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Market Bulletin: No Reversal Yet in Gold
Market Bulletin: No Reversal Yet in Gold
1350
1227.50 1300
The medium-term in the
1250 Gold market looks very
1200 attractive.
1150
1033.90 High
1100
The initial catalyst for the
1050
bulls was surely the Head
1000
and Shoulders continuation
950
pattern that drove the
$873 Prior High in 1980 900 market today to its minimum
850 target of 1350 or so.
800
Look closer.
SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets
Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
in association with
50000
12 19 26 3 10 17 24 1 7 14 21 28 6 12 19 26 2 9 16 23 30 7 13 20 27 4 11 18
Certainly the good volumes
May June July August September October
and rising open interest do
not suggest a trend reversal
yet….despite the violence of
today’s trading.
SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets
Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
in association with
Is this the end of the rally, the end of the trend or just yet another round of profit taking?
First, we need to understand what drives this market. Over the last several years Gold has
rallied mainly during periods of Dollar weakness and or geopolitical tension. Most recently the
main dynamic has been Dollar weakness.
But Gold is also supported by economic uncertainty and the policy mix that is generating. It is
well understood that the Dollar is weak because of the fragile nature of the US recovery, but
there are also serious concerns about the strength of recovery in the Euro zone, Japan and
now the UK too.
The response from policy makers has been a little different in each case:
1. In the US the administration continues to preside over a very large budget deficit and
debt build up with the Fed contemplating a new round of QE,
2. In the Euro zone, fiscal austerity has been the masterplan after the Sovereign debt
crisis earlier this year almost broke the Euro, with the ECB supplying sufficient liquidity
rather than QE,
3. In Japan the economy remains in the grip of deflation, the authorities are now
intervening to weaken the Yen and the BOJ has cut rates to zero and announced a
Bond purchase program,
4. In the UK the recently-elected government has put together a severe fiscal
consolidation that may cause several quarters of slow growth and perhaps tip the
economy back into recession. The response of the Bank of England has been to
contemplate a restart of QE.
So in three of the larger economies the Central Bank is either reactivating or close to
reactivating QE. The Gold market currently has little to fear from QE regarding inflation,
globally it is tame, although less so in the UK.
SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets
Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.
in association with
But what un-nerves investors and attracts them to Gold is the nature of the current economic
climate and the policy responses it requires. Quite literally no one really knows how all this will
end since other post WW11 recessions have been completely different.
While the likes of Fed chairman Bernanke has studied the great depression at great length no
two economic periods are the same. The world is a very different place to the 1930’s with many
previously economically primitive countries now economic powerhouses that are challenging
the older developed economies for dominance.
This is why we judge Gold is currently so attractive to investors and indeed Central Banks.
Since the current environment looks like persisting at least into much of next year, gold looks
set to make yet more all time highs, so for us, we are now likely witnessing a correction which
should ultimately provide fresh buying opportunities.
Mark Sturdy
John Lewis
Seven Days Ahead
SEVEN DAYS AHEAD Professional trading guides and recommendations for the World's markets
Authorised and Regulated by the FSA 124 REGENTS PARK ROADLONDON NW18XL TEL +44 (0) 7849 933573
E-MAIL MSTURDY@SEVENDAYSAHEAD.COM WWW.SEVENDAYSAHEAD.COM
This information memorandum has been prepared solely for informational purposes for customers of Seven Days Ahead and is based on publicly available information from sources
believed to be reliable. It is not an offer, recommendation or solicitation to buy or sell, nor is it an official confirmation of terms. No representation is made as to the completeness or
accuracy of any statements or forecasts contained herein and no responsibility or liability is accepted for losses arising from transactions undertaken or investments purchased, sold or
held on its recommendation. Consequently, any persons acting on information contained herein do so entirely at their own risk. Although the opinions contained herein were
considered valid at the time of release, financial markets are subject to rapid and unexpected movements. Seven Days Ahead, its associated companies, their directors, employees,
other customers or connected persons may from time to time undertake transactions or deal in investments mentioned in this information memorandum or have a material interest,
relationship or arrangement in relation to them.