Currencies and Gold
posted Mar 20, 2004 at 05:31PM
The people who made money on this last upturn required exquisite timing AND proper selection of trading vehicles.
I have not participated to date. The stocks that I have been following more closely are showing either difficulty escaping the gravity of 200 dma, suffering from inadequate liquidity to make the size of bets that I want to, have market depths that show a lot of supply at critical resistances
Bascially untill I see that supply bieng chewed up I am loathe to enter for fear of getting caught in a POG reversal/stock liquidity trap....DSM and to a lesser extent QRL comes to mind here
SUR.V had bad news in which terms of refinanicing went from 1.3 to 1.07 and has resolved a triange to the downside. It also emitts a strong stench in regards to where retail investors place on the food chain.
GBG reacted well but I didn't pile on and now is up against channel resistance.
My thinking is that big explorers with claim to "elephant" properties may be the way to go in any upleg that will certainly have lots of panic in regards to the dollar.
CDU silver ratio is giving warning signs however that stocks are not following silver up....read the lenard kaplan assessment on 321gold.com for why caution is warranted
I remain 100% cash as I think the contracting money supply of months back will put a whiff of deflation fears into the market. Read clif drokes economic outlook for 2004 at clifdroke.com or 321gold.com The fact that bond yiels are so ridiculously low in the face of $40 oil means people are still afraid of deflation
The dollar held up well considering the news that Japan may curtail currency intervention. Maybe because the news out of Europe on the economic front is horrible with growth figures that are lagging badly behind those of Asia and the US. The pressure to devalue the Euro will certainly be building to a fevered pitch.
My fantasy scenario is as follows...and basically revolves on hoping that gold stocks get a nice washing out.
Major channel resistance on gold holds and a trip to the bottom channel ensues. This will take it to 380 and below 200dma which will get the technicians selling out. Ideally the long term stochastics will put in a bullish cross followed by a bull kiss on the downturn. The other element of this fantasy scenario is that no bearish MACD cross show up on the monthly POG charts
XEU goes down to meet measured targets while USD tries and fails to reach, much less breach, its 200dma
Hopefully all that gold stock supply sitting at resistance levels breaks and flees for the exits. Some of these juniors are not that liquid and some of the prices hopefully will be screaming bargains
A lot to ask for, but the scenario is not outside the realm of possiblility.