At the end of a poor week for US and world stock markets both gold and stocks were down circa 4.2% with only Government backed bonds showing any resilience. Little doubt that this latter will be short lived with some erosion already being evident by Fridays close.
Gold and silver finished just off their lows for the week as no significant covering of short sales became apparent while the Dow and S & P 500 picked up 1.25% and 1.50% respectively, indicating that the week’s market play was principally confined to stocks rather than precious metals.
There seem to be a lack of clues for us to anticipate next week’s gold and silver performances. Ideally we would like to see silver quickly but briefly decline to not far off $17.00 an ounce in order to pick up some cheap SLV October $20 calls before making a strong rally back to over $19 before end June.
Because we still believe that the strong bull trend in gold and silver remains in place and that the current blip is due to combination of the perceived need for liquidity as fears of a return to last years stock tsunami grow, a dropping oil price, the Euro situation, etc., etc., all of which have inexorably led to a growing lack of confidence across all markets, including virtually all commodities.
With this in mind we hope that an opportunity will present itself next week to buy the SLV calls at around 50 to 55 cents a contract giving the prospect of a downside of limited losses or a highly leveraged profit potential if our reasoning turns out to be correct.
These are odds that we can live with despite our aversion to speculative short-term trades; more so because we have already allocated that percentage of our longer-term investment funds to gold and silver that we believe is prudent.
Category: Precious Metal Investment News