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Gold and Silver Feeling Pressure from Short Day Traders

Gold and Silver Feeling Pressure from Short Day Traders
Category: Market Reports
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Posted: 08-12-2016 12:21:00 PM

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.

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.

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About The Author

Walter Pehowich Author Name: Walter Pehowich
This editorial has been prepared by Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not prove to be true, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept the foregoing.

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