Gold/silver: are you buying the dip?
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
The first week of the New Year is in the books, and we are at "peak Fed hawkishness" with the stock market pricing in four rate hikes in 2022. The problem the Fed will find itself in is that they are tightening into a slowing economy. Looking at this week's ISM Services report showing slower growth and easing supply chain disruptions. The last time the Fed tightened into a slowdown was the 3rd quarter of 2018 and marked the bottom of Gold and the top of the stock market. With 2022 here, we are sending out a complimentary 2022 Futures Calendar & Reference Guide with a limited supply. The guide is your go-to resource for government & industry report dates, contract specifications, futures, and options expiration dates. *Available to U.S. residents only. You can request yours here: Blue Line Futures 2022 Pocket Calendar.
Weekly S&P 500 Chart
Weekly Gold Chart
Weekly Silver Chart
We believe the Fed will NOT be able to achieve its four-rate hike scenario given the state of the economy without doing significant damage to the recovery. Our stance on Gold and Silver is simple; we recommended that clients purchase April Gold futures this week at our rare major 4-star support at 1785/oz. If the price trends lower, we will scale down to long-term critical support at 1685/oz. We will consider taking partial profits on a rally back into the rare major 4-star resistance pocket at 1829-1835/oz. Additionally, we will back the position up with longer-dated call options. Many of you ask why we prefer the futures over other trading vehicles? The short answer is that futures trade nearly 24/hours, closely mirror the spot price, offer capital efficiency, have a more favorable tax treatment, and significantly more liquidity and volume than direct ETFs. To learn more, we completed a new educational guide that answers all your questions on how to transfer your current investing skills into trading "real assets," such as the 10 oz Gold futures contract. You can request yours here: Trade Metals, Transition your Experience Book.
Silver, if there was ever a time you thought about opening up a futures account, I have to believe that time is now. I have routinely checked on inventories of physical supplies, and they are either at a significant premium or unavailable. This week, we recommended our clients purchase Silver futures on a correction down to $22/oz. We will continue to add positions on any decline to the recent low at $21.42/oz. We will harvest some profits on a rally back to $23.50/oz and $25.50/oz while maintaining longer-dated call options. Additionally, we will continue to place bearish options on indices that carry high-growth or high-multiple names such as the Nasdaq and Russell.