All-time highs in the Dow, S&P and Nasdaq yesterday. Highest settlement in crude yesterday since July 22nd.
Overseas money still dominates the inflows into equities looking for yields and dividends and that’s just what they are getting. The question remains, can this continue or have we reached the top.
The price of gold and silver is feeling the pressure from the short day traders as they know that no one will stand in their way and bid the market up. So the shorts will have their way with their trading strategy until something changes. The 8:30 am government data could bring a STRONG bid back if numbers surprise, which in turn will cause the day traders shorts to cover immediately.
Some retail internet dealers have been sharing that their market is so very quiet that an immediate vacation is in order. One character started singing the song, “See you in September”. Not very funny, I’m not amused. I enjoy a busy market.
So as the market looks for a support level to hang its hat on, I turn to my technical friends to fill the gap for me. Gold’s first level of support below is not until $1,332 in the December futures contract and silver must hold the $ 19.48 level also in December for the markets to still hold an upward future trend. Some Wall Street traders are still looking for any pullback in the price of gold to jump back in. I would take the same stance as I believe holding physical gold for the long term is a must for any balanced portfolio.
For those who understand the CME Gold and Silver future spreads an interesting play has developed in the September / December Silver switch. The CME Sep / Dec switch as we call It, is currently yielding 2.4 percent. I find it very interesting because interest rates are virtually zero. So for the players who want to hold on to their long silver positions in futures, it’s costing them a nice piece of change to do so.
What I believe is happening, is the funds are rolling their long holding positions in silver and the speculators are making them pay up to do so by widening the spread. Government regulations have eliminated the banks from playing in this market, as they have big time in the past. So all you now have are the hedge funds holding their long positions in a bull market and the speculators who know that the funds for the most part have to roll out their positions if they want to stay long and most believe the funds don’t really care if the Sept / Dec switch is trading at 2 cents or 12 cents like it is today.
Have a wonderful Friday.
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