Precious Metals Update: High Open Positions In Metals Has Been Cleared

August 23, 2021

The last two weeks of the American summer vacation will be full of twist and turns. Twist in gold, silver, copper and crude oil have already been faced in the form of August crashes. Except for natural gas, every metal has sold off in August. The hyper optimism in metals (precious metals and industrial metals) has paved the way for realism. Unrealistic high open positions has been cleared. Mild short positions have been built up in gold and copper. The turns or the turning points in the next two weeks will be in form comments in Jackson Hole conference, technical breakout for gold, silver and copper and US August nonfarm payrolls on 3rd September. Crude oil to me is a buy on crashes strategy.  Option traders will start building positions for Christmas from this week. I personally will suggest to invest in December naked call options (of varying strike prices) in gold, silver, copper, crude oil and platinum.

Five themes have ruled the financial markets from 2020

  1. Coronavirus
  2. Vaccine of coronavirus
  3. Taper
  4. Taper Timing
  5. New Variants of coronavirus and its impact.

The trend of all asset classes have revolved around these five key themes. Political comments, financial policies of nations and central bankers have revolved around these five these. Crypto assets (currencies and NFT’s) have also been affected by these five key themes. In the next two months the world will get something new news to trade and bet. September can be another big month. August job numbers in key nations all over the world, delta variant trend of coronavirus trend in September, Canadian elections, German elections and September FOMC meet are the key factors which can change the medium term direction of all asset classes. Invest after looking at that asset class as a whole.  For example if you are investing in Comex copper December future then look at the industrial metal demand-supply scenario as a whole and not just copper.

Money is still to be made by day-trading/short term trading/investing in precious metals, industrial metals and energies. Just one caution to everyone “Herd trading will not work for the rest of the year”. If you follow the herd, you will end up buying at the highest price of selling at the lowest price.

Nymex crude oil October (current price $63.24)

  • Momentum is bearish for crude oil. Technically crude oil is nearing oversold conditions.
  • Two hundred day moving average is at $60.10.
  • Crude oil has to trade over $60.10 to rise to $67.60 and $70.90.
  • The next wave of sell off will be there if crude oil trade below $60.10 to $56.10.
  • I do not foresee crude oil falling below $56.10 till early November. The risk to this bullish view is new variants of coronavirus causes big economic slowdown.
  • Nymex crude oil is an invest on crashes strategy with a stop loss below $56.10

MCX Gold October (current price Rs.47210.00)

  • Gold has to trade over Rs.46973 to rise to Rs.47551 and Rs.47758.
  • Gold will crash only if it trades below 46973 to Rs.46701 and Rs.46586.

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In 1933 President Franklin Roosevelt signed Executive Order 6102 which outlawed U.S. citizens from hoarding gold.

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