Let the Good Times Roll
Yesterday, Retail sales in the U.S. beat expectations coming in at 0.6% versus an expected result of 0.4%. According to the Daily Shot (WSJ) Retail sales(excluding gasoline) have risen by over 5% compared to the same time last year. The article also notes that Federal Reserve data states that spending by Americans in bars and restaurants is increasing and is up 10% compared to the same time last year. This would seem to be a good sign for the economy with around 70% of GDP coming from the service sector. Its good news that people are comfortable enough with their economic situation to enjoy themselves. Given that interest rates are still historically low, unemployment is under 4% and appears to be heading lower in the short term, the stock market is hovering near all time highs and property markets have done well until recently, why not be happy?
As our readers know, we believe there is a place in investor’s portfolio for gold. Investing either in physical, through derivatives or via mining companies, we think it makes sense over time to have an allocation of some type. We tried going long above 1300 and were stopped out at the 1280 level, which for us was an important level. We have stood on the sidelines since in expectation of a new opportunity to buy. We have not been impressed with the price action and at the same time we have been positive to the USD. Historically, gold has a tendency to perform poorly when the USD is appreciating. We have watched the price slide down to the 1175 level where it is currently trading. We have no traded at this level since January of 2017. The next key support is the 1125 level. For the moment the momentum traders have done well being short and appear to be comfortable holding their positions. Some of the mining stocks we follow took a beating yesterday and we are waiting before we recommend adding positions to investors portfolios. In the case of gold patience is a virtue for the moment.
Gold (blue) vs USD index September future contract (red/green) something about to give?
|Ticker||Date Opened||Entry Price||Stop||Target Price||Current Price|
|EURUSD Put Option / Strike 1.1300 / Exp. 26 of Sept.||2/7||0.0056||premium||below 1.1300||0.0056|
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– Mark W