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Gold/silver: The bond breakdown

Commentaries & Views

Finally, a bit of excitement in the precious metals markets this week, with Silver one of the best-performing commodities right behind Copper, Coffee, Corn, and Lumber, giving further validation to this "Commodities Super-Cycle." Gold also broke through a critical psychological resistance level of $1800/oz while extending the rally on Friday when the payroll data added just 266,000 jobs, a far cry from the million expected.

The miss in the April jobs reading will spark chatter on wall-street that there are new challenges to the economic recovery. That will lead to further monetary debasement and increased debt discussions, often an ideal mix for the precious metals group. We at Blue Line Futures frequently are quoted saying that "the backbone of a Gold rally hinges on the direction of the U.S. Dollar and U.S. Treasury Notes and Bonds." That is why we created the "FX Rundown" covering the Dollar and other key currencies and now have launched the "Bond Breakdown." Remember, if you can get the Bonds right and get the Dollar right, you can get many markets right. Here is the link to a two-week trial of the Bond Breakdown, where you will receive actionable trade ideas. You can register here Bond Breakdown.

Focusing back to Gold and Silver, the next likely target I suspect in Gold will be a test of the 200 DMA at $1853/oz. A push to this level will most likely attract new participants into the market along with the market neutralizing the bearish trend the market has been in since reaching its "All-time high" last August. Silver had entered a "Value-Zone" sub $24/oz in March that many of you were able to capitalize on with 1000 oz futures, while this week, we had recommended to many of our clients purchasing the September Silver $29-$31 call spreads. If you did not receive the new edition of our free "Gold Trends Macro Book," it has been updated with silver slides. This monthly updated booklet will provide you with all the quantitative analyses of the precious metal's markets. You can request yours here: Free Gold Trends Macro Book.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.