems in Europe with Greece, Portugal and a host of yet to be named countries. We all know that the huge amount of money being printed, coupled with the bank failures abroad contribute to the dollars declining value. These events, in conjunction with the American governments actions, also contribute to the devaluation of the dollar. The government claims that this is beneficial to exports, but the bottom line is that the purchasing power of the American dollar continues to erode in world markets.

Based on the declining value of world currency against gold you might ask- why isnt gold trading at $2,000 or even $3,000 an ounce? What is wrong with this market? This is because a great deal of what goes into the gold market is psychological and reacts to cyclic trends driven by both psychological and economic factors.

So what does all this have to do with the price of gold now? It has everything to do with gold and nothing to do with gold.

Here is what I’ve been able to observe in the last several years in gold and seems to be holding true. It is something that you should pay attention to if you’re interested in the next big move in the gold market.

Before gold can move higher it needs to create what I call an “energy field”. The most recent energy fields in gold were between May 12, 2006 and September 20, 2007. This 17 month energy field saw gold prices oscillate between a broad trading range bound by $730.08 (upside) and $541.80 (downside). That energy field produced enough power to propel gold to the new high of $1,012.40 on March 17, 2008. This marked the first time gold exceeded, in dollar terms, the highs set in the early 80s mentioned earlier.

The energy fields I have observed for gold are taking somewhere between 17 and 18 months to complete. If the energy field holds, then the December 3rd 2009 high of $1,226.37 should remain in place for quite some time. If the same cycle remains true then the recent lows that we witnessed, at $1,050, should also remain intact as they represent the 15 to 16 month cycle low.

With the lows in place the next question becomes when is the next cyclical high in gold? Based on the existing cycle, we can expect the next major gold high in 2011.

To summarize: I expect gold to be locked in a broad trading range for the next 12 months bounded by the December 09 highs of 1,226.37 and the lows of $1,050.00. If the gold cycle holds true, we expect that gold tops the $1,226.37 marker by April or May of 2011.

On the on the upside we will also be looking for gold to make a nature cyclic high in October or November of 2011. It’s impossible to predict the future with any degree of accuracy; however when we look at the cycles in gold this reads as a pretty good bet.

No matter what happens we expect gold will offer some great trading opportunities that investors and traders should be able to take advantage of.

Watch the free video here: Gold going higher?

As I always discuss- in trading one should approach gold or any other market with a game plan and proper money management stops. The key to success in this decade will be an investors willingness to move in and out of asset classes such as gold and be well diversified into more than one asset class. That way you wont be left holding the bag for the next 25 years. Our World Commodity Portfolio is a good example of this approach and one I believe will serve investors well in the coming years.

Bob Prechter Reveals the Most Dangerous Gold & Silver Myths

admin — Tue, 23 Mar 2010 22:11:26 +0000

A FREE report keeps you on the right side of precious metals

By Nico Isaac

Right now, the gold BULL-ion bandwagon is more crowded than a New York subway train during rush hour. But before you squeeze your way into the crowd of passengers, you should know one thing: Those steering the course are using outdated maps based on ill-conceived notions and illusory hopes.

Where can you get better information about gold and silver? Take a look at the latest FREE resource from Club EWI, the Gold and Silver eBook. This riveting, 40-page eBook pools the recent and archived writings on the precious metals by EWI president Bob Prechter himself. The result is a comprehensive collection that spans the last four decades of gold and silver history to expose the most dangerous market myths. Off the top is this familiar bit of “wisdom” from the school of Alan Greenspan:

It is impossible to foresee the end of major trends in precious metals BEFORE they occur. Hindsight is foresight.

NOT SO, says Prechter. Since gold and silver established their all-time record peaks in 1979-80, he has stayed one step ahead of the metals’ history-making turns. Here, Chapters 2 and 3 of the Gold & Silver eBook offer up the following excerpts from Bob’s earliest writings:

Silver

November 18, 1979, Elliott Wave Theorist (EWT): With silver prices hovering near $20/ounce, Bob wrote: “If my wave count is valid, silver can be expected to drop back down to between $4 and $6, $3.20-$3.49 some time in the next decade.”

What actually happened: From there, silver prices embarked on a 13-year bear market that saw prices plunge into the $3.50-per-ounce area.

March 26, 1993, EWT: “Silver is approaching a major bottom” of its decades-plus long downtrend.

What actually happened: Silver found its low in 1993.

Gold

December 9, 1979, EWT: “After 13 years of rise, Elliott counts now suggest an important top is near in gold. The downside target is at least $282.50.”

What actually happened: While the price projection for gold’s peak was far off the mark (the Theorist cited the upper $480/ounce range), the time target of early 1980 was met with accuracy. From its 1980 peak, gold prices plummeted nearly 70% before hitting bottom in 2001.

At the Crest of the Tidal Wave, 1995: “One attractive termination date for the gold bottom is New Year’s Day of 2001 (plus/minus a month). That way, it will have lasted a … a lean 21 years from the 1980 peak.”

What actually happened: Gold registered its low at $255 on February 20, 2001.

Now that we can see that it is possible to benefit from foresight about the end of major trends in precious metals, what about these other popular notions –

Gold always goes up in recession and depressions.
Gold always performs better than stocks in economic downturns.
Gold and Silver are just beginning (as in the year 2010) their biggest bull market runs ever.

Download Robert Prechter’s FREE 40-Page Gold and Silver eBook. Is gold a simple buy-and-hold at today’s prices? The independent insights in this valuable ebook deliver Prechter’s complete analysis and help you decide how to – and how not to – incorporate gold and silver successfully into your own investment strategy. Learn more, and download your Gold and Silver eBook here.

Nico Isaac writes for Elliott Wave International, a market forecasting and technical analysis firm.

Crude Oil Chart is Showing a Bearish Divergence

admin — Tue, 16 Mar 2010 19:04:56 +0000

The RSI (Relative Strength Indicator) on the crude oil chart is showing a bearish divergence.

by Adam Hewison

The crude oil market came under pressure on Monday and I’m disappointed that I did not have this video out to you earlier. I created the video on Sunday along with the other three videos on the S&P 500, gold, and the euro.

Nonetheless, I think you will find this video useful as it outlines our position in this market. The video is short and to the point, nonetheless I think you’ll have a lot of good takeaway information.

As always our videos are free to watch and there are no registration requirements. I would really like to hear back from you with regards to your thoughts on this video.

Watch the video here: A Quick Peek at Crude Oil

Running time: 3:21

What’s Next for Gold? Free video

admin — Mon, 15 Mar 2010 23:42:05 +0000

by Adam Hewison

Last week we gave you a Trade Triangle alert to exit the gold market on the long side. Since that alert was issued gold has dropped significantly. In today’s short video I bring you up to date with our thoughts on what we think is going to happen next to gold.

This week could be shaping up to be an extraordinary week in the markets. I strongly recommend that traders everywhere take precautionary measures to protect capital.

Watch the video here: A Sneak Peek At Gold

Running time: 1:56

Gold: Best Supporting Role In Economic Downturns? Think Again

admin — Wed, 10 Mar 2010 20:34:30 +0000

Gold’s safe-haven status is based on hype, not history

By Nico Isaac

As I sat down to watch the Oscar pre-show on Sunday night, March 7, one word was repeatedly used to describe the celebrity starlets and their designer duds: GOLD. Gold bustiers and gold lame skirts, shiny gun-metal dresses and glittery sequined gowns all basking in the golden shadow of the final golden statue.

Everywhere you look, from the Red Carpet to Wall Street, gold is definitely in “fashion.” As for why, one word comes to mind: safe-haven. See, according to the mainstream financial experts, the more unstable the global economy, the greater the appeal for the precious metal.

And, with a staggering 17% unemployment rate in the United States, alongside slumping real estate sales, Eurozone weakness, the Greece debt debacle, and so on — the only thing going up is gold’s supposed disaster premium. Here, take these recent news items for example:

“Bullion Sales Hit Record In Stampede To Safety.” (Financial Times)
“Gold Ticks Higher On Safe Haven Buying. The risk trade is resuming.” (AP)
“Gold Rose to 6 ½ Week Highs as the metal benefits from fears over financial instability in general. The market is looking for some security with gold.” (Reuters)
“Gold Rush: This is a new round of safe haven buying.” (Bloomberg)

There’s just one problem: The correlation between a falling economy AND rising gold prices is based solely on hype, NOT history.

Case in point: In the March 2008 Elliott Wave Theorist (republished in his 40-page Gold and Silver eBook), Elliott Wave International President Bob Prechter presents an indisputable case AGAINST the safe-haven status of gold.

The first piece of evidence: The following table showing gold’s performance during the 11 officially recognized recessions beginning in 1945.

Prechter also plotted the Dow Jones Industrial Average into the same period and made this startling discovery: The average total return for the Dow during recessions since 1945 is 6.89%. Taking into account modern transaction costs, the Dow actually beats gold with a 6.87% return.

The most powerful myth-debunking punch of all, though, came via the second chart of gold’s performance — this time during periods of financial growth.

In Prechter’s own words:

“All huge gains in gold have come while the economy was expanding… The idea that gold reliably rises during recessions and depressions is wrong. In fact, like most such passionately accepted lore, it’s backwards.”

Now, this doesn’t mean that you shouldn’t own gold in a financial crisis. On the contrary: In chapter 22 of his Wall Street Journal business bestseller, Conquer the Crash, Prechter lists 5 reasons why “you should buy gold and silver anyway.” Gold is “real money,” after all! It’s just that, despite widespread beliefs to the contrary, you shouldn’t expect “huge gains in gold” when the economy contracts.

Nico Isaac writes for Elliott Wave International, a market forecasting and technical analysis firm.

Gold’s Latest Move – Video Analysis

admin — Tue, 09 Mar 2010 19:43:40 +0000

by Adam Hewison

The move down in gold yesterday surprised many traders and flashed an exit signal based on MarketClub‘s daily “Trade Triangle” technology. As we have mentioned before, we felt that gold was in a broad trading range and were not optimistic that it would shoot higher.

The action yesterday confirms that we have more of a two-way market. I expect we’ll see further selling on any rallies from this level.

In today’s video, I share with you some thoughts I have on gold based on one important element: how gold energy fields propel this market.

Watch the free video here (5:17): Gold’s latest move

Making Sense of Today’s Gold Market: Free video

admin — Thu, 25 Feb 2010 17:22:42 +0000

by Adam Hewison

It’s been about eight days since we did a video on gold, and given the market action today I thought I would look at what is causing the downward pressure in this market.

If you did not watch my last video on gold, I strongly recommend you click here to watch the video titled “Five Reasons Why Gold Will Not Make a New High This Time” as it will give you a bigger picture of how we see this market playing out in the next 12 months.

In today’s short video we look at an indicator that we have not talked about before in any of our videos. The indicator, which is an overlay on top of the chart, is called the Donchian Channel Indicator.

Richard Donchian, who has since passed away, came up with this indicator in the late ’40s. The reason why I like this indicator is the fact that it has successfully stood the test of time. I think you’ll really enjoy seeing how it can help you make money in the gold market.

Also in this video, I point out one very important cycle that is in play now and where I think the next tradable low is coming into this market.

Watch the video here: Making Sense of Today’s Gold Market (4:30)

ETFs For Commodity Investors

admin — Wed, 24 Feb 2010 01:49:42 +0000

Exchange Traded Funds
In recent years, there is one type of fund that has hit the commodities market creating a major impact. This comes in the form of exchange traded funds. United States markets alone hold more than $10 billion in assets, as of 2009. The investor has many choices when it comes to using these funds. They use them to purchase exposure to individual commodity sectors, gold, oil, broad-based commodity futures indexes, and silver. What makes these funds so popular is the fact that they are very easy to purchase. They are purchased as an exchange-traded fund as an investor would purchase any other security. Exchange traded funds are considered very affordable because there is no commission charge for purchase and they cost approximately 75% less than a commodity mutual fund.

Exchange-Traded Funds Linked to Individual Commodities Futures
Futures are very popular with investors, which can be considered the home of commodities-linked exchange trade funds. The way this works is that this type of fund will buy futures with leverage, but they will only offer a small part of the cost of the contract. Then the remaining balance will go to treasuries, who will in turn generate income from the interest that is accumulated. When an investor begins to inquire about the return he or she will get on their investment, the answer can be increasingly complicated. This is because it is based on many different contingencies that begin with roll yield, collateral interest income, and ends with any changes in spot price.

Exchange-Traded Funds Taxes
This can be a very tricky subject when it comes to exchange-trade funds. Essentially, the IRS requires investors to sell their exchange-traded funds by December 31 of each year. It is important to remember that if the fund is up then taxes will be owed. This is because there is no deferment when it comes to gains on commodity futures. It is vital to remember that all gains are taxed at a rate of 60 percent for long-term gains and 40 percent for short term; this is true not matter the holding time period. There is also a tax on the interest. Capital gains also cannot be deferred and they are taxed to a maximum of 23 percent.

Exchange-Traded Funds Linked to Commodities Indexes
There are only two broad-based commodity indexes; ishares GSCI Commodity Index and Trust DB Commodity Index Tracking Fund. When researching these funds, an investor will find that they use futures, including collateral and yield interest loans, which charge the same expenses. There are some differences between the two funds. The first difference is that DB Commodity Index Tracking Fund only tracks six commodities while ishares GSCI Commodity Index Trust will track a more simplified index of 24 components.

The roll strategies between the two indexes are another difference. DBC will look at 13 months for the highest yield, instead of rolling the expiring differences to the next month available. iShares, on the other hand, uses a five year contract, known as CERF kind of futures contract. The advantage to this is that CERF contracts will reduce trading costs.

While both funds will require taxes to be paid on their interest income, the GSCI Commodity Index fund are benefited with special long-term contracts where the annual tax can be dodged. It is important to mention that there is some controversy on this subject, however, the IRS has not issued their final ruling on its capabilities.

Exchange-Trade Funds Linked to Commodity Equities
Commodity-focused equities are considered a good investment for those who are looking for corporate upside or leverage. This type of fund is also high in oil exposure. It is important to remember that there is a high risk of corporate malfeasance, even though the fees are low with this type of investment.

For more advice on cd rates, please visit our site.

Silver versus Gold

admin — Tue, 23 Feb 2010 19:16:24 +0000

by Adam Hewison

Late in 2009 a lot of folks began asking us about buying silver instead of gold. At the time, we stated exactly how we felt, in that, why would you try to buy something that is not in the same league as gold? The two markets are completely different and are driven by a different set of emotions and fundamentals.

This is the first video that I’ve done on silver in quite some time, but I think it’s an important one for you to see.

One of the standout features that I noticed was the fact that when gold was making new all-time highs in early December, silver failed to take out the March 2008 high. I consider this to be a negative.

In this short video you will very quickly see how we feel about silver and how you can benefit from looking at this market from a different perspective.

As always our videos are free to watch and there are no registration requirements.

Watch the video here: Looking At Silver for All the Wrong Reasons (2:44)