Recently in metals Category

Weakness in commodities what to do? Here are a few ideas...get short, exit longs or be prepared to buy from lower levels. We think Crude oil and the distillates have put an interim top and expect prices to fall back. We reserve the right to change our mind if September closes above $79.50. We expect a $3 pullback in Crude and 10-15 cents in the distillates and then we would re-evaluate where from there. Exit ALL remaining longs. In terms of an allocation in this sector we prefer bullish exposure in natural gas via October and November 50 cent call spreads. As of the action today prices appear to be breaking the down sloping trend line previously mentioned. The next hurdle will be a settlement above the 50 day MA; at $4.57 in September.

As of this post indices are slightly higher but the bulls seem to be running out of gas. On a further appreciation of 1.5-2.5% clients will exit their August ES 1150 calls and buy back their September ES 1000 puts. We cannot rule out a probe of 1130/1135 but we do not feel those levels are sustainable. Was a top made in sugar today? We've been calling a top for the last week and exited clients long perhaps a little premature. Prices in October closed 3.4% off their highs today. If this is the start of a correction we think a trade back to 16/16.50 happens quickly.

Treasuries broke their 20 day MA with 30-yr bonds and 10-yr notes destined for lower ground. IF we can turn a profit on our clients Euro and Swissie shorts we would like to be in NOB spreads expecting September 30-yr bonds to track back to 122/123. Metal traders fled for the exit doors today with August gold breaking nearly 2% dragging prices to three month lows. We think the 200 day MA will be in play in the coming sessions at $1147. How prices respond there will determine movement in the next two weeks. Clients would be content buying from lower levels. September silver was lower by 4% today; we would exit futures and/or tighten stops as a close below the 200 day MA may mean lower ground. Traders holding December call spreads are losing money but once this correction concludes we may buy back their top legs. Nothing has changed with our year end target as we still anticipate a trade to $20/21 ounce.

Copper failed again to take out the 100 day MA; if prices fade from here then prices should head south. If corn trades 2-3% lower in the remainder of the week we suggest buying December and covering all remaining shorts in September. Additionally we still feel November soybeans and December soy meal are buys but from lower ground; $9.40 and $270 respectively. Some clients remain short the Euro which is unchanged as of this post and short the Swissie which is down by just over 1%. Our targets remain $1.25 and .9200. If energies and metals continue to depreciate we may have some bearish suggestions in the Loonie. A failed rally today has prices looking like we could get a correction back to .9400.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

Volatility Reigns....

Week High....$1218.80 ......7/13

Week Low.....$1185.80......7/16

This week's Gold market covered a very volatile $33.00 range as the summer dull-drums expose the lack of confidence from investors globally. This week has found Gold trading in a very technical range as lack of buying momentum has forced the bulls to take profits as the high price of Gold has cooled demand for physical Gold. There is still an insatiable demand for Gold world-wide but with the economic uncertainty savvier investors are looking for a price dip before re-entering the market.

The gold market is waiting for some fundamental news to help guide traders seeking direction. The Jewelers of Indian will be looking to re-stock for Their upcoming Wedding and Festival season beginning in September. The jewelers of India have been very quite since May and the celebration of Akshaya Tritiya which is probably the most auspicious Hindu Holiday for the giving of Gold as gifts. The higher prices have pushed India's investors into Gold ETF's.....(up 76% in June) However since India is the world's largest consumer of Gold I expect the jewelers of India will buy Gold for the upcoming season's no matter the price. Obviously they are side-lined hoping for a price dip....

There has been a lot of noteworthy headlines this week...including 29,000 more Americans found jobs...

The following are several more news worthy comments...

Federal Reserve Chairman Ben Bernanke while delivering a speech was quoted as saying "Small businesses are central to creating jobs in our economy" adding "they employ roughly one - half of all Americans and account for about 60% of gross job creation"........

He then stated "we have also been focused on strengthening the nation's banks, so that they can resume normal lending as quickly as possible"... Creating jobs and helping small business is the road to economic recovery in my opinion....

It has certainly become evident that many investors disposable income has become their priority income. As the summer markets continue I expect the volatility and the choppy conditions to remain. As we all remember the Gold made it's mammoth run last year...after Labor Day...

Mike Daly/ Gold Specialist

PFG BEST

mdaly@pfgbest.com

877-294-4669
773-563-8014

*THERE IS EXTREME RISK TRADING FUTURES, OPTIONS, and FOREX*

So far this week we have experienced a $41.30 range in the August Globex market notching another all-time high of $1266.50 on Monday and trading as low as $1225.20 during the Wednesday session. This volatility is a direct result of the continued uncertainty with the fiscal crisis in the European Union as well as the growing geo-political tensions world -wide. Gold and Silver tend to do better than most commodities in times of crisis and warring environments as investors tend to look for "safer environments".. investors are seeking tangible investments....This is happening globally...

The underlying fundamental has been and continues to be the over whelming demand globally for physical Gold as "safer haven" investment. The lack of confidence in fiat currencies has caused this phenomenon this was reported Wednesday.....

There are unsubstantiated reports from an Iranian news agency:

There are reports that a large American Military force has massed in Azerbaijan on the northwest border of Iran. This coincides with a report the Pentagon confirmed over the weekend regarding "an unusually large U.S. fleet" sailing through the Suez Canal . Iran has been boasting to the world that they possess 17 kg of 20% enriched uranium ready....KEEP a very close eye on this situation !!!!

The Purchase of new homes in the United States dropped in May to its lowest level on record. Sales dropped 33% much worse than the 19% projected by economists. The number of Americans applying for jobless benefits decreased by 19,000 to 457,000....This is good news!!!

Many economists believe the European Union crisis has caused some employers have delayed their hiring plans until the region shows improvement . Given the current climate of the world I expect the choppiness and volatility to continue. In spite of record price levels the physical demand for both Gold and Silver remain extremely high. Investors have become convinced that the "precious metals" are a better long term alternative.

Mike Daly / Gold Specialist
PFG BEST

mdaly@pfgbest.com

877-294-4669
312-563-8029
312-775-3014

*THERE IS EXTREME RISK TRADING FUTURES, OPTIONS, and FOREX*

After making a new high Crude failed and closed almost $2 off its' intra-day high. We suggest exiting all remaining longs as we suspect a set back. We anticipate a challenge of at least the 20 day MA; in August that level is $75.15. We're not suggesting getting short but rather moving to the sidelines. Natural gas finally filled the gap we'd been calling for today; at $5.865 on the August contract. Aggressive traders could scale into longs with tight stops though they'd be catching a falling knife. The more prudent move may be to see if the trend line at $4.80 holds. In a perfect world $4.55-4.65 in August serves as the ideal long entry.

A failed rally in indices as the 50 day MA acted as stiff resistance...this may sound familiar as we forecast this exact scenario in recent posts. From here aggressive traders could fade rallies in the S&P and ES. Today most clients started to buy September ES puts. First target in the futures is 1075 followed by 1045. October sugar gained 3.77% today closing just under 16 cents. We continue to feel this contract is a buy near 15 cents and a sale near 16.50 cents. Traders still holding October longs COULD get a push to 17/17.50 but if that lucky we would suggest exiting the trade. We continue to suggest selling December cotton at these levels anticipating a trade back under 75 cents is in the future.

September lumber was lower by 4.28% today reaching a seven month low. Bottom pickers this commodity should be on your radar. We advised clients to exit their NOB spreads at a small profit this morning when 30-yr bonds could not breach 122′20 and it appeared equities were rolling over as to their inverse relationship. Apparently the market liked the Cattle on feed report as cattle were well bid today gaining nearly 1%. We continue to suggest bullish exposure in December live cattle. Lean hogs were higher by 2% today; prices have retraced 61.8% in the last two weeks. We're not suggesting shorts yet but our bullish objective was obtained today.

Key reversal in the metals today; we liquidated ALL clients bullish gold and silver today. As for gold if the trend line gives way at $1235 we could see $1155-1175 soon there after. We will be looking to re-establish longs for clients after the coming wash out (as we see it). Silver made a new high and failed forming a bearish engulfing candle on the daily chart. We expect $17.80 and potentially $17.25.

Corn is allowing us to lift our July hedges for clients and get more length in the September options and December futures. As we've said use this set back as a buying opportunity. Trail stops on your longs in soybeans and soy meal. We would need to see $2.40 in July oats to hit clients profit objectives in their July $2.50 oat puts; current price $2.64′4. The US dollar likely bottomed today and if indices move lower the dollar should gain this week. Our upside target is the 20 day MA at 87.30. Clients were advised to cut losses on their Yen puts today; a loss of $328/per including our fees. Our featured currency play is bearish exposure in the Loonie with clients via futures and options expecting a trade to .9550 in the coming weeks.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

This week the Gold has rallied to another all-time high as global investors continue to choose gold as their currency of choice. Savvy investors are seeking tangible assets for long term investment opportunities as they have lost faith and confidence in the fiat currencies. We have once again received mixed news and reports from the European Union that has left investors trying to decipher the content which appears to be as clear as mud. For instance Monday we reported that 18 of the 19 industries in the STOXX Europe 600 index rose as industrial production increased greater than analysts predicted in April.

Later in Monday's session we learned that Moody's Investor Service downgraded Greece's government bond ratings to junk status. On Tuesday it was reported that Moody's further downgraded several Greek Banks as these actions rekindled the gold rally as physical bullion buying increased. We certainly now realized that the continuation of the Euro regions debt crisis was far from over...

Wednesday was yet another day of bad news for the Euro region as rumors and denials were flying... A Spanish financial journal (El Economista) reported that Spain was involved in a secret meeting with The European Union and the IMF and the U.S Treasury seeking a credit line of 250 Billion Euro's....All parties denied this happen... However we do know that the EU and the IMF are putting some type of aid package together for Spain...

We also learned that European Central Bank Member Nout Wellnik stated "the Netherlands should take firm Measures as quickly as possible as their economic situation is quite serious." This is the first I have learned of the crisis In the Netherlands...All of this news has been very Gold friendly....

The continued uncertainty has chased investors into safer havens and during times of crisis Gold and Silver usually retain value better than most commodities.

Today the leaders from the European Union attempted to ease investors minds as they released information that showed how Banks perform on stress tests, and seeking to gain investor confidence in Euro regions financial system... German Chancellor Angela Merkel stated "what's most important right now is that we have maximum transparency"..... Transparency would certainly be refreshing.

Meanwhile as I write Gold has traded as high as $1252.80...ANOTHER ALL-TIME HIGH.......

Jobless Claims In the week ending June 12, the advance figure for seasonally adjusted initial claims was 472,000, an increase of 12,000 from the previous week's revised figure of 460,000. Obviously this needs to become priority # 1...We need to get people back working and spending again.

The continuing global Geo-political tension has also helped the Gold markets latest rally as a warring environment is Normally "bullish" gold as investors tend to choose safer havens....

Feel Free To Email ME !

Mike Daly / Gold Specialist
PFG BEST
mdaly@pfgbest.com

877-294-4669
312-563-8029
312-775-3014

*THERE IS EXTREME RISK TRADING FUTURES, OPTIONS, and FOREX*

Based on the late action we should see indices lead us higher next week. After an 8% rally in the previous four sessions Crude gave back some of its gain today closing down just over $1. The 9 day MA did hold and as long as that level supports we think higher ground ahead. That level is $73.25 in July and on a breach we would move to the sidelines. The distillates should continue to look for guidance from Crude oil. Natural gas gained just over 3% today but closes slightly lower on the week. We have advised clients to buy 20-40 cent dips. On that they would likely be buyers of September futures and September call spreads.

It has been a challenge sitting on our hands but we suggest selling a rally in indices only if we get it. On the S&P we see upside resistance at 1100, 1125 and then 1145. The higher price one sells at obviously the better. October sugar touched 16 cents today; our first target gaining 6.7% this week. On a further appreciation next week we will be advising clients to lighten up on their longs. Cotton was unable to break above resistance; we would suggest fading this rally via December futures with tight stops or purchasing December puts. We will likely explore bullish positions in November OJ next week for clients...stay tuned.

Coffee was higher by 6% on expiration, a large allocation by a fund and weather concerns. Unfortunately we missed this one*$? All clients' profits in their NOB spreads were given back today. We still like the idea of being short Treasuries and those not yet in the trade can join us at a better price. Our target in September 30-yr bonds remains 120/121. Sloppy week in live cattle with prices were range bound and in our estimation finding support at these level. We suggest gaining long exposure in December live cattle.

The 20 day MA held today with gold finishing slightly higher on the week after posting a record high. As long as the trend line at $1215 in August gold holds stay long. July silver will end the week just below the 50 day MA higher by 4.5% on the week but much of that came on Monday. We have most client's long futures and options thinking $19/ounce shortly. Agriculture was higher across the board; corn and oats settling near their weekly highs. Oats may not make the headlines but prices have advanced 20% in the last two weeks. Continue to buy corn as we think we've turned a corner. Much like the USDA report back in January put a top in Agriculture we think the USDA report this week may have put in a bottom. Clients are positioned long the Aussie looking for .8540 and then .8680. Others are short the Yen looking for a trade below 1.08.

Risk Disclosure: The risk of loss in trading commodity futures and options can be substantial. Past performance is no guarantee of future trading results.

So far this week we have witnessed another all-time high( August Globex) of $1254.50 on Tuesday( June 8th )and low of $1212.10 as the global economic and geo-political uncertainties continue to fuel the market volatility. There is certainly huge physical demand world-wide As savvy investors have lost confidence in the fiat currencies and have apparently chosen Gold as a "safer haven" investment. The incredible demand has been the key fundamental that has been driving and maintaining these record levels.

After recording record prices earlier this week the gold market struggled between the $1250.00- $1255.00 levels as technical selling and hints that some FOMC members would consider raising interest rates by the end of summer had "bulls" taking profits. Any time the words "higher rates" and 'FOMC" are used in the same sentence it usually sends Gold south. Bernanke testified in front of the House Budget Committee on Wednesday and the following are some highlights from that committee testimony...

- "The Fed will take all necessary steps to aid in the economic recovery"

- "The tight credit is restraining commercial real estate"
- "Long run inflation expectations have been stable"
- "Inflationism is likely to remain subdued"

These comments may have been interpreted by investors as indication the Fed may be raising rates sooner than later. We still have 8 Million Americans unemployed and in my
opinion that should be priority one! The situation in the European Union continues to be brittle however, there appears to be more stability and less chaos coming out of the region. European Central Bank President Jean-Claude Trichet stated "Inflation pressures are contained over the medium term" and added "The ECB will do what is needed to maintain price stability" ... This probably restored some investor confidence and halted some bullion buying...

China's State Administration of Foreign Exchange (China's Foreign Exchange Regulator)stated that the current" volatility in the Gold market was not suitable for asset allocation".... This certainly was bearish for Gold considering China is the largest producer and number two consumer of Gold in the world... However, not too long ago China declared they would increase there Gold reserves by 10,000 Mt in the next decade...The regulators may not be willing to speculate in the Gold market but the Citizens of China have developed an insatiable appetite for owning Gold.

Jobless Claims dropped by 3,000 to 456,000...this was worse than anticipated as many economists predicted 450,000... Treasury Secretary Timothy Geithner told the Senate Finance Committee "The broad strength of U.S exports to China and the world is one
reason why we are seeing strong growth in manufacturing"....

Much of this news mentioned above has been "bearish" for Gold. But as I write August Gold has settled at $1222.20.... The resiliency has been phenomenal....The demand is there... Investors worldwide are watching the Geo-political tensions Between North Korea and South Korea, Israel and the Palestinians, As well as the border clashes on the Iraq/Iran border.... Warring environments are normally ' bullish" for Gold as investors
choose " safer havens "especially in oil producing regions...

Trade Smart....

Mike Daly / Gold Specialist

PFG BEST

mdaly@pfgbest.com

877-294-4669
312-563-8029
312-775-3014

*THERE IS EXTREME RISK TRADING FUTURES, OPTIONS, and FOREX*

Comex copper futures for July delivery on Wednesday morning were trading solidly higher on short covering in a market that is still technically bearish. July copper prices are in a two-month-old downtrend on the daily chart and earlier this week hit a fresh eight-month low of $2.72 a pound. For the bulls to begin to regain some fresh upside technical momentum to begin to suggest a market low is in place and that a price uptrend can be established, they will have to produce multiple daily closes above major resistance at $3.00 a pound. The bears remain in overall technical control of copper.

A close below strong technical support at this week's low of $2.72 in July copper would produce more serious chart damage and suggest a downside target of $2.50 a pound for nearby futures. The present significantly bearish technical posture for copper is also a bearish shot across the bow for all raw commodity markets. Copper is a red industrial metal that is very important for commercial and residential construction worldwide. A down-trending copper market suggests a weak worldwide construction sector. Stay tuned! Jim Wyckoff